271 F. Supp. 3d 501
S.D.N.Y.2017Background
- Grayson, an attorney, represented TradeWinds Airlines (TW Airlines) in veil-piercing litigation; Werther and Ressler represented related entities (Coreolis/TW Holdings) in parallel litigation before Judge Keenan in SDNY.
- Grayson previously represented Jet Star in related litigation and had a confidentiality/settlement agreement; defendants later alleged she violated confidentiality by representing TW Airlines.
- In 2013 the parties allegedly formed an oral cooperation agreement to prosecute parallel veil-piercing cases and share benefits; discovery resumed and disputes arose about depositions, experts, and documents (including original Jet Star deposition transcripts Grayson gave Werther to copy).
- On August 15, 2013 Werther and Ressler met with the bankruptcy trustee’s counsel Mayer and allegedly made statements criticizing Grayson’s ethics, performance, and responsiveness; Mayer later told Grayson Werther “wants you gone.”
- The Trustee terminated Grayson as special litigation counsel on August 19, 2013; Susman Godfrey replaced her and later the consolidated matter was lost on summary judgment. Grayson sued defendants alleging defamation, injurious falsehood, tortious interference, breach of an oral contract, quantum meruit, unjust enrichment, conversion, trespass to chattel, and prima facie tort.
- The Court granted in part and denied in part defendants’ Rule 12(b)(6) motion: defamation proceeds as to three statements (conflict-of-interest, inability to handle documents/lead depositions, and that defendants did the “lion’s share”); several other claims were dismissed (some with prejudice) and certain claims were permitted to be repleaded; Rule 11 sanctions denied without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Defamation (statements to Mayer) | Werther/Ressler falsely disparaged Grayson’s ethics, competence, and responsiveness to get her removed and replaced for financial motives | Statements fall within common-interest qualified privilege, were true or nonactionable opinion | Claim survives re privilege and truth analysis for three statements (conflict, inability to lead, lion’s share); dismissal as to “unresponsive” (opinion) |
| Injurious falsehood | Same communications disparaged quality of Grayson’s services causing pecuniary loss | Damages alleged are speculative; statements insufficiently particular for special damages | Claim fails for lack of adequately pleaded special damages; leave to replead granted |
| Tortious interference (contract and prospective business) | Defendants induced Trustee to breach/terminate relationship and thwarted Grayson’s prospective recovery | Claims duplicate defamation and flow from reputational harm | Dismissed as duplicative of defamation (injury flows from reputational statements) |
| Breach of alleged oral contract / Quantum meruit / Unjust enrichment | Parties had oral agreement to cooperate and share fees; defendants breached and retained benefit of Grayson’s work | Oral agreement terms are indefinite, statute of frauds applies; quantum meruit/unjust enrichment fail because expected compensation was from the client, not defendants | Breach dismissed with prejudice (failure to plead material terms and Statute of Frauds); quantum meruit and unjust enrichment dismissed with prejudice |
| Conversion / Trespass to chattel (Jet Star transcripts) | Werther took and failed to return Grayson’s original transcripts | Possession was authorized by subpoena and court order; no alleged demand/refusal; conduct justified | Dismissed with prejudice (no demand/refusal alleged; remedy is application to the issuing judge) |
| Prima facie tort | Defendants intentionally harmed Grayson without justification to frustrate her compensation | Alleged motive includes business advantage; lacking disinterested malevolence and special damages | Dismissed for failure to plead special damages; leave to replead only if can allege sole disinterested malevolence |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard — plausibility of factual allegations)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard — facts must nudge claims from conceivable to plausible)
- Koch v. Christie’s Int’l PLC, 699 F.3d 141 (accept factual allegations on motion to dismiss and draw inferences for plaintiff)
- Kirch v. Liberty Media Corp., 449 F.3d 388 (elements for tortious interference and discussion of duplicative tort claims)
- Revson v. Cinque & Cinque, P.C., 221 F.3d 59 (quantum meruit elements)
- Kramer v. Time Warner Inc., 937 F.2d 767 (judicial notice of filings in other litigation permitted to establish existence of filings, not truth)