Opinion
Index No. 150207/2023
01-24-2024
Nabeel Shaikh, Plaintiff, v. Lincoln Diagnostics, LLC and ABDULLAH CHOWDURY, Defendants.
Jesse David Eisenberg JDE LAW FIRM, PLLC For Plaintiff Anthony Michael Gruppuso Gruppuso Legal For Def. Lincoln
Unpublished Opinion
Jesse David Eisenberg JDE LAW FIRM, PLLC For Plaintiff
Anthony Michael Gruppuso Gruppuso Legal For Def. Lincoln
Wayne M. Ozzi, J.
The following papers were read and considered on the aforementioned motion submitted on January 4, 2024: NYSCEF Doc No. 1 to 12, inclusive. For the reasons set out below, the motion is granted and the complaint is dismissed.
Background
Defendant Lincoln Diagnostics, LLC (hereinafter, "Lincoln" or "Defendant Lincoln") moves to dismiss the amended verified complaint in this case under CPLR 3211(a)(1) and 3211(a)(7). The amended complaint in this matter pleads three causes of action: defamation; tortious interference with prospective economic advantage; and misappropriation of trade secrets. Plaintiff seeks monetary damages only as relief on all causes of action.
Plaintiff's complaint states that he is a "medical account representative" who acts as a liaison between doctors' offices and clinical and pathological laboratories. Plaintiff alleges that he was recruited by Gary Feinstein, who Plaintiff contends, on information and belief, is an officer or director of Lincoln, to help build the business of Defendant Lincoln by marketing its services to medical providers. Plaintiff alleges that, in October 2021, he "provided" Lincoln with several medical accounts and advised Defendant Chowdury (hereinafter "Chowdury") and Simon Sherjeel, who he alleges were and are employed by Lincoln, to act as account representatives. Plaintiff alleges that he trained Chowdury and Simon Sherjeel in "lab sales and techniques" and supervised their work as account representatives. Plaintiff alleges that under an oral agreement between him and the parties, the parties agreed that Lincoln would pay "a 15% commission for the revenue billed for each account." The agreement further stipulated that the 15%commission would be split such that 12% was paid to the representative servicing the account, and 3% to the Plaintiff." (NYSCEF Doc No 2, Complaint).
Later in the complaint, Plaintiff alleges that he made Chowdury and Sherjeel aware of the accounts that he serviced or held. No information is provided regarding what Plaintiff means by serviced or held. Plaintiff provides no information regarding in what capacity he related to these accounts - the complaint does not explain whether he perhaps did so under an agreement with other labs, through employment with a lab, or otherwise. The complaint alleges that Plaintiff told Chowdury and Sherjeel that they were not to solicit his accounts for Lincoln. It also states that Plaintiff told this to Gary Feinstein who agreed that Lincoln, Chowdury and Sherjeel would not solicit Plaintiff's accounts.
Plaintiff alleges that, in December 2021, Chowdury insisted on ending the split with Plaintiff. In March 2022, Sherjeel did the same. Plaintiff alleges that, as a result, Lincoln stopped paying him three percent of the revenue received for accounts he had assisted Lincoln in procuring.
Thereafter, in November 2022, Plaintiff and Lincoln entered into a negotiated settlement, wherein Lincoln would pay Plaintiff a total of $80,000 in settlement of Plaintiff's claims against it. (NYSCEF Doc No. 4). Plaintiff alleges that he was told that Chowdury and Sherjeel were no longer employed by Lincoln, and that this led him to sign the settlement agreement, although he is not seeking nullification of the settlement agreement in this action. Plaintiff, however, alleges on information and belief, that the two are still employed by Lincoln.
The November 2, 2022 settlement agreement provides that "the parties have agreed to terminate the Contract and settle all amounts, including all disputed amounts, that may be claimed or owed in full satisfaction of any and all outstanding payment obligations set forth in the Contract." (NYSCEF Doc No. 4). It further provides:
"[T]he Parties and their subsidiaries, parent companies, affiliates, their current agents, officers, principals, employees, successors, assigns, heirs, executors, and personal and legal representatives hereby irrevocably and unconditionally release and forever discharge each other from any and all causes of action, claims, complaints or charges pending and including any and all claims for compensatory damages and punitive damages, and any and all other claims of any nature whatsoever, at law or in equity, which the Parties had or now have against each other, arising out of the Contract up to and including the effective date of this Agreement ("Claims")."(NYSCEF Doc No. 4).
The settlement also includes the following provisions:
(1) "Except as provided herein, this Agreement sets forth the entire agreement among the Parties and supersedes any prior discussions, negotiations, or representations between them regarding its subject matter."
(2) "Each Party acknowledges and agrees that no representations or promises have been made to or relied upon by any of them or by any person acting for or on their behalves (sic) in connection with the subject matter of this Agreement which are not specifically set forth herein."
(3) "All prior representations and promises made by any Party to another, whether in writing or orally, are understood by the Parties to be merged in this Agreement."
(4) "Contractor agrees to refrain from soliciting any business, employees, clients, physicians, referral sources, vendors, or patients from Lincoln, attempting to influence or divert any of Lincoln's business, employees, physicians, referral sources, clients, vendors, or patients, or in any manner attempting to adversely influence Lincoln's business relations with any person or entity."
(5) "Agreement Governs. Should there be any conflict between this Agreement and a provision of the Contract, this Agreement shall govern."
Plaintiff's defamation claim alleges that on dates in November 2022, after the settlement agreement was executed, Chowdury contacted Plaintiff's employer (who is unnamed) at his primary job (also unnamed and undescribed) "multiple times" and left several harassing voicemails. In "those voicemails" plaintiff alleges that Chowdury stated that Plaintiff" 'is taking illegal kick backs and bribes and is working with Lincoln.'" Plaintiff claims that "[u]pon information and belief, Defendant Lincoln instructed Defendant Chowdury to make said calls accusing Plaintiff of crimes to get him fired and hurt him financially in retaliation for having to settle the matter with Plaintiff."
Plaintiff's tortious interference claim alleges that, after the settlement, Chowdury and Sherjeel used Plaintiff's list of accounts to contact certain medical offices. Plaintiff further alleges that he lost multiple accounts as a result and could lose more. The complaint does not name or otherwise describe the accounts that were allegedly lost or provide any dates, or any details about Plaintiff's or Defendants' dealings with said medical offices. The complaint names numerous medical providers, which Plaintiff alleges "on information and belief" were contacted by Chowdury and Sherjeel. It does not identify or describe Plaintiff's relationship with these providers.
Plaintiff claims that his list of accounts is a trade secret and has been and is being improperly used by Defendant Lincoln, although he told the Lincoln employees and Gary Feinstein that they could not solicit his accounts, and they agreed not to do so.
Defendant Lincoln's Motion under CPLR 3211(a)(1)
Defendant Lincoln moves to dismiss the tortious interference and the misappropriation of a trade secret causes of action under CPLR 3211(a)(1), which permits a defendant to rely on documents that provide a defense to the complaint. In general, on a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction. The Court must accept the facts as alleged in the complaint as true and accord plaintiffs the benefit of every possible favorable inference. (See Morone v Morone, 50 N.Y.2d 481, 484 ; Leon v. Martinez, 84 N.Y.2d 83, 88 (1994)). Under CPLR 3211(a)(1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law. (Heaney v Purdy, 29 N.Y.2d 157 (1971); Blonder & Co., Inc. v. Citibank, N.A., 28 A.D.3d 180 (1st Dept. 2006)). Only where bare legal conclusions and factual allegations are "flatly contradicted by documentary evidence," they "are not presumed to be true or accorded every favorable inference ." (Meyer v Guinta, 262 A.D.2d 463 (2d Dept. 1999)). Instead, the complaint is examined to determine whether it presents any cause of action. (Leon v. Martinez, 84 N.Y.2d at 88).
The Court finds that the settlement agreement definitively disposes of Plaintiff's claims of tortious interference with prospective economic advantage and misappropriation of trade secrets and provides a defense to them as a matter of law. As such, these causes of action are dismissed under CPLR 3211(a)(1). The settlement agreement states expressly that it terminates the oral contract between the parties. Also, while the agreement does not expressly state whether Lincoln was prohibited by the agreement from contacting any provider to market its services, it does indicate that "no representations or promises have been made to or relied upon by any of [the parties] or by any person acting for or on their behalves [sic] in connection with the subject matter of this Agreement which are not specifically set forth herein." Further, the agreement prohibited Plaintiff from soliciting any business, clients, physicians, referral sources from Lincoln, from attempting to divert any business or referral sources from Lincoln and from in any manner attempting to adversely influence Lincoln's business relations with any person or entity. It further states that "[e]xcept as provided herein, this Agreement sets forth the entire agreement among the Parties and supersedes any prior discussions, negotiations, or representations between them regarding its subject matter."
Although the parties do not raise this issue, and although this matter is at a pre-answer stage with no factual development through disclosure, the Court takes judicial notice of NYPH Law § 587. The prohibitions of NYPH Law §587 potentially may be implicated here as they prohibit revenue sharing arrangements between laboratories and non-employees who procure business, a violation of which may constitute a misdemeanor under certain circumstances. Therefore, there may be some question regarding the enforceability of the underlying oral contract in this matter, which was terminated by the settlement agreement. (Cf. Quality Health Care Mgt v. Kobakhidze, 42 Misc.3d 537 (Sup. Ct. 2013)). Relatedly, the statute of frauds is not discussed by either party on this motion.
In the Court's view, these provisions make clear that, to the extent there had been a promise on behalf of Lincoln not to solicit medical practices on Plaintiff's "account list," it did not survive the settlement agreement. Indeed, the settlement, by its express terms, terminated the contract and precluded Plaintiff from attempting to adversely influence Lincoln's business relations with any person or entity in any manner and from soliciting from Lincoln's referral sources. Such language appears to be in direct conflict with a claim for damages based upon an allegation that Lincoln contacted accounts Plaintiff held. The settlement also states that to "avoid any doubt, Contractor [that is, Plaintiff] specifically releases Lincoln from any and all Claims arising out of the Contract, that exist from the beginning of time through the Effective Date of this Agreement." It further states that this section is not intended to prevent "either party from instituting legal action for the sole purpose of enforcing this Agreement." These latter provisions also conflict with Plaintiff's claim that Defendants were prohibited from contacting persons on his account list or accounts he held pursuant to the agreement. Any such alleged promise did not survive the settlement agreement.
A claim for tortious interference with prospective business relations requires a showing that Defendants interfered with his prospective business relations through wrongful means or by acting "for the sole purpose of harming the other party." Plaintiff here seems to be alleging both wrongful means and that Defendants acted with the sole purpose of injuring Plaintiff. This cause of action does not require an existing contract, but the party asserting the claim must meet a "more culpable conduct" standard than an interference with contract claim. (L. Offs. of Ira H. Leibowitz v. Landmark Ventures, Inc., 131 A.D.3d 583, 585-86 (2d Dept. 2015); NBT Bancorp. v. Fleet/Norstar Fin. Group, 87 N.Y.2d 614, 621 (1996)). "Wrongful conduct," for purposes of this cause of action, includes physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure. (Guard-Life Corp. v. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 191 (1980)). Generally, the offending party's conduct must amount to a crime or an independent tort, as conduct that is neither criminal nor tortious will generally be "lawful" and thus insufficiently "culpable" to create liability for interference with prospective business relations (L. Offs. of Ira H. Leibowitz v. Landmark Ventures, Inc., 131 A.D.3d at 585-86.
Here, because, as the Court concluded above, any promise or agreement not to use Plaintiff's contacts or accounts did not survive the settlement agreement, Plaintiff's claims that the use of the list violated an agreement, which potentially may be seen as tortious, must fail. While cognizant of the liberal standard that applies to this motion, the Court rejects Plaintiff's bald assertion that, if Defendants' contacted people with whom Plaintiff had a business relationship or a prospective business relationship, ostensibly to market business, it did so solely with the purpose of injuring Plaintiff. It rejects this conclusion as specious on its face, since such efforts would necessarily assist Defendants by potentially bringing them revenue (the very reason according to Plaintiff that Defendant Lincoln had recruited and contracted with him - to increase Lincoln's business), and thus would not solely be to injure the Plaintiff. (See NYSCEF Doc 2; Complaint). Relatedly, in regard to Dr. Priscilla A. Linggard, plaintiff alleges on information and belief that Defendant Chowdury "attempted to force" Dr. Priscilla A. Linggard to use Lincoln's lab, however, the complaint does not include any information on how he did so or what was meant by "force." (NYSCEF Doc No. 2, Amended Verified Complaint, para. 42). It does not then meet the threshold of "wrongful conduct" under the previously discussed case law. The complaint also is silent as to Plaintiff's relationship with this doctor. For all of these reasons, the claim of tortious interference with prospective economic advantage must be dismissed under CPLR 3211(a)(1).
For similar reasons, the misappropriation of a trade secret cause of action is dismissed."A plaintiff claiming misappropriation of a trade secret must prove: (1) it possessed a trade secret, and (2) defendant is using that trade secret in breach of an agreement, confidence, or duty, or as a result of discovery by improper means." (E.J. Brooks Co. v. Cambridge Sec. Seals, 31 N.Y.3d 441, 452-53 (2018)). A trade secret is any formula, pattern, device or compilation of information which is used in one's business, and which gives one an opportunity to obtain an advantage over competitors who do not know or use it . (Ashland Management Inc. v. Janien, 82 N.Y.2d 395, 407 (1993)).
One of the factors in assessing whether a trade secret exists is the "ease or difficulty with which the information could be properly acquired or depicted by others." (Id.). Ultimately, plaintiff's list of accounts appears merely to be a list of doctors and medical offices who might be in need of laboratory and diagnostic services provided by defendant Lincoln, and others. Customer lists generally are not considered confidential information (H. Meer Dental Supply Co. v. Commisso, 269 A.D.2d 662, 664) warranting status as a trade secret. Plaintiff, however, may allege and demonstrate "that its customers are not known in the trade and are discoverable only by extraordinary efforts." (Id., quoting Empire Farm Credit v. Baily, 239 A.D.2d 855, 856). Plaintiff has failed to demonstrate that the list of doctors and medical offices is not readily available through public sources. (H. Meer Dental Supply Co., supra). In this age of information available on the internet, no extraordinary means would be necessary to identify and contact doctors and medical providers offices. (See also, Addison Hospitality Group, LLC v. Kaciupski, 59 Misc.3d 1232 (a); Battenkill Veterinary Equine, PC v. Cangelosi, 1 A.D.3d 856).
Even if the list could be considered a trade secret, this cause of action should be dismissed because, as discussed above, any agreement the parties had regarding Plaintiff's list of accounts was terminated by the settlement agreement. Therefore, it cannot be said that any alleged use by Defendant (or Defendant's alleged agents) was "in breach of an agreement, confidence, or duty, or as a result of discovery by improper means."
Defendant Lincoln's Motion under CPLR 3211(a)(7)
Defendant Lincoln also moves to dismiss the complaint under CPLR 3211(a)(7). A motion to dismiss under this provision may be granted only if, taking all facts alleged as true and according to them every possible inference favorable to the plaintiff, the complaint does not state in some recognizable form any cause of action. (Rubinstein v. Salomon, 46 A.D.3d 536, 538 (2d Dept. 2007)). "Whether a plaintiff can ultimately establish its allegations is not part of the calculus." (EBC I, Inc. v. Goldman, Sachs & Co., 5 N.Y.3d 11, 19 (2005)).
Although the complaint must be liberally construed on a such motion to dismiss, a plaintiff must support its claim with more than mere speculation. (Burrowes v. Combs, 25 A.D.3d 370, 373 (1st Dept. 2006)). "Conclusory allegations or bare legal assertions with no factual specificity are not sufficient and will not survive a motion to dismiss." (O'Neill v. Wilder, 204 A.D.3d 823, 824 (2d Dept. 2022). Indeed, in opposing such a motion, a plaintiff may submit affidavits and documents to further elucidate the pleadings. Courts have the discretion to deny such a motion without prejudice or to order a continuance where it appears from such affidavits submitted on the motion that "facts essential to justify opposition may exist but cannot then be stated." (CPLR 3211(d); see also, Mayo v. Grotthenthaler, 25 A.D.3d 998, 999 (3d Dept. 2006); Herzog v. Town of Thompson, 216 A.D.2d 801, 802 (3d Dept. 1995)). However, to be entitled to such a ruling, plaintiffs must make a sufficient start and show their position not to be frivolous. (Coll. v. Brady, 84 A.D.3d 1322, 1323 (2d Dept. 2011); see also Peterson v. Spartan Indus., Inc., 33 N.Y.2d 463, 467 (1974)).
Applying these principles to the tortious interference with prospective economic advantage claim - that is, taking all of the allegations of the complaint as true, and giving Plaintiff the benefit of every favorable inference - the Court finds that the complaint fails to state a cause of action under CPLR 3211(a)(7). Thus, it grants this aspect of the motion to dismiss under this subsection as well. The deficits regarding Plaintiff's pleading tortious interference with prospective economic advantage are that the pleading fails to allege a specific business relationship with an identified third party with which the defendants allegedly interfered. (Mehrhof v. Monroe-Woodbury Cent. Sch. Dist., 168 A.D.3d 713, 714, 91 N.Y.S.3d 503, 505 (2d Dept. 2019)(in order to state a cause of action to recover for tortious interference with prospective economic advantage, the plaintiff must allege a specific business relationship with an identified third party with whom the defendants interfered)). Plaintiff's lengthy complaint states "on information and belief" that Defendants allegedly contacted various medical practices, which practices are identified in the complaint. No where does the complaint indicate what the nature of Defendants' alleged contacts were, except for Dr. Linggard, as discussed below, or how they constituted "interference" with Plaintiff's relationship to the contacted practice. Similarly, the complaint does not indicate whether Plaintiff had a relationship with these identified entities or what the nature of any relationship was - it therefore fails to allege a "specific business relationship" with which Defendants "interfered." (See McGill v. Parker, 582 N.Y.S.2d 91, 95 (1st Dept. 1992) (New York courts have placed some limits on what constitutes "business relations" by rejecting, for example, a claim containing "only a general allegation of interference with customers without any sufficiently particular allegation of interference with a specific... business relationship); see also Schoettle v. Taylor, 282 A.D.2d 411, 411 (1st Dept. 2001)).
In regard to Dr. Priscilla A. Linggard, Plaintiff on information and belief alleges that Defendant Chowdury "attempted to force" Dr. Priscilla A. Linggard to use Lincoln's lab but does not include any information on how he did so, what services were offered, or what he means by "force." (NYSCEF Doc No. 2, Amended Verified Complaint, para. 42). The complaint also does not explain what Plaintiff's business relationship with this doctor was.
Similarly, the complaint alleges that, after the settlement agreement was entered, Chowdury and Sherjeel used Plaintiff's list to contact some of the medical accounts of Plaintiff's, that he lost accounts as a result of this and could lose more. This allegation suffers from the same deficiency - it does not name or otherwise describe the account or accounts that were allegedly lost, or the type of business relationship Plaintiff had with said accounts. Nor does it provide any dates or include any details about Plaintiff's or Defendants' dealings the accounts.
The Court also notes that Plaintiff's motion opposition papers do not rectify these deficiencies, which were raised in Defendant's motion papers. That is, they include no affidavit by Plaintiff or a witness with knowledge about the matter to amplify the complaint's allegations, and do not state that matters are currently unknown but may be discovered in the disclosure process, although they would seem to be within Plaintiff's knowledge. Instead, Plaintiff's reply is limited to submission of an attorney affirmation, which in the main relies upon the complaint itself for its factual underpinnings. (See Vorel v. NBA Properties, Inc., 285 A.D.2d 641, 641-642 (2d Dept. 2001) (a court may freely consider evidentiary material submitted on the motion to remedy any defects in the complaint) and CPLR 3211(c) (allowing consideration of factual materials in motion papers)). For all of these reasons, Plaintiff's motion to dismiss the cause of action for tortious interference with prospective economic advantage claim is also granted under CPLR 3211(a)(7).
Although the Court has dismissed Plaintiff's misappropriation of a trade secret under CPLR 3211(a)(1), it declines to find that this cause of action also should be dismissed under CPLR 3211(a)(7).
Defendant also moves to dismiss Plaintiff's defamation claim under CPLR 3211(a)(7). The elements of a cause of action for defamation are a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, and that either caused special harm or constituted defamation per se. Under the pleading rules in CPLR 3016(a) for this cause of action, the complaint must set forth the particular words allegedly constituting defamation. It also must allege the time, place, and manner in which the false statement was made and specify to whom it was made. (Arvanitakis v. Lester, 145 A.D.3d 650, 651 (2d Dept. 2016); see also Dillon v. City of New York, 261 A.D.2d 3, 38 (2d Dept. 2016)).
As Defendant correctly points out, the complaint does not assert that the alleged statement complained of was false, a required element of the cause of action. It simply alleges that the statement was defamatory, a legal conclusion. (See O'Neill v. Wilder, 204 A.D.3d 823, 824 (2d Dept. 2022). Further, the complaint does not identify with required specificity the person or persons to whom the statements were made. The complaint simply states that calls were allegedly made to plaintiff's primary employer and "harassing" voicemails left. They do not indicate who the employer was, the person to whom the voicemails were directed or the person who received the messages. (See Epifani v. Johnson, 65 A.D.3d 224, 235 (2d Dept. 2009) (claim that defamatory statements were made to plaintiff's "references" without further identification of the third parties did not meet the specific pleading requirements for this cause of action); see also Jackie's Enterprises, Inc. v. Belleville, 165 A.D.3d 1567, 1570 (3d Dept. 2018)(allegation that statements were made to unnamed prospective customers, providers, suppliers were not sufficiently specific to meet the pleading requirements)).
The cause of action also fails because the complaint is not specific enough regarding when the statement was made. "[M]erely alleging that a statement was made during a certain month does not suffice to meet the particularity requirement under New York law." (Alvarado v. Mount Pleasant Cottage Sch. Dist., 404 F.Supp. 3d 763, 790-91 (S.D.NY 2019) (dismissing defamation claims where, as here, the complaint referenced that the statement was made during a specific month) and citing Arvanitakis v. Lester, 145 A.D.3d 650 (2d Dept 2016) (dismissing claim where plaintiff alleged that defamatory statements were made "September 2012 through the present" because the allegation was not "sufficiently specific with respect to time"); see Kall v. Peekskill City Sch. Dist., No. 18-CV-10199 (NSR), 2020 WL 2555256, at *9 (S.D.NY May 19, 2020) (statements made to unnamed employees of two named employers within a 25-day period not sufficiently specific under New York law). A cause of action sounding in defamation that fails to comply with the special pleading requirements of CPLR 3016(a) and case law must be dismissed. (Simpson v. Cook Pony Farm Real Est., Inc., 12 A.D.3d 496, 497, 784 N.Y.S.2d 633, 635 (2004)). Here, because Plaintiff did not allege the statements were false, did not state the time, place or third party to whom the statements were made, he has not complied with CPLR 3016(a) and dismissal is therefore mandated.
Accordingly, for the reasons expressed herein, Defendant's motion is hereby GRANTED and Plaintiff's complaint is DISMISSED.
This constitutes the decision and order on this motion.