Consumer Protection Class Actions Have Important Position, Applying New York's Statutory Scheme

Consumer Protection Class Actions (continued)

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The standard for whether an act or practice or advertisement is misleading is objective, requiring a showing that a reasonable consumer would have been misled by the defendant's conduct. Berrios, 1998 WL 199842 at * 3, quoting S.Q.K.F.C., Inc. v. Bell Atl. Tricon Leasing Corp., 84 F.3d 629, 636 (2d Cir. 1996); Oswetto Laborers Local 214 Pension Fund v. Marine Midland Bank, 623 N.Y.S.2d 529, 533 (1995). Though not contained in the statute nor required by the New York Court of Appeals, several federal courts have determined that a private right of action under Sections 349 and 350 requires some sort of offense to the public interest. See, e.g., Franklin Electronic Publishers, Inc. v. Unisonic Products Corporation, 763 F. Supp. 1, 5 (S.D.N.Y. 1991); Jenesco Entertainment v. Kotch, 593 F. Supp. 743, 751-52 (S.D.N.Y. 1984).

Having concluded that Ed has a cause of action under both Section 349 and Section 350, P.C. explains to his client the benefits and economic desirability of pleading his case as a class action.

3. The Benefits of Consumer Protection Class Actions.

Consumer class actions often provide the only available means for large numbers of similarly injured consumers to seek and obtain recovery for the wrongful conduct of established corporations and unscrupulous operators. By presenting their substantially uniform claims in a single action, consumers, whose damages are typically too small to justify multiple individual suits, can even the economic playing field against well-financed and powerful institutions. As the California Supreme Court has recognized:

Protection of unwary consumers from being duped by unscrupulous sellers is an exigency of the utmost priority in contemporary society .... The alternatives of multiple litigation (joinder, intervention, consolidations, the test case) do not sufficiently protect the consumer's rights because these devices presuppose a group of economically powerful parties who are obviously able and willing to take care of their interests individually through individual suits or individual decision about joinder or intervention.

Vasquez v. Superior Court, 4 Cal.3d 800, 804 (1971).

In addition, using the class action device to remedy deceptive business practices impacting large numbers of people allows consumers to spread the costs, including attorneys fees, of complex and expensive litigation among all class members. Often, the costs and fees of single plaintiff proceeding on an individual basis would exceed the entire value of a judgment in favor of that one plaintiff. As the United States Supreme Court has stated: "A significant benefit to claimants who choose to litigate their individual claims in a class-action context is the prospect of reducing their costs of litigation, particularly attorney's fees by allocating such costs among all members of the class who benefit from any recovery." Deposit Guarantee National Bank v. Roper, 445 U.S. 326, 338 n. 9 (1980). See also Philips Petroleum Co. v. Schutts, 472 U.S. 797, 809 (1985) ("Class Actions ... may permit the plaintiffs to pool claims which would be uneconomical to litigate individually. For example, this lawsuit involves claims averaging about $100 per plaintiff most of the plaintiffs would have no realistic day in court if a class action were not available"); Amchem Products Inc. v. Windsor, ___ U.S. ___, 112 S.Ct. 2231, 2246 (1997) (dominant concern of the class action rules is the vindication of "rights of groups of people who individually would be without effective strength to bring their opponents into court at all").

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