Wheeler v. The Topps Company, Inc.

Background

Belinda Wheeler brought a consumer action against The Topps Company, Inc. on behalf of herself and a proposed class of purchasers. Topps sells trading cards connected to contests offering entrants a chance to win randomly selected cards, including rare and valuable cards. The products and contest materials stated that no purchase was necessary to enter.

Wheeler alleged that Topps’s packaging and marketing nevertheless made purchasing functionally necessary for some contests, and that at least one contest had an entry deadline before the product containing the entry instructions was released. She also alleged that Topps did not disclose information about completed contests, winners, or prize distributions. Wheeler said she bought Topps products in the Washington, D.C., metropolitan area, from Topps’s website, and elsewhere on the East Coast, paying a premium for the chance to win rare prizes.

The First Amended Complaint asserted claims under New York General Business Law §§ 349 and 350, claims for breach of express and implied warranties, a claim under the Magnuson-Moss Warranty Act, common-law fraud, and unjust enrichment. Wheeler withdrew her negligent-misrepresentation claim in her opposition to the motion.

New York consumer-protection claims

The court dismissed the claims under New York General Business Law §§ 349 and 350. Those statutes prohibit deceptive business practices and false advertising, respectively, but require the deceptive transaction or conduct to have the necessary connection to New York.

The court held that Wheeler did not allege that connection. The fact that Topps designed its contest rules in New York was not enough because the alleged deception had to involve the transaction or communication with the consumer, not merely the creation of the marketing plan. The court also rejected reliance solely on Topps’s website being controlled from New York. Based on the allegations, the challenged purchases occurred where Wheeler lived and made at least some purchases—Washington, D.C.—rather than in New York.

Warranty claims

The court dismissed the express-warranty, implied-warranty, and Magnuson-Moss Warranty Act claims. Under the applicable New York law, a buyer generally must give the seller timely notice of the alleged breach before seeking a remedy. The complaint did not allege that Wheeler actually gave Topps notice before filing suit. Statements that she “provided or will provide notice,” that she was providing notice through the complaint, and that Topps knew about complaints from other consumers were insufficient.

The court concluded that filing the lawsuit itself did not satisfy the required pre-suit notice requirement in these circumstances. It also rejected an alleged retail-sales exception because the cases recognizing that exception involved physical or personal injury, which Wheeler did not allege. Because the state warranty claims were deficient, the federal Magnuson-Moss claim also failed.

Fraud claim

The court dismissed the common-law fraud claim under the heightened pleading standard in Federal Rule of Civil Procedure 9(b). Wheeler alleged that Topps failed to disclose alternative entry methods and placed contests on products after the entry deadlines had passed. But the complaint’s allegations that Topps knew of the problems and intended to defraud were conclusory. The court held that Wheeler did not provide facts creating a strong inference that Topps knew its representations were false or intended to deceive purchasers.

Unjust-enrichment claim

The court dismissed the unjust-enrichment claim as duplicative. Under New York law, unjust enrichment is an equitable claim available in unusual situations when ordinary contract and tort remedies do not apply. Wheeler based this claim on the same alleged conduct underlying her warranty and fraud claims, so the court found no separate basis for allowing it to proceed.

Disposition

The court found that amendment would be futile. Before Wheeler filed the First Amended Complaint, Topps had identified the same alleged defects in a pre-motion letter. Wheeler amended her pleading but did not correct those defects. Judge Lorna G. Schofield therefore granted Topps’s motion to dismiss with prejudice and directed the Clerk of Court to close the case. The opinion does not separately state a disposition for the withdrawn negligent-misrepresentation claim beyond noting that Wheeler withdrew it.