PALTRE v. GENERAL MOTORS CORPORATION

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Supreme Court, Appellate Division, Second Department, New York.

Fernande PALTRE, etc., et al., appellants, v. GENERAL MOTORS CORPORATION, et al., respondents, et al., defendants.  (Action No. 1).

Lisa Baade, etc., appellant, v. General Motors Corporation, et al., respondents.  (Action No. 2).

Decided: February 28, 2006

STEPHEN G. CRANE, J.P., FRED T. SANTUCCI, WILLIAM F. MASTRO, and MARK C. DILLON, JJ. Zwerling, Schachter & Zwerling, LLP, New York, N.Y. (Robert S. Schachter, Cohen, Milstein, Hausfeld & Toll, PLLC [Daniel A. Small], Lowey Dannenberg Bemporad & Selinger, P.C. [Stephen Lowey], and Berger & Montague, P.C. of counsel), for appellants. Kirkland & Ellis, LLP, New York, N.Y. (Peter D. Doyle, Richard C. Godfrey, and David J. Zott of counsel), for respondents General Motors Corporation and General Motors of Canada, Ltd.;   Nixon Peabody, LLP, Garden City, N.Y. (Joseph J. Ortego and Howrey Simon Arnold & White, LLP[Margaret M. Zwisler and William R. Sherman] of counsel), for respondents Ford Motor Co. and Ford Motor Co. of Canada, Ltd.;   Cleary Gottlieb Steen & Hamilton, LLP, Washington, D.C. (Michael R. Lazerwitz of counsel), for respondent Toyota Motor Sales, USA, Inc.;   Richards Spears Kibbe & Orbe, LLP, New York, N.Y. (David Spears and Keker & Van Nest, LLP [Robert A. Van Nest and Ragesh K. Tangri] of counsel), for respondent American Honda Motor Co., Inc.;   Weil Gotshal & Manges, LLP, Washington, D.C. (James C. Egan, Jr., of counsel), for respondents DaimlerChrysler Corp. and Mercedes-Benz USA, LLC;  Gibson, Dunn & Crutcher, LLP, New York, N.Y. (Randy M. Mastro and Peter Sullivan of counsel), for respondent Nissan North America, Inc., Bingham McCutchen, LLP, New York, N.Y. (Diane C. Hertz, Daniel L. Goldberg, and Daniel S. Savrin of counsel), for respondent BMW of North America, LLC;  Kelly Rode & Kelly, P.C., Mineola, N.Y. (Stein Mitchell & Mezines [Glenn A. Mitchell and David U. Fierst] of counsel), for respondent North American Dealers Association (one brief filed). Eliot Spitzer, Attorney-General, New York, N.Y. (Michelle Aronowitz, Jay L. Himes, Peter D. Bernstein, and Jean Lin of counsel), for State of New York, amicus curiae.

In two purported class actions to recover damages, inter alia, for antitrust violations and deceptive business practices, (1) the plaintiffs in Action No. 1 appeal, as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Warshawsky, J.), dated April 21, 2004, as granted those branches of the motion of the defendants General Motors Corporation, General Motors of Canada, Ltd., Ford Motor Company, Ford Motor Company of Canada, Ltd., Toyota Motor Sales, USA, Inc., American Honda Motor Co., Inc., DaimlerChrysler Corp., Mercedes-Benz USA, LLC, Nissan North America, Inc., BMW of North America, LLC, and National Automobile Dealers Association which were to dismiss the antitrust and deceptive business practices class action claims insofar as asserted against them, and (2) the plaintiffs in Action No. 2 appeal, as limited by their brief, from so much of an order of the same court, also dated April 21, 2004, as granted those branches of the motion of the same defendants, made applicable to Action No. 2 by stipulation and order dated February 4, 2004, which were to dismiss the antitrust and deceptive business practices class action claims insofar as asserted against them.

ORDERED that the orders are affirmed insofar as appealed from, with one bill of costs.

In these actions, the plaintiffs, on their own behalf and on behalf of a putative class of consumers who purchased or leased new vehicles in New York, seek to recover damages against Japanese, American, and Canadian automobile manufacturers for allegedly conspiring to sell or lease vehicles in New York at prices 10% to 30% higher than nearly identical vehicles in Canada and for effectively prohibiting New York residents from purchasing those vehicles in Canada.

 CPLR 901(b) provides that “an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action” unless the statute specifically authorizes a class action.   In pertinent part, General Business Law (hereinafter GBL) § 340 (hereinafter the Donnelly Act), prohibits monopolies that interfere with trade or the furnishing of services in New York (see GBL 340[1] ), and mandates that “[a]ny person who shall sustain damages by reason of any violation of this section, shall recover three-fold the actual damages sustained thereby” (GBL 340[5] ).   The Donnelly Act provides for class actions brought by the Attorney-General (see GBL 342-b) but is silent as to class actions brought by private litigants (cf. Rudgayzer & Gratt v. Cape Canaveral Tour & Travel, 22 A.D.3d 148, 799 N.Y.S.2d 795).   The treble damages provision is a penalty within the meaning of CPLR 901(b).  The plaintiffs' Donnelly Act class action claims may not be maintained because the Donnelly Act does not specifically authorize the recovery of this penalty in a class action (see CPLR 901[b];  Fults v. Munro, 202 N.Y. 34, 41, 95 N.E. 23;  Rudgayzer & Gratt v. Cape Canaveral Tour & Travel, supra;  Cox v. Microsoft Corp., 290 A.D.2d 206, 737 N.Y.S.2d 1;  Asher v. Abbott Labs., 290 A.D.2d 208, 737 N.Y.S.2d 4;  Matter of Wai Leung Chan v. New York State Div. of Hous. & Community Renewal, 207 A.D.2d 552, 553, 616 N.Y.S.2d 251;  Lyke v. Anderson, 147 A.D.2d 18, 28, 541 N.Y.S.2d 817).

 Further, we agree with the Supreme Court that the plaintiffs failed to set forth a viable cause of action to recover damages for deceptive business practices under GBL 349 because the alleged misrepresentations were either not directed at consumers or were not materially deceptive (see In re New Motor Vehicles Canadian Export Antitrust Litig., 350 F.Supp.2d 160, 196-197;  cf. Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 344, 704 N.Y.S.2d 177, 725 N.E.2d 598;  Cox v. Microsoft Corp., 8 A.D.3d 39, 40, 778 N.Y.S.2d 147;  McGill v. General Motors Corp., 231 A.D.2d 449, 647 N.Y.S.2d 209).

The parties' remaining contentions are either without merit or need not be reached in light of our determination.

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