Defendants move to dismiss the complaint or, alternatively, to dismiss the first cause of action which seeks damages for violation of General Business Law §349 to the extent it is [*2]interposed ad part of a class action.

Plaintiff John Lawlor ("Lawlor") brings this action on behalf of himself and others similarly situated to recover taxes or fees paid to Defendant Cablevision Systems Corporation ("Cablevision") for internet service. Lawlor alleges that during the period in question, federal law prohibited state and local governments from imposing taxes for providing internet access. During the period in question, New York State Tax Law exempted internet access from sales and use taxes. Further, New York did not impose fees for internet access.

Lawlor became a subscriber to Cablevision's Optimum Online internet services for business in 2002. From the time that he first subscribed to this internet service through April 7, 2005, his monthly bill contained a charge for "Taxes and Fees." Lawlor alleges Cablevision had no legal right to charge these taxes or fees and seeks to recover for himself and the other members of the class for the taxes and fees wrongfully collected.

Cablevision claims that the business internet service was provided by Cablevision Lightpath, Inc. ("Lightpath"). Lightpath was a local telephone company subject to the regulation of the New York State Public Service Commission. As a local telephone company, it was obligated to collect and pay franchise taxes and surcharges imposed by Tax Law §§184, 184-a and gross receipts taxes and surcharges imposed by Tax Law §§186-a, 186-c. These were the taxes that were assessed on Plaintiff's monthly bill. Lightpath collected the taxes and remitted them to the State of New York.

Lightpath is a wholly owned subsidiary of Defendant CSC Holdings, Inc. ("CSC"). From the inception of Optimum Online internet service for business through 2005, Cablevision's high speed internet service was provided to business customers by Lightpath. This changed in 2005 when Optimum Online internet service for business customers was transferred from Lightpath to CSC Optimum Holdings, LLC ("CSC Optimum"), which is also wholly owned by CSC.

These fees and taxes were removed from customers' bills when CSC Optimum began to provide Optimum Online service for business. CSC Optimum is not a telecommunications provider subject to Public Service Commission regulation and, thus, is not subject to the taxes imposed by Tax Law §§184, 184-a, 186-a and 186-c.

Optimum Online services for residential customers was not provided by Lightpath. Residential customers were never charged or billed for these taxes or fees.

Lawlor's internet service agreement states, "CSC Holdings, Inc. ( Cablevision') is pleased to provide Optimum Online high speed internet access for Commercial Service." The agreement never mentions the service is being provided by Lightpath.

The monthly invoice sent to subscribers to Optimum Online for business customers which contained the charges for taxes and fees was issued by Cablevision, 930 Soundview Avenue, Bronx, NY 10473-3796. The invoice does not mention Lightpath. The address to which payment was to be mailed was "Cablevision of Long Island, P. O. Box 9202, Uniondale, NY 11555-9202."

The only mention of Lightpath in any of the documents before the Court is the work order for the installation of the cable modem required for the service. The work order header reads "Lightpath a service of Cablevision brings you Business Optimum Online." However, the "Terms and Conditions" provisions of the work order makes several references to "Cablevision's Cable Modem Internet Service" [*3]

The complaint alleges three causes of action. The first cause of action alleges a violation of General Business Law §349. The second cause of action alleges a claim for fraud. The third cause of action alleges a claim for unjust enrichment.

When deciding a motion to dismiss for failure to state a cause of action, the court must determine whether the pleader has a cognizable cause of action and not whether the action has been properly plead. Guggenheimer v. Ginzburg, 43 NY2d 268 (1977); and Rovello v. Orofino Realty Co., 40 NY2d 633 (1976); and Well v. Yeshiva Rambam, 300 AD2d 580 (2nd Dept. 2002). The court must accept as true all of the facts alleged in the complaint. 511 West 232rd Street Owners Corp. v. Jennifer Realty Co., 98 NY2d 144 (2002): and Sokoloff v. Harriman Estates Development Corp., 96 NY2d 409 (2001). The complaint must be liberally construed, and the plaintiff must be given the benefit of every favorable inference which can be drawn from the complaint. Leon v. Martinez, 84 NY2d 83 (1994); and Paterno v. CYC, LLC, 8 AD3d 544 (2nd 2004).

When a defendant moves to dismiss the complaint, the motion must be denied if any of the causes of action are legally sufficient. Anand v. Soni, 215 AD2d 420 (2nd Dept. 1995); and Maritarano Construction Corp. v. Briar Contracting Corp., 104 AD2d 1028 (2nd Dept. 1984). Here, Defendants' motion to dismiss the complaint does not differentiate among the three causes of action alleged. Thus, upon finding a cognizable cause of action from the for corners of the complaint, the motion must be dismissed. See, One Acre, Inc. v. Town of Hempstead, 215 AD2d 359 (2nd Dept. 1995).

The causes of action as plead are all premised upon an allegation that Cablevision was unjustly enriched by collecting taxes it was not required or permitted to collect. The inference which must be drawn from this allegation is that although Cablevision collected the taxes it did not remit them to the State of New York. If Cablevision collected taxes which it was required to collect did not remit to the State of New York, then the State of New York has the right to obtain payment of the unpaid taxes.

Tax Law §184(4)(c) requires a telephone or telegraph company to calculate the gross revenues derived from in-state service and the portion of its revenue derived from interstate or international service attributable to New York. These revenues are taxed in accordance with Tax Law §184(1).

Tax Law §184-a imposes a surcharge upon revenue derived within the Metropolitan Commuter Transportation District as defined by Public Authorities Law §1262.

Tax Law §186-a imposes a tax on the gross income of providers of telecommunications which are subject to the supervision of the Public Service Commission. For the purposes of this statute, a telecommunications provider is one who sells or furnishes telecommunications services. See, Tax Law §186-e(e).

Tax Law §186-c imposes an excise tax upon telecommunication service providers operating within the Metropolitan Commuter Transportation District.

These statutes do not exempt from the taxes imposed by these statutes income derived by telecommunication service providers income derived from providing internet services.

Tax Law § 1115 exempts internet services from sales and use taxes. [*4]Additionally, Tax Law §12(b) exempts internet service from the taxes imposed by Tax Law §§184, 186 or Article 9-A of the Tax Law.

If Lightpath is a provider of telecommunications services, it was obligated to collect these taxes.

The issue in this case, which is not addressed by either party, is whether Cablevision was obligated to advise its business customers that their Optimum Online service would was being provided by Lightpath and would be subject to these taxes.

A.Dismissal

General Business Law §349 prohibits deceptive business practices. It makes actionable conduct which does not rise to the level of common law fraud. Gaidon v. Guardian Life Ins. Co. Of America, 94 NY2d 330 (1999). The statute provides a remedy to those who have been subject to deceptive or misleading acts or business practices that are consumer oriented. Oswego Laborers Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 NY2d 20 (1995). A deceptive act or practice for the purposes of the statute is one which is likely to mislead a reasonably prudent consumer. Karlin v. IVF, America, Inc., 93 NY2d 282 (1999).

The elements of a claim under General Business Law § 349 are "(1) a deceptive consumer-oriented act or practice which is misleading in a material respect, and (2) injury resulting from such act. (Citations omitted)" Andre Strishak & Associates, P.C. v. Hewlett Packard Co., 300 AD2d 608, 609 (2nd Dept. 2002). See also, Solomon v. Bell Atlantic Corp., 9 AD3d 49 (1st Dept. 2004).

To establish a claim under General Business Law §349, the plaintiff must establish (1) the act or practice was consumer oriented; (2) the act or practice was misleading; and (3) the plaintiff suffered injury as a result of the deceptive act. Stutman v. Chemical Bank, 95 NY2d 24 (2000).

An act or practice is consumer oriented if it is aimed at the public generally. Breen Belgium BVBA v. International Foreign Currency, Inc., -A.D.3d- , 2007 WL534577 (2nd Dept. 2007); and Lynch v. Park Avenue Securities, 309 AD2d 790 (2nd Dept. 2003). In this case, the practice or act affected all who subscribed to Cablevision's Optimum Online business service.

A representation or omission is deceptive if it is "...likely to mislead a reasonable consumer acting reasonable under the circumstances." Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, supra at 184. See, Andre Strishak & Assocs, P.C. v. Hewlett Packard Co., supra.The Agreement for Optimum Online for Commercial Services could be considered misleading. The agreement indicates the service was being provided by "CSC Holdings, Inc. ( Cablevision')." The agreement does not mention Lightpath.

Paragraph 10 of the Agreement indicates that the subscriber is obligated to pay all taxes levied or imposed upon Optimum Online Commercial Service. However, a reasonably prudent consumer could not have discovered from reading the service agreement that the services were being furnished by Lightpath or that Lightpath was a telecommunications provider subject to the aforementioned taxes. Nor is it clear from the facts presented that there were any taxes levied or imposed upon Optimum Online Commercial Service, itself.

Plaintiff has also alleged damages. If the services had not been provided by a telecommunications provider, these services would not have been subject to the aforementioned taxes. Plaintiff seeks to recover the taxes he and, the members of the putative class, paid because the services were provided by Lightpath, These payments are actual damages sustained as a result of the allegedly deceptive acts. [*5]

Since the first cause of action alleges a cognizable claim, the motion must be denied. In finding that the first cause of action should not be dismissed, it need not reach the second and third causes of action. See, Anand v. Soni, supra; and Maritarano Construction Corp. v. Briar Contracting Corp., supra.

B.Class Action

The second branch of Defendants' motion seeks to dismiss the cause of action alleging violation of General Business Law §349 because it does not specifically authorize the bringing of a class action to recover the statutory minimum or treble damages penalty. See, CPLR 901(b). See. Carter v. Frito-Lay, Inc., 74 AD2d 550 (1st Dept. 1980), aff'd., 52 NY2d 994 (1981).

Plaintiff may maintain a class action under General Business Law §349 if plaintiff seeks to recover actual damages. See, Cox v. Microsoft Corp., 8 AD3d 39 (1st Dept. 2004); and Ridge Meadows Homeowners' Assoc., Inc. v. Tara Development Co., 242 AD2d 947 (4th Dept. 1997). Lawlor is not seeking to recover the statutory minimum or treble damages. Rather, he is seeking to recover the taxes he asserts that he and the other class members were required to pay as a result of their internet service being provided by a telecommunications provider. These are actual damages which can appropriately be pursued by a class. See, Super Glue Corp. v. Avis Rent a Car System, Inc, 132 AD2d 604 (2nd Dept. 1987).

Accordingly, it is,

ORDERED, that Defendants' motion to dismiss the complaint is denied; and it is further,

ORDERED, that Defendant shall serve an answer within twenty days of the date of service of this order with notice of entry; and it is further,

ORDERED, that counsel for the parties are directed to appear for a preliminary conference on May 16, 2007 at 9:30 a.m.

This constitutes the decision and Order of the Court.

Dated: Mineola, NY_____________________________

March 22, 2007Hon. LEONARD B. AUSTIN, J.S.C.