Orlander v. Staples, Inc.
2015 U.S. App. LEXIS 16492
| 2d Cir. | 2015Background
- Orlander bought an HP desktop and a two-year, $99.99 Staples “Carry-in” Protection Plan and received a brochure (the “Contract”); he alleges oral assurances that Staples would provide complete coverage so he would not need to contact the manufacturer.
- The brochure listed services (24/7 support, 100% parts and labor, one-time replacement or cash settlement, referral to nearest authorized repair center for carry-in service) and included a small‑print starred paragraph referencing Terms and Conditions and stating, “The plan term is inclusive of manufacturer’s warranty and store return policy and does not replace the manufacturer’s warranty.”
- After experiencing internet/connectivity problems within the first year, Orlander returned the computer to Staples; employees told him to contact HP and said the Staples plan provided no coverage until the manufacturer’s warranty expired.
- Orlander sued for breach of contract, N.Y. Gen. Bus. Law §§ 349 and 350 (consumer deception/false advertising), warranties, and unjust enrichment; the district court dismissed the contract and GBL claims under Rule 12(b)(6).
- On appeal, the Second Circuit assumed the Terms and Conditions were not provided, reviewed only the brochure, and considered extrinsic allegations (oral promises and sales statements) in evaluating ambiguity and misleading conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the brochure/Contract is ambiguous | Orlander: brochure ambiguous; starred small print does not unambiguously eliminate all listed services during manufacturer warranty | Staples: small-print clause unambiguously limits Staples’ obligations while manufacturer warranty is in effect | Court: Contract is ambiguous as a matter of law; multiple reasonable readings exist |
| Whether Staples failed to perform its contractual obligations | Orlander: Staples failed to provide promised services (e.g., referral to authorized repair center) and oral assurances support broader coverage | Staples: even if promises made, manufacturer warranty controls and Staples owed no services during first year | Court: Plaintiff adequately alleged failure to perform; extrinsic evidence may clarify scope at trial |
| Whether a breach must be "material" to state a breach claim | Orlander: materiality is irrelevant to liability for breach; immaterial breach still supports damages | Staples/district court: dismissed breach as immaterial and non-damaging | Court: materiality is generally a fact question and not a threshold for liability; dismissal on that ground was improper |
| Whether Orlander pled a cognizable injury under N.Y. GBL §§ 349 & 350 | Orlander: paid for two-year plan and was denied first-year services; oral representations and brochure were materially misleading causing monetary injury | Staples: no actionable injury; plaintiff got what he contracted for or only alleged a mere expectancy, not a price premium | Court: adequately pleaded materially misleading, consumer-oriented conduct and actual injury (payment for services not received); § 349/350 claims survive dismissal |
Key Cases Cited
- W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157 (N.Y. 1990) (whether a writing is ambiguous is a question of law)
- JA Apparel Corp. v. Abboud, 568 F.3d 390 (2d Cir. 2009) (extrinsic evidence may be considered when contract language is ambiguous)
- Olin Corp. v. Am. Home Assur. Co., 704 F.3d 89 (2d Cir. 2012) (definition of unambiguous contract language)
- Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168 (2d Cir. 2004) (if contract ambiguous on pleadings, dismissal is improper)
- Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568 (2d Cir. 1993) (where reasonable minds could differ, extrinsic evidence goes to the trier of fact)
- In re Men’s Sportswear, Inc. v. Sasson Jeans, Inc., 834 F.2d 1134 (2d Cir. 1987) (plaintiff may recover restitution of payments upon failure of consideration)
- Cohen v. JP Morgan Chase & Co., 498 F.3d 111 (2d Cir. 2007) (objective standard for whether business conduct is likely to mislead a reasonable consumer)
- Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (N.Y. 1995) (definition of "misleading" under § 349)
- VFS Financing, Inc. v. Falcon Fifty LLC, 17 F. Supp. 3d 372 (S.D.N.Y. 2014) (discussed as background on materiality; court distinguished its relevance)