Opinion
1:18-cv-01005 (AT) (SDA)
10-09-2023
Indira Kairam, M.D., Plaintiff, v. West Side GI, LLC, Defendant.
ANALISA TORRES, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION
STEWART D. AARON UNITED STATES MAGISTRATE JUDGE
Plaintiff Indira Kairam, M.D. (“Dr. Kairam” or “Plaintiff”) brings this consolidated action against defendants West Side GI, LLC (“WSGI”), Peter Distler, M.D. (“Dr. Distler”) and Ricardo Pou, M.D. (“Dr. Pou”) (collectively, “Defendants”). (See Revised Second Amended Consolidated Complaint (“RSACC”), ECF No. 318.) Presently before the Court is Defendants' partial motion to dismiss the fraud and negligent misrepresentation claims contained in the RSACC. (Defs.' 5/31/2023 Mot., ECF No. 329.) For the reasons set forth below, I respectfully recommend that Defendants' motion be GRANTED.
BACKGROUND
This is the fourth motion to dismiss Plaintiff's fraud claims and second motion to dismiss her negligent misrepresentation claims, which were added later. The Court assumes familiarity with the relevant factual and procedural background of this action, which exhaustively has been set forth in the Court's prior decisions. See, e.g., Kairam v. W. Side GI, LLC, No. 18-CV-01005 (AT) (SDA), 2022 WL 2530455, at *1-3 (S.D.N.Y. May 25, 2022) (hereinafter “Kairam I”), report and recommendation adopted in part, rejected in part, 2022 WL 4234548 (S.D.N.Y. Sept. 14, 2022) (hereinafter “Kairam II”), opinion vacated in part on reconsideration, 2023 WL 2986930 (S.D.N.Y. Apr. 18, 2023) (hereinafter “Kairam III”). The Court considers the new allegations of the RSACC in analyzing Plaintiff's claims below.
The Court assumes that the well-pleaded allegations of the RSACC are true. See Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (when “well-pleaded factual allegations” are present, “a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief”). Moreover, in making its recommendations herein, the Court ignores Plaintiff's counsel's inaccurate and disrespectful rhetoric regarding “[t]he Court's repeated baseless and erroneous reading of the applicable law” and the “chain of errors” purportedly committed by the Court. (Pl.'s Opp. Mem., ECF No. 354, at 1-2.)
LEGAL STANDARDS
To survive a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6), a complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. The Court “must accept as true all of the factual allegations contained in a complaint[,]” but “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citation omitted). Further, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Id.; see also Rothstein v. UBS AG, 708 F.3d 82, 94 (2d Cir. 2013) (“we are not required to credit conclusory allegations or legal conclusions couched as factual allegations”) (citing Twombly, 550 U.S. at 555, 557).
When deciding a Rule 12(b)(6) motion, a district court may consider, in addition to the factual allegations in the complaint, “documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint.” DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010); see also Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (court may consider “any written instrument attached to [the complaint] as an exhibit or any statements or documents incorporated in [the complaint] by reference” (citation omitted)).
DISCUSSION
I. Fraud Claims (Counts 8 and 22)
A. Legal Standards
“Under New York law, the five elements of fraud are (1) a material misrepresentation or omission of fact (2) made by [a] defendant with knowledge of its falsity (3) and intent to defraud; (4) reasonable reliance on the part of the plaintiff; and (5) resulting damage to the plaintiff.” Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC, 13 F.4th 247, 259 (2d Cir. 2021). Fraudulent concealment claims have the additional element that the defendant had a duty to disclose the material information. See Banque Arabe et Internationale D'Investissement v. Maryland Natl Bank, 57 F.3d 146, 153 (2d Cir. 1995).
“Under New York law, a duty to disclose material facts arises in one of three ways: (1) where the parties stand in a confidential fiduciary relationship, (2) where one party possesses superior knowledge, not readily available to the other, and knows that the other is acting on the basis of mistaken knowledge, or (3) where a party to a business transaction has made a partial or ambiguous statement, on the theory that once a party has undertaken to mention a relevant fact to the other party it cannot give only half of the truth.” Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F.Supp.2d 162, 201 (S.D.N.Y. 2011) (citing Lerner v. Fleet Bank, N.A., 459 F.3d 273, 292 (2d Cir. 2006)).
Fraud claims are subject to the heightened pleading standard of Federal Rule of Civil Procedure 9(b). See Lerner, 459 F.3d at 290. Accordingly, “the complaint must: (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Id. (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993)). “The heightened particularity requirement of Rule 9(b) does not apply to allegations regarding fraudulent intent, also known as scienter, which may be alleged generally.” Tradeshift, Inc. v. Smucker Servs. Co., No. 20-CV-03661 (MKV), 2021 WL 4463109, at *4 (S.D.N.Y. Sept. 29, 2021) (citing Iqbal, 556 U.S. at 686). “However, plaintiffs ‘are still required to plead the factual basis which gives rise to a strong inference' of fraudulent intent.'” Id. (quoting Stephenson v. PricewaterhouseCoopers, LLP, 482 Fed.Appx. 618, 622 (2d Cir. 2012)); see also Lerner, 459 F.3d at 290 (courts “must not mistake the relaxation of Rule 9(b)'s specificity requirement regarding condition of mind for a license to base claims of fraud on speculation and conclusory allegations,” rather “plaintiffs must allege facts that give rise to a strong inference of fraudulent intent”).
B. Fraud Claims Based On Misrepresentations During 2012-2014 Negotiations
Plaintiff again asserts fraud claims based on alleged misrepresentations by Defendants during the time she was negotiating to purchase shares in WSGI. (RSACC ¶¶ 190, 234.) As in her prior pleading, Plaintiff alleges that Defendants knowingly and falsely represented that the price of her shares was related to the value of the company; represented the amount of units WSGI would agree to sell to her was related to her proportion of medical procedures; represented that the number of units was based on a valuation that was permitted under the Ambulatory Surgery Center (“ASC”) safe harbor to the Anti-Kickback Statute (the “ASC Safe Harbor”);and represented that WSGI was in compliance with the ASC Safe Harbor when they knew that the transaction with Plaintiff would void the ASC Safe Harbor. (See id.)
“The AKS, 42 U.S.C. § 1320a-7b(b), includes a ‘safe harbor' exception for any payment practice authorized by the Secretary of Health and Human Services (‘HHS').” Kairam I, 2022 WL 2530455, at *2 n.4 (quoting DeBartolo v. Healthsouth Corp., 569 F.3d 736, 738 (7th Cir. 2009)). “In 1999 the Secretary of HHS used that safe-harbor authority to permit some payments from ambulatory surgical centers to qualified physician-investors.” Id. (citation omitted).
1. Alleged Misrepresentations Regarding Price/Value Of Units
The Court previously recommended dismissal of Plaintiff's claims based on alleged misrepresentations regarding the price of her units and their value, finding that Plaintiff had not plausibly alleged reasonable reliance because she disclaimed reliance on any representations by WSGI or its managers or members regarding the value of the company or its units, which recommendation was adopted. See Kairam 1, 2022 WL 2530455, at *9; see also Membership Subscription Agreement (“MSA”), RSACC Ex. 2, ECF No. 318-1, § 5(t).Despite additional factual allegations in the RSACC, Defendants argue that Plaintiff still fails to plead a fraud claim based on alleged misrepresentations regarding the price of her units or their value for the same reason. (See Defs.' Mem., ECF No. 330, at 10-12.) In response, Plaintiff primarily raises legal arguments, some recycled and some new, as to the justifiable reliance standard and why the disclaimers in the MSA were ineffective, inapplicable or inoperative. (Pl.'s Opp. Mem. at 9-14.)
Section 5(t) of the MSA states:
Purchaser has relied solely upon the investigations made by or on behalf of Purchaser in making the decision to purchase Purchaser's Units and is familiar with the operations and objectives of the Company in conducting the Surgery Center. Purchaser has been furnished with or has had access to such information, documents and records as an investor would customarily require to evaluate the benefits and risks of the proposed investment together with such additional information as is necessary to verify the accuracy of the information supplied. Purchaser further represents that Purchaser has had an opportunity to ask such questions of the Company's management and representatives as Purchaser has deemed necessary or desirable. Purchaser further represents and warrants that neither the Company, nor any Members, Managers, officers, representatives, or agents of the Company have made any representations or warranties, other than as stated herein, regarding the value of the Company or the Units, or any future business profitability or growth of the Company or otherwise.MSA § 5(t).
a. Reasonable Or Justifiable Reliance Standard
As she did in her prior motion for reconsideration (see Pl.'s Mem. Support Mot. for Reconsideration, ECF No. 250, at 23-24), Plaintiff again argues that the proper standard for a fraud claim is “justifiable reliance” rather than “reasonable reliance.” (Pl.'s Opp. Mem. at 7-8.) Contrary to Plaintiff's statement that Judge Torres “also noted that the correct test is justifiable reliance[,]” Judge Torres previously rejected this argument, explaining that “Plaintiff's reliance on an inapposite U.S. Supreme Court case [Field v. Mans, 516 U.S. 59, 70 (1995), the same case Plaintiff cites again here] is misguided” and that “Judge Aaron applied the correct standard” in evaluating Plaintiff's claims. (9/14/2022 Order, ECF No. 241, at 6 n.7 (discussing same standard in context of negligent misrepresentation claims)). In any event, “both the Second Circuit and the New York courts appear to use standards of ‘reasonable reliance' and ‘justifiable reliance' interchangeably in adjudicating fraud claims.” Computech Int'l, Inc. v. Compaq Computer Corp., No. 02-CV-02628 (RWS), 2004 WL 1126320, at *9 (S.D.N.Y. May 21, 2004) (collecting cases); see also PHL Variable Ins. Co. v. Town of Oyster Bay, 929 F.3d 79, 94 (2d Cir. 2019) (“In order to state a claim under New York law for any level of actionable misrepresentation, a plaintiff must allege, inter alia, that it reasonably or justifiably relied on the misrepresentation.”); Loreley, 13 F.4th at 259 (referring to reasonable reliance as element of fraud claim under New York law).
Plaintiff also argues that justifiable reliance is a subjective standard that takes the sophistication of the parties into account and cannot be decided at the motion to dismiss stage. (Pl.'s Opp. Mem. at 8.) However, courts have found that “the standard is an objective one” that can be addressed on a motion to dismiss. See Brock Cap. Grp. LLC v. Siddiqui, No. 21-CV-02070 (NRB), 2022 WL 2047589, at *3 (S.D.N.Y. June 7, 2022); see also Terra Sec. ASA Konkursbo v. Citigroup, Inc., 740 F.Supp.2d 441, 449 (S.D.N.Y. 2010) (reasonableness of reliance properly considered at motion to dismiss stage) (citing Emergent Cap. Inv. Mgmt., LLC v. Stonepath Grp., Inc., 343 F.3d 189, 196 (2d Cir. 2003)), aff'd, 450 Fed.Appx. 32 (2d Cir. 2011).
In assessing reasonable reliance, courts “consider the entire context of the transaction, including factors such as its complexity and magnitude, the sophistication of the parties, and the content of any agreements between them.” Universe Antiques, Inc. v. Vareika, 510 Fed.Appx. 74, 75-76 (2d Cir. 2013) (quoting Crigger v. Fahnestock & Co., 443 F.3d 230, 235 (2d Cir. 2006)). Ordinarily, a plaintiff has “no duty to exercise due diligence” but must show “minimal diligence” or care “that negat[es] its own recklessness.” Banque Franco-Hellenique de Commerce Int'l et Mar., S.A. v. Christophides, 106 F.3d 22, 27 (2d Cir. 1997). Courts impose a more stringent standard on sophisticated parties, holding that they have a duty to obtain available information material to investment decisions once put on notice of the existence of such information. See Lazard Freres & Co. v. Protective Life Ins. Co., 108 F.3d 1531, 1543 (2d Cir. 1997).
Moreover, under New York law, a party typically “cannot justifiably rely on a representation that is specifically disclaimed in an agreement.” Dallas Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775, 785 (2d Cir. 2003) (citing Danann Realty Corp. v. Harris, 5 N.Y.2d 317, 321 (1959)). Thus, “while reasonable reliance is often an issue of fact for trial . . . even dismissal at the Rule 12(b)(6) stage [ ] is appropriate where . . . a specific contractual disclaimer precludes the plaintiff from proving that its reliance was reasonable.” JM Vidal, Inc. v. Texdis USA, Inc., 764 F.Supp.2d 599, 624 (S.D.N.Y. 2011) (citing cases). “Only when matters are held to be peculiarly within defendant's knowledge is it said that plaintiff may rely without prosecuting an investigation,” because the plaintiff would have “no independent means of ascertaining the truth.” Crigger, 443 F.3d at 234 (internal quotation marks, citation, and alterations omitted); see also Warner Theatre Assocs. Ltd. P'ship v. Metro. Life Ins. Co., 149 F.3d 134, 136 (2d Cir. 1998) (if “allegedly misrepresented facts are peculiarly within the misrepresenting party's knowledge, even a specific disclaimer will not undermine another party's allegation of reasonable reliance on the misrepresentations.”) (citing Danann Realty, 5 N.Y.2d at 322).
For the reasons set forth below, the Court finds that the disclaimers in the MSA were effective and that Plaintiff has not plausibly alleged that the information regarding the price of her units or the valuation were peculiarly within Defendants' knowledge. Accordingly, regardless of the whether Plaintiff can be considered a sophisticated party, see Kairam III, 2023 WL 2986930, at *2 (vacating conclusion that Plaintiff was sophisticated party and finding Court need not make that determination at this stage), the Court finds that Plaintiff has not plausibly alleged reasonable reliance on alleged misrepresentations regarding her units or their value.
b. Effectiveness Of Disclaimers
Plaintiff raises two arguments as to why the representations in § 5(t) of the MSA are not effective. First, Plaintiff argues that there is no basis for the Court to find any of the disclaimers effective because there is a factual question as to whether Defendants ever complied with § 3(a) of the MSA by signing and delivering the agreement to her. (Pl.'s Opp. Mem. at 9-10.) The notion that Plaintiff has continued to work at WSGI for over nine years while somehow questioning whether the MSA ever has been effectuated lacks credulity. Plaintiff does not actually assert that Defendants never signed the MSA or that she never received a signed copy. Indeed, the RSACC alleges that WSGI signed the MSA in or about March 2015 (RSACC ¶ 95) and the majority of Plaintiff's claims, including her fraud claims, are founded on alleged harm she suffered based on the purchase of her shares. (See id. ¶¶ 191, 235.) Accordingly, the Court finds no merit to Plaintiff's argument that the disclaimers in the MSA are ineffective on this basis.
Second, Plaintiff argues that the disclaimers are not specific enough to cover the alleged misrepresentations regarding her units or their value. (Pl.'s Opp. Mem. at 10-11.) Plaintiff raised this argument in her objections to the prior Report & Recommendation and that objection was overruled. (See Pl.'s Objs., ECF No. 221, at 4-5; Kairam II, 2022 WL 4234548, at *2 (overruling objections regarding disclaimers in MSA).) Nothing in the RSACC warrants a different result now.
Under New York law, “it is well established that a general, boilerplate disclaimer of a party's representations cannot defeat a claim for fraud.” Dallas Aerospace, 352 F.3d at 785 (citing Danann Realty, 5 N.Y.2d at 320). “However, a party cannot justifiably rely on a representation that is specifically disclaimed in an agreement[.]” Id. Here, § 5(t) of the MSA contains specific representations by Plaintiff that she relied “solely” on investigations made by or on behalf of her; that she had been furnished with or had access to documents “to evaluate the benefits and risks of the proposed investment” and information “necessary to verify the accuracy of the information supplied[;]” and, most pertinent to her misrepresentation claims based upon her units or their value, that WSGI had not made any “representations or warranties, other than as stated herein, regarding the value of the Company or the Units[.]” (MSA § 5(t).) This disclaimer goes well beyond a general boilerplate disclaimer and addresses the specific subject matter of Plaintiff's claims. Thus, the Court agrees with Defendants (see Defs.' Reply Mem., ECF No. 369, at 5) that the disclaimers in the MSA are directly related to the subject matter of Plaintiff's claims based on her units and their value. See Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404 F.3d 566, 576 (2d Cir. 2005) (there need not be “precise identity between the misrepresentation and the particular disclaimer” as long as the “substance of the disclaimer provisions tracks the substance of the alleged misrepresentations”); see also Danann Realty, 5 N.Y.2d at 323 (“If the language here used is not sufficient to estop a party from claiming that he entered the contract because of fraudulent representations, then no language can accomplish that purpose.”).
c. Peculiar Knowledge
Plaintiff also argues that Defendants' peculiar knowledge rendered the disclosures inoperative. (Pl.'s Opp. Mem. at 12-14.) As set forth above, under New York law, a party typically cannot justifiably rely on a representation that is specifically disclaimed in an agreement, unless the party can show the allegedly misrepresented facts are peculiarly within the misrepresenting party's knowledge. See Dallas Aerospace, 352 F.3d at 785; Warner Theatre, 149 F.3d at 136. “The ‘peculiar-knowledge' exception is meant to ‘address circumstances where a party would face high costs in determining the truth or falsity of an oral representation' and does not apply where a party ‘could have insisted that the written contract terms reflect any oral undertaking on a dealbreaking issue.'” Psenicska v. Twentieth Century Fox Film Corp., 409 Fed.Appx. 368, 371 (2d Cir. 2009) (quoting Warner Theatre, 149 F.3d at 136). Facts are considered within a defendant's peculiar knowledge when a plaintiff has “no independent means of ascertaining the truth.” Lazard Freres, 108 F.3d at 1542.
The Court previously rejected Plaintiff's peculiar knowledge arguments, finding that her prior pleading did not adequately allege any facts that were within the peculiar knowledge of Defendants. See Kairam 1, 2022 WL 2530455, at *9 n. 12; see also Kairam II, 2022 WL 4234548, at *2 (overruling objections), Kairam III 2023 WL 2986930, at *3 (denying reconsideration). The RSACC attempts to cure this deficiency by adding allegations that certain categories of information, including WSGI's revenue and insurance mix, the valuation report prepared by WSGI's accountant and recent comparable sales, was peculiar to WSGI. (RSACC ¶¶ 23, 36-37, 40.)
Plaintiff has not plausibly alleged that any of this information was peculiar to WSGI. Plaintiff does not allege that she was denied access to information regarding WSGI's revenue and insurance mix, but instead alleges that she believed Mr. Fowler was obtaining the information from WSGI for her. (RSACC ¶ 23.) Nor does Plaintiff allege that she was denied access to the valuation report or that she was given a partial or incorrect report.Rather, the allegations in the RSACC make clear that Plaintiff was aware that WSGI had obtained a valuation to price her shares. (See, e.g., RSACC ¶ 36 (“During the negotiations in the autumn of 2014, Dr. Peter Distler of WSGI and Jordan Fowler represented that they had obtained an independent valuation for the shares of WSGI.”); see also id. (“Mr. Fowler represented on a phone call with Dr. Kairam in or about the third week of October 2014, that he had received ‘the' valuation[.]”).) The fact that Plaintiff apparently never sought to review the valuation report does not render it within WSGI's peculiar knowledge. See Psenicska, 409 Fed.Appx. at 371 (plaintiffs could not rely on peculiar knowledge exception when took no steps to confirm oral representations on which they claimed to have relied); see also Crigger, 443 F.3d at 234 (“Reasonable reliance entails a duty to investigate the legitimacy of an investment opportunity where ‘plaintiff was placed on guard or practically faced with the facts.'”) (quoting Mallis v. Bankers Tr. Co., 615 F.2d 68, 81 (2d Cir. 1980)).
Plaintiff's claim based on WSGI's revenue and insurance mix fails for the additional reason that Plaintiff has not plausibly alleged that statements by Mr. Fowler and Dr. Distler about WSGI's revenue and insurance mix or her appropriate share of units (see, e.g., RSACC ¶¶ 23, 25, 70) were material misrepresentations. Plaintiff has not alleged any facts to support her allegations that her “appropriate share” of units was greater than what she was offered. The RSACC contains only a conclusory allegation that Defendants knew that Plaintiff's appropriate share was the 5-6% she requested. (RSACC ¶ 70.) Moreover, Plaintiff has not sufficiently alleged fraudulent intent. Plaintiff's allegation that Mr. Fowler had a financial interest in WSGI is insufficient. See, e.g., Steamship Trade Ass'n of Baltimore-Int'l Longshoreman's Ass'n Pension Fund v. Olo Inc., No. 22-CV-08228 (JSR), 2023 WL 4744197, at *5 (S.D.N.Y. July 25, 2023) (scienter requirement not satisfied “merely by an allegation of a motive possessed by virtually all corporate insiders”). Further, Plaintiff's allegation that Defendants failed to disclose Mr. Fowler's membership status in order to induce her to provide her own confidential financial information does not support the inference that Defendants shorted her on shares. Again, Plaintiff has not plausibly alleged that the information she provided justified a greater number of shares.
As Defendants point out, Plaintiff does not claim that the price of her shares was inconsistent with the valuation report provided by WSGI's accountant. (Defs.' Mem. at 10.) To the contrary, the 2.65 shares offered to Plaintiff at a price of $528,121.15 is consistent with the accountant's conclusion of value as of August 31, 2014. (See WSGI Valuation Report (defined in n.6, infra) at 32.)
The WSGI Valuation Report contains what Plaintiff refers to as the “lower valuation” (see RSACC ¶¶ 67, 190, 234) and, thus, Plaintiff easily could have discovered that information by asking to review the report. Although Plaintiff resists being labeled a sophisticated party, even the most unsophisticated investor cannot fail to do any diligence, disclaim reliance on specific representations, represent that she had access to all necessary information (see MSA § 5(t)) and still claim to have been defrauded. Cf. UniCredito Italiano SpA v. JPMorgan Chase Bank, 288 F.Supp.2d 485, 499-500 (S.D.N.Y. 2003) (“[I]f the plaintiff has the means of learning the facts and disclaims reliance on the defendant's representations, there simply is no reason to relieve it of the consequences of both its failure to protect itself and its bargain to absolve the defendant of responsibility.”).
As noted in paragraph 52 of the RSACC, after commencement of this action, WSGI produced to Plaintiff a Report on Valuation of WSGI as of August 31, 2014 that was prepared by King and Associates, CPA, P.C. (the “WSGI Valuation Report”), a redacted version of which was filed by Plaintiff as Exhibit 5 to the RSACC (ECF No. 318-3). An unredacted version of the Valuation Report previously had been filed by Plaintiff under seal at ECF No. 252-4.
The WSGI Valuation Report utilized two different valuation methodologies, i.e., the income approach method and the adjusted net value method. (See WSGI Valuation Report at 28-30.) The Report concluded that the income approach method, which resulted in a higher valuation, was “most appropriate method to value the Company,” stating that this method “is most appropriate for estimating the value of a business that is not capital intensive and is service intensive.” (Id. at 29.) The Report stated that the adjusted net value method, which resulted in a lower valuation, “would understate the value of the Company” because WSGI “is service intensive.” (Id. at 28.)
Plaintiff seeks to avoid the consequences of her inaction by alleging that Defendants withheld information concerning recent comparable sales of WSGI shares from the accountant who prepared the WSGI Valuation Report and, therefore, she “would not have gotten any more true information” had she asked for it. (RSACC ¶¶ 36-37, 40, 50, 66-67, 74.) This allegation is founded upon the purported premise that Defendants withheld comparable sales of WSGI shares from their accountant in order to obtain a higher valuation. (Id. ¶ 38.) In that regard, Plaintiff alleges that the accountant who prepared the WSGI Valuation Report had considered a third valuation methodology, which Plaintiff refers to as “comparable sales,” but did not use that methodology because the accountant was not aware of any recent sales because WSGI concealed them. (RSACC ¶¶ 36-39.) Specifically, Plaintiff alleges that, “[u]pon information and belief, had Defendants provided the accountant with accurate information concerning recent comparable sales of WSGI shares, the accountant would have provided a valuation based on those sales and that valuation amount would have been significantly less than that amount Defendants provided to Dr. Kairam.” (Id. ¶ 39.) Plaintiff's allegations regarding recent sales of WSGI shares is based upon a misapprehension of the third valuation method that is addressed in the WSGI Valuation Report. The third valuation method was the “guideline (or comparative) approach,” pursuant to which companies that are “analogous for investment purposes” are identified based upon “areas of business circumstances.” (WSGI Valuation Report at 27.) This method was not used because companies “sharing similar investment characteristics” could not be located. (Id. at 28.) Thus, recent sales of WSGI shares were irrelevant to the third valuation method and could have had no impact upon it.
d. Scope Of Disclaimers
Plaintiff also argues that the disclaimers cannot apply to statements made by Mr. Fowler because he was not a member of WSGI at the time the MSA was signed, having transferred his shares in February 2013. (Pl.'s Opp. Mem. at 11-12; see also RSACC ¶ 55.) Plaintiff's allegations regarding Mr. Fowler are difficult to reconcile. Plaintiff bases some of her fraud claims on alleged misrepresentations made by Mr. Fowler during the negotiations period, i.e., from 2012 through September 2014, alleging that no one told her Mr. Fowler was a member of WSGI and that she thought he was acting as an intermediary or neutral. (See, e.g., RSACC ¶¶ 15, 19, 21-23, 27). For example, in support of her claim based on representations that the amount of units WSGI would agree to sell to her was related to her proportion of procedures, Plaintiff alleges that she disclosed her confidential information to Mr. Fowler, believing him to be a neutral, and then relied on Mr. Fowler's representations that her appropriate share would be 2-3%. (RSACC ¶¶ 2123, 25.)
At other times, Plaintiff plainly alleges that Mr. Fowler was negotiating on behalf of WSGI and that she believed Mr. Fowler was making representations on behalf of WSGI. (See, e.g., RSACC ¶¶ 15-16, 25, 31-36, 70.) As discussed further below, Plaintiff even goes so far as to allege that Defendants intentionally misrepresented Mr. Fowler's status in the MSA, by listing him as a member (when he had resigned in February 2013), in order to induce her to “rely on Mr. Fowler's knowledge as an insider at WSGI.” (Id. ¶ 55; see also Pl.'s Opp. Mem. at 12 (arguing that Plaintiff relied on statements from Mr. Fowler because of representation in MSA that he was a member).)
Plaintiff cannot have it both ways. Either she believed Mr. Fowler was acting as a neutral or she believed he was representing WSGI. Regardless of which is true, her claims based on Mr. Fowler's alleged representations should be dismissed. To the extent Plaintiff bases her claims on representations Mr. Fowler purportedly made on behalf of WSGI, he would have been acting as an agent or representative of WSGI and MSA § 5(t) would clearly apply.(See MSA § 5(t).) To the extent Plaintiff bases her claims on Defendants' failure to disclose Mr. Fowler's status as a member of WSGI, Plaintiff cannot allege reasonable reliance regardless of any disclaimers in the MSA because Mr. Fowler was listed as a member in the MSA and, thus, she would have been aware of his interest in the company prior to signing the MSA.
To the extent Plaintiff argues the disclaimers in the MSA do not protect Dr. Distler and Dr. Pou from suit because they are not parties to the MSA (Pl.'s Opp. Mem. at 12), MSA § 5(t) also plainly applies given their status as members of WSGI. (See Defs.' Reply Mem. at 5-6.)
2. Alleged Misrepresentations Regarding Compliance With ASC Safe Harbor
The Court previously recommended dismissal of Plaintiff's fraud claims based on compliance with the ASC Safe Harbor, finding that the purported statements regarding compliance did not constitute misrepresentations of fact and that Plaintiff could not allege reasonable reliance because the MSA warned investors like Plaintiff that it might be found not to be in compliance, which recommendation was adopted. See Kairam 1, 2022 WL 2530455, at * 9 (citing MSA Ex. A § 24).
To the extent Plaintiff's claim still is based on representations that “WSGI believed its actions to be within the ASC Safe Harbor” (RSACC ¶ 63), it should be dismissed for the same reasons. Moreover, that allegation, along with other allegations in the RSACC that Mr. Fowler told Plaintiff that negotiating on price would void the ASC Safe Harbor (RSACC ¶¶ 50, 55-56) and that Defendants “repeatedly and falsely told Dr. Kairam that WSGI was within the ASC Safe Harbor” (RSACC ¶ 43), do not meet the particularity requirements of Rule 9(b), which requires a complaint to, inter alia, “specify the statements plaintiff contends were fraudulent,” “identify the speaker” and “state where and when the statements were made.” Lerner, 459 F.3d at 290.
The only specific statement regarding compliance with the AKS in the RSACC is Plaintiff's allegation that during a conversation “in or about the third week of October 2014, Mr. Fowler represented that Dr. Kairam and WSGI could not negotiate on the share price because the AntiKickback Statute required them to use the accountant's valuation.” (RSACC ¶ 52.) Plaintiff attempts to turn this statement into an actionable misrepresentation based upon her own conclusion that the accountant's valuation voided the ASC Safe Harbor and, therefore, violated the AKS. (See RSACC ¶¶ 44, 61, 73.) However, as Defendants point out, even if the valuation voided the ASC Safe Harbor, it does not follow that it violated the AKS. (See Defs.' Mem. at 15 (“Being within the ASC Safe Harbor ensures that an ASC will not be in violation of the AKS, but ASC's can fall outside of the protections of the ASC Safe Harbor without violating the AKS.”); see also MSA Ex. A § 24(c)-(d).) Moreover, Mr. Fowler's statement that the AKS required WSGI to use the accountant's valuation could have been based on a variety of factors unrelated to the ASC Safe Harbor. (See Defs.' Mem. at 17-18.) Accordingly, Plaintiff has not plausibly alleged that this statement was false.
Defendants dispute Plaintiff's theory that, to qualify for ASC Safe Harbor protection, the amount of payment to an investor in return for the investment must be directly proportional to the amount of capital invested by that investor. (See Defs.' Mem. at 15 n.5.) Although Plaintiff alleges that the valuation used by the accountant did void the ASC Safe Harbor (RSACC ¶ 73), when referencing an advisory opinion from the U.S. Department of Health and Human Services she alleges only that a cash flow valuation “can” void the ASC Safe Harbor. (RSACC ¶¶ 60-61.)
Plaintiff also has not plausibly alleged that Defendants knew Mr. Fowler's statement was false. Plaintiff points to documents later filed with the New York State Department of Health showing the price certain members paid for their shares, which, she contends, demonstrate that “Defendants knew WSGI was not within the ASC Safe Harbor.” (RSACC ¶ 44.) Even if that were true, it does not demonstrate that Defendants knew Mr. Fowler's statement that the AKS required them to use the accountant's valuation was false. Plaintiff's other conclusory allegations that Defendants knew WSGI was not in the ASC Safe Harbor; knew using the accountant's valuation would void the ASC Safe Harbor and/or knew the transaction with Dr. Kairam would void the ASC Safe Harbor (see RSACC ¶ 43-44, 46, 51-52, 56, 63, 71-73) are similarly insufficient. See Tradeshift, 2021 WL 4463109, at *6 (conclusory statements insufficient to allege knowledge) (citing cases); see also Meyer v. Seidel, No. 20-CV-03536 (VSB), 2021 WL 3621695, at *11 (S.D.N.Y. Aug. 16, 2021) (allegations of defendant's expertise and experience insufficient to allege “must have known” representations were false when made). Indeed, the statement of risk factors attached to the MSA makes clear that WSGI believed that profit distributions to members would not violate the AKS “because such distributions are not intended to induce referrals in violation of the law[,]” MSA Ex. A § 24(c), and that WSGI believed it would be in compliance with AKS despite “investments in the Company that do not meet all of the ASC Safe Harbor criteria.” Id. § 24(d).
C. Fraudulent Inducement Claims
Plaintiff again alleges that Defendants fraudulently induced her to close her office-based surgery practice (“OBS”) and perform cases at WSGI during the transition period by representing that her compensation would remain the same; and induced her to stay at WSGI in 2016 by promising to resolve her outstanding claims and promising her new employment. (RSACC ¶¶ 2834, 89-92, 96-99, 107, 190, 234; Pl.'s Opp. Mem. at 6-7.)
The Court previously dismissed these claims as duplicative of Plaintiff's breach of contract claims. See Kairam 1, 2022 WL 2530455, at *10 (dismissing fraud claims based on purported contracts) (citing Lenard v. Design Studio, 889 F.Supp.2d 518, 529 (S.D.N.Y. 2012) (“[A] fraud claim cannot exist when [it] arises out of the same facts as a breach of contract claim with the sole additional allegation that the defendant never intended to fulfill its express contractual obligations.”); Kairam II, 2022 WL 4234548, at *3 (“Where, as here, Plaintiff fails to ‘establish that the tortious conduct alleged in the proposed pleading is separate and distinct from any breach of the governing contract,' a fraud claim necessarily fails.”) (quoting Kay Dentistry PLLC v. Turchin, No. 13-CV-05306 (JMF), 2014 WL 2649976, at *5 (S.D.N.Y. June 13, 2014)), Kairam III, 2023 WL 2986930, at *3 (denying reconsideration).
In the Amended Consolidated Complaint, Plaintiff asserted breach of contract claims based on, inter alia, failing to pay her for the procedures she performed during the transition period and failing to pay her the negotiated amount for her lost income. (See ACC, ECF No. 187, ¶¶ 162, 247.)
To state a separate fraud claim Plaintiff must allege tortious conduct that is separate and distinct from the breach of contract. See Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 20 (2d Cir. 1996); see also Fairway Prime Estate Mgt., LLC v. First Am. Intl. Bank, 99 A.D.3d 554, 557 (1st Dep't 2012) (fraud claim “can be predicated upon an insincere promise of future performance only where the alleged false promise is collateral to the contract the parties executed; if the promise concerned the performance of the contract itself, the fraud claim is subject to dismissal as duplicative”) (internal quotation marks omitted). If “a plaintiff pleads misconduct independent from the breach of contract, such that it was induced to enter into a transaction because a defendant misrepresented material fact, then the fraud claim survives even though the same circumstances also give rise to the breach of contract claim.” KCG Americas LLC v. Brazilmed, LLC, No. 15-CV-04600 (AT), 2016 WL 900396, at *4 (S.D.N.Y. Feb. 26, 2016) (quoting First Bank of the Ams. v. Motor Car Funding Inc., 257 A.D.2d 287, 291-92 (1st Dep't 1999)) (alterations omitted).
The RSACC adds allegations that Defendants represented Plaintiff would not lose any income from moving her cases to WSGI because distributions would make up for the loss of income from closing her OBS. (RSACC ¶¶ 25-26, 28-34, 90-93.) Plaintiff alleges that she suffered a loss of at least $200,000 but does not allege whether she received any distributions. (Id. ¶ 92.) Her alleged harm is only that WSGI never paid her the $200,000 that the parties negotiated as compensation for her performing procedures at WSGI during the transition period. (Id. ¶ 98, 100.) Thus, her claim still is based on a future promise to compensate her for cases, which is insufficient to state a claim for fraud. See Matsumura v. Benihana Nat. Corp., 542 F.Supp.2d 245, 253 (S.D.N.Y. 2008) (“[U]nder New York law, a promissory statement of what will be done in the future gives rise only to a breach of contract cause of action”) (citing Stewart v. Jackson & Nash, 976 F.2d 86, 88-89 (2d Cir. 1992)).
The RSACC also adds allegations that Defendants previously had told another doctor that they could not compensate her for cases performed at WSGI prior to becoming a member because it would violate the AKS and, therefore, they “already knew” that they would use the same excuse to not pay Dr. Kairam. (RSACC ¶¶ 96-99.) However, allegations that Defendants knew they would not pay is not a misrepresentation of fact, but just another way of alleging that they were not sincere in their promise to perform, which is insufficient to transform a breach of contract claim into a claim for fraud. Plaintiff's claims that Defendants induced her to stay at WSGI in 2016 by promising to resolve her outstanding claims and promising her new employment fails for the same reason. Accordingly, Plaintiff's fraudulent inducement claims should be dismissed.
D. Alleged Frauds In The MSA
The RSACC adds allegations that Defendants knowingly gave Plaintiff false information in the MSA regarding members and their share ownership.(RSACC ¶¶ 47-48, 68, 190, 234; Pl.'s Opp. Mem. at 6.) In particular, Plaintiff asserts that Defendants misrepresented Mr. Fowler's membership status and failed to disclose the four sales to other doctors. (RSACC ¶¶ 55, 65, 68.) However, Plaintiff has not plausibly alleged that she relied upon these misrepresentations/omissions to her detriment. Rather, Plaintiff alleges that she relied upon these alleged misrepresentations/omissions to support other alleged false statements regarding WSGI's compliance with the ASC Safe Harbor. (See id.) However, as set forth in Discussion Section I(B)(2) above, Plaintiff has not stated a fraud claim based on alleged statements regarding compliance with the ASC Safe Harbor. In addition, Plaintiff's conclusory allegation that the “false disclosure” regarding members was calculated by Defendants to induce her to rely on Mr. Fowler's knowledge as an insider at WSGI is insufficient to plausibly allege fraudulent intent. (RSACC ¶ 55.) Further, to the extent Plaintiff purports to have relied on omissions within the MSA to conclude that WSGI was within the ASC Safe Harbor or that the sale of her shares would not void the ASC Safe Harbor, she cannot plausibly allege reasonable reliance given the plain language of MSA Ex. A § 24, at pp. A-7 to A-8 (ECF No. 318-1 at PDF pp. 23-24).
Plaintiff also suggests that failure to disclose this information violated disclosure requirements under the Securities Act of 1933. (See RSACC ¶ 48.) The Court notes that the RSACC does not include a separate fraud claim based on these allegations (see RSACC ¶¶ 190, 234) and therefore Plaintiff's argument that “Defendants do not move to dismiss the frauds in the MSA which purport to make the document an Offering under the auspices of the Securities Act of 1933” is of no moment. (Pl.'s Opp. Mem. at 6.) Moreover, even if Plaintiff could rely on the Securities Act to establish a duty to disclose, any fraudulent concealment claim still would fail for failure to plausibly allege reasonable reliance.
E. Failure to Disclose Lower Valuation
Plaintiff again alleges that Defendants failed to disclose the lower valuation and withheld that using the higher valuation “would or was likely to void the ASC Safe Harbor.” (RSACC ¶¶ 190, 234.) Given that Plaintiff was told about the WSGI valuation (see RSACC ¶ 36), yet never asked to review such valuation, and her contractual representations that she was “furnished with or has had access to such information, documents and records as an investor would customarily require to evaluate the benefits and risks of [her] proposed investment” and “had an opportunity to ask such questions of [WSGI's] management and representatives as [Plaintiff] has deemed necessary or desirable” (MSA § 5(t)), Defendants had no separate duty to disclose the contents of the WSGI Valuation Report to her, which included an unchosen methodology for arriving at a lower valuation.
Even assuming that Defendants had a duty to disclose regarding valuation, for the reasons set forth in Discussion Sections I(B)(1) and I(B)(2) above, Plaintiff cannot plausibly allege reasonable reliance, which “is essential to a claim of duty to disclose or fraudulent concealment.” Psenicska, 409 Fed.Appx. at 371; see also Barrett v. Freifeld, 77 A.D.3d 600, 602 (2d Dep't 2010) (no liability based on duty to disclose where “plaintiff did not justifiably rely on the [defendants] to disclose [the] information”).
F. Other Alleged Frauds
The RSACC also includes fraud claims on the grounds that Defendants “agreed to pay $200,000 to resolve the loss of income to Dr. Kairam,”and “charged her premiums for a retirement plan and then intentionally credited the premiums to other doctors.” (RSACC ¶¶ 190, 234.) The Court previously dismissed these claims finding, along with Plaintiff's fraudulent inducement claims, that they were duplicative of breach of contract claims. See Kairam I, 2022 WL 2530455, at *10. The RSACC does not add any allegations specific to these claims. Accordingly, I recommend that these claims be dismissed.
Although Plaintiff includes this as a separate ground (see RSACC ¶¶ 190, 234), it is part and parcel of her claim that Defendants induced her to stay at WSGI in 2016. (See RSACC ¶ 98.)
II. Negligent Misrepresentation Claims (Counts 9 and 30)
A. Legal Standards
“Under New York law, ‘a claim for negligent misrepresentation requires the plaintiff to demonstrate (1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information.'” McCaffrey v. Gatekeeper USA, Inc. et al., No. 14-CV-00493 (VSB), 2022 WL 902423, at *6 (S.D.N.Y. Mar. 28, 2022) (quoting Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 180 (2011)); see also Dallas Aerospace, 352 F.3d at 788.
Duty may be demonstrated when there is “actual privity of contract between the parties or a relationship so close as to approach that of privity.” Anschutz Corp. v. Merrill Lynch & Co., 690 F.3d 98, 114 (2d Cir. 2012) (internal quotation marks omitted); see also Sykes v. RFD Third Ave. 1 Assocs., LLC, 15 N.Y.3d 370, 372 (2010) (“It has long been the law in New York that a plaintiff in an action for negligent misrepresentation must show either privity of contract between the plaintiff and the defendant or a relationship so close as to approach that of privity.”) (internal quotation marks omitted). “Under New York law, a statement made in the context of an arms-length commercial transaction, without more, cannot give rise to such a duty.” EED Holdings v. Palmer Johnson Acquisition Corp., 387 F.Supp.2d 265, 281 (S.D.N.Y. 2004) (citing Kimmell v. Schaefer, 89 N.Y.2d 257, 263 (1996)). “Rather, an arms-length commercial transaction can only give rise to a negligent misrepresentation claim if a special relationship exists between the parties such that plaintiff's reliance on defendant's representation was justifiable.” Id.; see also Landesbank Baden-Wurttemberg v. Goldman, Sachs & Co., 478 Fed.Appx. 679, 682 (2d Cir. 2012) (“The law of negligent misrepresentation requires a closer degree of trust between the parties than that of the ordinary buyer and seller in order to find reliance on such statements justified.”) (citation and alteration omitted).
B. Application
Defendants argue that Plaintiff still cannot establish the “privity-like” relationship between her and any of the Defendants that is necessary to state a claim for negligent misrepresentation. (Defs.' Mem. at 19.) The Court previously found Plaintiff's allegations insufficient to establish a special relationship with WSGI. See Kairam 1, 2022 WL 2530455, at *11. Plaintiff again alleges that she had known Dr. Distler and Mr. Fowler for many years and had a “long history of trust and professional respect” with each of them (RSACC ¶¶ 16-21), but these allegations remain insufficient to establish a special relationship with WSGI.
In any event, for the same reasons set forth set forth in Discussion Section I(B)(1) above, Plaintiff's negligent misrepresentation claims based on allegedly false statements regarding the price of her units or their value and compliance with the ASC Safe Harbor fail because she has not adequately alleged reasonable reliance. See PHL Variable Ins. Co., 929 F.3d at 94 (same standard of reliance applies to negligent misrepresentation claims).
Plaintiff's remaining negligent misrepresentations fail for the same reason set forth in the Court's prior decisions. See Kairam I, 2022 WL 2530455, at *12 (dismissing negligent misrepresentation claims based on inducing Plaintiff to perform procedures at WSGI during the transition period and to stay at WSGI in 2016 because they are promises of future conduct and dismissing claims based on negotiating in good faith and misrepresentations regarding retirement premiums because Plaintiff had not alleged any representation that was incorrect). The RSACC does not cure these defects. Accordingly, I recommend that Plaintiff's negligent misrepresentation claims be dismissed.
Plaintiff's argument that Defendants do not move to dismiss the majority of Plaintiff's fraud and negligent misrepresentation claims is incorrect. Defendant's notice of motion and memorandum of law address each of the grounds for fraud and negligent misrepresentation alleged in the RSACC.
III. Leave to Amend
The final issue is whether Plaintiff should be granted leave to amend her complaint for yet another time. (See Pl.'s Opp. Mem. at 23 (requesting leave to amend “[s]hould the Court find any deficiency”).) Plaintiff has taken ample advantage of the liberality provided in Rule 15 to amend her pleading. However, all good things must come to an end.
“Although Federal Rule of Civil Procedure 15(a) provides that leave to amend a complaint shall be freely given when justice so requires, it is within the sound discretion of the district court whether to grant or deny leave to amend.” Schvimmer v. Off. of Ct. Admin., 857 Fed.Appx. 668, 671 (2d Cir. 2021) (citation omitted). Plaintiff previously has had the opportunity to amend her fraud claims twice and her negligent misrepresentation claims once. However, the allegations in the RSACC remain remarkably the same as in the prior pleading and Plaintiff primarily proffers previously rejected legal arguments in search of a different outcome. “[W]here pleading deficiencies have been identified a number of times and not cured, there comes a point where enough is enough.” In re Initial Pub. Offering Sec. Litig., 241 F.Supp.2d 281, 397 (S.D.N.Y. 2003). Because there is no indication that any further amendment would be productive, I respectfully recommend that leave to amend be denied. See State St. Glob. Advisors Tr. Co. v. Visbal, 462 F.Supp.3d 435, 443 (S.D.N.Y. 2020) (citing Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51, 62 (2d Cir. 2016) (“Where it appears that granting leave to amend is unlikely to be productive . . . it is not an abuse of discretion to deny leave to amend.”)).
One final point. Plaintiff's counsel refers to “[t]he unconscionable delay” in this case (Pl.'s Opp. Mem. at 1), much of which was occasioned by Plaintiff's own litigation conduct. Plaintiff's initial Complaint in this action, filed on February 5, 2018, asserted ten state law counts and premised the Court's jurisdiction upon diversity of citizenship. (See Compl., ECF No. 1, ¶¶ 5, 4074; see also 2/16/18 Order, ECF No. 3 (requiring Plaintiff to allege citizenship of natural persons who were members of WSGI and place of incorporation and principal place of business of any corporate entities who were members of WSGI).) On February 28, 2018, Plaintiff amended her Complaint to add a single federal claim under the Equal Pay Act (“EPA”), so as to invoke federal jurisdiction. (See Am. Compl., ECF No. 4, ¶¶ 4, 39-41.) On May 24, 2018, Plaintiff filed a Second Amended Complaint adding claims under three federal statutes in addition to the EPA: Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act and the Defend Trade Secrets Act. (See SAC, ECF No. 22, ¶¶ 42-47, 60-62.)
Thereafter, based upon the undersigned's recommendation, all of Plaintiff's federal law claims were dismissed and the Court declined to exercise supplemental jurisdiction over Plaintiff's state law claims. See Kairam v. W. Side GI, LLC, 18-CV-01005 (AT) (SDA), 2019 WL 396573, at *8 (S.D.N.Y. Jan. 31, 2019).On appeal, in a Summary Order, dated December 9, 2019, the Second Circuit held that the Court “properly dismissed [Plaintiff's] federal claims,” but that “it erred in denying her request for leave to amend as futile,” and thus remanded this case with instructions to allow Plaintiff to amend her complaint. Kairam v. W. Side GI, LLC, 793 Fed.Appx. 23, 28 (2d Cir. 2019).
On the same day that the Court dismissed Plaintiff's federal claims in this action, Plaintiff filed a new related action, Kairam, M.D. v. West Side GI, LLC, No. 19-CV-00953 (AT) (SDA), in which she alleged identical claims to the claims in this action. (See 2/27/19 Order, 19-CV-00953 ECF No. 4.)
On October 30, 2020, Plaintiff filed a third related action, Kairam, M.D. v. Distler, M.D. et al., No. 20-CV-09141 (AT) (SDA), in which she asserted an EPA claim and state law claims against Dr. Distler and Dr. Pou. (Compl., 20-CV-09141 ECF No. 1, ¶¶ 108-36.) On July 7, 2021, the three related actions were consolidated upon stipulation of the parties. (7/7/21 Stip. & Order, ECF No. 160.) The current operative, consolidated pleading, i.e., the RSACC, contains 30 operative counts and, if this Court's recommendation is adopted, this case will proceed with Plaintiff prosecuting 26 of those 30 counts.
The RSACC contains 33 counts, but three of them, i.e., Counts 11, 28 and 33, are “reserved for appeal.” (See RSACC at pp. 64, 73, 75.)
Even though there has not yet been a final ruling with respect to Plaintiff's operative pleading, the Court directed that discovery proceed. Under the current schedule, fact discovery shall conclude on December 1, 2023 and expert discovery shall conclude on March 11, 2024. (6/26/23 Order, ECF No. 346, ¶ 2.)
CONCLUSION
For the foregoing reasons, I respectfully recommend that Defendants' partial motion to dismiss be GRANTED and that Counts 8, 9, 22 and 30 of the RSACC be dismissed.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Torres.
THE FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).