Reynolds v. Lifewatch, Inc.
136 F. Supp. 3d 503
S.D.N.Y.2015Background
- Plaintiff Edward J. Reynolds alleges Lifewatch and related entities sold medical-alert devices via telemarketing calls that falsely told consumers a friend or family member had purchased the device (device thus “free” except for monthly monitoring), and that charges would not occur until activation. Reynolds paid monthly fees after a July 2013 call and the device was never activated.
- Lifewatch, Inc. and Lifewatch Technologies Corp. are alleged to have purchased consumer accounts from outside telemarketers under purchase agreements, set prices, processed payments, and reviewed sales scripts/recordings; individual defendants Sirlin and May are alleged officers with control.
- Claims: state-law consumer protection violations (N.Y. Gen. Bus. Law §§ 349–350), common-law fraud/intentional misrepresentation, and unjust enrichment; class action sought on behalf of purchasers/residents of multiple states.
- Procedural posture: Defendants moved to strike class allegations and to dismiss the amended complaint. Some co-defendants were dismissed by stipulation; Lifewatch moved to dismiss; Individual defendants moved to dismiss for lack of personal participation/veil-piercing insufficiency.
- Court treated facts as alleged for motions; Lifewatch’s voluntary refund campaign was asserted as mooting the action but the court found unresolved factual questions and declined to dismiss on mootness grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness from Lifewatch refund campaign | Refunds offered; but plaintiff seeks class relief and additional remedies so case remains live | Refund campaign moots claims and makes class action inferior | Dismissal on mootness denied — factual gaps about scope/effect of refund and additional relief remain |
| Motion to strike class allegations (Rule 23, ascertainability, superiority, extraterritoriality) | Class is proper: common misrepresentations, numerosity, typicality; discovery will clarify issues and subclasses can address state-law differences | Class uncertifiable now: refund program defeats superiority; ascertainability and predominance problems (individualized reliance; multi-state law variances); New York GBL cannot apply extraterritorially | Motion to strike denied as premature; class allegations remain for discovery and later certification motion |
| Sufficiency of GBL §§ 349–350 claim | Alleged objective misrepresentations caused monetary injury (monthly fees); pleaded reliance and amounts | Claim is conclusory; plaintiff voluntarily provided card and received device so no cognizable harm | GBL claim survives: pleadings sufficiently allege deceptive practice, causation, and injury |
| Fraud and Rule 9(b) particularity | Identifies the fraudulent statements (purchased by friend/family; no charge until activation), timing (July 2013), reliance, and agency relationships | Fails to specify speaker identity, date/time, or precise location of call as required by Rule 9(b) | Fraud claim meets Rule 9(b): pleaded who made statements (agents of defendants), what/why fraudulent, and sufficiently circumscribed time period |
| Unjust enrichment duplicative of other claims | May provide equitable recovery if other claims fail | Unjust enrichment merely duplicates GBL and fraud claims arising from same facts | Unjust enrichment dismissed as duplicative (without prejudice) |
| Individual liability / veil piercing for officers Sirlin and May | Officers participated or had authority and knowledge; can be liable for their own participation or for control leading to injunctive relief | Plaintiff fails to allege personal participation or facts to pierce the corporate veil | Claims against individual defendants dismissed for failure to allege personal participation or facts supporting veil piercing; leave to amend granted |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (context-specific plausibility and inference principles)
- Goshen v. Mutual Life Insurance Co. of N.Y., 98 N.Y.2d 314 (2002) (GBL § 349 requires deception/transaction occurring in New York)
- McLaughlin v. American Tobacco Co., 522 F.3d 215 (2d Cir. 2008) (fraud-based class actions can be appropriate where similar misrepresentations are used)
- In re Visa Check/MasterMoney Antitrust Litigation, 280 F.3d 124 (2d Cir. 2001) (class action manageability and predominance principles)
- MAG Portfolio Consult GmbH v. Merlin Biomed Group, 268 F.3d 58 (2d Cir. 2001) (corporate veil-piercing standard under New York law)