The Business Council of New York State opposes the above referenced legislation that would greatly expand the consumer protection deceptive acts and practices section of the general business law. Should this legislation be adopted we fear that there would be a spike in the number of meritless lawsuits in New York. We strongly urge legislators to oppose this proposal.
This legislation would add the term “unconscionable” to §349 of the General Business Law, thereby allowing for a vastly broader interpretation by the courts of excessive or unreasonable actions. The court would be empowered to consider circumstances of which the defendant knew or reasonably should have known that the plaintiff was physically infirm, illiterate, or unable to understand the language of the agreement. In addition, the court would be empowered to determine that at the time the consumer transaction was entered into, the price grossly exceeded the price at which similar property or services were readily obtainable.
This legislation would advance a flood of meritless lawsuits by specifically allowing class actions under a new civil action for unconscionable or deceptive practices. The consequences of this provision would either force defendants to settle with the plaintiffs to avoid a long, costly and publicly damaging lawsuit or dramatically increase the caseload of our overburdened court system. The prevailing plaintiff would also be awarded attorney's fees and court costs.
Defendants would be forced to pay the following fee increases: minimum damages from $50 to $500; treble damages from $1,000 to $10,000; and maximum civil penalties from $10,000 to $20,000 and $5,000 to $10,000. The court may also award punitive damages up to three times the actual damages and provide any equitable relief the court considers necessary or proper.
While well intentioned, the irony of this legislation is that consumers would ultimately suffer by paying higher prices for goods and services because of frivolous lawsuits, excessive punitive damages, increased fees and higher court costs.
For the reasons set forth in this memorandum, The Business Council of New York State is strongly urging against approval of this legislation.