Non-Consumer Can Bring GBL 349 Claim if Public at Large Has Been Harmed

On January 19, 2021, the First Department issued a decision in KS Trade LLC v. International Gemological Inst., Inc., 2021 NY Slip Op. 00259, holding that a non-consumer can bring GBL 349 claims if the public at large has been harmed, explaining:

The court properly upheld the claim under GBL 349 against defendants International Gemological Institute, Inc. (IGI NY), Jerry Ehrenwald (Ehrenwald), and David Weinstein (Weinstein) (collectively IGI Defendants). To state a claim under GBL 349, a plaintiff must allege [1] that the challenged act or practice was consumer-oriented; [2] that it was misleading in a material way; and [3] that the plaintiff suffered injury as a result of the deceptive act. Plaintiff has alleged that IGI Defendants engaged in deceptive consumer-oriented conduct, as the alleged fraud scheme, which involved the issuance of false appraisal certificates for over-graded diamonds, were ultimately directed at misleading consumers into buying diamonds at artificially inflated prices. Indeed, the gravamen of the amended complaint is harm to the public interest. Plaintiff has standing to bring a claim despite not being a consumer, as courts have permitted business competitors to bring claims under GBL 349 so long as there has been harm done to the public at large. Further, plaintiff has pleaded facts that the individual defendants were aware of, and participated in, the deceptive conduct.

(Internal quotations and citations omitted).

Commercial litigation frequently involves fraud-based claims. This decision relates a statute-based fraud claim brought by under General Business Law Section 349. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a fraud-based claim, including one brought pursuant to a state or federal statute.