Opinion ID: 2585
Heading Depth: 2
Heading Rank: 2

Heading: The City's State Law Claims

Text: As a preliminary matter to our discussion of the City's state law claims, we must determine whether we have jurisdiction over them. Defendants argue that we lack jurisdiction over the appeals from the District Court's orders dismissing the state law claims because the City's notices of appeal did not specifically indicate an appeal from those orders. However, for the reasons explained below, we agree with the City that its notices of appeal from the final judgments encompass all prior interlocutory orders, including the earlier dismissals of the state law claims. Rule 3 of the Federal Rules of Appellate Procedure requires that the notice of appeal designate the judgment, order, or part thereof being appealed. Fed. R.App. P. 3(c)(1)(B). Rule 4 sets forth the time limits for filing a notice of appeal. Fed. R.App. P. 4. Rules 3 and 4 are a single jurisdictional threshold and may not be waived. See Torres v. Oakland Scavenger Co., 487 U.S. 312, 317, 108 S.Ct. 2405, 101 L.Ed.2d 285 (1988); New Phone Co. v. City of New York, 498 F.3d 127, 131 (2d Cir.2007) (per curiam). However, we have held that the requirements of the rules should be liberally construed. Marrero Pichardo v. Ashcroft, 374 F.3d 46, 54-55 (2d Cir.2004). Unless the District Court directs entry of a final judgment, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action is, by definition, interlocutory. Fed.R.Civ.P. 54(b); see Sahu v. Union Carbide Corp., 475 F.3d 465, 467-68 (2d Cir.2007) (per curiam) (finding no jurisdiction as grant of partial summary judgment was not final order under 28 U.S.C. § 1291, in part, because a separate claim remained unresolved); Hanlin v. Mitchelson, 794 F.2d 834, 838 (2d Cir.1986) ([A]n order disposing of only a portion of a case is ordinarily not appealable absent a Rule 54(b) certification.). In 2005, the District Court dismissed all of the City's claims, with leave to replead the RICO claims only. These dismissals were interlocutory because they did not end the actions. The only case here where the District Court directed entry of a judgment in 2005 is Smokes-Spirits. That judgment stated as follows: [T]he Court ... having rendered its Order granting defendants' motions to dismiss with leave to plaintiff to file a Second Amended Complaint within 45 days of the Order dated February 8, 2005, it is, ORDERED, ADJUDGED AND DECREED: That for the reasons stated in the Court's Order dated February 8, 2005, defendants' motions to dismiss are granted. Clerk's Judgment, Smokes-Spirits, No. 04 civ. 6616 (S.D.N.Y. April 8, 2005). In light of the District Court's grant of leave to replead, we do not view this judgment as a final judgment or a certification by the District Court pursuant to Fed.R.Civ.P. 54(b). Thus, it too was interlocutory. As the decisions dismissing the state law claims were interlocutory, the notices of appeal specifying the final judgments incorporate those 2005 orders. We generally interpret[ ] an appeal from a specific order disposing of the case as an appeal from the final judgment, which incorporates all previous interlocutory judgments in that case and permits their review on appeal. Anobile v. Pelligrino, 303 F.3d 107, 115 (2d Cir.2002); see also Shannon v. Gen. Elec. Co., 186 F.3d 186, 192 (2d Cir.1999) (When a district court enters a final judgment in a case, interlocutory orders rendered in the case typically merge with the judgment for purposes of appellate review.); 16A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3949.4 at 72 (3d ed. 1999) ([A] notice of appeal that names the final judgment is sufficient to support review of all earlier orders that merge in the final judgment under the general rule that appeal from a final judgment supports review of all earlier interlocutory orders.). Here, the City appealed from each and every part of the final judgment entered in each case. Thus, the earlier orders dismissing the state law claims, with leave to amend the RICO claims, merge into the final judgments. See Phelps v. Kapnolas, 123 F.3d 91, 93 (2d Cir.1997) (construing the notice of appeal to apply both to an earlier order dismissing the complaint as to five out of six defendants, as well as to the final judgment order dismissing case against final defendant). Moreover, the City's intent to appeal from the entire judgment can be reasonably inferred from the City's notices of appeal. The cases defendants cite to the contrary, where we found certain District Court orders to be outside of the scope of the appeal, are distinguishable. In those cases, the notices of appeal generally specified certain aspects of an order or judgment, or particular orders, but not others, and intent to appeal from the entire final judgment could not be inferred. See New Phone Co., 498 F.3d at 131 (finding no jurisdiction to review separate order enjoining plaintiffs from filing additional complaints without leave of court because intent to appeal from it [could not] be inferred); Johnson v. Smithsonian Inst., 189 F.3d 180, 185 n. 2 (2d Cir.1999) (finding no jurisdiction to consider separate denials of motion for leave to amend or for reconsideration because the plaintiff's notice of appeal specifically state[d] that he [was] appealing only the district court's June 25, 1998 decision dismissing the complaint); Kowsh v. Bd. of Elections, 99 F.3d 78, 80 (2d Cir.1996) (per curiam) (finding no jurisdiction over parts of judgment other than discrete portion specifically mentioned); Shrader v. CSX Transp., Inc., 70 F.3d 255, 256 (2d Cir.1995) (finding no jurisdiction to review the district court's earlier decision to dismiss the plaintiff's Railway Labor Act challenge where notice of appeal referred solely to an order dismissing the claims under the Federal Employers' Liability Act, and noting in passing that the Railway Labor Act challenge appear[ed] to be meritless). [32] Accordingly, we have jurisdiction to review the dismissals of the City's state law claims.
We affirm the District Court's dismissals of the City's common law fraud claims. See Nexicon, 383 F.Supp.2d at 564-66. Defendants argue that the City has not and cannot allege reliance, that defendants made no affirmative misrepresentations, and that failing to file Jenkins Act reports does not give rise to a cause of action for the City, in part because defendants have no duty to file Jenkins Act reports with the City and no duty to provide tax advice to their purchasers. The elements of fraud under New York law are: (1) a misrepresentation or a material omission of material fact which was false and known by defendant to be false, (2) made for the purpose of inducing the plaintiff to rely on it, and (3) justifiably relied upon by the plaintiff, (4) who then suffered an injury as a result of such reliance. Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 421, 646 N.Y.S.2d 76, 668 N.E.2d 1370, 1373 (N.Y.1996); see also Crigger v. Fahnestock & Co., 443 F.3d 230, 234 (2d Cir.2006). [A] fraud cause of action may be predicated on acts of concealment where the defendant had a duty to disclose material information. Kaufman v. Cohen, 760 N.Y.S.2d 157, 165, 307 A.D.2d 113, 119-20 (1st Dep't 2003); see also Merrill Lynch & Co. v. Allegheny Energy, Inc., 500 F.3d 171, 181 (2d Cir.2007). In all four cases before us, the City failed to plead reasonable reliance on the part of the plaintiff.  Crigger, 443 F.3d at 234 (emphasis added). Rather, under the City's theory, the alleged intentional omissions or misrepresentations were either directed at the State or the consumers, causing the City to be unable to collect its taxes. Such allegations of third-party reliance, however, are insufficient to make out a common law fraud claim under New York law. See Cement & Concrete Workers Dist. Council Welfare Fund v. Lollo, 148 F.3d 194, 196 (2d Cir.1998) (explaining that a plaintiff does not establish the reliance element of fraud for purposes of ... New York law by showing only that a third party relied on a defendant's false statements). The City's sole argument, located in part of a footnote of its brief, for why the common law fraud claims should nevertheless proceed, is that it has an agreement with the State to exchange information on cigarette sales transactions. However, allegations that the City has an agreement to exchange tax information with the Statewhich is the party that relied on the omission of information required under the Jenkins Actis simply another iteration of its third-party reliance claim. Therefore, we affirm the District Court's dismissals of the City's common law fraud claims in all four cases.
The District Court dismissed the City's GBL § 349 claims in the three cases where it was raised. For the reasons below, we affirm the district court's holding in the Smokes-Spirits case, and reserve judgment in the Nexicon and EZTobacco cases pending certification of a question regarding standing to the New York Court of Appeals. GBL § 349(a) declares that [d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in New York are unlawful. N.Y. Gen. Bus. § 349(a). The statute provides a private right of action. Id. at § 349(h); see Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris U.S.A. Inc., 3 N.Y.3d 200, 205, 785 N.Y.S.2d 399, 818 N.E.2d 1140, 1143 (N.Y. 2004). To make out a prima facie case under Section 349, a plaintiff must demonstrate that (1) the defendant's deceptive acts were directed at consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has been injured as a result. Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir.2000) (per curiam) (citing Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25, 623 N.Y.S.2d 529, 647 N.E.2d 741, 744 (N.Y.1995)). [A]n action under § 349 is not subject to the pleading-with-particularity requirements of Rule 9(b), Fed.R.Civ. P., but need only meet the bare-bones notice-pleading requirements of Rule 8(a).... Pelman ex rel. Pelman v. McDonald's Corp., 396 F.3d 508, 511 (2d Cir. 2005). We have explained that the gravamen of a GBL § 349 claim is consumer injury or harm to the public interest. Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 264 (2d Cir.1995) (internal quotation marks omitted), cert. denied, 516 U.S. 1114, 116 S.Ct. 916, 133 L.Ed.2d 846 (1996). Thus, in Securitron, we found that a plaintiff could sue its competitor under GBL § 349 as it had alleged injury to the public interest. See id. [33] The City's allegations in Smokes-Spirits are that defendants intentionally failed to inform their customers that they must pay taxes and omitted the amount of taxes owed to the City and the State from the advertised prices. See Oswego, 623 N.Y.S.2d 529, 647 N.E.2d at 745 (holding that the definition of deceptive acts and practices under GBL § 349 includes representations or omissions). But the omission of the tax amount from the price of the cigarettes, where the vendor is not required to collect that tax, is not, on its own, likely to mislead or assume significance in the deliberation of a reasonable consumer acting reasonably under the circumstances. See id. Consumer taxpayers are charged with some knowledge of the law. See Niedringhaus v. Comm'r, 99 T.C. 202, 222, 1992 WL 190129 (1992) (As a general rule, taxpayers are charged with knowledge of the law.). In this unique situation, an omission of information about a consumer's duty to pay taxes to that consumer's home state and city cannot be tantamount to an affirmative misrepresentation that a consumer does not need to pay taxes. Therefore, we affirm the District Court's dismissal of the GBL § 349 claim in Smokes-Spirits. We reach a different conclusion, however, with respect to allegations in Nexicon and EZTobacco, where the City alleges that defendants represented to customers that the cigarettes are tax free, that their customers do not have to pay taxes, and/or that defendants did not have to file Jenkins Act reports. Such statements are untrue and could mislead a reasonable consumer into believing that those cigarettes are in fact tax free. [34] See 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, 604 (N.Y.1999) (finding that plaintiffs adequately alleged a claim under GBL § 349 where they alleged that defendants lured them into purchasing policies by using illustrations that created unrealistic expectations as to the prospects of premium disappearance upon a strategically chosen `vanishing date'). Though taxpayers are charged with general knowledge of the tax laws, they are not charged with knowing them to such an extent that we expect them to discern an actual and intentional misrepresentation about the intricate tax laws at issue in this case. Thus, a misrepresentation that affirmatively assures a consumer that no taxes are due may be reasonably relied on, whereas, as discussed above, the failure to list, in the price of a cigarette pack, the tax which the seller is not required to collect, may not. A question nevertheless remains as to whether the City has standing to allege its GBL § 349 claims in Nexicon and EZTobacco. Although we have held that GBL § 349 extends to protect competitors as well as consumers, see Securitron, 65 F.3d at 264, we are aware of no case extending protection under GBL § 349 to an entity that was neither harmed as a competitor nor a consumer. As a general matter, if the New York Court of Appeals has not ruled on an issue of state law, we are bound to apply the law as interpreted by New York's intermediate appellate courts unless we find persuasive evidence that the New York Court of Appeals, which has not ruled on this issue, would reach a different conclusion. Blue Cross & Blue Shield of N.J., 344 F.3d at 221 (internal quotation marks and alterations omitted). We may certify a question if with respect to the question asked ... there is a statute implicated [and] its plain language does not answer the question. Id. (internal quotation marks omitted) (certifying the question of whether the claims of a third party payer of health care costs seeking to recover costs of services provided to subscribers as a result of those subscribers being harmed by a defendant's or defendants' violation of [GBL] § 349[are] too remote); see also Hamilton v. Beretta U.S.A. Corp., 222 F.3d 36, 42 (2d Cir.2000) (certifying the question of whether gun manufacturers owe a duty to exercise reasonable care in marketing and distributing their products in New York because the question of [w]hether defendants owe a duty to the plaintiffs' victims is ... a particularly thorny inquiry, implicating questions of policy that cannot adequately be resolved by reviewing New York state precedents). Although the parties did not request certification, we are empowered to seek certification sua sponte. See Local Rules of the United States Court of Appeals for the Second Circuit § 0.27. With respect to the unsettled question of whether the City has standing under New York law to allege its GBL § 349 claims in Nexicon and EZTobacco, we believe that certification to the New York Court of Appeals is the most prudent path. See City of New York v. Beretta U.S.A. Corp., 524 F.3d 384, 407 (2d Cir.2008) (Katzmann, J., dissenting) (noting that the use of certification for an unsettled area of state law is [i]n keeping with our preference that states define the meaning of their own laws in the first instance); Allstate Ins. Co. v. Serio, 261 F.3d 143, 150 (2d Cir.2001) (same). We therefore sever the GBL § 349 claims in Nexicon and EZTobacco, and certify them to the New York Court of Appeals, as set forth below. See Abrahams, 79 F.3d at 239 (severing a claim and certifying it to the Connecticut Supreme Court).
Under New York law, a public nuisance is conduct or omissions which... endanger or injure the property, health, safety or comfort of a considerable number of persons, and is actionable by a governmental agency. Hoover v. Durkee, 622 N.Y.S.2d 348, 349, 212 A.D.2d 839, 840 (3d Dep't 1995) (citation and internal quotation marks omitted). The City's public nuisance claims before us are predicated on New York Public Health Law § 1399- ll. In enacting that law, the legislature found that the shipment of cigarettes sold via the internet or by telephone or by mail order to residents of this state poses a serious threat to public health, safety, and welfare, to the funding of health care pursuant to the health care reform act of 2000, and to the economy of the state. N.Y. Pub. Health Law § 1399- ll, ch. 262, § 1. While the legislature clearly believes that the internet sale of cigarettes into New York poses a health risk to its residents, we have some reservation as to whether the legislature, in passing § 1399- ll, intended to displace common law nuisance claims with respect to this subject matter. Cf. City of New York v. Milhelm Attea & Bros., Inc., 550 F.Supp.2d 332, 350-51 (E.D.N.Y.2008). A violation of § 1399- ll is a crime and the law empowers the State Commissioner of Health to impose a civil fine. See id. § 1399- ll (5). It does not, however, provide for enforcement by another entity besides the State. Because this question implicates both the State's particular interest in protecting the public's health, as well as the public policy goals behind the Public Health Law, we find that certification of this question is also the most prudent path. See Sealed v. Sealed, 332 F.3d 51, 59 (2d Cir.2003). We therefore also sever the public nuisance claims, and certify them to the New York Court of Appeals, as set forth here.