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An appellate court has dismissed a class action lawsuit against Chase Manhattan Bank in a ruling that lays out strict standards for seeking damages against companies that sell personal information to telemarketers. The unanimous ruling from the New York Supreme Court’s Appellate Division, 2nd Department, said that the suit, brought by holders of credit cards and mortgages issued by Chase, had to be dismissed because the plaintiffs did not sustain actual injury. “Class members were merely offered products and services which they were free to decline,” the court wrote in Smith v. Chase Manhattan Bank USA, 9531B. “This does not qualify as actual harm.” Andrew L. Sandler of the Washington, D.C., office of Skadden, Arps, Slate, Meagher & Flom, who represented Chase, said the ruling is the first in New York to establish clear guidelines that will make it more difficult for consumers to bring class action suits in privacy cases. “It’s a very significant result for the industry,” he said, referring to the consumer financial services industry. Lester L. Levy of New York’s Wolf Popper, who brought the lawsuit on behalf of the plaintiffs, said the ruling left little room for consumers to bring suits when their personal information is sold to other companies. “If you have to show some out-of-pocket, economic loss, it’s going to be difficult,” Levy said. “I think the ruling might encourage banks and other companies not to be that careful with your private information.” Levy said he had also argued that consumers can recover statutory damages of $50 per person under General Business Law � 349, an issue the court did not address. The plaintiffs alleged that Chase had violated privacy policies enumerated in its “Customer Information Principles” by selling names, addresses, telephone numbers, account and loan numbers, and other financial data without consumers’ consent. Chase’s policy said the company would not sell information to third parties, except to conduct its business or to make special offers available to customers. The suit, filed in Brooklyn Supreme Court, alleged five causes of action: a violation of General Business Law � 349(a) for engaging in a deceptive practice; breach of contract; unjust enrichment; a violation of Civil Rights Law � 50; and a violation of CRL � 51. Supreme Court Justice Nicholas A. Clemente dismissed the suit, and this week the 2nd Department affirmed. NO UNJUST ENRICHMENT Assuming that the allegations were true, the appellate court ruled, the plaintiffs had alleged “actionable deception.” But the court said they could not prove actual injury under GBL � 349, adding that junk mail and unwanted telephone solicitations do not constitute actual harm. In dismissing the unjust enrichment claims, the court said that some of the plaintiffs had received a benefit by purchasing products and services sold by the marketers. “There being no allegation that the benefits received were less than what these purchasers bargained for, it cannot be said that the commissions paid by the third-party vendors to Chase belong to the plaintiffs as a matter of equity.” The third-party vendors agreed to pay Chase up to 24 percent of each sale to a Chase customer. The court also dismissed the breach of contract claim, saying damages for “emotional distress are insufficient to state a cause of action for breach of contract.” As far as the civil rights claims, the court said, CRL �� 50 and 51 were never intended to address these types of claims. Concurring on the panel were Justices Nancy E. Smith, Sondra Miller, Daniel F. Luciano and Robert W. Schmidt. Samuel P. Sporn and Jay P. Saltzman of New York’s Schoengold & Sporn represented the plaintiffs along with Levy.

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