Academic journal article Albany Law Review

Sea Change: New York State Class Actions; Making It Work, Fulfilling the Promise

Academic journal article Albany Law Review

Sea Change: New York State Class Actions; Making It Work, Fulfilling the Promise

Article excerpt

In this third installment of our ongoing analysis of class actions brought pursuant to CPLR article 9 (1) we discuss the following developments.

First, in 2014 the Court of Appeals rendered a decision in Borden v. 400 East 55th Street Associates, L.P. (2) which clarified its strong commitment to enforcing the broad, liberal goals set forth in the legislative history of CPLR article 9. (3) In doing so, the Court of Appeals encouraged the appellate division and trial courts to take a more aggressive role in certifying a variety of class actions, particularly, those brought by tenants, consumers and employees. (4) As we shall see, the appellate division and the trial courts have responded accordingly.

Second, while the Court of Appeals was expanding the usefulness of CPLR article 9, the U.S. Supreme Court was closing the door on state court consumer class actions (5) with its decisions in AT&T v. Conception, (6) American Express Co. v. Italian Colors Restaurant, (7) and related cases which, relying on the Federal Arbitration Act (FAA), enforced mandatory arbitration clauses, class action waivers, and class arbitration waivers in consumer contracts. (8) To the extent the directives set forth by the U.S. Supreme Court may be circumvented (9) or ameliorated in state courts, (10) the First Department's bold decision in Gold v. New York Insurance Co. (11) expands that circumvention or amelioration to mandatory arbitration clauses in employment contracts. (12) Unfortunately, the U.S. Supreme Court recently decided to enforce mandatory arbitration clauses and class action waivers in employee contracts in Epic Systems Corp. v. Lewis (13) thus rendering the ruling in Gold v. New York Insurance problematic, at best.

Third, disclosure-only settlements, typically entered into pre-class certification, in mergers and acquisitions (M&A) and corporate governance class actions have been widely criticized. (14) In response the Appellate Division, First Department, in Gordon v. Verizon Communications (15) set forth two new factors, in addition to the five factors set forth in Matter of Colt Industries Shareholders Litigation, (16) which serve to guide trial courts in evaluating whether a proposed disclosure-only settlement is beneficial to shareholders and the corporations. (17)

Fourth, the Court of Appeals in Desrosiers v. Perry Ellis Menswear, LLC (18) addressed the issue of whether and to what extent notice should be given to purported class members pursuant to CPLR 908 when a purported class action is settled with court approval prior to class certification. (19)

Fifth, the Fourth Department in DeLuca v. Tonawanda Coke Corp. (20) and the First Department in Roberts v. Ocean Prime, LLC (21) have dramatically changed course and certified mass tort class actions alleging property damage and personal injuries. (22)

Sixth, indirect tax payer class actions have been approved by the Third Department in Matter of New Cingular Wireless PCS, LLC u. Tax Appeals Tribunal. (23)


In our 2010 article, New York State Class Actions: Make It Work-Fulfill The Promise, (24) we asked the Court of Appeals to take a more active role in providing necessary guidance to the appellate division and the trial courts regarding the use of CPLR article 9: "[a]nd, lastly, the article encourages the New York State Court of Appeals to continue to take a more active role in choosing to hear appeals in class action cases involving a variety of issues, including the granting and denial of class certification (CPLR 901, 902)." (25)

A. The Beginning of Change

In Koch v. Acker, Merrall & Condit Co., (26) an individual consumer fraud action involving the sale of counterfeit wine, the Court of Appeals determined that both General Business Law ("GBL") section 349 (deceptive and misleading business practices prohibited) and GBL 350 (false advertising prohibited) are certifiable in consumer class actions. …

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