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Admir KOVACEVIC, individually, and on behalf of all others similarly situated, Plaintiff, v. INTELLITIX, INC., Defendant.
The following papers numbered 1 to 5 were marked fully submitted on May 1, 2018:
Upon the foregoing papers, Defendant, Intellitix, Inc.'s motion (001) to dismiss Plaintiff's Complaint is granted in its entirety.
Plaintiff purchased admission to the 2015 Mysteryland USA Festival (hereinafter “the Festival”) held in Bethel, New York. The Festival utilized wristbands equipped with Radio frequency Identification (hereinafter “RFID”) technology rather than using traditional paper tickets or digital tickets. The Festival obtained these wristbands through Defendant, Intellitix, Inc. The wristband enabled Festival attendees to purchase goods and services at the Festival without using cash, credit, or debit cards. The Festival utilized an event-specific currency, called “Birdie Bucks.” Festival attendees could either register their wristband in advance on the Intellipay website and purchase “Birdie Bucks,” or convert U.S. currency into “Birdie Bucks” during the Festival on site. Plaintiff, as well as other attendees, used credit cards, debit cards, or other methods to convert U.S. currency into Festival “Birdie Bucks” linked to their wristbands.
Registration of the wristband in advance required Festival attendees, like Plaintiff, to accept “Terms and Conditions” which included the following provisions:
For Customers who purchase “Birdie Bucks” online in advance of the Event:
All visitors who choose to add $100 USD to their wrist-band by 11:59 pm May 21, 2015 will receive a bonus 2.5 “Birdie Bucks.” Additionally, visitors have the option to elect to automatically have their Credit/Debit card on file add 22.5 “Birdie Bucks” ($50) each time during the Event that their “Birdie Bucks” balance reaches 9 “Birdie Bucks” or less.
All “Birdie Bucks” left unredeemed by 5 pm May 25, 2015 will be refunded in accordance with the terms below:
Cash equivalent of remaining “Birdie Bucks” to be credited back to Credit/Debit card subject to $5 handling by June 12, 2015.
* * *
For Customers who purchase “Birdie Bucks” on-site at Event or online during the Event:
“Birdie Bucks” will be available for purchase at several physical locations at the Event. Visitors will also be able to add “Birdie Bucks” to their wristband via a mobile website.
Birdie Bucks left unredeemed by 5 pm May 25, 2015 will be refunded in accordance with the terms below:
For visitors who purchase “Birdie Bucks” using a Credit or Debit Card:
Cash equivalent of remaining “Birdie Bucks” to be credited back to Credit/Debit card subject to $5 handling free by 11:59 pm June 12, 2015.
Visitors who purchase “Birdie Bucks” using cash:
Will be required to fill out an online form with name, wristband number, bank name, bank account number and bank ACH routing number by 11:59 pm Friday May 29, 2015.
Subject to accurate input of the online form, cash equivalent of remaining “Birdie Bucks” less $5 handling fee will be refunded via an ACH transfer by 11:59 pm June 12, 2015.
Here, Plaintiff loaded approximately $100 worth of “Birdie Bucks” onto his wristband when he registered online.1 Plaintiff spent approximately $50 at the Festival leaving approximately $50 worth of Birdie Bucks on his wristband. Plaintiff argues he received no advance disclosures relating to the fee to receive a refund of any unused funds.
Plaintiff commenced this action seeking damages on behalf of himself, and others similarly situated, based on Defendant's charging of a $5 refund fee. Plaintiff's Complaint alleges a violation of GBL § 349 based on three distinct theories: 1) Defendant's charging of a refund processing fee; 2) Defendant's failure to pay refunds; and 3) Defendant's purported violation of New York's Gift Card Statute, GBL § 396-i by failing to conspicuously print the terms and conditions on the wristband or its packaging. Plaintiff alleges had he, and those in the putative class of plaintiffs similarly situated, “known that Intellitix would charge a refund processing fee or would not refund their money” they would not have left unused funds on their wristbands. Plaintiff further alleges a separate cause of action seeking damages based on unjust enrichment premised on Defendant's failure to refund unused “Birdie Bucks” and/or the charging of a refund fee.
Plaintiff's second cause of action for unjust enrichment is premised on an allegation that Defendant “violated fundamental principles of justice, equity, and good conscience” when it charged the $5 refund fee.
Defendant moves to dismiss Plaintiff's Complaint under CPLR § 3211(a)(1) [a defense founded on documentary evidence]; (a)(7) [the pleading fails to state a cause of action].
I. Motion to Dismiss Standard
A motion to dismiss based on documentary evidence pursuant to CPLR 3211(a)(1) may be appropriately granted only when the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law. “Documentary evidence” must be unambiguous and of undisputed authenticity, that is, it must be essentially unassailable. (see Rabos v. R & R Bagels & Bakery, Inc., 100 AD3d 849 [2d Dept., 2012] ). Factual allegations normally presumed to be true on a motion pursuant to CPLR 3211(a)(7) may properly be negated by affidavits and documentary evidence. (see Wilhelmia Models, Inc. v. Fleisher, 19 AD3d 267 [1st Dept., 2005] ). When a court considers evidentiary material submitted to support a motion to dismiss a complaint purported to have failed to state a cause of action, the court must determine not whether a cause of action had been stated but whether one exists. Dismissal should not be granted unless a material fact, as claimed by the plaintiff, is not a fact at all and unless it can be said that no significant dispute exists regarding it. (see Gershner v. Eljama, 111 AD3d 664 [2d Dept., 2013] ).
II. Plaintiff cannot demonstrate a violation of GBL § 349
The broad scope of General Business Law (GBL) § 349 prohibits deceptive and misleading business practices and “appl(ies) to virtually all economic activity and [its] application has been correspondingly broad․ The reach of (this) statute ‘provides needed authority to cope with the numerous, ever-changing types of false and deceptive business practices which plague consumers in our State.” (Karlin v. IVF America, Inc., 93 NY2d 282, 290  ). To state a cause of action under GBL § 349 “a plaintiff must allege that the defendant has engaged in an act or practice that is deceptive or misleading in a material way and the plaintiff has been injured by reason thereof” (Feld v. Apple Bank for Savs., 116 AD3d 549, 550 [1st Dept., 2014] ). “A deceptive act or practice is defined as a representation or omission likely to mislead a reasonable consumer acting reasonably under the circumstances.” Id. Whether an act or omission is materially misleading is an objective standard requiring a showing that reasonable consumer would have been misled by the defendant's conduct. (see Jones v. Bank of Am., Nat'l Ass'n, 97 AD3d 639  ).
A. Defendant provided Plaintiff with unambiguous notice concerning the $5 refund fee
Defendant submits documentary evidence in support of its motion demonstrating Plaintiff, as well as members of the putative class, received multiple disclosures concerning the $5 refund fee charged by Intellitix. Documentary evidence demonstrates Defendant unequivocally disclosed the $5 handling fee in multiple sections of the Festival's website. Defendant directs this Court's attention to the language contained Terms and Conditions appearing on the wristband registration portion of the Intellipay website as well as on the “Refund” and “Info” sections of the same web address. (see supra. p. 2 and 3)
The multiple statements concerning the $5 refund fee adequately disclosed the alleged deceptive business practice, therefore, no violation of GBL § 349 took place. (see A.N.R. Inv. Co. Ltd. v. HSBC Private Bank, 135 AD3d 632 [1st Dept. 2016] [finding the conduct forming the basis of the plaintiff's GBL § 349 cause of action was fully disclosed in the terms and conditions and accepted by the plaintiff was “patently insufficient” to survive a motion to dismiss]; Mancuso v. Rubin, 52 AD3d 580 [2d Dept. 2008] [holding full disclosure of a provision limiting defendant's liability in a contract substantiated a finding that plaintiff failed to state a cause of action under GBL § 349].
Plaintiff fails to distinguish the application of these cases to the motion before this Court and instead focuses on a theory that the violation of GBL § 396-i may provide a separate basis for a GBL § 349 private cause of action. Moreover, Plaintiff's additional argument in opposition characterizing the disclosures found Defendant's Terms and Conditions as an “unconscionable contract” finds no support in Plaintiff's Complaint. Plaintiff cites King v. Fox, a Court of Appeals case concerning a fact pattern relating to an allegedly unconscionable attorney fee agreement. (7 NY3d 181  ). In King the Court of Appeals stated
[i]n regard to attorney fee agreements, ‘courts as a matter of public policy give particular scrutiny to fee arrangements between attorneys and clients, casting the burden on attorneys who have drafted the retainer agreements to show that the contracts are fair, reasonable, and fully know and understood by the clients’ A ‘contingent fee may be disallowed as between attorney and client in spite of a contingent fee retainer agreement, where the amount becomes large enough to be out of all proportion to the value of the professional services rendered.’
(id. at 191). First, the facts before this Court do not relate to a fee relationship between an attorney and client. Second, even if this court were to apply this case to the facts before it Plaintiff makes no allegation against Defendant indicating a $5 refund service fee is unconscionable.
This Court, therefore, finds Defendants adequately disclosed the $5 refund fee in various locations throughout its website, including the website location listed as “refund.” Plaintiff's allegation concerning the nondisclosure of the refund fee is not a fact at all.
B. Plaintiff may not base a GBL § 349 cause of action on a purported violation of
GBL § 396-i alone
Plaintiff maintains Defendant violated GBL § 349 despite numerous disclosures appearing in the “Terms and Conditions” associated with the Festival wristband because the wristband functions as a “gift card” and is subject to heightened disclosures under GBL § 396-i. Plaintiff maintains to satisfy GBL § 396-i the language concerning the $5 refund fee must appear printed either on or with the wristbands. Admittedly, the disclosures relating to the $5 refund did not appear on or with the wristbands.
Plaintiff's argument while novel remains a nonstarter based on well-settled New York law. This Court need not determine whether the wristband in question constitutes a “gift card” because assuming the wristband was a “gift card” no private right of action exists under GBL § 396-i.
The Court of Appeals in Schlessinger v. Valspar Corp., answered a certified question from the United States Circuit Court of Appeals for the Second Circuit seeking a determination of:
May plaintiffs bring suit pursuant to [GBL] § 349 on the theory that defendants deceived them including a contraction provision that violates [GBL] § 395-a and later enforcing this agreement?
(21 NY3d 166  )
The Court of Appeals found neither an express or implied private cause of action exists to enforce GBL § 395-a (see 21 NY3d 166, 169  ). The plaintiff in Schlessinger argued the defendant inserted a provision into its service contract which unilaterally refunded the amount the plaintiff paid for a service contract in the event the store location that sold the plan closed (id. at 169). The Court of Appeals summarized the plaintiffs' theory of liability under GBL § 349 as follows:
Valspar's violation of section 395-a is perforce a violation of section 349(a) because, by inserting an unlawful provision in the contract, Valspar impliedly represented that this provision was valid and thereby engaged in a deceptive act or practice.
The Court went on to hold while a contractual provision may violate GBL § 395-a, the terms the plaintiff took issue with alone could not predicate a GBL § 349 private cause of action. The court reasoned the plaintiff's purported claim, “would not have existed absent provisions in a statute [GBL § 395-a] ․” (id. at 171). The court continued by saying to hold otherwise would open a backdoor to private causes of action under a statute where it was clear that a private cause of action did not exist (id. at 172). Instead, the court found only government officials may enforce the statutory provisions under GBL § 395-a.
Similar to Schlessinger, Plaintiff fails to allege any facts indicating a cause of action exists under GBL § 349 separate from a violation of GBL § 396-i. The clearly disclosed $5 refund fee for unused Birdie Bucks does not represent an actionable deceptive business practice protected against by GBL § 349. While the Appellate Division, Second Department evaluated several cases concerning gift card practices, it never held a private cause of action existed under GBL § 396-i (see Lonner v. Simon Prop. Group, Inc., 57 AD3d 100 [2d Dept. 2008] [holding while the plaintiff alleged a violation of GBL § 396-i a private cause of action existed under GBL § 349 due to the allegation that the “font size in which the dormancy fee provision was printed” was inadequately small]; Llanos v. Shell Oil Co., 55 AD3d 796 [2d Dept. 2008] [holding the Supreme Court erred when it dismissed the plaintiff's complaint based on purported preemption of the plaintiff's GBL § 349 cause of action by GBL § 396-i. The court made no finding concerning whether an implied private right of action existed under GBL § 396-i.] ). Indeed, the Appellate Division, Second Department held a private cause of action did not exist under GBL § 396-I (see Goldman v. Simon Prop. Group, Inc., 58 AD3d 208 [2d Dept. 2008] ) Associate Justice Thomas Dickerson, writing for a unanimous court, evaluated the legislative history of GBL § 349 and concluded to find a private cause of action under GBL § 349 for an alleged violation of GBL § 396-i would be “inconsistent with the legislative scheme” with both statutes (id. 58 AD3d at 218).
Consequently, Defendant's motion to dismiss Plaintiff's first cause of action for a violation of GBL § 349 is granted.
III. Plaintiff fails to state a cause of action for unjust enrichment
To prevail on a claim of unjust enrichment, “a party must show that (1) the other party was enriched, (2) at that party's expense, and (3) that ‘it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered’ ” (Citibank, N.A. v. Walker, 12 AD3d 480, 481, 787 NYS2d 48 , quoting Paramount Film Distrib. Corp. v. State of New York, 30 NY2d 415, 421, 285 NE2d 695, 334 NYS2d 388 , cert denied 414 US 829, 94 S Ct 57, 38 L Ed 2d 64  ). “Unjust enrichment, however, does not require the performance of any wrongful act by the one enriched” (Ptachewich v. Ptachewich, 96 AD2d 582, 583, 465 NYS2d 277  ). “Innocent parties may frequently be unjustly enriched” (id.; see Simonds v. Simonds, supra at 242). (Cruz v. McAneney, 31 AD3d 54, 59 [2d Dept 2006].) An unjust enrichment cause of action is not viable where parties entered into an express agreement. (see Shovak v. Long Is. Commercial Bank, 50 AD3d 1118 [2d Dept. 2008] ).
Here, Plaintiff concedes the existence of the express agreement contained in the Terms and Conditions, but instead seeks to characterize the contents of that document as illegal under GBL § 396-i. This Court therefore dismisses Plaintiff's cause of action seeking damages under an unjust enrichment theory having already determined that Plaintiff cannot prosecute a GBL § 396-i cause of action.
Defendant's motion to dismiss Plaintiff's Complaint is granted in its entirety.
Accordingly, it is hereby:
ORDERED that Defendant's motion to dismiss Plaintiff's Complaint is granted, and it is further
ORDERED that the Clerk shall enter judgment accordingly.
1. Neither Plaintiff nor Defendant elaborates how those individuals who did not register their wristbands online registered their wristbands onsite.
Orlando Marrazzo Jr., J.
Response sent, thank you
Docket No: 152743/2017
Decided: June 22, 2018
Court: Supreme Court, Richmond County, New York.
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