Class Action Claim Asserting The Defendant Ran a Pyramid Scheme*

The plaintiff in this class action claim is Alf Amore et al. The defendants are Tony Cone et al.

This class action arises out of the alleged breach of home distributorship agreements between the defendant/third-party plaintiff Tony Cone and the individual plaintiff class members who allege that they were fraudulently convinced to buy home delivery routes for the delivery of TV Time.

According to the plaintiffs, the defendant Tony Cone engaged in a pyramid scheme to defraud the plaintiff, used the funds received from them for his own benefit and had no money or expertise to publish and distribute the magazine.

The class action claim alleges six causes of action. The first cause of action seeks recovery of monies paid for non-existent distributorship routes.

The second cause asserts a punitive damages claim predicated on the defendants' malicious and wanton conduct.

The third cause claims treble damages for violation of the General Business Law including deceptive business practices and false advertising.

The fourth, fifth and sixth causes allege breach of contract, unjust enrichment and conversion of plaintiffs' monies.

Approximately three years after the class action claim was filed, a third party action was commenced by Tony Cone saying that the third-party defendants engaged in a campaign to concoct and disseminate false accusations that he was a "crook", "fraud" and "scam artistm," and that this ruined his business.

Before the court is a motion to dismiss by third-party defendants County of Nassau et al. The County of Nassau is asserting that the first action for indemnification fails to state a cause of action and that the claims in the second through sixth causes may not be properly asserted (as they are not related to the issue of whether the defendant third-party plaintiff is liable to plaintiffs in the main action).

Other reasons to dismiss include the fact that newly asserted direct class action claims are barred by the applicable statute of limitations, and that a prior action similar to this one is pending in the US District Court.

The court said that after service of his answer "a defendant may proceed against a person not a party who is or may be liable to the defendant for all or part of the plaintiff's claim against that defendant."

Before a defendant can sue a third party, they must show that the person is or may be liable for all or part of the plaintiffs' claim. It is not enough that the two claims arise out of the same set of facts; the liability of the third-party defendant must be conditioned upon the liability of the defendant/third-party to the plaintiff in the main action.

In considering whether Tony Cone can sue the defendants the following issue must be addressed: whether the injuries alleged by the class action claim were the result of the defendants' alleged defamatory statements to distributors and vendors accusing Cone and his business of fraud and passing a bad check. The answer is no.

Since Cone's liability in the main action is based on its own alleged wrongdoing with the class members, a claim for indemnification against the moving third-party defendants alleging defamation, etc. cannot be sustained.

The critical requirement of a valid third-party claim for contribution is that the breach of duty by the contributing party had a part in causing the injury for which contribution is sought.

In the second through sixth causes of action of the complaint, defendant/third-party plaintiff Cone alleges that the movers negligently conducted an investigation of him and his publishing business and knowingly maligned his reputation with false statements.

Where the two actions at issue are sufficiently similar, and the relief sought is the same or substantially the same, dismissal is warranted.

An already judged matter bars litigation of a claim that was either raised or could have been raised in a prior action provided that the party to be barred had a full and fair opportunity to litigate the claim and the disposition was on the merits.

The claims which defendant/third-party plaintiff Cone seeks to assert against Nassau County et al are barred on the grounds of being a matter already judged.

Nassau County defendants' motion to dismiss the third-party Cone´s complaint is granted.