Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (1995)

To state a claim under New York General Business Law § 349 for deceptive acts or practices, a plaintiff must demonstrate that the defendant’s conduct was consumer-oriented, deceptive or misleading in a material way, and that the plaintiff was injured as a result.

Summary

Oswego Laborers’ Local 214 Pension Fund sued Marine Midland Bank alleging deceptive practices under General Business Law § 349. The Funds claimed the bank failed to inform them that their commercial savings accounts, though held by not-for-profit entities, were treated as for-profit accounts subject to interest limitations under federal Regulation Q. The New York Court of Appeals held that while the bank’s conduct was consumer-oriented, factual disputes remained regarding whether the bank’s actions were materially deceptive and whether the Funds could reasonably have obtained the relevant information. The Court reversed the grant of summary judgment for the bank.

Facts

The Pension Fund and Welfare Fund, not-for-profit associations, had a long-standing relationship with Marine Midland Bank. In 1976 and 1977, Robert Bradshaw, administrator for both Funds, opened savings accounts at Marine Midland Bank through Bruce Whitney, a bank vice-president. Whitney provided blue signature cards, typically used for for-profit commercial accounts, rather than green cards used for nonprofit entities. Federal Regulation Q limited the amount of interest paid on commercial accounts exceeding $100,000 (later $150,000), but not-for-profit entities were exempt. The Funds were allegedly not informed of this distinction and the limitation on interest. In 1984, the bank informed the Funds that it had not been paying interest on principal exceeding the regulatory cap, resulting in lost interest.

Procedural History

The Funds sued Marine Midland Bank, alleging a violation of General Business Law § 349. The Supreme Court granted summary judgment to the bank, finding that the conduct did not rise to the level of a deceptive business practice. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.

Issue(s)

Whether the bank’s conduct constituted a “deceptive act or practice” within the meaning of General Business Law § 349.

Holding

Yes, because the plaintiff’s allegations meet the threshold of consumer-oriented conduct. However, the order of the lower court is modified to deny the defendant’s motion for summary judgment, because there are triable issues of fact as to whether a reasonable consumer in the plaintiffs’ circumstances might have been misled by the Bank’s conduct.

Court’s Reasoning

The Court of Appeals analyzed General Business Law § 349, noting its purpose is to protect consumers from deceptive acts and practices. The Court stated that, “as a threshold matter, plaintiffs claiming the benefit of section 349…must charge conduct of the defendant that is consumer-oriented.” Consumer-oriented conduct requires a broader impact on consumers at large, distinguishing it from private contract disputes unique to the parties. The Court clarified that “Plaintiff, thus, need not show that the defendant committed the complained-of acts repeatedly…but instead must demonstrate that the acts or practices have a broader impact on consumers at large.”

A prima facie case requires showing that the defendant engaged in deceptive or misleading acts in a material way and that the plaintiff was injured. While intent to defraud is not required, a plaintiff seeking damages must show that the deceptive act caused actual harm. The Court adopted an objective definition of deceptive acts, limiting them to those “likely to mislead a reasonable consumer acting reasonably under the circumstances.” This objective test is modeled after the Federal Trade Commission’s antifraud provision.

In cases involving omissions, a business is not required to ascertain individual consumer needs, but the scenario changes “where the business alone possesses material information that is relevant to the consumer and fails to provide this information.” Here, the bank’s actions were deemed consumer-oriented because they involved standard banking documents presented to customers. However, the Court found the record inconclusive as to whether a reasonable consumer in the Funds’ circumstances might have been misled. There were disputes over whether Bradshaw received bank rules or other documentation and whether those rules adequately conveyed the different treatment of for-profit and not-for-profit entities. The bank’s liability depended on whether the Funds possessed or could reasonably have obtained the relevant information.