Opinion ID: 2585
Heading Depth: 3
Heading Rank: 2

Heading: Common Law Fraud: Smokes-Spirits, EZTobacco, NCCigarettes, and Nexicon

Text: 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.