Consumer Class Actions in New York - New York City Bar Association
Consumer Class Actions in New York - New York City Bar Association
Consumer Class Actions in New York - New York City Bar Association
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ecause reliance is not an element of a §349 claim.@ Id. at 30; Anotably, even after<br />
Oswego, the Appellate Division has occasionally applied an <strong>in</strong>correct standard <strong>in</strong> section<br />
349 cases, impos<strong>in</strong>g a reliance requirement when <strong>in</strong> fact there is none. Id. See, e.g.,<br />
Gershon v. Hertz Corp., 215 A.D.2d 202, 202-203 (no §349 claim where pla<strong>in</strong>tiff=s<br />
>allegations do not show materially deceptive conduct on which pla<strong>in</strong>tiff relied to his<br />
detriment=). The Court of Appeals cont<strong>in</strong>ued,<br />
95 N.Y.2d at 30.<br />
[n]or did the Appellate Division merely apply the causation<br />
standard <strong>in</strong> the guise of reliance. The Appellate Division=s<br />
rul<strong>in</strong>g clearly imposed a reliance requirement that pla<strong>in</strong>tiffs<br />
made the decision to take the loan <strong>in</strong> reliance on their belief<br />
that the $275 fee would not apply. In contrast to section 349<br />
claims, that is precisely the type of reliance that must be shown<br />
<strong>in</strong> order to state a common law fraud claim.<br />
The Court of Appeals used the Stutman facts to illustrate the difference between<br />
reliance and causation, stat<strong>in</strong>g<br />
Id. at 30.<br />
pla<strong>in</strong>tiffs alleged that because of defendant=s deceptive act,<br />
they were forced to pay a $275 fee that they had been led to<br />
believe was not required. In other words, pla<strong>in</strong>tiffs alleged that<br />
defendant=s material deception caused them to suffer a $275<br />
loss. This allegation satisfies the causation requirement.<br />
Pla<strong>in</strong>tiffs need not additionally allege that they would not<br />
otherwise have entered <strong>in</strong>to the transaction. Noth<strong>in</strong>g more is<br />
required.<br />
The court likened the issue to cases <strong>in</strong> the securities context where Aproof of<br />
reliance is not required where a duty to disclose material <strong>in</strong>formation has been breached or<br />
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