On October 8, the New York City Council introduced the POWER (“People and Organizations Winning Economic Relief”) Act.[1] The bill would drastically expand consumer and worker rights and give “every person in the city of New York” a private right of action against companies engaging in “unfair, deceptive, abusive, or unlawful acts or practices in business, trade, or commerce.”[2]
Most significantly, the proposed legislation would allow private litigants to bring suits alleging “unfair” trade practices.[3] Currently, New York’s consumer protection statute, General Business Law (“GBL”) § 349, allows private suits for deceptive practices, but only the New York Attorney General can sue over unfair practices.[4] The POWER Act is also not limited to consumer-oriented conduct, so anyone affected by such acts or practices could sue—not just consumers. This could include, for example, a business suing a competitor, a tenant suing a landlord, or an employee suing an employer. The POWER Act would also allow nonprofits to sue on behalf of their members or the general public.[5] The bill has no exception for sophisticated transactions, meaning private litigants could challenge sophisticated deals even if they are otherwise regulated or approved by a government entity.
Of particular concern to businesses, the POWER Act carries the risk of hefty damages. The Act would allow recovery of actual damages plus uncapped statutory damages of $2,500 per violation.[6] Depending on the conduct at issue, these damages could be very large and potentially fatal to small businesses—especially in the event of a class action. Courts would also be required to award attorneys’ fees to prevailing plaintiffs,[7] making it easier for individuals to bring POWER Act claims because successful plaintiffs would not bear their own legal costs.
The Committee on Consumer and Worker Protection is expected to hold a hearing and vote on the bill before it is put before the full City Council for a vote. If adopted, the law would take effect immediately.[8]
Companies that do business in New York City should be mindful of the POWER Act and ensure their practices comply with the law and are not unfair, deceptive, or abusive.
Wiggin and Dana routinely advises clients in connection with unfair and deceptive acts and practices matters, including matters under New York State’s GBL § 349 and other state and local laws. Associate Jessica Puterman serves on the New York City Bar Association’s Consumer Affairs Committee, which examines consumer protection issues affecting New Yorkers.
[1] Int. No. 1105, Amending Title 22 of the Administrative Code of the City of New York, adding Chapter 15, § 22-1501 et seq.
[2] Id.
[3] § 22-1502. Notably, the factors that constitute an “unfair act or practice” mirror the FTC’s current unfairness methodology. Compare § 22-1501 with Section 5(n) of the FTC Act, 15 U.S.C. § 45(n).
[4] GBL § 349(b)(1), (h).
[5] § 22-1503(b).
[6] The POWER Act does not define the term “violation,” but this term could be defined narrowly to quickly drive up the dollar amount of statutory damages. For example, regarding the publication of false or deceptive advertisements, courts in other jurisdictions have assessed civil penalties on either a per publication or per consumer basis. See, e.g., May Dept. Stores Co. v. State ex rel. Woodard, 863 P.2d 967, 975–76 (Colo. 1993); People v. Bestline Prods., Inc. 61 Cal. App. 3d 879 (2d Dist. 1976).In State v. Planet ZaZa Corporation, a Connecticut court assessed civil penalties pursuant to the Connecticut Unfair Trade Practices Act (“CUTPA”), based on each day the defendant illegally sold cannabis. Because the defendant had been engaged in that conduct for almost two years, the per-day calculation resulted in a civil penalty of almost $5 million – the largest civil penalty awarded under CUTPA.
[7] § 22-1503(a).
[8] § 22-1504, § 3.
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