Trustpilot Damages LLC v. Trustpilot Inc.
1:21-cv-00432
S.D.N.Y.Jun 29, 2021Background
- Trustpilot operates trustpilot.com and sells annual business subscriptions that automatically renew unless the subscriber gives notice; subscriptions cost about $2,400/year.
- Plaintiffs are Trustpilot Damages LLC (TDL), an assignee entity, and Quasar (a subscriber). They allege Trustpilot sent renewal reminders from the trustpilot.net domain (while other communications used trustpilot.com), causing renewal notices to land in junk folders.
- Plaintiffs contend Trustpilot used the irregular sender domain and lax email authentication (e.g., no DMARC) to hide renewals and trap customers into paid renewals; cancellation afterward was allegedly difficult and could risk loss of review visibility.
- Claims asserted: breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, violation of N.Y. Gen. Bus. Law § 349, and similar state statutes; defendant moved to dismiss.
- The court treated the subscriber agreements (produced by Trustpilot) as integral and considered them; it dismissed the Amended Complaint with prejudice, but denied Trustpilot’s motion to dismiss TDL for lack of standing under New York’s anti-champerty law (without prejudice to later challenge).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Should the court consider the subscriber agreements on a Rule 12(b)(6) motion? | Plaintiffs urged agreements were unauthenticated and beyond the pleadings. | Agreements are integral to the complaint and were produced by defendant. | Court considered the agreements as integral and admissible. |
| Is TDL barred by New York’s anti-champerty rule (assignment to sue)? | TDL says assignment was legitimate and formed to obtain justice for subscribers. | Trustpilot says TDL was formed to pursue litigation, making assignment champertous. | Court denied dismissal for lack of standing; champerty is a factual inquiry reserved for later. |
| Does N.Y. Gen. Bus. Law § 349 apply (consumer-oriented/deceptive practice)? | Plaintiffs say autorenewal scheme and stealth emails were consumer-oriented and deceptive. | Trustpilot says subscribers are businesses, transactions are B2B, and autorenewal was disclosed in contract. | Court held plaintiffs failed to show consumer-oriented conduct or a deceptive practice under § 349. |
| Does N.Y. Gen. Oblig. Law § 5-903 (autorenewal statute) apply and render the autorenewal unenforceable? | Plaintiffs argue subscriptions involve personal property or data and so § 5-903 applies. | Trustpilot contends subscriptions are services (personal services/contract rights), not separable personal property. | Court held § 5-903 does not apply; subscription rights are contract rights/services, not personal property for the statute. |
| Did Trustpilot breach the contracts, the implied covenant, or result in unjust enrichment? | Plaintiffs contend Trustpilot breached by covert renewals, improper notices (wrong domain) and abused contractual administration; allege unjust enrichment if renewals unenforceable. | Trustpilot points to clear, express autorenewal and notice/price-change provisions in the written Agreements; cancellations and remedies are governed by the contract. | Court dismissed breach, implied covenant, and unjust enrichment claims: contract terms authorized renewal and foreclosed implied-duty and quasi-contract claims. |
Key Cases Cited
- Giunta v. Dingman, 893 F.3d 73 (2d Cir. 2018) (motion-to-dismiss pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not accepted as true on a motion to dismiss)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Chambers v. Time Warner, 282 F.3d 147 (2d Cir. 2002) (documents integral to the complaint may be considered on a motion to dismiss)
- Stutman v. Chemical Bank, 731 N.E.2d 608 (N.Y. 2000) (elements of a § 349 claim)
- Oswego Laborers' Loc. 214 Pension Fund v. Marine Midland Bank, N.A., 647 N.E.2d 741 (N.Y. 1995) (consumer-oriented requirement for § 349)
- Tr. for the Certificate Holders of Merrill Lynch Mortg. Inv’rs, Inc. v. Love Funding Corp., 918 N.E.2d 889 (N.Y. 2009) (champerty/purpose-of-assignment is a factual inquiry)
- Healthcare I.Q., LLC v. Tsai Chung Chao, 986 N.Y.S.2d 42 (N.Y. App. Div. 2014) (statutory scope of § 5-903; distinguishing when data/services constitute personal property)
- Wornow v. Register.com, Inc., 778 N.Y.S.2d 25 (N.Y. App. Div. 2004) (domain/contract rights are contract rights not separable personal property)
- Ludl Elecs. Prods., Ltd. v. Wells Fargo Fin. Leasing, 775 N.Y.S.2d 59 (N.Y. App. Div. 2004) (disclosed autorenewal in contract is not deceptive under § 349)