Opinion ID: 2702
Heading Depth: 2
Heading Rank: 1

Heading: Cohen's State Law Claim

Text: Cohen further appeals the dismissal of her deceptive practices claim under New York General Business Law § 349. We review that dismissal de novo. See Broder v. Cablevision Sys. Corp., 418 F.3d 187, 193-94 (2d Cir.2005). Section 349 states: Deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful. N.Y. Gen. Bus. Law § 349. A § 349 claim has three elements: (1) the defendant's challenged acts or practices must have been directed at consumers, (2) the acts or practices must have been misleading in a material way, and (3) the plaintiff must have sustained injury as a result. See Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir.2000) (citing Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 623 N.Y.S.2d 529, 647 N.E.2d 741 (1995)). A successful plaintiff can recover both treble damages and attorney's fees. See N.Y. Gen. Bus. Law § 349(h). The element at issue on this appeal is the requisite misleading act. The New York Court of Appeals has adopted an objective definition of misleading, under which the alleged act must be likely to mislead a reasonable consumer acting reasonably under the circumstances. Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d at 26, 623 N.Y.S.2d at 532-33, 647 N.E.2d 741. The district court concluded that the $225 post-closing fee complained of in this case could not be objectively misleading because it had been disclosed prior to closing. New York law offers some support for this conclusion. See Zuckerman v. BMG Direct Mktg., Inc., 290 A.D.2d 330, 737 N.Y.S.2d 14 (1 st Dep't 2002) (holding shipping and handling fees not deceptive where amounts disclosed); Sands v. Ticketmaster-New York, Inc., 207 A.D.2d 687, 616 N.Y.S.2d 362 (1st Dep't 1994) (same re: disclosed ticket service fees); Lewis v. Hertz Corp., 181 A.D.2d 493, 581 N.Y.S.2d 305 (1st Dep't 1992) (same re: disclosed rental car refueling fees). In none of these cases, however, did the courts have occasion to consider fees prohibited by other substantive laws. As Chase concedes, New York courts have held that collecting fees in violation of other federal or state laws may satisfy the misleading element of § 349. See Negrin v. Norwest Mortgage, Inc., 263 A.D.2d 39, 50, 700 N.Y.S.2d 184, 193 (2d Dep't 1999) (Allegations of a bank's unilateral imposition of illegal and/or unwarranted fees upon its customers state a valid claim [under § 349].); Bartolomeo v. Runco, 162 Misc.2d 485, 490, 616 N.Y.S.2d 695, 699 (1994) (holding representation that cellar apartment was a legal apartment . . . was false, misleading and deceptive under § 349); cf. Lum v. New Century Mortgage Corp., 19 A.D.3d 558, 559, 800 N.Y.S.2d 408, 410 (2d Dep't 2005) (holding no materially misleading statement under § 349 where yield spread premium disclosed to plaintiff was not per se illegal). Certainly, Chase does not suggest that, in the absence of indications to the contrary, a consumer might not reasonably assume that all fees charged by a respected financial institution such as Chase were legal. We express no opinion as to whether Cohen will, in fact, show that the challenged $225 post-closing fee violates RESPA § 8(b), but while she pursues that claim, we cannot conclude simply from the fact of disclosure that, as a matter of law, the charge cannot constitute a deceptive practice in violation of § 349. Accordingly, we vacate the dismissal of Cohen's § 349 claim. We further note that, upon remand, the district court should allow Cohen to amend her state law claim to include her belated allegation that payment of the challenged post-closing fee was coerced by the threat of forfeiting a $425 non-refundable application and appraisal fee. Whatever the merits of this coercion claim, it cannot be rejected as a matter of law at this very early stage of the litigation.