SUPREME COURT - STATE OF NEW YORK IAS TERM PART 16 NASSAU COUNTY. Justice

Transcription

1 5C SUPREME COURT - STATE OF NEW YORK IAS TERM PART 16 NASSAU COUNTY INDEX No PRESENT: HONORABLE Justice LEONARD B. AUSTIN Motion RID: Submission Date: Motion Sequence No.: 002/MOT D NISSENBAUM & ASSOCIATES, LLC; RALPH PAGAN d/b/a EXPERT SEWER & DRAIN SERVICE, and BIENENFELD & WERTMAN, P.C., Plaintiffs, - against - HISPANIC MEDIA GROUP USA, INC. d/b/a SPANISH YELLOW PAGES USA a/kla LAS SUPER PAGINAS AMARILLAS; SKY MEDIA CORP. d/b/a SPANISH YELLOW PAGES USA a/kla LAS SUPER PAGINAS AMARILLAS; SPANISH YELLOW PAGES USA a/kla LAS SUPER PAGINAS AMARILLAS; and EDUARDO CERCHIARA aikla EDDIE CRUZ d/b/a HISPANIC MEDIA GROUP USA, INC., SKY MEDIA CORP. and/or SPANISH YELLOW PAGES USA; Defendants. COUNSEL FOR PLAINTIFF Locks Law Firm, PLLC 110 East 55th Street New York, New York Thomas W. Alfano, Esq. 400 Garden City Plaza Garden City, New York Marc G. Alster, P. Two University Plaza Hackensack, New Jersey Goldstein Isaacson, P. 100 Morris Avenue - Third Floor Springfield, New Jersey COUNSEL FOR DEFENDANT Keith A. Lavallee, Esq. P. 4 West Gate Road Farmingdale, New York ORDER The following papers were read on Plaintiffs ' motion for class certification:

2 NISSENBAUM & ASSOCIATES, LLC, et a/., v. HISPANIC MEDIA GROUP USA, et a/. Notice of Motion dated May 12, 2006; Affrmation of Andrew P. Bell, Esq. dated May 12, 2006; Plaintiffs' Memorandum of Law; Affrmation of Keith A. Lavallee, Esq. dated June ; Plaintiffs' Reply Memorandum of Law. Plaintiffs move to certify this action as a class action, to designate Plaintiffs as the representatives of the class and designating counsel for the named Plaintiffs as counsel for the class. BACKGROUND In or about 1998, Defendant Hispanic Media Group, USA, Inc. ("HMG") began to publish the Spanish Yellow Pages. The Spanish Yellow Pages is a telephone directory aimed at the Hispanic community in the New York City, Long Island and Northern New Jersey. Plaintiff Nissenbaum & Associates, LLC (" Nissenbaum ) is a law firm with an office in Union, New Jersey. Plaintiff Ralph Pagan d/b/a Expert Sewer & Drain Service Pagan ) operates a sewer and drain service with its principal place of business in Stony Point, Rockland County, New York. Plaintiff Bienenfeld & Wertman, P. ("Bienenfeld") is a law firm with offices in lower Manhattan. The Spanish Yellow Pages contains general telephone listings and paid advertisements. Each of the Plaintiffs placed a paid advertisement in the Spanish Yellow Pages. Neither law firm received a call as a result of their advertising in the The motion is timely. The time for the Plaintiffs to move to certify this action as a class action was extended by "So Ordered" stipulations to permit the Plaintiffs to complete discovery necessary to make the application.

3 NISSENBAUM & ASSOCIATES, LLC, et a/. v. HISPANIC MEDIA GROUP USA, et a/. Spanish Yellow Pages. Pagan did not receive any inquiries from his ad. Plaintiffs allege that they chose to place paid advertisements in the Spanish Yellow Pages based upon representations that were false. Plaintiffs claim they were provided with promotional material indicating that hundreds of thousands of copies of the Spanish Yellow Pages were printed and distributed annually. Plaintiffs were also advised that the directory was used by millons of people. In fact, a maximum of 50, 000 copies were printed in any given year and less than the entire printing was systematically distributed. If the entire printing was distributed, the directory would be available to several hundred thousand people; not the milions advertised. Plaintiffs seek to have certified as a class all persons who placed paid advertisements in the Spanish Yellow Pages for the years 1998 to present. The complaint alleges three causes of action. In each, Plaintiffs seek to recover on behalf of the class the money paid for advertising in the Spanish Yellow Pages. The cause of action seeks first cause of action alleges common law fraud. The second The third cause of rescission of the advertising contract based upon unilateral mistake. action seeks restitution of the money paid for advertising. DISCUSSION In determining whether to certify an class, the court must consider the five factors set forth in CPLR 901 (a). Siegel New York Practice

4 NISSENBAUM & ASSOCIATES, LLC, et a/. v. HISPANIC MEDIA GROUP USA, et a/. Numerosity The first of these factors is whether the class is so numerous that joinder of all members is impractical. CPLR 901 (a)(1). There is no mechanical test to determine whether the number of prospective claimants is sufficient to constitute a class. Friar v. Vanguard Holding Corp.. 78 A. 2d 83 (2 Dept. 1980). In this case, numerosity is not an issue. The Spanish Yellow Pages has hundreds of paid advertisers annually. The Spanish Yellow Pages estimates a renewal rate of between 65% and 80%. Thus, between 1998 and the present time, hundreds, if not thousands, of individual advertisers placed paid advertisements in the Spanish Yellow Pages. As few as eighty has been found to be sufficiently numerous to constitute a class. Pesantez v. Boyle Environmental Services. Inc., 251 A. 2d 11 (1 Dept. 1998). Thus, the several hundred or more potential claimants is sufficiently numerous to be treated as a class. Common Questions of Law and Fact The second factor the court must consider is whether there are common questions of law and fact which predominate over questions relating to individual members of the class. CPLR 901 (a)(2). This factor causes great diffculty when fraud is the underlying claim of the putative class. Fraud claims are generally not amenable to class certification because they generally require proof that each member of the class reasonably relied upon the defendant's misrepresentations to their detriment. Small v. Lorilard Tobacco Co., 252

5 NISSENBAUM & ASSOCIATES, LLC, et a/., v. HISPANIC MEDIA GROUP USA A.D. 2d 1 (1 Dept. 1998), affd. 94 N. 2d 43 (1999); and Vermeer Owners. Inc. v. Guterman, 169 A. 2d 442 (1 Dept.), aff' 78 N. 2d 1114 (1991). An exception et a/. exists when the defendant controls all the information about the transaction. King v. Club Med. Inc., 76 A. 2d 123 (1 Dept. 1980). See also Stellema v. Vantage Press. Inc., 109 A. 2d (1 Dept. 1985). In such circumstances, once proof is adduced that the representations, if made, were false and material, reliance wil be presumed. /d. In this case, the Defendants controlled all of the information regarding the number of volumes printed and the methods and locations used to distribute the Spanish Yellow Pages. Plaintiffs cannot be held to the reasonable reliance presumptions of King or Stellema. In those cases, the plaintiffs had established that the defendants had one type of advertising which had been used to solicit business from each member of the class. Such a circumstance is not presented in this case. Plaintiffs' allegations of fraud relate primarily, if not exclusively, to advertising brochures sent out by Defendants soliciting potential customers to advertise in the Spanish Yellow Pages. Defendant Eduardo Cerchiara a/kja Eddie Cruz ("Cruz ), the president of Hispanic Media Group, admits that the advertising material contains false and misleading information. However, over the years HMG has used numerous types of The advertising information was prepared by and sent out by PMP, a direct marketer retained by HMG. The material contains misstatements regarding the number of pages in the directory, the number of households to which the directory was distributed and the number of

6 NISSENBAUM & ASSOCIATES, LLC, et a/. v. HISPANIC MEDIA GROUP USA, et a/. solicitation to obtain paid advertising. It has also used different materials. Plaintiffs, in this case, have failed to p1ace before the Court any of the promotional materials that were actually provided to them? Thus, the Court cannot even determine whether the Plaintiffs claims involve common questions of law or fact. It is not even clear that the same solicitation for ads was used from one year to the next. Plaintiffs have failed to establish theses claims involve common questions of fact. Hundreds, if not thousands, of businesses have taken paid advertisements in the Spanish Yellow Pages over the years. Over the past several years, between 65 and 80% of all advertisers have renewed their ads. Numerous business reasons exist as to why advertisers choose to advertise in the Spanish Yellow Pages and why they choose to continue or terminate their ads. Plaintiffs must concede, not every advertising campaign has the desired results. Representative Claims Plaintiff must also establish that their claims are typical of the claims of the class. CPLR 901 (a)(3). HMG has printed the Spanish Yellow Pages since Over the It has also used various years, it has used various printed material to solicit business. directories printed. Cruz asserts he never saw this advertising information before it was distributed. He further asserts it was distributed to a limited number of potential customers on a trial basis with limited success. Plaintiff have attached to their complaint and to this motion copies of advertising material soliciting ads for the Spanish Yellow Pages. While this material concededly contains misleading or inaccurate information, Plaintiffs could not have relied upon this material when they chose to place an ad in the Spanish Yellow Pages since it was prepared after the Plaintiffs had placed their ads in the directory. Nissenbaum s ad was solicited and placed in Pagan and Bienenfeld' s ads were solicited and placed in 2002.

7 NISSENBAUM & ASSOCIATES, LLC, et a/. v. HISPANIC MEDIA GROUP USA, et a/. techniques to solicit business including fax transmissions, brochures, phone solicitations and personal solicitations. In order to obtain class certification based upon misrepresentations, Plaintiffs must establish that the members of the class were exposed to or provided with the same or substantially similar misleading, false or inaccurate materials. Solomon v. Bell Atlantic Corp., 9 A. 3d 49 (1 Dept. 2004). Class certification is inappropriate when the plaintiff fails to establish the existence of one specific advertisement that was seen by the purported class or provided to the purported class by the defendant. Small v. Lorilard Tobacco Co. supra. None of the Plaintiffs herein indicate precisely how they were solicited to advertise in the Spanish Yellow Pages or what representations were made to them. HMG' practices and procedures for soliciting paid advertisers has changed over the years. has the promotional material they have provided to prospective advertisers. clear whether the same marketing techniques were used on each Plaintiff. It is not The only commonality among Plaintiffs is that they did not derive or obtain business from their advertising in the Spanish Yellow Pages. Additionally, it would appear that Plaintiffs ' experiences are atypical of those who Cruz testified that place or have placed paid advertising in the Spanish Yellow Pages. the Spanish Yellow Pages had approximately 300 paid advertisers in the first edition that was published in The number of paid advertisers has increased to 15% per year. The Spanish Yellow Pages now has approximately 800 paid approximately 10 advertisers. A large majority of its paid advertisers have renewed their ads over the last

8 NISSENBAUM & ASSOCIATES, LLC, et a/. v. HISPANIC MEDIA GROUP USA et a/. several years. The Court must infer that those who are renewing their advertising are getting results or, at least, are satisfied with their choice of utilzing the Spanish Yellow Pages to reach potential customers. Adequate Class Representation The next factor the court must consider is whether the lead plaintiffs wil fairly and adequately represent the interests of the class. CPLR 901 (a)(4). In determining this factor, the court should consider whether a conflict of interest exists between the members of the class and the representative(s), background of the representative(s) personal familarity of the representative(s) with the issues involved in the action so that the representative(s) can assist in the prosecution of the action and, if required, act as a check on his or her attorney, the competence of the attorney and the financial resources available to prosecute the action. Pruitt v. Rockefeller Center Properties. Inc., 167 2d 14 (1 Dept. 1991). The one relevant factor here is that of conflict of interest. With a substantial renewal rate, it is clear that advertisers who are renewing their ads do not have the same interest as Plaintiffs. Plaintiffs' interests thus conflict with those of advertisers who appear to have been satisfied with the results they have obtained by advertising in the Spanish Yellow Pages. Plaintiffs have also failed to plead or prove that they have an interest in common with other advertisers who did not renew their ads.

9 NISSENBAUM & ASSOCIATES, LLC et a/. v. HISPANIC MEDIA GROUP USA et a/. Alternatives to Adiudication as a Class The final factor the court should consider is whether proceeding as a class action is superior to other methods for the fair and effcient adjudication of the controversy. CPLR 901 (a)(5). Plaintiffs seek to recover the amount paid for the ads. In this case, the claims of the individual Plaintiffs could be dealt with as effciently, if not more so, in the Commercial Small Claims parts of the local courts. See, e. g. New York City Civil Court Act Article 18-A; Uniform District Court Act Article 18-A; and Uniform City Court Act Article 18-A. The simplified procedures in those parts would permit each Plaintiff to appear pro se, the matters wil come on to be heard within a relatively short time and the parties wil avoid the costs and expenses involved in a protracted litigation and the costs involved in providing notification to the members of the class. Determination The determination of whether to certify the class is one addressed to the discretion of the court. Small v. Lorilard Tobacco Co. supra. Plaintiff must establish by competent evidence that it has satisfied all five requirements set forth in CPLR 901 (a) for obtaining class certification. Askey v. Occidental Chemical Corp., 102 A. 2d 130 (4 Dept. 1984); and Katz v. NVF Co., 100 A.D. 2d 470 (1 Dept. 1984). In this regard, Katz is particularly instructive. In this matter, as in Katz Plaintiffs made no attempt to ascertain or demonstrate to the court how many members there are in the potential class. In this case, Plaintiff simply assumes that all advertisers in the Spanish Yellow Pages were convinced to advertise because of the misleading or

10 NISSENBAUM & ASSOCIATES, LLC et a/., v. HISPANIC MEDIA GROUP USA, et a/. inaccurate promotional material and were similarly dissatisfied with the results. Standing alone, this is not enough to warrant class certification. Plaintiffs have failed to satisfy the five prong test required under CPLR 901 in order to warrant certification as a class. Thus, their motion must be denied. Accordingly, it is, ORDERED, that Plaintiffs motion for class certification is denied; and it is further ORDERED, that counsel for the parties are directed to appear for a status conference on October 17, 2006 at 9:30 a. This constitutes the decision and Order or the Co Dated: Mineola, NY September 27, 2006 Hon. L. ONARD B. AUSTIN, J. ENTERED OC i NASSAU COUNTY COUNTY CLERK' S OFFICE