Second Circuit Affirms Dismissal in Pitney Bowes Case: NY Resident Cannot Maintain CUTPA Class Action

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The Second Circuit Court of Appeals on October 15, affirmed the dismissal of a putative nationwide consumer class action brought against Pitney Bowes, Inc. and two of its subsidiaries challenging the equipment return fee in Pitney Bowes leases. In Kings Choice Neckwear, Inc. v. Pitney Bowes, et al, 09 Civ. 3980, brought in the United States District Court for the Southern District of New York, the plaintiff alleged that the equipment return fee charged by Pitney Bowes at the expiration of equipment leases did not fairly represent Pitney Bowes’ cost of reclaiming the equipment and, accordingly, was an unfair trade practice by Connecticut-based Pitney Bowes under the Connecticut Unfair Trade Practices Act (“CUTPA”). Plaintiff also brought claims for breach of contract, breach of the covenant of good faith and fair dealing and for unjust enrichment.

In December 2009, the District Court (Cote, J.) granted Pitney Bowes’ motion dismissing plaintiff’s Second Amended Complaint. The Court found that while plaintiff pled in conclusory fashion that Pitney Bowes’ conduct was ​“unconscionable, disproportionate and deceptive,” plaintiff did not plead any facts demonstrating the type of ​“aggravating circumstances” to support a CUTPA claim.

Moreover, deciding an issue where there is little developed law, the Court held that plaintiff as a New York resident could not maintain a CUTPA class action since the CUTPA statute only permits Connecticut residents to do so. The plaintiff unsuccessfully argued on appeal that this ruling was contrary to the Supreme Court’s recent Decision in Shady Grove Orthopedic Assocs. Allstate Insur., 130 S.Ct. 1431 (2010) which prohibits a state procedural rule from conflicting with a litigant’s right to maintain a class action under FRCP Rule 23. Pitney Bowes argued on appeal that the CUTPA class action residence limitation was a substantive rule of Connecticut law outside of the scope of the Shady Grove ruling. The Court dismissed plaintiff’s remaining common law claims.

Pitney Bowes was represented by partner Jonathan K. Cooperman and associate Jaclyn M. Metzinger of Kelley Drye & Warren LLP.