Ovitz v. Bloomberg L.P. (Motion for leave granted on Feb. 17, 2011) 77 A.D.3d 515 (1st Dep’t 2011)
We are all familiar with those magazine subscription deals and the like where you sign up for a free trial period, and the magazine automatically renews your subscription if you don’t contact the company. The matter in Ovitz addresses a somewhat similar concept. General Obligations Law §§ 5-902 and 5-903 are statutes that place limitations on a lessor’s ability to automatically renew a contract for services. In Ovitz, the plaintiff and the defendants’ agreement contained an automatic renewal provision; the plaintiff was representative of a putative class action regarding the inoperability and unenforceability of the defendants’ failure to provide the requisite notice set forth in § 5-903 to the plaintiff that the two-year subscription term was to be automatically renewed.
At least one New York Court has recognized that § 5-903 is clearly designed to protect businessspeople from inadvertent renewal pursuant to automatic renewal clause by requiring timely and explicit notice of provision for renewal. The novel issue appears to be whether §§ 5-902 and 5-903 creates a private right of action. The First Department held that the language of the statutes and a legislative intent to create such a right of action is not fairly implied in the statutory provisions and their legislative history.
The Court of Appeals’ decision in this matter will impact businesses like those providing telephone services, real estate management services, and other service-oriented businesses.