Opinion
02 Civ. 8318 (SAS)
November 5, 2003
Ramon A. Pagan, Esq., The Law Offices of Neal Brickman, New York, NY, for Plaintiff
A. Michael Weber, Esq., Christina L. Feege, Esq., Littler Mendelson, P.C., New York, NY, for Defendant
MEMORANDUM OPINION AND ORDER
In a complaint filed October 18, 2002, Peter Stamelman sued his former employer, Fleishman-Hillard, Inc., for breach of contract and fraudulent inducement. By Opinion and Order dated July 30, 2003, I granted Fleishman's motion to dismiss Stamelman's claims, but granted leave to replead. See Stamelman v. Fleishman, No. 02 Civ. 8318, 2003 WL 21782645 (S.D.N.Y. July 30, 2003). Stamelman filed an amended complaint asserting only fraudulent inducement, and Fleishman again moves to dismiss. For the reasons that follow, Fleishman's motion is denied.
I. THE AMENDED COMPLAINT
The core allegations in this lawsuit are fully described in my prior Opinion and Order, familiarity with which is presumed. In short, Stamelman alleges that he was lured into accepting employment at Fleishman — and leaving a lucrative job as Vice President of TBWA Entertainment Company — when Fleishman promised him that he could head a new entertainment practice. Stamelman alleges that Fleishman (a public relations and marketing firm) never seriously tried to build its entertainment practice and never provided him the (promised) support that he would have needed to build it himself.
The amended complaint differs from Stamelman's initial complaint in only two material respects. First, Stamelman has discarded his breach of contract claim. Second, Stamelman has added several new paragraphs, giving particular examples of when Fleishman allegedly "sought to exploit Plaintiff's contacts in Hollywood," Amended Complaint ("Compl.") ¶ 22. See id. ¶¶ 22-27.
II. LEGAL STANDARD
Stamelman's amended complaint alleges only one count of fraudulent inducement, a pleading of fraud that must satisfy the requirements of Federal Rule of Civil Procedure 9(b). As the Second Circuit has explained,
To pass muster under rule 9(b), [a] complaint must allege the time, place, speaker, and sometimes even the content of the alleged misrepresentation. Although scienter need not be alleged with great specificity, there must be some factual basis for conclusory allegations of intent. Allegations of scienter are sufficient if supported by facts giving rise to a strong inference of fraudulent intent.Ouaknine v. MacFarlane, 897 F.2d 75, 78-80 (2d Cir. 1990) (quotation marks and citations omitted). A "strong inference of fraudulent intent," in turn, can be pled in one of two ways:
First, the plaintiff may allege a motive for committing fraud and a clear opportunity for doing so. Second, where motive is not apparent, it is still possible to plead scienter by identifying circumstances indicating conscious behavior by the defendant, though the strength of the circumstantial allegations must be correspondingly greater.Powers v. British Vita. P.L.C., 57 F.3d 176, 184 (2d Cir. 1995) (citations, quotation marks and alterations omitted).
III. DISCUSSION
For the same reasons stated in my July 30, 2003, Opinion and Order, Stamelman has adequately pled the circumstances constituting fraud, reliance, and damages. See Stamelman, 2003 WL 21782645, at *6-8. The only question remaining is whether Stamelman has properly pled scienter.
He has now done so, under the motive and opportunity test articulated above. Fleishman's alleged motive for fraudulently inducing Stamelman to accept employment was to gain access to, and to exploit, Stamelman's contacts within the entertainment industry for the benefit of Fleishman's consumer marketing practice. See Compl. ¶ 29 (alleging that Fleishman's "intention was to utilize plaintiff's Hollywood contacts and network for its financial advantage, and then discard plaintiff");see also id. ¶ 12 (alleging that Fleishman "was then looking to buttress its consumer marketing practice with an entertainment marketing group"). Stamelman's initial complaint failed because it did not properly allege "concrete benefits" that Fleishman enjoyed as a result of its fraud — a necessary component of pleading motive. Ganino v. Citizens Util. Co., 228 F.3d 154, 170 (2d Cir. 2000) (quoting Shields v. Citytrust Bancorp. Inc., 25 F.3d 1124, 1128 (2d Cir. 1994)). "He [did] not allege, for example, that Fleishman benefitted from its use of his contacts or that Fleishman retained his contacts subsequent to his termination."Stamelman, 2003 WL 21782645, at *6.
Stamelman has now corrected that deficiency. Paragraphs 22-27 of the amended complaint plead concrete examples of Fleishman capitalizing on Stamelman's entertainment industry contacts:
22. However, prior to Plaintiff's acceptance of the [employment] offer, [Fleishman] sought to exploit Plaintiff's contacts in Hollywood. Specifically, on June 8, 2001, Peter Verrengia [then-General Manager of Fleishman's New York office] had Plaintiff contact, and arrange a telephone conference call that day with, the distinguished television producer Norman Lear. At that time, Norman Lear was proposing to tour the United States with the last extant copy of the Dunlap Broadside of the Declaration of Independence. [Fleishman] asked Plaintiff if he would use his relationship with Norman Lear to assist [Fleishman] in gaining exclusive rights to offer this sponsorship opportunity to [Fleishman] clients.
23. In November 2001, [Fleishman] had Plaintiff begin work on a project for their client ExxonMobil, specifically to use his "expertise" in contacting, and ascertaining the availability of, Jackie Chan to appear in a Public Service Announcement ("PSA") on saving the endangered Asian tiger. When plaintiff learned that Mr. Chan was not available to appear in such a PSA, Plaintiff then identified and contacted three other Asian actors, Chow Yun Fat, Michelle Yeoh and Joan Chen, as replacements for Mr. Chan.
24. In or about February of 2002, [Fleishman], th[r]ough its Kansas City office, asked Plaintiff to identify and arrange a high-profile media event for its client Hallmark Cards and their in-house artist Marjolein Bastin. Once again [Fleishman] had Plaintiff use his high-level contacts, this time to arrange for the Consul General of the Netherlands to co-host the September, 2002 event at a New York City venue.
25. Plaintiff also successfully arranged, and attended, a meeting in New York City between Lee Gabler, a partner at CAA [Creative Artists Agency, an entertainment talent agency], and Peter Verrengia to discuss, among other things, the CAA foundation working with the AARP, a [Fleishman] client, on enlisting such CAA clients as Sally Field, Sydney Poitier and Robert Redford to appear on behalf of the AARP.
26. Indeed, [Fleishman]'s exploitation of Plaintiff's contacts extended to personal favors: upon request, Plaintiff was sending the resumes of the children of [Fleishman] colleagues to contacts in the entertainment business. During his employ with [Fleishman], Plaintiff regularly received emails and phone calls from other [Fleishman] employees who stated, in substance, that they had been referred to him to find Hollywood or European media contacts and entertainment celebrities for their projects at [Fleishman].
27. As detailed herein, [Fleishman] benefitted from its use of Stamelman's contacts, and even retained and expanded some of those contacts subsequent to his termination on May 28, 2002.
Compl. ¶¶ 22-27. While discovery may eventually bear out Fleishman's assertion that these allegations are mere examples of Stamelman fulfilling his job requirements, I must draw all inferences in Stamelman's favor. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). That being so, he has adequately alleged motive.
Stamelman has also adequately pled opportunity, as was the case in his initial complaint. See Stamelman, 2003 WL 21782645, at *6 ("Stamelman does not explicitly state Fleishman's opportunity to act on this motive but presumably, as an international public relations firm and as Stamelman's employer, Fleishman had access to Stamelman's contacts."). Accordingly, Stamelman has properly pled motive and opportunity, and thus, scienter. Because he has also properly pled the circumstances constituting fraud, reliance, and damages, Stamelman has satisfied the requirements of Rule 9(b) and stated a claim for fraudulent inducement.
IV. CONCLUSION
For the reasons set forth above, Fleishman's motion is denied. The Clerk is directed to close this motion [#15]. A conference is scheduled for 4:30 p.m. on December 11, 2003, in Courtroom 15C.