171 F. Supp. 3d 194
S.D.N.Y.2016Background
- De Sesto worked as Slaine’s nanny/housekeeper from 2000 until May 16, 2014 and sued Slaine for unpaid overtime and related NYLL claims.
- Slaine counterclaimed alleging that, beginning circa 2009, De Sesto repeatedly overreported hours and expenses and was overpaid (Schedule A lists checks and alleged overpayments totalling about $51,722.95).
- After employment ended, De Sesto organized public protests and leafleting at Slaine’s residence seeking unpaid wages; Slaine alleges emotional harm and that some protest participants were associated with controversial political groups.
- De Sesto moved to dismiss six counterclaims and to strike multiple affirmative defenses.
- The court evaluated (a) whether the overreporting-based counterclaims met Rule 9(b) fraud pleading particularity, and (b) whether the protest-based emotional-distress claims met New York’s stringent standards.
- Court disposition: the four overreporting counterclaims (fraud, unjust enrichment, breach of fiduciary duty, civil theft) dismissed without prejudice for failure to plead fraud with particularity; intentional and negligent infliction of emotional distress dismissed with prejudice. Several affirmative defenses were struck or converted to specific denials; leave to replead granted for overreporting claims (deadline given).
Issues
| Issue | Plaintiff's Argument (Slaine) | Defendant's Argument (De Sesto) | Held |
|---|---|---|---|
| Whether overreporting-based counterclaims satisfy Rule 9(b) | Slaine says De Sesto submitted false payment requests identified in Schedule A and thus committed fraud/unjust enrichment/etc. | De Sesto says Slaine fails to plead specific misrepresentations, dates, and factual basis for believing requests were false. | Dismissed: Slaine pleaded dates/amounts but failed to allege the factual basis explaining why she knows the reported hours/expenses were false; Rule 9(b) not met. Leave to replead granted. |
| Whether protest-related conduct supports intentional infliction of emotional distress (IIED) | Slaine alleges protests, leaflets calling her a "wage thief," presence of controversial organizers, and severe emotional harm (insomnia, weight loss). | De Sesto argues protest conduct was typical labor protest and not sufficiently outrageous to state IIED. | Dismissed with prejudice: conduct not sufficiently extreme/outrageous under New York/Howell standard. |
| Whether protest-related conduct supports negligent infliction of emotional distress (NIED) | Slaine claims negligence in organizing protests caused emotional harm. | De Sesto argues Slaine alleges no threat to physical safety or any recognized negligence producing genuine emotional injury. | Dismissed with prejudice: Slaine failed to plead the required "guarantee of genuineness" or fear for physical safety; no compensable NIED. |
| Whether affirmative defenses based on employee misreporting and fraud are permissible | Slaine asserts defenses that De Sesto’s reporting/representations bar recovery or show in pari delicto. | De Sesto argues employer has non-delegable recordkeeping duty and fraud-based defenses must meet Rule 9(b). | Mixed: Defenses premised on negating an element of plaintiff’s claim (knowledge) were converted to specific denials (not struck); fraud-sounding defenses that lacked particularity were struck; in pari delicto defense struck but may be repleaded if overreporting claims are refiled. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions need not be accepted as true)
- Lerner v. Fleet Bank, N.A., 459 F.3d 273 (Rule 9(b) particularity requirements explained)
- Rombach v. Chang, 355 F.3d 164 (Rule 9(b) applies to averments sounding in fraud)
- Kuebel v. Black & Decker Inc., 643 F.3d 352 (employer liability under FLSA requires actual or constructive knowledge; employee misreporting does not automatically bar recovery)
- Chao v. Gotham Registry, Inc., 514 F.3d 280 (duty of employer to prevent unapproved overtime when it has knowledge)
- Howell v. New York Post Co., 81 N.Y.2d 115 (New York’s rigorous standard for IIED)
- Conboy v. AT&T Corp., 241 F.3d 242 (definition of extreme and outrageous conduct)
- Bender v. City of New York, 78 F.3d 787 (discussing IIED pleading difficulty)