§4.10 D. Gbl § 349 Claims Require Actual Deception Of Consumers

• Jurisdiction: New York

D. GBL § 349 Claims Require Actual Deception of Consumers

Courts have permitted private indirect purchaser plaintiffs to seek damages for anticompetitive conduct under GBL § 349(h) provided that they can allege that the conduct in some way actually deceived consumers. For example, in Cox v. Microsoft, the court upheld a GBL § 349 claim based on anticompetitive conduct—Microsoft’s alleged monopoly in the operating and application software markets. The deceptive, consumer-oriented conduct that satisfied GBL § 349 was that Microsoft had allegedly “secretly engineered the computer code for Microsoft’s Internet Explorer (IE) to cause a malfunction when a consumer used any browser . . . other than IE . . . to deceive consumers into believing that browsers . . . other than IE caused the malfunction.”⁴²⁷

By contrast, a GBL § 349 claim involving anticompetitive conduct alone—without allegations of deception—ordinarily will not survive. For example, in Paltre v. General Motors Corp.,⁴²⁸ plaintiffs alleged that automobile manufacturers in the United States, Japan, and Canada illegally conspired to keep prices for new automobiles 10% to 30% higher in the United States than in Canada. The trial court held that the plaintiff could not make out a GBL § 349(h) claim for price-fixing where the only allegations of a deceptive transaction in New York State were that consumers were forced to pay higher prices at the point of sale. Further, while plaintiffs alleged that defendants misrepresented laws and procedures concerning the importation of vehicles from Canada into the United States, they failed to allege that any such misrepresentations were directed to New York consumers.⁴²⁹

Similarly, in Sperry v. Crompton Corp., plaintiffs alleged that defendants conspired to fix the prices of certain rubber-processing chemicals that tire manufacturers used in making tires and that, as a result, plaintiffs paid higher prices when they purchased automobile tires. Because the defendants made chemicals rather than the tires themselves, plaintiffs’ only contacts were with the tire manufacturers, not with defendants. The trial court dismissed plaintiffs’ GBL § 349(h) claim, characterizing the alleged conduct as, “private business transactions between corporations that cannot be construed as ‘consumer oriented’ ” and holding that plaintiff pled no facts suggesting that the defendants engaged in a deceptive scheme likely to mislead consumers.⁴³⁰

At least one court has tied the exclusion...