Preview
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
_______________________________________________
PEOPLE OF THE STATE OF NEW YORK, by
LETITIA JAMES, Attorney General of the
State of New York, Index No.
Petitioner, IAS Part
Assigned to Justice
-against-
5 CORNERS PET, INC.; RISK ENTERPRISES, INC.
d/b/a SHAKE-A-PAW, and GERARD O’SULLIVAN
and MARC JACOBS, both individually and as
owners of Shake-A-Paw,
Respondents.
_________________________________________________
MEMORANDUM OF LAW IN SUPPORT OF
THE VERIFIED PETITION AND ORDER TO SHOW CAUSE
WITH A TEMPORARY RESTRAINING ORDER
LETITIA JAMES
Attorney General of the State of New York
Attorney for Petitioner
200 Old Country Road, Suite 240
Mineola, NY 11501
Of Counsel:
VALERIE SINGLETON
Assistant Attorney General-in-Charge
CHRISTINA H. BEDELL
Assistant Attorney General
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TABLE OF CONTENTS
TABLE OF AUTHORITIES............................................................................................ iii-
PRELIMINARY STATEMENT ......................................................................................... 1
STATEMENT OF FACTS…………………………………………………………………….2
A. Background……………………………………………………………………………...2
STATUTORY FRAMEWORK …………………………………………………………...…4
A. Summary Proceedings ………………………………………………………………..4
B. Attorney General’s Statutory Authority ………………….………………………..7
C. Executive Law § 63(12) ……………………………………………………………….8
i. Fraud. ………………………………………………………………………...8
ii. Illegality. ………………………………………………………………………..9
D. General Business Law § 349: Deceptive Acts and Practices …………………..10
ARGUMENT ...................................................................................................................... 11
Point I. Respondents Have Engaged In Repeated And
Persistent Fraudulent Conduct In Violation Of
Executive Law § 63(12). 4 …………………………………………………11
Point II. Respondents Have Engaged In Repeated And
Persistent Illegality Within The Meaning Of
Executive Law § 63(12)……………………………………………………13
A. Shake A Paw Has Repeatedly And Persistently
Violated General Business Law Article 35-D ………………………13
i. Shake A Paw Has Repeatedly Violated
GBL § 753, the Pet Lemon Law ………………………………………14
ii. Shake A Paw’s Contract Fraudulently
Misstates the Pet Lemon Law, in Violation of GBL §754.………….15
Point III. Respondents Have Engaged In Repeated And
Persistent Deception In Violation Of GBL § 349……………………..16
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i. Respondents Sold Sick Puppies to Consumers………………………..18
ii. Respondents Failed to Provide Refunds Pursuant
to the New York State Pet Lemon Law ………………………………19
iii. Respondents Fraudulently and Deceptively Misrepresented
the Source of its Puppies ……………………………………………….19
Point IV. Shake A Paw Violated New York GBL § 350 By
Falsely Advertising Its Products ……………………………………….20
Point V. Respondents Marc Jacobs And Gerard O’Sullivan Are
Personally Liable For The Repeated And Persistent
Illegal And Fraudulent Acts Alleged In The Petition ………………..23
Point VI. The Court Should Grant A Temporary Restraining Order …............24
Point VII. The Court Should Grant Permanent Injunctive Relief,
Restitution, Civil Penalties, And Costs Against Respondents……….27
A. The Court Should Grant Permanent Injunctive Relief Against
Respondents' Illegal and Fraudulent Conduct ……………………………..27
B. The Court Should Direct Respondents to Pay Restitution
to Aggrieved Consumers ……………………………………………………….29
C. The Court Should Order Respondents to Pay Penalties
for Their Repeated Violations of GBL Articles 35-D and
22-A and AML Article 26-A …………………………………………………….31
D. The Court Should Order Respondents to Pay Costs …………………..32
CONCLUSION ……………………………………………………………………………..33
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TABLE OF AUTHORITIES
Page(s)
CASES
Am. Home Prod. Corp. v. FTC,
695 F.2d 681 (3d Cir. 1982) ........................................................................................ 29
Aronberg v. FTC,
132 F.2d 165 (7th Cir. 1942)....................................................................................... 28
Benrus Watch Co. v. F.T.C.,
352 F.2d 313 [8th Cir. 1965]....................................................................................... 31
Ciba-Geigy Corp. v. Thompson Med. Co.,
672 F. Supp. 679 (S.D.N.Y. 1985) .............................................................................. 29
Consumer Sales Corp. v. F.T.C.,
198 F.2d 404 [2d Cir. 1952] ........................................................................................ 31
Council of City of N.Y. v. Bloomberg,
6 N.Y.3d 380 (2006) ..................................................................................................... 14
F.T.C. v. Amy Travel Service, Inc.,
875 F.2d 564 [7th Cir. 1989]....................................................................................... 31
FTC v. Crescent Publ’g. Grp. Inc.,
129 F. Supp. 2d 311 (S.D.N.Y. 2001) ......................................................................... 17
Gaidon v. Guardian Life Ins. Co.,
94 N.Y.2d 330 (1998) ............................................................................................. 18, 24
Goshen v. Mut. Life Ins. Co. of New York,
98 N.Y.2d 314 (2002) ................................................................................................... 25
Guggenheimer v. Ginzburg,
43 N.Y.2d 268 (1977) .............................................................................................. 28-29
In re Ngan Gung Restaurant,
183 B.R. 689 (Bankr. S.D.N.Y. 1995) ........................................................................ 36
In re People v. Applied Card Sys., Inc.,
27 A.D.3d 104 (3d Dep’t. 2005) aff’d. on other grounds, 11 N.Y.3d
105 (2008) ............................................................................................................. passim
iii
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In re People v. Therapeutic Hypnosis Inc.,
83 Misc. 2d 1068 (Sup. Ct. Alb. Cnty. 1975), rev’d on other grounds,
52 A.D.2d 1017 (3d Dep’t. 1976) ................................................................................ 40
In re State v. Bevis Indus.,
63 Misc. 2d 1088 (Sup. Ct. N.Y. Cnty. 1970) ............................................................ 37
In re Thompson Med. Co. v. FTC,
791 F.2d 189 (D.C. Cir. 1986), cert. denied, 479 U.S. 1086 (1987) ........................ 28
Kraft, Inc. v. FTC,
970 F.2d 311 (7th Cir. 1992), cert. denied, 507 U.S. 909 (1993) ............................ 28
Lefkowitz v. Bull Inv. Group,
46 A.D.2d 25 (3d Dep’t. 1974)............................................................................... 15, 19
Lefkowitz v. E.F.G. Baby Products,
40 A.D.2d 364 (3d Dep’t. 1973) ............................................................................ 16, 29
Lefkowitz v. McMillen,
57 A.D.2d 979 (3d Dept 1977) ............................................................................... 12-13
Matter of Daimler Chrysler Corp. v. Spitzer,
7 N.Y.3d 653 (2006) ..................................................................................................... 15
Matter of People v Trump Entrepreneur Initiative ,
137 A.D.3d 409 (1st Dep’t. 2016) ............................................................................... 15
Meyers Bros. Parking Sys. v. Sherman,
87 A.D.2d 562, aff’d, 57 N.Y.2d 653 (1982) ............................................................... 39
Mitchell v. Robert DeMario Jewelry, Inc.,
361 U.S. 288 (1960) ..................................................................................................... 33
New York v. Feldman,
210 F. Supp. 2d 294 (S.D.N.Y. 2002) ............................................................. 18, 24, 28
Oswego Laborers’ Local 214 v. Marine Midland Bank, NA,
85 N.Y.2d 20 (1995) .........................................................................................18, 24, 28
People ex rel. Cuomo v. Greenberg,
95 A.D.3d 474 (1st Dep’t 2012) .................................................................................. 14
People v. 21st Century Leisure Spa Int’l., Ltd.,
153 Misc. 2d 938 (Sup. Ct. N.Y. Cnty. 1991) ............................................................ 19
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People v. Am. Modification Agency. Inc.,
2010 N.Y. Misc. LEXIS 2433 (Sup. Ct. N.Y. Cnty. 2010) ....................................... 16
People v. American Motor Club, Inc.,
179 A.D.2d 277 (1st Dep’t. 1992) ............................................................................... 31
People v. Apple Health & Sports Clubs, Ltd.,
206 A.D.2d 266 (1st Dep’t. 1994) .................................................................... 16, 31-32
People v. B.C. Assocs., Inc.,
22 Misc. 2d 43 (Sup. Ct. N.Y. Cnty. 1959) ................................................................ 12
People v. Concert Connection Ltd.,
211 A.D.2d 310 (2d Dep’t. 1995) ................................................................................ 31
People v. Court Reporting Inst.,
245 A.D.2d 564 (2d Dep’t. 1997) ................................................................................ 31
People v. Credit Solutions of Am.,
2012 N.Y. Misc. LEXIS 2090 (Sup. Ct. N.Y. Cnty. 2012) ................................. 17, 38
People v. Empire Prop. Solutions, LLC,
2012 N.Y. Misc. LEXIS 1845 (Sup. Ct. Nassau Cnty. Apr. 10, 2012) ................... 14
People v. Empyre Inground Pools, Inc.,
227 A.D.2d 731 (3d Dep’t. 1996) .............................................................. 16-17, 31, 37
People v. Frink Am., Inc.,
2 A.D.3d 1379 (4th Dep’t. 2003) ................................................................................. 31
People v. Gagnon Bus Co. Inc.,
30 Misc.3d 1225(A) (Sup. Ct. Qns. Cnty. 2011).................................................. 16, 37
People v. Helena VIP Personal Introductions Servs.,
199 A.D.2d 186 (1st Dept 1993) ................................................................................. 13
People v. Imported Quality Guard Dogs,
88 AD3d 800 (2d Dep’t. 2011)............................................................................... 30, 35
People v. Levy,
2011 N.Y. Misc. LEXIS 2519 (Sup. Ct. N.Y. Cnty. 2011) ....................................... 13
People v. Lexington Sixty-First Associates,
38 N.Y. 2d 588 (1976) .................................................................................................. 15
People v. Life Science Church,
113 Misc. 2d 970 (Sup. Ct. N.Y. Cnty. 1982) ............................................................ 37
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People v. Ludwig Baumann & Co.,
56 Misc. 2d 153 (Sup. Ct. N.Y. Cnty. 1968) .............................................................. 36
People v. Network Assocs.,
195 Misc. 2d 384 (Sup. Ct. N.Y. Cnty. 2003) ...................................................... 18, 24
People v. Sign FX, Inc.,
43 Misc. 3d 1234(A) (Sup. Ct. Dutchess Cnty., 2014) ............................................. 13
People v. Telehublink Corp.,
301 A.D.2d 1007 (3d Dept 2003) ..................................................................... 13, 37-38
People v. Wilco Energy Corp,
284 A.D.2d 469 (2d Dep’t. 2001) .................................................................... 17, 28, 39
Port of N.Y. Auth. v. 62 Cortlandt St. Realty Co.,
18 N.Y.2d 250 (1966) ................................................................................................... 12
Porter v. Warner Cnty.,
328 U.S. 395 (1946) ................................................................................................ 32-33
Rizzo v. The Puppy Boutique ,
27 Misc. 3d 1227(A) (Civil Court Richmond Cnty. 2010) ........................................ 20
Spitzer v. Gen. Elec. Co. Inc.,
302 A.D.2d 314 (1st Dep’t. 2003) ....................................................................... passim
State of New York v. Veleanu,
89 A.D.3d 950 (2d Dep’t 2011).................................................................................... 38
State v. Abandoned Funds Info. Center, Inc.,
129 Misc.2d 614 (N.Y. Sup. Ct.1985)......................................................................... 28
State v. Abortion Info. Agency,
69 Misc.2d 825 (Sup. Ct. N.Y. Cnty. 1971) ............................................................... 32
State v. Colorado State Christian Coll.,
76 Misc. 2d 50 (Sup. Ct. N.Y. Cnty. 1973) .................................................... 18, 24, 28
State v. Daro Chartours, Inc.,
72 A.D.2d 872 (3d Dept 1979) ............................................................................ passim
State v. Ford Motor Co.,
136 A.D.2d 154 (3d Dep’t. 1988), aff’d, 74 N.Y.2d 495 (1989) ................................ 16
State v. Hotel Waldorf Astoria,
67 Misc. 2d 90 (Sup. Ct. N.Y. Cnty. 1971) .......................................................... 36, 40
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State v. Management Transition Resources, Inc.,
115 Misc.2d 489 (Sup. Ct. N.Y. Cnty. 1982) ....................................................... 12, 25
State v. Martin Fine ,
113 A.D. 2d 304 (1st Dep’t 1987) ............................................................................... 15
State v. Midland Equities of New York, Inc.,
117 Misc. 2d 203 (Sup. Ct. N.Y. Cnty. 1982) ............................................................ 12
State v. Princess Prestige ,
42 N.Y.2d 104 (1977) ........................................................................................... passim
State v. Remedial Education, Inc.,
70 Misc. 2d 1068 (Sup. Ct. N.Y. Cnty 1972) ............................................................. 33
State v. Saksniit,
69 Misc. 2d 554 (Sup. Ct. N.Y. Cnty 1972) ............................................................... 33
State v. Waterfine Conditioning,
87 Misc. 2d 18 (Sup. Ct. Albany Cnty. 1975)............................................................ 13
State v. ZKG Assoc., Inc.,
1974 N.Y. Misc. LEXIS 2067 (Sup. Ct. N.Y. Cnty. Oct. 29, 1974) ......................... 33
Zuckerman v. City of N.Y.,
49 N.Y.2d 557 (1980) .............................................................................................. 13-14
STATE STATUTES
A.M.L. Article 26-A………………………………………………………………………….32
A.M.L. § 406…………………………………………………………………………………..32
C.P.L.R.
§ 409(b).......................................................................................................................... 13
§ 410 .............................................................................................................................. 14
§ 3212 ............................................................................................................................ 12
§ 6313 ............................................................................................................................ 34
§ 8303(a)(6) ................................................................................................................... 40
Executive Law
§ 63 subd. 12......................................................................................................... passim
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GBL
Article 22-A .................................................................................................................. 38
Article 35-D ................................................................................................ 14, 20-21, 39
§ 349 ...................................................................................................................... passim
§ 350 ......................................................................................................................... 27-28
§ 350(a).......................................................................................................................... 28
§ 350-d ..................................................................................................................... 30, 39
§ 751 .............................................................................................................................. 20
§ 752(3).......................................................................................................................... 20
§ 753 .......................................................................................................................... 8, 21
§ 753-B Notice .............................................................................................................. 27
§ 753(1).......................................................................................................................... 22
§ 753(2).......................................................................................................................... 22
§ 754 .......................................................................................................................... 8, 23
§ 755 ........................................................................................................................ 14, 39
FEDERAL STATUTES
Federal Trade Commission Act of 1914, 15 U.S.C.
§ 45 ................................................................................................................................ 28
MISCELLANEOUS AUTHORITIES
ASPCA Puppy Mill Pipeline………………………………………………………… …….4
Ban on Pet Shop Animal Sales (March 30, 2021)………………………………………...4
Governor’s Approval Mem, 1970 ..................................................................................... 36
David D. Siegel, N.Y. Practice § 547 (5th ed. 2011) ...................................................... 12
David D. Siegel, N.Y. Practice § 556 (5th ed. 2011) ...................................................... 13
Humane Society’s Horrible Hundred Reports (2014, 2019, and 2021)…………….4, 20
Mem. of Governor Rockefeller, 1970 N.Y. Legis. Ann., at 472-473……… .................. 17
Merriam-Webster (definition of puppy mill)(Vol, ed., p. , year
)……………………...23
Report by the New York City Bar Association in Support of the New
York State Ban on Pet Shop Animal Sales (March 30, 2021) ................................ 11
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PRELIMINARY STATEMENT
The Office of the New York State Attorney General (“Petitioner”) brings
this summary proceeding pursuant to New York Executive Law § 63(12), New
York General Business Law Article 22-A, §§ 349 and 350, Article 35-D, §§ 753,
753-A, 753-B, 753-C and 754. Petitioner seeks an order permanently enjoining
Respondents, 5 Corners Pet, Inc. and Risk Enterprises, Inc., d/b/a Shake A
Paw, Gerard O’Sullivan and Marc Jacobs (collectively “Respondents” or “Shake
A Paw”) from doing business as Shake A Paw, or selling, advertising, or
soliciting the sale of live animals under any assumed name. Petitioner also
seeks restitution, civil penalties, and costs for Respondents’ fraudulent and
illegal conduct and deceptive practices in connection with the selling of puppies
at two retail locations in the state of New York. The Attorney General also
seeks an order temporarily enjoining Shake A Paw from obtaining any new
puppies for sale to the public. In consideration of the well-being of the puppies
already in Shake A Paw’s custody (and those who may be in-transit to the
stores at the time of the issuance of this order), the NYAG requests temporary
relief permitting the sale of those puppies and also seeks an order requiring
oversight of those sales by this Court, in order to insure compliance with state
law.
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STATEMENT OF FACTS
A. Background
Respondent Gerard O’Sullivan is a New York resident, and is the co-owner of
Shake-A-Paw and has overseen and been responsible for the operations of all of its
store locations. Respondent Gerard O’Sullivan formulated, directed, controlled, and
participated in the unfair and deceptive acts and practices of Shake-A-Paw as set
forth in this Verified Petition.
Respondent Marc Jacobs is a New York resident, and is the co-owner of Shake-
A-Paw and has overseen and been responsible for the operations of all of its store
locations. Respondent Marc Jacobs formulated, directed, controlled, and participated
in the unfair and deceptive acts and practices of Shake-A-Paw as set forth in this
Verified Petition. Respondents 5 Corners Pet, Inc. and Risk Enterprises, Inc. are New
York for profit corporations d/b/a Shake-A-Paw. Shake-A-Paw is a pet dealer licensed
by the New York State Department of Agriculture and Markets. 5 Corners Pet, Inc.
and Risk Enterprises, Inc. operate two retail pet stores in New York under the name
Shake-A-Paw:
Shake-A-Paw
1 Atlantic Avenue
Lynbrook, New York 11563
Shake-A-Paw
285 S. Broadway
Hicksville, New York 11801
Respondents Gerard O’Sullivan and Marc Jacobs, owners of Long Island-based
corporations 5 Corners Pet, Inc and Risk Enterprises, Inc, doing business as Shake-
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A-Paw, have repeatedly and consistently sold and offered for sale sick animals; failed
to disclose the animals’ medical conditions; sold puppies acquired from puppy mills;
misrepresented the health, breeding and pedigree of the dogs offered for sale;
unlawfully refused to reimburse customers’ veterinarian bills; and failed to provide
customers with refunds as required by the New York Pet Lemon Law. Despite
Respondents’ advertisements and representations on their websites that the puppies
are, among other things, of “the highest quality” and that they “work with the most
trusted breeders nationwide and handpick the best of the bunch,” within days and
even hours of the sale of these puppies, many of these animals faced serious and, in
some cases, fatal illnesses that cost Shake-A-Paw’s heartbroken customers thousands
of dollars to treat. Many Shake-A-Paw customers described their experience of caring
for sick puppies after being duped by Respondents as “heartbreaking” and
“devastating,” made worse by the need for costly veterinary care, sometimes for the
rest of the animals’ lives. Furthermore, many, if not most of the breeders from whom
Shake-A-Paw purchases hundreds of puppies each year are far from “trusted
breeders”: rather, they actually are infamous puppy mills, some of which have been
indicted or closed down by state and federal agencies.
The State brings this special proceeding pursuant to Executive Law § 63(12).
In support of the Verified Petition, the State submits substantial evidence, including
but not limited to the following: twenty-eight (28) consumer affidavits, sworn
testimony from Dr. Gregory Nelson, DVM of Central Veterinary Associates, Exhibit
B; veterinarian records from West Hills Animal Hospital, Sunrise Animal Hospital,
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Central Veterinary Associates, and Carman Avenue Animal Hospital, Exhibits I
through L; bank checks, Exhibit C; the Humane Society’s Horrible Hundred Reports
(2014, 2019, and 2021), Exhibit D; the Report by the New York City Bar Association
in Support of the New York State Ban on Pet Shop Animal Sales (March 30, 2021),
Exhibit E; USDA List of Active Licensees and Registrants as of November 2021,
Exhibit F; the ASPCA Puppy Mill Pipeline, Exhibit G; Veterinary Certificates of
Inspection, H; and USDA Inspection Reports, Shake A Paw Records, Exhibit M. For
a full discussion of the underlying facts of this case, the NYAG refers to the
Affirmation in Support submitted herewith, and incorporates all facts herein.
STATUTORY FRAMEWORK
I. SUMMARY PROCEEDINGS
Executive Law § 63(12) empowers the Attorney General to bring a special
proceeding for permanent injunctive relief, restitution, and damages whenever a
person or business engages in “repeated or persistent fraud or illegality.” See Exec.
Law § 63(12) (“[w]henever any person shall engage in repeated fraudulent or illegal
acts…the attorney general may apply…on notice of five days” for relief). A special
proceeding as authorized under Exec. Law § 63(12) is “plenary as an action,
culminating in a judgment, but is brought on with the ease, speed and economy of a
mere motion.” David D. Siegel, N.Y. Practice § 547, at 943 (5th ed. 2011). The
legislative purpose for allowing a special proceeding under section 63(12) is to further
the public interest by giving the Attorney General an expeditious means to enjoin
fraudulent or illegal activity and to obtain relief for its victims, including ex parte
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relief. See People v. B.C. Assocs., Inc., 22 Misc. 2d 43, 44-46 (Sup. Ct. N.Y. Cnty.
1959).
Special proceedings are governed by Article 4 of the Civil Practice Law and
Rules (“CPLR”) and go right to the merits of the proceeding. Where the petition and
supporting papers sufficiently merit the requested relief, respondents must raise
triable issues of fact by an evidentiary showing. The tests and standards applied to
decide whether a respondent has raised a triable issue of fact are the same as those
applied on a motion for summary judgment pursuant to CPLR § 3212. See Port of
N.Y. Auth. v. 62 Cortlandt St. Realty Co., 18 N.Y.2d 250, 255 (1966); see also State v.
Daro Chartours, Inc., 72 A.D.2d 872 (3d Dept 1979); Lefkowitz v. McMillen, 57 A.D.2d
979, 979 (3d Dept 1977); State v. Management Transition Resources, Inc., 115
Misc.2d 489, 492 (Sup. Ct. N.Y. Cnty. 1982)( “The standards governing a special
proceeding are those applied by a court on a motion for summary judgment.”); ; State
v. Midland Equities of New York, Inc., 117 Misc. 2d 203 (Sup. Ct. N.Y. Cnty. 1982).
Further, Article 4 requires that on the return date of a petition “[t]he court shall make
a summary determination upon the pleadings, papers and admissions to the extent
that no triable issues of fact are raised.” CPLR § 409(b); Siegel, New York Practice,
§ 556, at 954-955 (5th ed. 2011).
Where the Attorney General has submitted evidence in a special proceeding
demonstrating entitlement to the relief requested, the burden shifts to the
respondents to come forward with proof in evidentiary form to demonstrate triable
issues of fact. To establish a triable issue of fact, the respondents must present facts
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having probative value sufficient to demonstrate there is an unresolved material
issue. See Zuckerman v. City of N.Y., 49 N.Y.2d 557, 562 (1980). General denials or
conclusory allegations do not meet this burden. See People v. Telehublink Corp., 301
A.D.2d 1007 (3d Dept 2003); see also McMillen, Id., 57 A.D.2d 979; People v. Helena
VIP Personal Introductions Servs., 199 A.D.2d 186 (1st Dept 1993); Daro Chartours,
Inc., Id., 72 A.D.2d 872; People v. Levy, 2011 N.Y. Misc. LEXIS 2519 at *24-*25 (Sup.
Ct. N.Y. Cnty. 2011); State v. Waterfine Conditioning, 87 Misc. 2d 18 (Sup. Ct. Albany
Cnty. 1975).
Notably, once the petitioner has made a prima facie showing of entitlement to
the relief sought, affidavits from the respondents, without supporting evidence, are
insufficient to overcome petitioner’s showing. See Telehublink, Id., 301 A.D.2d at
1008; see also People v. Sign FX, Inc., 43 Misc. 3d 1234(A) (Sup. Ct. Dutchess Cnty.,
2014). Accordingly, respondents must present facts having probative value sufficient
to demonstrate an unresolved material issue. See Zuckerman v. City of N.Y., 49
N.Y.2d 557, 562 (1980).
To the extent factual issues are raised, then they must be tried “forthwith.”
CPLR § 410. It is the very purpose of a special proceeding to provide a summary
remedy, “so summary, indeed, as to dispense with the need or occasion for the
application of summary judgment.” Council of City of N.Y. v. Bloomberg, 6 N.Y.3d
380, 401 (2006).
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II. STATUTORY AUTHORITY
The NYAG has the statutory authority to investigate and take action against
individuals and entities that engage in fraudulent, deceptive, or illegal conduct.
Executive Law § 63(12) authorizes the NYAG to seek injunctive relief, restitution,
and damages when any individual or entity has engaged in repeated or persistent
fraudulent or illegal conduct. Similarly, General Business Law (“GBL”) §§ 349 and
350 authorizes the NYAG to seek injunctive relief, restitution, and penalties for
deceptive business practices. Section 755 of the GBL further authorizes the Attorney
General to seek redress for violations of GBL Article 35-D. All of these statutes
authorize the NYAG to undertake investigations, issue subpoenas, and take proof.
All of the enforcement statutes under which the State brings this proceeding
are remedial in nature. See People ex rel. Cuomo v. Greenberg, 95 A.D.3d 474, 483
(1st Dep’t 2012); People v. Empire Prop. Solutions, LLC, 2012 N.Y. Misc. LEXIS 1845
(Sup. Ct. Nassau Cnty. Apr. 10, 2012). Remedial statutes are to be liberally construed
to achieve their intended purpose. See Matter of Daimler Chrysler Corp. v. Spitzer, 7
N.Y.3d 653 (2006); People v. Lexington Sixty-First Associates, 38 N.Y. 2d 588 (1976);
State v. Martin Fine, 113 A.D. 2d 304 (1st Dep’t 1987); see also McKinney’s Statutes
§ 321 (remedial statutes are “liberally construed to spread their beneficial result as
widely as possible”). A liberal construction is one that is “in the interest of those whose
rights are to be protected.” McKinney’s Statutes § 321.
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A. Executive Law § 63(12): Fraud.
A claim under Executive Law § 63(12) is brought either for repeated or
persistent fraud – or repeated or persistent illegality. Here, the Attorney General
has brought claims under both prongs.
Executive Law § 63(12) defines the terms “fraud” or “fraudulent” as “any
device, scheme or artifice to defraud and any deception, misrepresentation,
concealment, suppression, false pretense, false promise or unconscionable
contractual provisions.” Consistent with this language and the legislative intent,
courts have consistently applied an extremely broad view of what constitutes
fraudulent and deceptive conduct in proceedings brought by the Attorney General
under Executive Law § 63(12). See, e.g., Matter of People v Trump Entrepreneur
Initiative, 137 A.D.3d 409, 417-418 (1st Dep’t. 2016) (“fraud” in § 63(12) proceedings
does not require scienter or reliance, which are required on a common law fraud
claim); see Lefkowitz v. Bull Inv. Group, 46 A.D.2d 25, 28 (3d Dep’t. 1974). “It is well
settled that the definition of fraud under subdivision 12 of section 63 of the Executive
Law is extremely broad and proof of scienter is not necessary.” Id. (internal citations
omitted). It is not necessary to establish the traditional elements of common law
fraud, such as intent to deceive and reliance, to establish liability for fraud under
Executive Law § 63(12). People v. Apple Health & Sports Clubs, Ltd., 206 A.D.2d
266, 267 (1st Dep’t. 1994); State v. Ford Motor Co., 136 A.D.2d 154, 158 (3d Dep’t.
1988), aff’d, 74 N.Y.2d 495 (1989); People v. Gagnon Bus Co. Inc., 30 Misc.3d 1225(A)
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at *2 (Sup. Ct. Qns. Cnty. 2011); People v. Am. Modification Agency. Inc., 2010 N.Y.
Misc. LEXIS 2433 (Sup. Ct. N.Y. Cnty. 2010).
Instead, the test of fraudulent conduct under Executive Law § 63(12) is
whether the act “has the capacity or tendency to deceive, or creates an atmosphere
conducive to fraud.” In re People v. Applied Card Sys., Inc., 27 A.D.3d 104, 107 (3d
Dep’t. 2005) aff’d. on other grounds, 11 N.Y.3d 105 (2008). The courts have found that
Executive Law § 63(12) protects the credulous and the unthinking as well as the
cynical and the intelligent; the trusting as well as the suspicious. Spitzer v. Gen. Elec.
Co. Inc., 302 A.D.2d 314 (1st Dep’t. 2003); see also Applied Card, 27 A.D.3d at 106.
B. Executive Law § 63(12): Illegality.
As to the “illegality” prong of the statute, courts have repeatedly found that a
violation of state, federal, or local law constitutes illegality within the meaning of
Executive Law § 63(12). See State v. Princess Prestige, 42 N.Y.2d 104, 107 (1977);
People v. Empyre Inground Pools, Inc., 227 A.D.2d 731, 733 (3d Dep’t. 1996);
Lefkowitz v. E.F.G. Baby Products, 40 A.D.2d 364 (3d Dep’t. 1973); Mgmt. Transition
Res.,115 Misc. 2d 489 (Sup. Ct. N.Y. Cnty. 1982) (career counseling service that
operated as an employment agency without a license and improperly took up-front
fees violated Executive Law § 63(12) prohibition on illegality).
Both fraud and illegality must be repeated or persistent, each of which are also
defined in the statute. “Repeated” is defined as “repetition of any separate and
distinct fraudulent or illegal act or conduct which affects more than one person.” Exec.
Law § 63(12); see also People v. Wilco Energy Corp, 284 A.D.2d 469 (2d Dep’t. 2001);
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Empyre, id., 227 A.D.2d at 733. “Persistent” is defined as “continuance or carrying
on of any fraudulent or illegal act of conduct.” Exec. Law § 63(12). Courts have found
that under these definitions, the Attorney General is not required to establish that a
large percentage of the person’s or business’s transactions were fraudulent or illegal.
See Princess Prestige, id., 42 N.Y.2d at 107 (finding 16 out of 3,600 total transactions
a sufficient basis to proceed under Executive Law § 63(12)); see also People v. Credit
Solutions of Am., 2012 N.Y. Misc. LEXIS 2090, at *5 (Sup. Ct. N.Y. Cnty. 2012).
Accordingly, the existence of some satisfied consumers is not a defense to otherwise
fraudulent and illegal practices. See Midland Equities, id., 117 Misc. 2d at 207; FTC
v. Crescent Publ’g. Grp. Inc., 129 F. Supp. 2d 311, 322 (S.D.N.Y. 2001).
C. General Business Law § 349: Deceptive Acts and Practices.
The Attorney General is explicitly authorized to bring a special proceeding
against any business engaged in deceptive acts and practices in violation of General
Business Law § 349. This section prohibits “[d]eceptive acts or practices in the
conduct of any business, trade, or commerce or in the furnishing of any service in this
state.” The definition of deceptive practices under GBL § 349 is given parallel
construction to that of fraud under Executive Law § 63(12). State v. Colorado State
Christian Coll., 76 Misc. 2d 50, 54 (Sup. Ct. N.Y. Cnty. 1973). A representation or
omission is deceptive pursuant to GBL § 349 if it is likely to mislead a reasonable
consumer acting reasonably under the circumstances. Oswego Laborers’ Local 214 v.
Marine Midland Bank, NA, 85 N.Y.2d 20, 26 (1995).
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Like Executive Law § 63(12), GBL § 349 is “intended to be broadly applicable,
extending beyond the reach of common law fraud.” New York v. Feldman, 210 F.
Supp. 2d 294, 301 (S.D.N.Y. 2002). As with fraud under Executive Law § 63(12), the
elements of common law fraud need not be established to demonstrate a violation of
GBL § 349. Applied Card, id., 27 A.D.3d at 107; Gen. Electric, id., 302 A.D.2d at 315;
People v. Network Assocs., 195 Misc. 2d 384, 389 (Sup. Ct. N.Y. Cnty. 2003); Colorado
State Christian Coll., id., 76 Misc. 2d at 56. As a result, a business practice with the
capacity to mislead or deceive a reasonable person violates GBL § 349, regardless of
whether it falls within the scope of common law fraud. Gaidon v. Guardian Life Ins.
Co., 94 N.Y.2d 330, 348 (1998). Consequently, omissions may also be the basis for
claims pursuant to GBL § 349. See Applied Card, id., 27 A.D.3d at 107.
ARGUMENT
POINT I.
RESPONDENTS HAVE ENGAGED IN REPEATED AND PERSISTENT
FRAUDULENT CONDUCT IN VIOLATION OF EXECUTIVE LAW § 63(12).
Executive Law § 63(12) defines “fraud” and “fraudulent” broadly to include
“any device, scheme or artifice to defraud and any deception, misrepresentation,
concealment, suppression, false pretense, false promise, or unconscionable
contractual provisions.” As noted above, fraud under Executive Law § 63(12) extends
beyond the reach of common law fraud. See, e.g., Lefkowitz v. Bull Inv. Grp., id., 46
A.D.2d at 28; People v. 21st Century Leisure Spa Int’l., Ltd., 153 Misc. 2d 938, 943
(Sup. Ct. N.Y. Cnty. 1991). The test of fraudulent conduct under Executive Law §
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FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU _______________________________________________ PEOPLE OF THE STATE OF NEW YORK, by LETITIA JAMES, Attorney General of the State of New York, Index No. Petitioner, IAS Part Assigned to Justice -against- 5 CORNERS PET, INC.; RISK ENTERPRISES, INC. d/b/a SHAKE-A-PAW, and GERARD O’SULLIVAN and MARC JACOBS, both individually and as owners of Shake-A-Paw, Respondents. _________________________________________________ MEMORANDUM OF LAW IN SUPPORT OF THE VERIFIED PETITION AND ORDER TO SHOW CAUSE WITH A TEMPORARY RESTRAINING ORDER LETITIA JAMES Attorney General of the State of New York Attorney for Petitioner 200 Old Country Road, Suite 240 Mineola, NY 11501 Of Counsel: VALERIE SINGLETON Assistant Attorney General-in-Charge CHRISTINA H. BEDELL Assistant Attorney General 1 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 TABLE OF CONTENTS TABLE OF AUTHORITIES............................................................................................ iii- PRELIMINARY STATEMENT ......................................................................................... 1 STATEMENT OF FACTS…………………………………………………………………….2 A. Background……………………………………………………………………………...2 STATUTORY FRAMEWORK …………………………………………………………...…4 A. Summary Proceedings ………………………………………………………………..4 B. Attorney General’s Statutory Authority ………………….………………………..7 C. Executive Law § 63(12) ……………………………………………………………….8 i. Fraud. ………………………………………………………………………...8 ii. Illegality. ………………………………………………………………………..9 D. General Business Law § 349: Deceptive Acts and Practices …………………..10 ARGUMENT ...................................................................................................................... 11 Point I. Respondents Have Engaged In Repeated And Persistent Fraudulent Conduct In Violation Of Executive Law § 63(12). 4 …………………………………………………11 Point II. Respondents Have Engaged In Repeated And Persistent Illegality Within The Meaning Of Executive Law § 63(12)……………………………………………………13 A. Shake A Paw Has Repeatedly And Persistently Violated General Business Law Article 35-D ………………………13 i. Shake A Paw Has Repeatedly Violated GBL § 753, the Pet Lemon Law ………………………………………14 ii. Shake A Paw’s Contract Fraudulently Misstates the Pet Lemon Law, in Violation of GBL §754.………….15 Point III. Respondents Have Engaged In Repeated And Persistent Deception In Violation Of GBL § 349……………………..16 i 2 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 i. Respondents Sold Sick Puppies to Consumers………………………..18 ii. Respondents Failed to Provide Refunds Pursuant to the New York State Pet Lemon Law ………………………………19 iii. Respondents Fraudulently and Deceptively Misrepresented the Source of its Puppies ……………………………………………….19 Point IV. Shake A Paw Violated New York GBL § 350 By Falsely Advertising Its Products ……………………………………….20 Point V. Respondents Marc Jacobs And Gerard O’Sullivan Are Personally Liable For The Repeated And Persistent Illegal And Fraudulent Acts Alleged In The Petition ………………..23 Point VI. The Court Should Grant A Temporary Restraining Order …............24 Point VII. The Court Should Grant Permanent Injunctive Relief, Restitution, Civil Penalties, And Costs Against Respondents……….27 A. The Court Should Grant Permanent Injunctive Relief Against Respondents' Illegal and Fraudulent Conduct ……………………………..27 B. The Court Should Direct Respondents to Pay Restitution to Aggrieved Consumers ……………………………………………………….29 C. The Court Should Order Respondents to Pay Penalties for Their Repeated Violations of GBL Articles 35-D and 22-A and AML Article 26-A …………………………………………………….31 D. The Court Should Order Respondents to Pay Costs …………………..32 CONCLUSION ……………………………………………………………………………..33 ii 3 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 TABLE OF AUTHORITIES Page(s) CASES Am. Home Prod. Corp. v. FTC, 695 F.2d 681 (3d Cir. 1982) ........................................................................................ 29 Aronberg v. FTC, 132 F.2d 165 (7th Cir. 1942)....................................................................................... 28 Benrus Watch Co. v. F.T.C., 352 F.2d 313 [8th Cir. 1965]....................................................................................... 31 Ciba-Geigy Corp. v. Thompson Med. Co., 672 F. Supp. 679 (S.D.N.Y. 1985) .............................................................................. 29 Consumer Sales Corp. v. F.T.C., 198 F.2d 404 [2d Cir. 1952] ........................................................................................ 31 Council of City of N.Y. v. Bloomberg, 6 N.Y.3d 380 (2006) ..................................................................................................... 14 F.T.C. v. Amy Travel Service, Inc., 875 F.2d 564 [7th Cir. 1989]....................................................................................... 31 FTC v. Crescent Publ’g. Grp. Inc., 129 F. Supp. 2d 311 (S.D.N.Y. 2001) ......................................................................... 17 Gaidon v. Guardian Life Ins. Co., 94 N.Y.2d 330 (1998) ............................................................................................. 18, 24 Goshen v. Mut. Life Ins. Co. of New York, 98 N.Y.2d 314 (2002) ................................................................................................... 25 Guggenheimer v. Ginzburg, 43 N.Y.2d 268 (1977) .............................................................................................. 28-29 In re Ngan Gung Restaurant, 183 B.R. 689 (Bankr. S.D.N.Y. 1995) ........................................................................ 36 In re People v. Applied Card Sys., Inc., 27 A.D.3d 104 (3d Dep’t. 2005) aff’d. on other grounds, 11 N.Y.3d 105 (2008) ............................................................................................................. passim iii 4 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 In re People v. Therapeutic Hypnosis Inc., 83 Misc. 2d 1068 (Sup. Ct. Alb. Cnty. 1975), rev’d on other grounds, 52 A.D.2d 1017 (3d Dep’t. 1976) ................................................................................ 40 In re State v. Bevis Indus., 63 Misc. 2d 1088 (Sup. Ct. N.Y. Cnty. 1970) ............................................................ 37 In re Thompson Med. Co. v. FTC, 791 F.2d 189 (D.C. Cir. 1986), cert. denied, 479 U.S. 1086 (1987) ........................ 28 Kraft, Inc. v. FTC, 970 F.2d 311 (7th Cir. 1992), cert. denied, 507 U.S. 909 (1993) ............................ 28 Lefkowitz v. Bull Inv. Group, 46 A.D.2d 25 (3d Dep’t. 1974)............................................................................... 15, 19 Lefkowitz v. E.F.G. Baby Products, 40 A.D.2d 364 (3d Dep’t. 1973) ............................................................................ 16, 29 Lefkowitz v. McMillen, 57 A.D.2d 979 (3d Dept 1977) ............................................................................... 12-13 Matter of Daimler Chrysler Corp. v. Spitzer, 7 N.Y.3d 653 (2006) ..................................................................................................... 15 Matter of People v Trump Entrepreneur Initiative , 137 A.D.3d 409 (1st Dep’t. 2016) ............................................................................... 15 Meyers Bros. Parking Sys. v. Sherman, 87 A.D.2d 562, aff’d, 57 N.Y.2d 653 (1982) ............................................................... 39 Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288 (1960) ..................................................................................................... 33 New York v. Feldman, 210 F. Supp. 2d 294 (S.D.N.Y. 2002) ............................................................. 18, 24, 28 Oswego Laborers’ Local 214 v. Marine Midland Bank, NA, 85 N.Y.2d 20 (1995) .........................................................................................18, 24, 28 People ex rel. Cuomo v. Greenberg, 95 A.D.3d 474 (1st Dep’t 2012) .................................................................................. 14 People v. 21st Century Leisure Spa Int’l., Ltd., 153 Misc. 2d 938 (Sup. Ct. N.Y. Cnty. 1991) ............................................................ 19 iv 5 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 People v. Am. Modification Agency. Inc., 2010 N.Y. Misc. LEXIS 2433 (Sup. Ct. N.Y. Cnty. 2010) ....................................... 16 People v. American Motor Club, Inc., 179 A.D.2d 277 (1st Dep’t. 1992) ............................................................................... 31 People v. Apple Health & Sports Clubs, Ltd., 206 A.D.2d 266 (1st Dep’t. 1994) .................................................................... 16, 31-32 People v. B.C. Assocs., Inc., 22 Misc. 2d 43 (Sup. Ct. N.Y. Cnty. 1959) ................................................................ 12 People v. Concert Connection Ltd., 211 A.D.2d 310 (2d Dep’t. 1995) ................................................................................ 31 People v. Court Reporting Inst., 245 A.D.2d 564 (2d Dep’t. 1997) ................................................................................ 31 People v. Credit Solutions of Am., 2012 N.Y. Misc. LEXIS 2090 (Sup. Ct. N.Y. Cnty. 2012) ................................. 17, 38 People v. Empire Prop. Solutions, LLC, 2012 N.Y. Misc. LEXIS 1845 (Sup. Ct. Nassau Cnty. Apr. 10, 2012) ................... 14 People v. Empyre Inground Pools, Inc., 227 A.D.2d 731 (3d Dep’t. 1996) .............................................................. 16-17, 31, 37 People v. Frink Am., Inc., 2 A.D.3d 1379 (4th Dep’t. 2003) ................................................................................. 31 People v. Gagnon Bus Co. Inc., 30 Misc.3d 1225(A) (Sup. Ct. Qns. Cnty. 2011).................................................. 16, 37 People v. Helena VIP Personal Introductions Servs., 199 A.D.2d 186 (1st Dept 1993) ................................................................................. 13 People v. Imported Quality Guard Dogs, 88 AD3d 800 (2d Dep’t. 2011)............................................................................... 30, 35 People v. Levy, 2011 N.Y. Misc. LEXIS 2519 (Sup. Ct. N.Y. Cnty. 2011) ....................................... 13 People v. Lexington Sixty-First Associates, 38 N.Y. 2d 588 (1976) .................................................................................................. 15 People v. Life Science Church, 113 Misc. 2d 970 (Sup. Ct. N.Y. Cnty. 1982) ............................................................ 37 v 6 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 People v. Ludwig Baumann & Co., 56 Misc. 2d 153 (Sup. Ct. N.Y. Cnty. 1968) .............................................................. 36 People v. Network Assocs., 195 Misc. 2d 384 (Sup. Ct. N.Y. Cnty. 2003) ...................................................... 18, 24 People v. Sign FX, Inc., 43 Misc. 3d 1234(A) (Sup. Ct. Dutchess Cnty., 2014) ............................................. 13 People v. Telehublink Corp., 301 A.D.2d 1007 (3d Dept 2003) ..................................................................... 13, 37-38 People v. Wilco Energy Corp, 284 A.D.2d 469 (2d Dep’t. 2001) .................................................................... 17, 28, 39 Port of N.Y. Auth. v. 62 Cortlandt St. Realty Co., 18 N.Y.2d 250 (1966) ................................................................................................... 12 Porter v. Warner Cnty., 328 U.S. 395 (1946) ................................................................................................ 32-33 Rizzo v. The Puppy Boutique , 27 Misc. 3d 1227(A) (Civil Court Richmond Cnty. 2010) ........................................ 20 Spitzer v. Gen. Elec. Co. Inc., 302 A.D.2d 314 (1st Dep’t. 2003) ....................................................................... passim State of New York v. Veleanu, 89 A.D.3d 950 (2d Dep’t 2011).................................................................................... 38 State v. Abandoned Funds Info. Center, Inc., 129 Misc.2d 614 (N.Y. Sup. Ct.1985)......................................................................... 28 State v. Abortion Info. Agency, 69 Misc.2d 825 (Sup. Ct. N.Y. Cnty. 1971) ............................................................... 32 State v. Colorado State Christian Coll., 76 Misc. 2d 50 (Sup. Ct. N.Y. Cnty. 1973) .................................................... 18, 24, 28 State v. Daro Chartours, Inc., 72 A.D.2d 872 (3d Dept 1979) ............................................................................ passim State v. Ford Motor Co., 136 A.D.2d 154 (3d Dep’t. 1988), aff’d, 74 N.Y.2d 495 (1989) ................................ 16 State v. Hotel Waldorf Astoria, 67 Misc. 2d 90 (Sup. Ct. N.Y. Cnty. 1971) .......................................................... 36, 40 vi 7 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 State v. Management Transition Resources, Inc., 115 Misc.2d 489 (Sup. Ct. N.Y. Cnty. 1982) ....................................................... 12, 25 State v. Martin Fine , 113 A.D. 2d 304 (1st Dep’t 1987) ............................................................................... 15 State v. Midland Equities of New York, Inc., 117 Misc. 2d 203 (Sup. Ct. N.Y. Cnty. 1982) ............................................................ 12 State v. Princess Prestige , 42 N.Y.2d 104 (1977) ........................................................................................... passim State v. Remedial Education, Inc., 70 Misc. 2d 1068 (Sup. Ct. N.Y. Cnty 1972) ............................................................. 33 State v. Saksniit, 69 Misc. 2d 554 (Sup. Ct. N.Y. Cnty 1972) ............................................................... 33 State v. Waterfine Conditioning, 87 Misc. 2d 18 (Sup. Ct. Albany Cnty. 1975)............................................................ 13 State v. ZKG Assoc., Inc., 1974 N.Y. Misc. LEXIS 2067 (Sup. Ct. N.Y. Cnty. Oct. 29, 1974) ......................... 33 Zuckerman v. City of N.Y., 49 N.Y.2d 557 (1980) .............................................................................................. 13-14 STATE STATUTES A.M.L. Article 26-A………………………………………………………………………….32 A.M.L. § 406…………………………………………………………………………………..32 C.P.L.R. § 409(b).......................................................................................................................... 13 § 410 .............................................................................................................................. 14 § 3212 ............................................................................................................................ 12 § 6313 ............................................................................................................................ 34 § 8303(a)(6) ................................................................................................................... 40 Executive Law § 63 subd. 12......................................................................................................... passim vii 8 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 GBL Article 22-A .................................................................................................................. 38 Article 35-D ................................................................................................ 14, 20-21, 39 § 349 ...................................................................................................................... passim § 350 ......................................................................................................................... 27-28 § 350(a).......................................................................................................................... 28 § 350-d ..................................................................................................................... 30, 39 § 751 .............................................................................................................................. 20 § 752(3).......................................................................................................................... 20 § 753 .......................................................................................................................... 8, 21 § 753-B Notice .............................................................................................................. 27 § 753(1).......................................................................................................................... 22 § 753(2).......................................................................................................................... 22 § 754 .......................................................................................................................... 8, 23 § 755 ........................................................................................................................ 14, 39 FEDERAL STATUTES Federal Trade Commission Act of 1914, 15 U.S.C. § 45 ................................................................................................................................ 28 MISCELLANEOUS AUTHORITIES ASPCA Puppy Mill Pipeline………………………………………………………… …….4 Ban on Pet Shop Animal Sales (March 30, 2021)………………………………………...4 Governor’s Approval Mem, 1970 ..................................................................................... 36 David D. Siegel, N.Y. Practice § 547 (5th ed. 2011) ...................................................... 12 David D. Siegel, N.Y. Practice § 556 (5th ed. 2011) ...................................................... 13 Humane Society’s Horrible Hundred Reports (2014, 2019, and 2021)…………….4, 20 Mem. of Governor Rockefeller, 1970 N.Y. Legis. Ann., at 472-473……… .................. 17 Merriam-Webster (definition of puppy mill)(Vol, ed., p. , year )……………………...23 Report by the New York City Bar Association in Support of the New York State Ban on Pet Shop Animal Sales (March 30, 2021) ................................ 11 viii 9 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 PRELIMINARY STATEMENT The Office of the New York State Attorney General (“Petitioner”) brings this summary proceeding pursuant to New York Executive Law § 63(12), New York General Business Law Article 22-A, §§ 349 and 350, Article 35-D, §§ 753, 753-A, 753-B, 753-C and 754. Petitioner seeks an order permanently enjoining Respondents, 5 Corners Pet, Inc. and Risk Enterprises, Inc., d/b/a Shake A Paw, Gerard O’Sullivan and Marc Jacobs (collectively “Respondents” or “Shake A Paw”) from doing business as Shake A Paw, or selling, advertising, or soliciting the sale of live animals under any assumed name. Petitioner also seeks restitution, civil penalties, and costs for Respondents’ fraudulent and illegal conduct and deceptive practices in connection with the selling of puppies at two retail locations in the state of New York. The Attorney General also seeks an order temporarily enjoining Shake A Paw from obtaining any new puppies for sale to the public. In consideration of the well-being of the puppies already in Shake A Paw’s custody (and those who may be in-transit to the stores at the time of the issuance of this order), the NYAG requests temporary relief permitting the sale of those puppies and also seeks an order requiring oversight of those sales by this Court, in order to insure compliance with state law. 1 10 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 STATEMENT OF FACTS A. Background Respondent Gerard O’Sullivan is a New York resident, and is the co-owner of Shake-A-Paw and has overseen and been responsible for the operations of all of its store locations. Respondent Gerard O’Sullivan formulated, directed, controlled, and participated in the unfair and deceptive acts and practices of Shake-A-Paw as set forth in this Verified Petition. Respondent Marc Jacobs is a New York resident, and is the co-owner of Shake- A-Paw and has overseen and been responsible for the operations of all of its store locations. Respondent Marc Jacobs formulated, directed, controlled, and participated in the unfair and deceptive acts and practices of Shake-A-Paw as set forth in this Verified Petition. Respondents 5 Corners Pet, Inc. and Risk Enterprises, Inc. are New York for profit corporations d/b/a Shake-A-Paw. Shake-A-Paw is a pet dealer licensed by the New York State Department of Agriculture and Markets. 5 Corners Pet, Inc. and Risk Enterprises, Inc. operate two retail pet stores in New York under the name Shake-A-Paw: Shake-A-Paw 1 Atlantic Avenue Lynbrook, New York 11563 Shake-A-Paw 285 S. Broadway Hicksville, New York 11801 Respondents Gerard O’Sullivan and Marc Jacobs, owners of Long Island-based corporations 5 Corners Pet, Inc and Risk Enterprises, Inc, doing business as Shake- 2 11 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 A-Paw, have repeatedly and consistently sold and offered for sale sick animals; failed to disclose the animals’ medical conditions; sold puppies acquired from puppy mills; misrepresented the health, breeding and pedigree of the dogs offered for sale; unlawfully refused to reimburse customers’ veterinarian bills; and failed to provide customers with refunds as required by the New York Pet Lemon Law. Despite Respondents’ advertisements and representations on their websites that the puppies are, among other things, of “the highest quality” and that they “work with the most trusted breeders nationwide and handpick the best of the bunch,” within days and even hours of the sale of these puppies, many of these animals faced serious and, in some cases, fatal illnesses that cost Shake-A-Paw’s heartbroken customers thousands of dollars to treat. Many Shake-A-Paw customers described their experience of caring for sick puppies after being duped by Respondents as “heartbreaking” and “devastating,” made worse by the need for costly veterinary care, sometimes for the rest of the animals’ lives. Furthermore, many, if not most of the breeders from whom Shake-A-Paw purchases hundreds of puppies each year are far from “trusted breeders”: rather, they actually are infamous puppy mills, some of which have been indicted or closed down by state and federal agencies. The State brings this special proceeding pursuant to Executive Law § 63(12). In support of the Verified Petition, the State submits substantial evidence, including but not limited to the following: twenty-eight (28) consumer affidavits, sworn testimony from Dr. Gregory Nelson, DVM of Central Veterinary Associates, Exhibit B; veterinarian records from West Hills Animal Hospital, Sunrise Animal Hospital, 3 12 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 Central Veterinary Associates, and Carman Avenue Animal Hospital, Exhibits I through L; bank checks, Exhibit C; the Humane Society’s Horrible Hundred Reports (2014, 2019, and 2021), Exhibit D; the Report by the New York City Bar Association in Support of the New York State Ban on Pet Shop Animal Sales (March 30, 2021), Exhibit E; USDA List of Active Licensees and Registrants as of November 2021, Exhibit F; the ASPCA Puppy Mill Pipeline, Exhibit G; Veterinary Certificates of Inspection, H; and USDA Inspection Reports, Shake A Paw Records, Exhibit M. For a full discussion of the underlying facts of this case, the NYAG refers to the Affirmation in Support submitted herewith, and incorporates all facts herein. STATUTORY FRAMEWORK I. SUMMARY PROCEEDINGS Executive Law § 63(12) empowers the Attorney General to bring a special proceeding for permanent injunctive relief, restitution, and damages whenever a person or business engages in “repeated or persistent fraud or illegality.” See Exec. Law § 63(12) (“[w]henever any person shall engage in repeated fraudulent or illegal acts…the attorney general may apply…on notice of five days” for relief). A special proceeding as authorized under Exec. Law § 63(12) is “plenary as an action, culminating in a judgment, but is brought on with the ease, speed and economy of a mere motion.” David D. Siegel, N.Y. Practice § 547, at 943 (5th ed. 2011). The legislative purpose for allowing a special proceeding under section 63(12) is to further the public interest by giving the Attorney General an expeditious means to enjoin fraudulent or illegal activity and to obtain relief for its victims, including ex parte 4 13 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 relief. See People v. B.C. Assocs., Inc., 22 Misc. 2d 43, 44-46 (Sup. Ct. N.Y. Cnty. 1959). Special proceedings are governed by Article 4 of the Civil Practice Law and Rules (“CPLR”) and go right to the merits of the proceeding. Where the petition and supporting papers sufficiently merit the requested relief, respondents must raise triable issues of fact by an evidentiary showing. The tests and standards applied to decide whether a respondent has raised a triable issue of fact are the same as those applied on a motion for summary judgment pursuant to CPLR § 3212. See Port of N.Y. Auth. v. 62 Cortlandt St. Realty Co., 18 N.Y.2d 250, 255 (1966); see also State v. Daro Chartours, Inc., 72 A.D.2d 872 (3d Dept 1979); Lefkowitz v. McMillen, 57 A.D.2d 979, 979 (3d Dept 1977); State v. Management Transition Resources, Inc., 115 Misc.2d 489, 492 (Sup. Ct. N.Y. Cnty. 1982)( “The standards governing a special proceeding are those applied by a court on a motion for summary judgment.”); ; State v. Midland Equities of New York, Inc., 117 Misc. 2d 203 (Sup. Ct. N.Y. Cnty. 1982). Further, Article 4 requires that on the return date of a petition “[t]he court shall make a summary determination upon the pleadings, papers and admissions to the extent that no triable issues of fact are raised.” CPLR § 409(b); Siegel, New York Practice, § 556, at 954-955 (5th ed. 2011). Where the Attorney General has submitted evidence in a special proceeding demonstrating entitlement to the relief requested, the burden shifts to the respondents to come forward with proof in evidentiary form to demonstrate triable issues of fact. To establish a triable issue of fact, the respondents must present facts 5 14 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 having probative value sufficient to demonstrate there is an unresolved material issue. See Zuckerman v. City of N.Y., 49 N.Y.2d 557, 562 (1980). General denials or conclusory allegations do not meet this burden. See People v. Telehublink Corp., 301 A.D.2d 1007 (3d Dept 2003); see also McMillen, Id., 57 A.D.2d 979; People v. Helena VIP Personal Introductions Servs., 199 A.D.2d 186 (1st Dept 1993); Daro Chartours, Inc., Id., 72 A.D.2d 872; People v. Levy, 2011 N.Y. Misc. LEXIS 2519 at *24-*25 (Sup. Ct. N.Y. Cnty. 2011); State v. Waterfine Conditioning, 87 Misc. 2d 18 (Sup. Ct. Albany Cnty. 1975). Notably, once the petitioner has made a prima facie showing of entitlement to the relief sought, affidavits from the respondents, without supporting evidence, are insufficient to overcome petitioner’s showing. See Telehublink, Id., 301 A.D.2d at 1008; see also People v. Sign FX, Inc., 43 Misc. 3d 1234(A) (Sup. Ct. Dutchess Cnty., 2014). Accordingly, respondents must present facts having probative value sufficient to demonstrate an unresolved material issue. See Zuckerman v. City of N.Y., 49 N.Y.2d 557, 562 (1980). To the extent factual issues are raised, then they must be tried “forthwith.” CPLR § 410. It is the very purpose of a special proceeding to provide a summary remedy, “so summary, indeed, as to dispense with the need or occasion for the application of summary judgment.” Council of City of N.Y. v. Bloomberg, 6 N.Y.3d 380, 401 (2006). 6 15 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 II. STATUTORY AUTHORITY The NYAG has the statutory authority to investigate and take action against individuals and entities that engage in fraudulent, deceptive, or illegal conduct. Executive Law § 63(12) authorizes the NYAG to seek injunctive relief, restitution, and damages when any individual or entity has engaged in repeated or persistent fraudulent or illegal conduct. Similarly, General Business Law (“GBL”) §§ 349 and 350 authorizes the NYAG to seek injunctive relief, restitution, and penalties for deceptive business practices. Section 755 of the GBL further authorizes the Attorney General to seek redress for violations of GBL Article 35-D. All of these statutes authorize the NYAG to undertake investigations, issue subpoenas, and take proof. All of the enforcement statutes under which the State brings this proceeding are remedial in nature. See People ex rel. Cuomo v. Greenberg, 95 A.D.3d 474, 483 (1st Dep’t 2012); People v. Empire Prop. Solutions, LLC, 2012 N.Y. Misc. LEXIS 1845 (Sup. Ct. Nassau Cnty. Apr. 10, 2012). Remedial statutes are to be liberally construed to achieve their intended purpose. See Matter of Daimler Chrysler Corp. v. Spitzer, 7 N.Y.3d 653 (2006); People v. Lexington Sixty-First Associates, 38 N.Y. 2d 588 (1976); State v. Martin Fine, 113 A.D. 2d 304 (1st Dep’t 1987); see also McKinney’s Statutes § 321 (remedial statutes are “liberally construed to spread their beneficial result as widely as possible”). A liberal construction is one that is “in the interest of those whose rights are to be protected.” McKinney’s Statutes § 321. 7 16 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 A. Executive Law § 63(12): Fraud. A claim under Executive Law § 63(12) is brought either for repeated or persistent fraud – or repeated or persistent illegality. Here, the Attorney General has brought claims under both prongs. Executive Law § 63(12) defines the terms “fraud” or “fraudulent” as “any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions.” Consistent with this language and the legislative intent, courts have consistently applied an extremely broad view of what constitutes fraudulent and deceptive conduct in proceedings brought by the Attorney General under Executive Law § 63(12). See, e.g., Matter of People v Trump Entrepreneur Initiative, 137 A.D.3d 409, 417-418 (1st Dep’t. 2016) (“fraud” in § 63(12) proceedings does not require scienter or reliance, which are required on a common law fraud claim); see Lefkowitz v. Bull Inv. Group, 46 A.D.2d 25, 28 (3d Dep’t. 1974). “It is well settled that the definition of fraud under subdivision 12 of section 63 of the Executive Law is extremely broad and proof of scienter is not necessary.” Id. (internal citations omitted). It is not necessary to establish the traditional elements of common law fraud, such as intent to deceive and reliance, to establish liability for fraud under Executive Law § 63(12). People v. Apple Health & Sports Clubs, Ltd., 206 A.D.2d 266, 267 (1st Dep’t. 1994); State v. Ford Motor Co., 136 A.D.2d 154, 158 (3d Dep’t. 1988), aff’d, 74 N.Y.2d 495 (1989); People v. Gagnon Bus Co. Inc., 30 Misc.3d 1225(A) 8 17 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 at *2 (Sup. Ct. Qns. Cnty. 2011); People v. Am. Modification Agency. Inc., 2010 N.Y. Misc. LEXIS 2433 (Sup. Ct. N.Y. Cnty. 2010). Instead, the test of fraudulent conduct under Executive Law § 63(12) is whether the act “has the capacity or tendency to deceive, or creates an atmosphere conducive to fraud.” In re People v. Applied Card Sys., Inc., 27 A.D.3d 104, 107 (3d Dep’t. 2005) aff’d. on other grounds, 11 N.Y.3d 105 (2008). The courts have found that Executive Law § 63(12) protects the credulous and the unthinking as well as the cynical and the intelligent; the trusting as well as the suspicious. Spitzer v. Gen. Elec. Co. Inc., 302 A.D.2d 314 (1st Dep’t. 2003); see also Applied Card, 27 A.D.3d at 106. B. Executive Law § 63(12): Illegality. As to the “illegality” prong of the statute, courts have repeatedly found that a violation of state, federal, or local law constitutes illegality within the meaning of Executive Law § 63(12). See State v. Princess Prestige, 42 N.Y.2d 104, 107 (1977); People v. Empyre Inground Pools, Inc., 227 A.D.2d 731, 733 (3d Dep’t. 1996); Lefkowitz v. E.F.G. Baby Products, 40 A.D.2d 364 (3d Dep’t. 1973); Mgmt. Transition Res.,115 Misc. 2d 489 (Sup. Ct. N.Y. Cnty. 1982) (career counseling service that operated as an employment agency without a license and improperly took up-front fees violated Executive Law § 63(12) prohibition on illegality). Both fraud and illegality must be repeated or persistent, each of which are also defined in the statute. “Repeated” is defined as “repetition of any separate and distinct fraudulent or illegal act or conduct which affects more than one person.” Exec. Law § 63(12); see also People v. Wilco Energy Corp, 284 A.D.2d 469 (2d Dep’t. 2001); 9 18 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 Empyre, id., 227 A.D.2d at 733. “Persistent” is defined as “continuance or carrying on of any fraudulent or illegal act of conduct.” Exec. Law § 63(12). Courts have found that under these definitions, the Attorney General is not required to establish that a large percentage of the person’s or business’s transactions were fraudulent or illegal. See Princess Prestige, id., 42 N.Y.2d at 107 (finding 16 out of 3,600 total transactions a sufficient basis to proceed under Executive Law § 63(12)); see also People v. Credit Solutions of Am., 2012 N.Y. Misc. LEXIS 2090, at *5 (Sup. Ct. N.Y. Cnty. 2012). Accordingly, the existence of some satisfied consumers is not a defense to otherwise fraudulent and illegal practices. See Midland Equities, id., 117 Misc. 2d at 207; FTC v. Crescent Publ’g. Grp. Inc., 129 F. Supp. 2d 311, 322 (S.D.N.Y. 2001). C. General Business Law § 349: Deceptive Acts and Practices. The Attorney General is explicitly authorized to bring a special proceeding against any business engaged in deceptive acts and practices in violation of General Business Law § 349. This section prohibits “[d]eceptive acts or practices in the conduct of any business, trade, or commerce or in the furnishing of any service in this state.” The definition of deceptive practices under GBL § 349 is given parallel construction to that of fraud under Executive Law § 63(12). State v. Colorado State Christian Coll., 76 Misc. 2d 50, 54 (Sup. Ct. N.Y. Cnty. 1973). A representation or omission is deceptive pursuant to GBL § 349 if it is likely to mislead a reasonable consumer acting reasonably under the circumstances. Oswego Laborers’ Local 214 v. Marine Midland Bank, NA, 85 N.Y.2d 20, 26 (1995). 10 19 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/16/2021 Like Executive Law § 63(12), GBL § 349 is “intended to be broadly applicable, extending beyond the reach of common law fraud.” New York v. Feldman, 210 F. Supp. 2d 294, 301 (S.D.N.Y. 2002). As with fraud under Executive Law § 63(12), the elements of common law fraud need not be established to demonstrate a violation of GBL § 349. Applied Card, id., 27 A.D.3d at 107; Gen. Electric, id., 302 A.D.2d at 315; People v. Network Assocs., 195 Misc. 2d 384, 389 (Sup. Ct. N.Y. Cnty. 2003); Colorado State Christian Coll., id., 76 Misc. 2d at 56. As a result, a business practice with the capacity to mislead or deceive a reasonable person violates GBL § 349, regardless of whether it falls within the scope of common law fraud. Gaidon v. Guardian Life Ins. Co., 94 N.Y.2d 330, 348 (1998). Consequently, omissions may also be the basis for claims pursuant to GBL § 349. See Applied Card, id., 27 A.D.3d at 107. ARGUMENT POINT I. RESPONDENTS HAVE ENGAGED IN REPEATED AND PERSISTENT FRAUDULENT CONDUCT IN VIOLATION OF EXECUTIVE LAW § 63(12). Executive Law § 63(12) defines “fraud” and “fraudulent” broadly to include “any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise, or unconscionable contractual provisions.” As noted above, fraud under Executive Law § 63(12) extends beyond the reach of common law fraud. See, e.g., Lefkowitz v. Bull Inv. Grp., id., 46 A.D.2d at 28; People v. 21st Century Leisure Spa Int’l., Ltd., 153 Misc. 2d 938, 943 (Sup. Ct. N.Y. Cnty. 1991). The test of fraudulent conduct under Executive Law § 11 20 of 43 FILED: NASSAU COUNTY CLERK 12/16/2021 01:55 PM INDEX NO. 615766/2021 NYSCEF DOC. NO. 3