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New York Appellate Court Discusses GBL §§ 349, 350 and 350, Grants Plaintiff’s Motion to Amend Complaint


Defendants argue that Plaintiff fails to allege that Defendants’ conduct was consumer-oriented. Defendants urge that the term consumer-oriented refers only to those who purchase goods and services for personal, family or household use. Injury Disputes that are unique to the parties do not fall within GBL § 349.

However, the focus of GBL § 349 on consumer orientation does not preclude its application to disputes between businesses per se, but it does severely limit it. Although the statute is, at its core, a consumer protection device, corporate competitors now have standing to bring a claim under this statute so long as some harm to the public at large is at issue.

Here, Defendants fail to demonstrate that from the allegations in the proposed amended complaint, it cannot be inferred that Defendants’ practice has a broader impact on the consumer at large.

Additionally, Defendants maintain that Plaintiffs claims fail under GBL §§ 350 and 350-a because Plaintiff does not allege a false advertisement in the proposed third amended complaint.

Plaintiff asserts that Defendants advertise that they sell semi-precious jewelry including sapphires, rubies, opals, topaz, tourmaline and citrine, without any indication that any of the gems are synthetic or glass.

On a motion for leave to amend, plaintiff need not establish the merit of its proposed new allegations, but simply show that the proffered amendment is not palpably insufficient or clearly devoid of merit.

Despite the dearth of injury allegations, it may be inferred from the allegations in the complaint and the supporting affidavits that Defendants engaged in deceptive acts and/or false advertising as defined under GBL §§ 349, 350 and 350-a.

Accordingly, leave to amend by adding this cause of action is granted.

Plaintiff seeks to add to the complaint allegations to the effect that ER sold to retailers and consumers false and synthetic stones alleging that said stones were semi-precious gems. ER is the sole member of R. Gems Inc. Based on the new allegations, Plaintiff seeks to pierce the corporate veil and hold ER personally liable for the actions of R. Gems Inc.

To pierce the corporate veil, a plaintiff bears a heavy burden of showing that the corporation was dominated as to the transaction attacked and that such domination was the instrument of fraud or otherwise resulted in wrongful or inequitable consequences. A plaintiff need not plead or prove actual fraud in order to pierce the corporate veil, but must allege that the individual defendant’s control of the corporate defendant was used to perpetrate a wrongful or unjust act toward plaintiff.

Plaintiff alleges in the proposed third amended complaint that ER has been engaged in the business of selling and marketing gems for the past 9 years; has sold to retailers and consumers false and synthetic stones alleging that said stones were semi-precious gems; sold merchandise and conducted transactions on her own behalf, and by utilizing the name RG Inc.; and participated in the operation of said business on a day-to-day basis and was actively involved in its marketing and sales activities.

Accordingly, Plaintiff has sufficiently alleged medical wrongdoing by ER to justify piercing the corporate veil.

Accordingly, it is ordered that Plaintiffs motion for leave to file a third amended complaint is granted, and the third amended complaint in the proposed form annexed to the moving papers shall be deemed served upon service of a copy of this order with notice of entry thereof; and it is further ordered that Defendants shall serve an answer to the amended complaint or otherwise respond thereto within 20 days from the date of said service.

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