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Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

Timothy P. Smith, et al. v. Chase Manhattan Bank, USA, N.A.

741 N.Y.S.2d 100 (N.Y. App. Div., 2d Dep’t, April 15, 2002)

A New York intermediate appellate court affirms the dismissal of plaintiffs' action, and holds that defendant's act of allegedly selling personal information about plaintiffs, including their names, addresses and telephone numbers, to third party vendors in violation of defendant's promise not to divulge such information does not give rise to claims under either New York General Business Law §394 or Civil Rights Law Sections 50 and 51, or to a claim for breach of contract or unjust enrichment.  No claim arises under Gen. Bus. Law §349 because plaintiffs have not alleged that they suffered the requisite actual injury necessary to sustain such a claim as a result of Chase's sale of such personal information.  This burden was not met by plaintiffs' allegations that the sale of such information led to their receipt of unwanted solicitations by third party vendors.  Similarly, no claim for breach of contract was stated, because plaintiffs failed to allege the requisite injury needed to sustain such a claim.  This holding was premised on the court's determination that any emotional distress plaintiffs' sustained as a result of receiving unwanted solicitations is not actionable on a breach of contract theory.  Lastly, the court dismissed plaintiffs' unjust enrichment claim, which claim was based on the commissions paid to Chase on sale transaction completed by plaintiffs.  The court dismissed this claim because plaintiffs always received precisely that which they bargained for in these transactions.

Plaintiffs were holders of credit cards and mortgages issued by defendant Chase Manhattan Bank N.A. ("Chase").  Allegedly in violation of "Customer Information Principles" plaintiffs received from Chase, and without plaintiffs' knowledge or consent, Chase sold personal information about plaintiffs, including their name, telephone number, address, credit card usage and other financial data, to third-party vendors.  This information was then allegedly used by telemarketers and direct mail vendors to solicit plaintiffs.  In exchange for this personal information, the third-party vendors agreed to pay Chase a commission on sales made to plaintiffs.

Plaintiffs commenced suit, alleging that defendant's conduct ran afoul of N.Y. Gen. Bus. Law sections 349 and Civil Rights Law sections 50 and 51, and constituted both a breach of parties' contract, as well as unjust enrichment.  Chase moved to dismiss the complaint.  Finding the complaint failed to state a cause of action, the Appellate Division affirmed the dismissal of plaintiffs' claims.

To state a claim under Gen. Bus. Law Section 349:

a plaintiff must prove that the challenged act or practice was consumer-oriented, that it was misleading in a material way, and that the plaintiff suffered injury as a result of the deceptive act.

"[T]o recover under the statute, a plaintiff must prove actual injury though not necessarily pecuniary harm."

The court held that the plaintiffs had not alleged that they sustained the requisite actual injury as a result of the sale of their personal information and subsequent solicitation, and accordingly dismissed plaintiffs' section 349 claim.  Said the Court:

[T]he "harm" at the heart of this purported class action is that class members were merely offered products and services which they were free to decline.  This does not qualify as actual harm.

The court similarly dismissed plaintiffs' breach of contract claim because it failed to allege that the acts which constituted the claimed contract breach - sale of plaintiffs' personal information - caused the type of damages for which recovery is permitted on a breach of contract theory.  Said the Court:

Even if the Complaint were construed to allege damages for the invasive and unsolicited telephone calls, no cause of action is stated, since damages for emotional distress are insufficient to state a cause of action for breach of contract.

The Court also rejected plaintiffs' unjust enrichment claim, which was based on the commissions paid to Chase as compensation for supplying the personal information about plaintiffs which led to a purchase by them.  The Court stated:

The plaintiffs failed to state a cause of action to recover damages for unjust enrichment since the members of the plaintiffs' class who made purchases of products and/or services received a benefit.  There being no allegation that the benefits received were less than what these purchasers bargained for, it cannot be said the commissions paid by the third-party vendors to Chase belong to the plaintiffs as a matter of equity.

Lastly, the Court dismissed plaintiffs' Civil Rights claim stating that sections 50 and 51 of the Civil Rights Laws "were never intended to address the wrongs complained of by the plaintiffs."

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