Wright v. Publishers Clearing House, Incorporated
2:18-cv-02373
E.D.N.YFeb 13, 2020Background
- Plaintiffs (multiple out-of-state consumers) sued Publishers Clearing House (PCH) alleging deceptive marketing that implied purchases would increase odds of winning sweepstakes, asserting claims under N.Y. Gen. Bus. Law § 349 and other federal statutes.
- Alleged misconduct included mailed and emailed solicitations (simulated checks, “winner selection” lists, entry/order forms, paywall screens, reward-point schemes, mistaken winner emails) originating from PCH offices in New York.
- Plaintiffs claimed injuries principally as a "price premium" (paying more for products because they believed purchases increased winning odds), plus theories that they bought items they otherwise would not and used an inferior search product.
- District Court previously dismissed the original complaint (March 2019) with leave to replead Section 349 claims; plaintiffs filed an Amended Complaint alleging specific ads viewed by individual plaintiffs.
- Defendants moved to dismiss under Rules 12(b)(1) and 12(b)(6); Court found the Amended Complaint still failed—plaintiffs lacked standing under § 349, did not plausibly allege cognizable injury or a materially misleading representation—and dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing under N.Y. GBL § 349 (transactional nexus to NY) | PCH is headquartered in NY, sent ads from NY, processed orders in NY, and has NY choice-of-law — so transactions sufficiently connected to NY. | Mere origination of ads, processing in NY, or a NY choice-of-law clause does not make out a NY transaction; plaintiff transactions occurred out-of-state. | Dismissed for lack of standing: plaintiffs failed to show "some part" of the underlying transactions occurred in NY; Goshen controls. |
| Pleading particularity/causation (ads → specific purchases) | Amended Complaint identifies specific ads each plaintiff saw and alleges those impressions caused purchases. | Plaintiffs still fail to tie particular purchases to particular ads or plead facts showing reliance producing loss. | Court found plaintiffs adequately identified ads seen, but not the causal connection to specific purchases with required factual support for injury. |
| Injury—price-premium theory under § 349 | Plaintiffs paid more (higher price, fees, shipping, interest) because they believed purchases increased sweepstakes odds, thus suffered pecuniary harm. | Allegations are conclusory boilerplate; plaintiffs did not identify purchased products, prices paid, comparators, or a measurable loss. | Dismissed: plaintiffs failed to plead a cognizable pecuniary injury (no concrete price-premium facts); subjective disappointment is insufficient. |
| Whether ads were materially misleading to a reasonable consumer | Plaintiffs contend cumulative materials (including "winner selection" notices and comingled order/entry forms) conveyed that buying would improve odds. | The materials contain no explicit promise that purchases increase odds; official Sweepstakes Rules clearly state "NO PURCHASE NECESSARY" and "BUYING WON’T HELP YOU WIN." | Dismissed: as a matter of law the cited materials would not mislead a reasonable consumer given the clear contest rules and lack of explicit linkage between purchases and improved odds. |
Key Cases Cited
- Goshen v. Mutual Life Ins. Co. of New York, 98 N.Y.2d 314 (N.Y. 2002) (GBL § 349 applies only where the deceptive transaction occurred in New York)
- Cruz v. FXDirectDealer, LLC, 720 F.3d 115 (2d Cir. 2013) (out-of-state plaintiffs may have § 349 standing if some part of the transaction occurred in NY; focus on transactional nexus)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (courts need not accept legal conclusions; assess plausibility)
- Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (N.Y. 1995) (reasonable consumer standard for material deceptiveness)
- Orlander v. Staples, Inc., 802 F.3d 289 (2d Cir. 2015) (§ 349 actual-value/price-premium framework)
- Fink v. Time Warner Cable, 714 F.3d 739 (2d Cir. 2013) (courts may decide as a matter of law that an advertisement would not mislead a reasonable consumer)
- Pelman ex rel. Pelman v. McDonald's Corp., 396 F.3d 508 (2d Cir. 2005) (notice-pleading standards for § 349 claims)