Cullum v. Wyndham Hotels & Resorts Corp.

Background

Sandra L. Cullum and Deirdre Saleh proceeded without lawyers and purported to bring this case for themselves and a class. They alleged that Defendants used deceptive statements, high-pressure sales tactics, and misleading information in connection with a timeshare purchase. Plaintiffs alleged that they attended a sales presentation at a Wyndham hotel property in midtown Manhattan, purchased timeshare interests and financing on December 5, 2019, had difficulty booking resort stays, and were charged $143,201.65 in monthly assessments during a period spanning February 2019 to February 2023. They sought $367,000 in compensatory damages, $15.4 billion in class relief, and a permanent injunction.

The Amended Complaint asserted numerous federal and state statutory and common-law claims, including claims under the Truth in Lending Act, the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, the Racketeer Influenced and Corrupt Organizations Act, and other laws, as well as contract and misrepresentation claims. The opinion states that Plaintiffs generally referred to “Defendants” without identifying which defendant took which action. Plaintiffs also attempted to assert claims seeking criminal prosecution. The court ruled that private plaintiffs cannot direct prosecutors to bring criminal charges and dismissed those claims for lack of subject-matter jurisdiction.

Wyndham Destinations, Inc.

Wyndham Destinations, Inc. moved to dismiss based on an arbitration provision in the Retail Installment Contract and, alternatively, for failure to state a claim. Although WDI was not itself a party to the contract, it argued that the agreement required arbitration of Plaintiffs’ claims concerning the timeshare purchase and financing. WDI did not ask the court to order arbitration, so the court treated its request only as a motion to dismiss.

Applying New York law, the court found that Plaintiffs challenged the contract generally through their allegations of fraudulent inducement, rather than specifically challenging the arbitration provision. Under the arbitration rules discussed by the court, that general challenge had to be addressed by the arbitrator. The court further found that the arbitration provision covered Plaintiffs’ statutory and common-law claims because they arose from or related to the contract, the timeshare purchase, or the sales presentations. The court therefore granted WDI’s motion to dismiss without prejudice to Plaintiffs pursuing those claims in arbitration in Florida under the contract.

Wyndham Hotels & Resorts, Inc. and Geoffrey A. Ballotti

The Wyndham Hotels & Resorts defendants moved to dismiss for lack of personal jurisdiction and, alternatively, for failure to state a claim and failure to plead fraud with particularity. The court granted the motion for lack of personal jurisdiction over both WHR and Mr. Ballotti.

The court found that Plaintiffs had not alleged facts showing that WHR was essentially at home in New York for purposes of general jurisdiction. Plaintiffs also did not provide specific facts connecting WHR to the hotel location or marketing team involved in the alleged sales activity, or showing that their claims arose from WHR’s New York contacts. The allegations against Mr. Ballotti were likewise insufficient. Plaintiffs did not identify specific conduct showing that he personally participated in the relevant New York activity or controlled WHR’s alleged conduct in a way that would support jurisdiction. The court determined that another amendment concerning WHR and Mr. Ballotti would be futile and did not grant leave to amend those claims.

Broadridge Corporate Issuer Solutions

Broadridge moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim. The court dismissed Plaintiffs’ federal claims against Broadridge because the pleadings did not allege facts showing that the federal statutes applied to Broadridge or that Broadridge took actions violating them.

For example, Plaintiffs did not allege that Broadridge was a lender or loan servicer covered by the Real Estate Settlement Procedures Act, a creditor or lessor covered by the Truth in Lending Act, or a consumer-reporting agency or information furnisher covered by the Fair Credit Reporting Act. The court found similar deficiencies in Plaintiffs’ other federal statutory and constitutional claims. After dismissing the federal claims, the court declined to exercise supplemental jurisdiction—the court’s authority to hear related state claims—over Plaintiffs’ state and local claims against Broadridge because the federal claims had been eliminated, the case was at an early stage, and Plaintiffs had not shown diversity jurisdiction.

Elisabeth Gale and Disposition

Elisabeth Gale had not been served, had not appeared, and had not responded. Instead of immediately dismissing the claims against her, the court granted Plaintiffs 30 days to file a Second Amended Complaint limited to claims against Gale. The new complaint must state the specific facts supporting each claim, the relevant events and approximate dates and locations, Plaintiffs’ injuries, facts supporting personal jurisdiction in New York, and the relief requested. If Plaintiffs do not file that complaint within 30 days, the claims against Gale will be dismissed without prejudice and the case will be closed.

Judge Laura Taylor Swain’s order granted WDI’s motion to dismiss without prejudice to arbitration in Florida, granted the WHR Defendants’ motion to dismiss for lack of personal jurisdiction, dismissed Plaintiffs’ federal claims against Broadridge under Rule 12(b)(6), and declined supplemental jurisdiction over the state and local claims against Broadridge. The Clerk was directed to terminate Broadridge, Mr. Ballotti, WDI, and WHR as defendants. The case remained pending as to Gale subject to the 30-day amendment opportunity.