Whether an allegedly deceptive scheme that originates in New York, but injures a consumer in a transaction outside the State, constitutes an actionable deceptive act under General Business Law § 349(a).

No. In order to be actionable under General Business Law § 349(a), the transaction in which the consumer was allegedly deceived must have occurred in New York.

This opinion consolidates two cases on appeal: Goshen v. Mutual Life Ins. Co. of New York and Scott, et al. v. Bell Atlantic Corp., et al.

In Goshen v. Mutual Life Insurance Co. of New York, Appellants purchased "vanishing premium" insurance policies from Respondents, Mutual Life Insurance Company of New York and MONY Life Insurance Company of America (MONY). Respondents have extensive ties to New York and conduct business in the State. Appellant Goshen, a Florida resident, claimed that a MONY sales agent in Florida induced him to surrender his prior MONY life insurance policy in order to purchase a "vanishing premium" policy by using a deceptive sales presentation to illustrate the new policy's potential economic benefits. Alleging several causes of action, including "deceptive trade practices," Appellants commenced an action against Respondents. The trial court granted Respondents' motion for summary judgment and dismissed the action. The Appellate Division affirmed. On appeal, the Court of Appeals reinstated Appellants' General Business Law § 349 cause of action and remitted to the trial court. On remittal, Respondents sought dismissal as to Appellant Goshen, which the trial court granted because Goshen purchased his policy in Florida. The Appellate Division affirmed.

In Scott, et al. v. Bell Atlantic Corp., et al., Appellants commenced an action against Respondents collectively seeking relief for allegedly deceptive acts arising out of the sale to Appellants of subscriptions to Respondents' Digital Subscriber Line Internet service (DSL). Respondents are Delaware corporations with principle places in New York and Virginia. Three of the Appellants are New York residents; the rest, however, are out-of-state residents. In their complaint, Appellants alleged that the service they purchased was defective due to malfunctions largely or wholly within Respondents' control, that Respondents knew this to be the case, and that Respondents' promotional representations were therefore knowingly deceptive. Appellants asserted, among other things, that these alleged deceptions violated General Business Law §§ 349 and 350. Respondents moved to dismiss the complaint on the grounds that the action was barred by documentary evidence ( CPLR §§ 3211(a)(1)) and that the pleading failed to state a cause of action (CPLR § 3211(a)(7)). Finding the pleadings sufficient to defeat Respondents' CPLR § 3211 motion, the trial court denied the motion and granted Appellants leave to amend their second amended complaint to add a claim for fraudulent inducement. The Appellate Division reversed on the law, dismissing Appellants' complaint. On appeal, Appellants sought reinstatement of their General Business Law §§ 349 and 350 claims.

The Court of Appeals affirmed the Appellate Division in Goshen and, in Scott, reinstated the General Business Law claims only for the New York Appellants. In reaching its decision, the Court first observed that the language in General Business Law § 349, as well as the legislative history of the statute, indicated that the legislative intent was to protect consumers in transactions that occur within New York. Therefore, applying the statute to out-of-state transactions would "lead to an unwarranted expansive reading of the statute." In addition, the Court noted that such application would interfere with the ability other states to enforce their own consumer protection laws. The Court rejected the argument that actionable deceptive conduct occurred in New York at the time the Respondents devised a potentially deceptive plan, reasoning that the origin of any promotional conduct is irrelevant if the deception itself did not result in a transaction in New York in which the consumer was harmed. Thus, given that Goshen purchased his policy and paid his premiums in Florida, through a Florida agent, the Court held that Goshen did not have a claim under General Business Law § 349. Similarly, the Court held that the out-of-state Appellants in Scott did not state a cognizable cause of action because they could not allege that they were deceived in New York.

As to the New York Appellants in Scott, the Court held that their allegations were sufficient to withstand Respondents' CPLR §§ 3211(a)(1) and (7) challenges. The Court stated that CPLR § 3211(a)(1) motions may be granted only where the documentary evidence utterly refutes a plaintiff's factual allegations, conclusively establishing a defense as a matter of law. Regarding the CPLR § 3211(a)(7) challenge, the Court noted that the pleadings are afforded a liberal construction and that plaintiffs are given "the benefit of every possible favorable inference." See Leon v. Martinez, 84 N.Y.2d 83 (1994). Because the Respondents did not produce documentation that established a defense as a matter of law, and because the allegations in the Appellants' complaint were sufficient as pleaded, the Court held that, as to the New York Appellants, Respondents' motion to dismiss pursuant to CPLR §§ 3211(a)(1) and (7) was improperly granted.