DECISION AND ORDER
Plaintiffs Alvin Kaufman (“Kaufman”) and Richard LaLuna (“LaLuna”) (collectively, “Plaintiffs”) brought this action on behalf of themselves and all those similarly situated, against defendant Sirius XM Radio, Inc. (“Sirius”), asserting in their third amended complaint (the “Third Amended Complaint”) claims asserting unlawful deception under New York General Business Law § 349 (“GBL § 349”) and breach of contract. By letter to the Court dated June 11, 2010 (“Sirius’s Pre-Motion Letter”) and at the August 20, 2010 telephone conference with the parties (the “Telephone Conference”), Sirius indicated that
After discussing the basis for Sirius’s contemplated motion with the parties, the Court directed Sirius and Plaintiffs to submit letter-briefs 1 stating their respective arguments and supporting authorities relating to two issues: (1) whether non-New York resident Kaufman (and those similarly situated) adequately pled deception that occurred in New York sufficient to state a GBL § 349 claim and (2) whether Plaintiffs sufficiently pled facts to support a viable breach of contract claim. The Court also stated that the briefing should be limited to these two issues, and should not include arguments relating to the merits of the GBL § 349 claim because the Court found dismissal on merits grounds would be premature at the pleading stage.
The Court indicated that it would deem Sirius’s letter-briefs as a partial motion to dismiss pursuant Rule 12(b)(6) (“Rule 12(b)(6)”) of the Federal Rules of Civil Procedure, and determine on the basis of the Telephone Conference and a review of the parties’ Letter-Briefs whether (1) Plaintiffs’ GBL § 349 claim should be limited to Subscribers who were allegedly deceived in New York and (2) their breach of contract claim should be dismissed altogether. See Fed.R.Civ.P. 12(b)(6). For the reasons discussed below, Sirius’s partial motion to dismiss is GRANTED.
I. BACKGROUND 2
LaLuna, a resident of New York, and Kaufman, a resident of Nevada, assert a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure, claiming to represent a potential class of “hundreds of thousands of [Sirius and Sirius’s predecessors’] subscribers [ (“Subscribers”) ].” (TAC ¶ 1.) Plaintiffs’ claims arise from the contractual payment terms (the “Payment Terms”) found in certain Sirius standard Subscriber contracts. Plaintiffs allege that “a portion of [Sirius’s revenue], albeit [a] small [portion], likely is attributable to overcharging certain of its [Subscribers [the $2.00 Invoice Administration Fee (the “$2.00 Invoice Administration Fee”) ] in a manner contrary to the [Payment Terms].” (Id. ¶ 2.) Specifically, the class consists of:
[Subscribers who tendered payment to Sirius in exchange for Sirius’[s] services and who paid a $2.00 Invoice Administration Fee when payment was made by any means other than a check or money order, (including but not limited to credit car [sic], debit card, Sirius Prepaid Card, XM Prepaid Card, gift card, and electronic funds transfer).
(Id. ¶ 14.)
Plaintiffs attach to the Third Amended Complaint several iterations of Sirius’s Payment Terms. The Payment Terms in the September 8, 2007 contract read:
F. Payment: In return for receiving the Service, you agree to pay us as follows:
Subscription Fee: You must pay in advance by credit card or debit card. You may combine payment with a SIRIUS prepaid card. You may also pay bycheck or money order for Subscriptions of at least one year in length.... If you pay by check or money order you will receive an invoice by mail and will be required to make your first payment before your Subscription is activated.
Automatic Renewal: Your Subscription ... will automatically renew at the end of the Subscription Term unless you choose to cancel prior to that renewal.... Your account will automatically be charged (or you will be billed, as applicable) at the rates in effect at the time of renewal.
Administrative Fees: We will charge you one or more of the following fees, all of which are subject to change without notice: ... Invoice Administration Fee: If you commit to a Subscription of at least one year in length and elect to pay by check or money order, we will charge you an administration fee. The administration fee is currently $2.00 per invoice.
(Id., Ex. D).
Further, the Payment Terms in the August 1, 2009 contract state:
Payment. In return for receiving the Service, you agree to pay us as follows:
1. Subscription Fee: You must pay in advance by credit card or debit card. You may also pay in advance by electronic funds transfer. You may combine payment with, as applicable, a SIRIUS or XM Prepaid Subscription card. You may also pay by check or money order. If you pay by check or money order you will receive an invoice by mail and will be required to make your first payment before your Subscription is activated.
2. Automatic Renewal: Your Subscription ... will automatically renew for another prepaid period of the same length.... Your account will automatically be charged (or you will be billed, as applicable) at the rates in effect at the time of renewal....
5. Statements: If you are not using an electronic method of payment we will send you a statement for the billing plan you selected. If you elect to pay by check or money order, we may charge you a fee of up to $2.00 per Invoice. Otherwise, billing statements will be provided only upon request.
8. Fees: We will charge you one or more of the following fees, all of which are subject to change without notice: ... Invoice Administration Fee: If you elect to pay by check or money order, we will charge you an administration fee. This administration fee is currently $2.00 per Invoice.
(Id., Ex. E.)
After the commencement of this lawsuit, effective March 15, 2010, Sirius modified the Payment Terms (the “Payment Terms Modification”) to read:
Statements: If you are not using an electronic method of payment, we will send you a paper statement for the billing plan you selected. If you receive an Invoice or you request an Invoice, we will charge you an Invoice administration fee on each Invoice rendered.
Fees: We will charge you one or more of the following fees, all of which are subject to change without notice: ... Invoice Administration Fee: 'If you elect to receive an Invoice or you request an Invoice, we will charge you an Invoice administration fee on each Invoice rendered. The Invoice administration fee is currently $2.00 per invoice.
(Id., Ex. H.)
Focusing here on the time period before the Payment Terms Modification, Plaintiffs allege that Subscribers who paid through one of several payment methods
in advance
of Sirius issuing an invoice
Plaintiffs cry foul. According to them, “Sirius devised and was well aware of this improper charge and yet it neither informed its [Subscribers of the nature of the charge nor offered a refund of the administration fees or adequate compensation once it became apparent to Sirius that the invoice was paid by a means other than check or money order or simply not paid by check or money order.” (Id. ¶ 26.) Moreover, Plaintiffs plead that “Sirius’[s] acts of charging and collecting [the $2.00] Invoice Administration Fee ... per subscriber who has not paid by check or money order are misleading and deceptive acts.” (Id. ¶ 52.)
II. DISCUSSION
A. LEGAL STANDARD
In assessing a motion to dismiss under Rule 12(b)(6), dismissal of a complaint is appropriate if the plaintiff has failed to offer factual allegations sufficient to render the asserted claim plausible on its face.
See Ashcroft v. Iqbal,
— U.S. -,
For the purposes of deciding a motion to dismiss, the Court accepts the factual allegations in a complaint as true, and draws all reasonable inferences in the plaintiffs favor.
See Iqbal,
B. BREACH OF CONTRACT
Sirius asserts that the Third Amended Complaint fails to adequately plead a breach of contract claim because the unambiguous language of the Payment Terms, according to the company, allowed it to charge the $2.00 Invoice Administration Fee “each time it provide[d] the service of generating and mailing an invoice.”
With regard to Sirius’s first argument, Sirius buttresses its assertion by bringing to the Court’s attention the contractual language in the Payment Terms that explicitly states that the “[i]nvoice administration [f|ee is currently $2.00 per invoice.” (TAC, Ex. D.) Thus, Sirius argues that the Payment Terms unequivocally include a $2.00 administration fee in exchange for the company providing an invoice to a Subscriber. While Sirius correctly quotes this language in the Payment Terms, the company omits the words immediately preceding that clause, which read: “If you elect to pay by check or money order, we will charge you an administration fee.” (Id.; see also id., Ex. E (“If you are not using an electronic method of payment we will send you a statement for the billing plan you selected. If you elect to pay by check or money order, we may charge you a fee of up to $2.00 per Invoice.”).) Thus, the Court finds that the contractual language in the Payment Terms, on the record before the Court, is, at best, not clear as to whether a Subscriber who receives an invoice, and who elects to pay through an electronic method such as a one-time credit card payment and not via check or money order, will be charged the $2.00 Invoice Administration Fee. Therefore, the Court cannot rule that the Payment Terms expressly and unambiguously contemplate Sirius charging the $2.00 Invoice Administration Fee to Plaintiffs.
However, the Court finds Sirius’s second grounds for dismissing Plaintiffs’ breach of contract cause of action persuasive. The Court provided clear instructions to Plaintiffs at the Telephone Conference, directing them to set forth in their contemplated letter-brief the language in the contract that they assert has been breached, what their interpretation of that clause is, and how the facts pled in the Third Amended Complaint support a breach of that provision. However, Plaintiffs’ brief focuses exclusively on the GBL § 349 claim (and mostly on the merits of that count which the Court stated repeatedly would not be susceptible to dismissal at the pleading stage) and does not even mention the contractual cause of action. Indeed, Plaintiffs’ September 3 Letter-Brief and Plaintiffs’ September 21 Letter-Brief fail to point the Court to any contractual obligation on the part of Sirius to refrain from charging the $2.00 Invoice Administration Fee. Accordingly, the Court rules that the Plaintiffs have abandoned their breach of contract cause of action. 3
Even had Plaintiffs attempted to justify their contractual claim, the Court agrees with Sirius that there is no factual basis in the Third Amended Complaint upon
C. DECEPTION IN NEW YORK
Sirius next seeks partial dismissal because “Plaintiffs purportedly bring suit for a single, nationwide class under [GBL] § 349 ... rather than limiting the [GBL] § 349 claim to New Yorkers.” (Sirius’s Pre-Motion Letter at 2.) Specifically, the company argues that Subscribers such as Kaufman cannot recover on a GBL § 349 claim because they fail to allege that they were deceived in New York.
At various conferences in this matter, the Court stated that it was persuaded that a nationwide class suing under GBL § 349 would have to be limited to those who engaged in a transaction that deceived them in New York. At a December 15, 2009 telephone conference with the Court, Sirius pointed out that named plaintiff Kaufman was a Nevada resident who was in Nevada when he received the allegedly deceptive invoice from Sirius and that the alleged deceptive act had no relevant connection to New York. Approximately one month later, following up on that telephone conference by letter on January 15, 2010, Kaufman stated: “Having reviewed and considered [Sirius’s initial] motion to dismiss and memorandum in support thereof, it is Plaintiffs intention to limit the class of Plaintiffs [to] those in New York State. Plaintiff believes this action will cure the material deficiencies in the complaint. Plaintiff intends to substitute the class representative ...”
GBL § 349(a) prohibits “[deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service
in this state.”
N.Y. Gen. Bus. Law § 349 (emphasis added). In
Goshen v. Mutual Life Insurance Company of New York,
[t]he reference in § 349(a) to deceptive practices in ‘the conduct of any business, trade or commerce or in the furnishing of any service’ in this state unambiguously evinces a legislative intent to address commercial misconduct occurring within New York. Indeed an examination of the text of the General Business Law § 349 leads us to conclude that ‘in this state’ can only modify ‘the conduct of any business, trade, or commerce [or] the furnishing of any service.’ The phrase ‘deceptive acts or practices’ under the statute is not the mere invention of a scheme or marketing strategy, but the actual misrepresentation or omission to a consumer. Thus, to qualify as a prohibited act under the statute, the deception of a consumer must occur in New York.
Id. (quoting N.Y. Gen. Bus. Law § 349(a)) (first emphasis and second alteration in original) (second emphasis added) (citation omitted). The Goshen Court further opined:
To apply the statute to out-of-state transactions in the ease before us would lead to an unwarranted expansive reading of the statute, contrary to legislative intent, and potentially leading to the nationwide, if not global application of [GBL] § 349. Furthermore, the interpretation out-of-state plaintiffs would have us adopt would tread on the ability of other states to regulate their own markets and enforce their own consumer protection laws.
Id.
at 325,
Plaintiffs seek to establish that “as is evident from the [Third Amended] Complaint, they plead deceptive acts or transactions that occurred in New York.” (Plaintiffs’ September 21 Letter-Brief at 2.) However, the Third Amended Complaint asserts only the threadbare conclusion that “[t]he transaction between Sirius and Plaintiffs and other members of the class of providing services in exchange for payment of service and invoice fees occurred in New York.” (TAC ¶ 41.) “Threadbare recitals of the elements of a [claim], supported by mere conclusory statements, do not suffice.... Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”
Iqbal,
The pleading also alleges a laundry-list of connections to New York—none of which supports the inference that the deception occurred in New York.
(See
TAC ¶ 25 (“In breach of [the Payment Terms] and before the form of payment had been elected by the Plaintiffs, Sirius formulated and provided invoices from New York to each of the Plaintiffs indicating a $2.00 Invoice Administration Fee associated with the annual renewal of Sirius Satellite Radio accounts.”);
id.
¶ 29 (“Plaintiffs ... and other members of the class are persons who have been damaged by Sirius from within the State of New York by reason of Sirius’[s] violation of [GBL § 349.]”);
id.
¶30 (“Sirius’[s] principal place of business is in New York City, New York, and [it] has been in the business of trade or commerce furnishing internet or satellite radio services from within the State of New York.”);
id.
¶ 32 (“Sirius’[s] corporate offices are located in New York.”);
id.
¶ 9 (“Sirius, by and through its corporate managers in New York, drafted and/or approved Sirius’[s]
Goshen
explicitly rejected the assertion of a GBL § 349 claim by non-New York plaintiffs who had not engaged in any transaction in New York, even though the allegedly improper scheme was “contrived and implemented” in New York by defendants that “have extensive ties to New York and conduct business in the state.”
III. ORDER
Accordingly, for the reasons stated above, it is hereby
ORDERED that the motion of defendant Sirius XM Radio, Inc. to dismiss, in part, the complaint in this action of plaintiffs Alvin Kaufman and Richard LaLuna is GRANTED; and it is further
ORDERED that the parties are directed to appear for a telephone status conference on Thursday, November 18, 2010 at 2:00 p.m. prepared to discuss the case status and jurisdictional issues.
SO ORDERED.
Notes
. The parties submitted the following: a letter-brief from Sirius, dated August 30, 2010; a letter-brief from Plaintiffs, dated September 3, 2010 ("Plaintiffs' September 3 Letter-Brief”); a letter-brief from Sirius, dated September 21, 2010 ("Sirius’s September 21 Letter-Brief”); and a letter-brief from Plaintiffs, dated September 21, 2010 ("Plaintiffs' September 21 Letter-Brief”) (collectively, the ‘ 'Letter-Briefs' ’).
. The facts below are taken from the Third Amended Complaint, and the documents attached to it or incorporated by reference. The Court accepts these facts as true for the purposes of ruling on a motion to dismiss. See
Spool v. World Child Int’l Adoption Agency,
. The Court also acknowledges that the Plaintiffs' breach of contract claim did not appear in their initial complaint, perhaps reflecting counsel's inability to find a legally-enforceable promise by Sirius. Plaintiffs’ omissions, when read in light of the lack of facts supporting a breach of contract claim in their pleading, are telling and serve only to solidify the Court’s conclusion that they have failed to plead facts sufficient to support a viable breach of contract claim.
. Plaintiffs make much of Sirius’s Payment Terms Modification after the initiation of this lawsuit. These updated Payment Terms unambiguously state that Sirius will charge the $2.00 Invoice Administration Fee to all Subscribers who opt to receive an invoice and do not contain what are the arguable qualifications that are found in the earlier versions of dle Payment Terms based on whether the Subscriber pays by check or money order. The Court concludes that Plaintiffs have failed to demonstrate that the Payment Terms Modification leads to the inference that Sirius breached a contractual obligation by charging the $2.00 Invoice Administration Fee before Sirius’s amended its Payment Terms.