On November 13, 2023, Justice Chan of the New York County Commercial Division issued a decision in WarnerMedia Direct, LLC v. Paramount Global, 2023 NY Slip Op. 34025(U), dismissing a GBL 349 claim because the allegations related to defrauding a contractual counterparty, not the public, explaining:
A key component of a GBL § 349 claim is that the alleged misconduct by a defendant must be consumer oriented. Private contract disputes, unique to the parties, are not covered by the statute. Even though the alleged conduct need not be repetitive or recurring, defendant’s acts or practices must have a broad impact on consumers at large. In other words, the gravamen of the complaint must be consumer injury or harm to the public interest rather than harm to another business.
Plaintiffs GBL § 349 claim fails as a matter of law. As the complaint alleges, defendants purportedly repudiated plaintiffs streaming rights by diverting new South Park content-in the form of supersized movies, films, and/or events to Paramount’s new streaming service, Paramount+. In doing so, defendants purportedly failed to deliver South Park episodes (i.e., Type A Licensed Content), or otherwise allow plaintiff to exercise an option to license other forms of South Park content (i.e., Type B Licensed Content), as was contemplated under the 2019 Agreement. Because of this alleged derogation of plaintiffs bargained-for licensing rights, defendants caused WMD to overpay for South Park episodes while defendants purportedly gained increased streaming subscribers and profits at plaintiffs expense. Viewing these allegations together, it is evident that the gravamen of the complaint centers around a private contract dispute that has caused harm to plaintiffs business and not conduct that has caused harm to consumers. And insofar as plaintiff has alleged any harm flowing from defendants’ marketing and sales, it is incidental to the private contractual harm squarely at the heart of the complaint and therefore insufficient to support this cause of action.
Plaintiffs reliance on N. State Autobahn, Inc. v Progressive Ins. Group Co. (102 AD3d 5 [2d Dept 2012]) misses the mark. The plaintiffs in N. State Autobahn, alleged that defendants engaged in a false marketing scheme to mislead plaintiffs’ customers, as well as those of other independent repair shops, into believing that they must have their vehicles repaired at repair shops that were members of a program advertised by defendants. Notably, the Autobahn plaintiffs had alleged that defendants’ conduct was part of an institutionalized program and constituted a standard practice that was routinely applied to all claimants. Based on these allegations, the Second Department concluded that plaintiffs had sufficiently alleged consumer-oriented conduct because their claim focused on actions that had a broad impact on consumers at large. Here, by contrast, the complaint is devoid of any allegations of a similar type of wide-reaching marketing campaign by defendants. Rather, as explained above, the overwhelming focus of plaintiffs claims is that it was aggrieved by defendants’ purported attempts to skirt their contractual duties under the 2019 Agreement.
(Internal quotations and citations omitted).