Summary
granting leave to amend where “[d]efendants have had ample notice of the possibility of these claims, and indeed have already filed briefs on this issue and should not be prejudiced by the addition of this claim”
Summary of this case from Deskovic v. City of PeekskillOpinion
02 Civ. 566 (CSH)
November 12, 2003
ORDER
Plaintiff Paul Knoll commenced this action against defendants for several claims arising from an allegedly wrongful termination and as well as slanderous and derogatory statements allegedly made by defendants. Plaintiff now moves to amend his complaint to (1) add a claim for unpaid bonus wages and (2) add Thomas Washburn as a defendant for allegedly defamatory statements made by Washburn. For reasons discussed below, plaintiffs motion is granted in part and denied in part.
I. Background
The detailed factual background of this case is set forth in the Court's prior opinion reported at 2003 WL 21556942, familiarity with which is assumed. For present purposes, it is sufficient to state that Knoll was hired by Merrill Corporation ("Merrill"), a document and communications services company, in December 1998 to serve as the General Manager of Document Management Services for the New York/New Jersey region. In its offer letter, Merrill promised to pay Knoll a salary of $140,000 a year, in addition to a $30,000 signing bonus. Affidavit of John A Snyder II, Ex. A (October 16, 2003) ("Snyder Reply Aff."). The full length of Knoll's employment with Merrill ran from approximately December 1998 or January 1999 through March 2001.
That opinion dealt with the effect of a written release executed by Knoll when Merrill terminated his employment. Specifically, Merrill moved on the basis of that release for partial summary judgment dismissing Knoll's first four claims in his initial complaint, and Knoll cross-moved to strike Merrill's third affirmative defense, which pleaded the preclusive effect of the release. The Court denied both motions because they presented triable issues of fact. See 2003 WL 21556942, at *15.
Men-ill's fiscal year runs from February 1 through January 31. Plaintiff was employed by Merrill roughly from January 1999 through March 2001. Therefore, he was employed by Merrill during the tail end of fiscal year $999, full fiscal years 2000 and 2001, and approximately five weeks of fiscal year 2002.
The offer letter also stated, "During FY' 00 [Fiscal Year 2000], you will be eligible for a performance bonus up to 50% of your salary based on team and individual performance." Id. With regard to the bonus issue, defendant Lisa Dady, Senior Vice-President of Sales and Operations at Merrill and plaintiffs supervisor, asserts, "No other General Managers received performance bonuses for years 1999 and 2000 because Merrills team performance did not meet 1999 or 2000 performance objectives. Moreover, Mr. Knoll was terminated for poor performance and was not entitled to a bonus for 2000 based on his individual performance for year 2000." Affidavit of Lisa Dady K ¶ 5 (December 9, 2002) ("Dady Reply Aff.").
There is some confusion as to whether Dady is referring here to fiscal or calendar years 1999 and 2000. Based on the context of her statements, I decide for purposes of this opinion only that Dady is referring to calendar years 1999 and 2000, or fiscal years 2000 and 2001.
In or about October 2000, Knoll began suffering psychological and mental problems arising out of stress, depression, and anxiety. By March 2001, Knoll sought treatment from a mental health professional, and also at that time reported his problems to Julie Koch, Vice Present of Human Resources, and to Lisa Dady.
Despite having responded to Knoll's mental health problems by offering to provide mental health services by a Merrill-paid psychologist, on or about March 12, 2001, Dady notified Knoll that he would be terminated from Merrill. Knoll claims that the sole reason for his termination was his disability.
Plaintiff further alleges that on or about October 2001, five months after his termination, defendants made slanderous statements concerning him to members of his business community. He claims that Nancee Roning, a General Manager," with the knowledge and consent of all the Defendants" told certain other Merrill employees that the reason Knoll was terminated was due to "very illegal activities" on his part. Proposed Amended Complaint ¶ 23. He further claims that this and possibly other statements by the defendants were slanderous and also that they violated a release agreement signed by both parties, which contained a mutual no defamation provision that prohibited the making of derogatory or defamatory statements. Proposed Amended Complaint ¶ 71, 75, and 76.
Finally, plaintiff seeks to amend his complaint to allege that on or about August or September 2000, Thomas Washburn, another General Manager of Merrill, stated to Rick Avers (then a Merrill employee) and others that plaintiff was engaging in illegal activities involving kickbacks with clients. Proposed Amended Complaint ¶ 23. Based on this alleged statement, plaintiff seeks to include Washburn as a defendant for common law defamation.
II. Discussion
A. Standard of Review
Rule 15 of the Federal Rules of Civil Procedure provides that once a responsive pleading is served, a party seeking to amend a pleading must do so "only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." The Second Circuit has held that if a plaintiff "has at least colorable grounds for relief, justice does so require unless the plaintiff is guilty of undue delay or bad faith or unless permission to amend would unduly prejudice the opposing party." S.S. Silberblatt, Inc. v. East Harlem Pilot Block-Bldg. 1 Housing Dev. Fund Co., Inc., 608 F.2d 28, 42 (2d Cir. 1979) (citations omitted). Leave to amend should also be denied where the proposed amendment would be futile. Foman v. Davis, 371 U.S. 178, 182 (1962); Hoyden v. County of Nassau, 180 F.3d 42, 54 (2d Cir. 1999) (holding that if a plaintiff cannot demonstrate he is able to amend his complaint "in a manner which would survival dismissal, opportunity to replead is rightfully denied").
B. Bonus Wage Claims
Plaintiff first moves to amend his complaint to add a claim for unpaid bonus wages, both under his N.Y. Labor Law Article 6 claim as well as his breach of contract claim.
This issue has been previously discussed in the earlier opinion. See Knoll v. Merrill Corp., 2003 WL 21556942, at *14 (S.D.N.Y. July 9, 2003). To summarize, the offer letter extended to plaintiff states that "[d]uring FY '00, you will be eligible for a performance bonus up to 50% of your salary based on team and individual performance." Snyder Reply Aff., Ex. A. Furthermore, defendant Dady, Senior Vice-President of Sales and Operations at Merrill, stated, "Knoll was eligible for a performance bonus in 1999 and 2000." Dady Reply Aff. ¶ 15. However, Dady went on to state, "No other General Managers received performance bonuses for years 1999 and 2000 because Merrill's team performance did not meet 1999 or 2000 performance objectives. Moreover, Mr. Knoll was terminated for poor performance and was not entitled to a bonus for 2000 based on his individual performance for 2000." Id.
That is, fiscal years 2000 and 2001.
Based on this mixed record, I earlier found that, within the context of the sufficiency of the consideration Knoll received for executing the release, the evidence on the issue of bonus wages was inconclusive and held that it "must be developed and considered at trial." Knoll,; 2003 WL 21556942, *14. Defendants now argue that the bonus claim is futile, based on evidence previously submitted as well as the terms of Merrill's DMS Incentive Plan for General Managers for Fiscal Year 2000 (the "Incentive Plan"). Snyder Aff., Ex. C. Under the terms of the Incentive Plan, the company as a whole must meet certain performance thresholds before a bonus pool is even established. Defendants allege that because those thresholds were not met, no General Managers, including plaintiff, were eligible for any bonuses.
Defendants' proffered Incentive Plan is not enough to make plaintiffs claim futile. First, the plan does not speak to fiscal year 2001, for which Dady concedes in her deposition plaintiff was at least eligible. Second, defendants have yet to establish whether the Incentive Plan had been authorized and executed by Merrill Corporation, or whether Dady's statements that the company had failed to meet performance thresholds is credible or can be supported by documentation.
For these reasons, plaintiff has colorable grounds for relief with respect to the bonus claims. Defendants have had ample notice of the possibility of these claims, and indeed have already filed briefs on this issue and should not be prejudiced by the addition of this claim. Therefore, his complaint shall be amended to include the bonus claims against the defendant.
However, plaintiff has failed to provide even colorable grounds for relief as to whether he was eligible for or should have received bonuses for any work performed during fiscal years 1999 or 2002. Therefore, the amendment shall be limited to bonus claims for fiscal years 2000 and 2001 only.
C. Defamation
Plaintiff also moves to amend his complaint to seek a defamation claim against Washburn. Under New York law, claimants have one year to assert a defamation claim to meet the statute of limitations. N.Y. C.P.L.R. § 215 (McKinney's 2003); Shamley v. ITT Corp., 869 F.2d 167, 172 (2d Cir. 1989). A cause of action for defamation accrues, and the statute of limitation begins to run, from the date that the alleged defamatory statement is first published, not from when a claimant first acquires knowledge of the statement. Shamley, 869 F.2d at 172; Horowitz v. Aetna Life Ins., 148 A.D.2d 584, 539 N.Y.S.2d 50 (4th Dep't 1989); Fleischer v. Institute for Research in Hypnosis, 51 A.D.2d 535, 535, 394 N.Y.S.2d 1, 2 (1st Dep't 1977) ('The statute of limitations of one year, C.P.L.R. § 215(3), applies, and the fact that the libel may not have been discovered until later matters not, for the cause of action accrues on the date of publication"). Plaintiff alleges that Washburn made slanderous statements against him on August or September 2000. Proposed Amended Complaint ¶ 23. However, plaintiffs initial complaint was not filed until January 2002. Therefore, it would appear that the statute of limitations had run with respect to this claim prior to plaintiff filing his initial complaint on January 24, 2002.
In response, plaintiff argues that the offending statements alleged to have been uttered by Washburn are part of the same pattern of defamation on the part of the defendants. According to plaintiff, because the alleged statements uttered by Washburn are part of this continuing wrong committed by the defendants, the one-year statute of limitations should be tolled to allow for the addition of this new defendant. Plaintiff cites two cases to support his claim, Banner v. Guccione, 916 F. Supp. 271 (S.D.N.Y. 1996) and Neufeld v. Neufeld, 910 F. Supp. 977 (S.D.N.Y. 1996).
Plaintiffs argument misperceives the nature of a defamation claim. The two cases cited by the plaintiff make a distinction between ordinary torts, which "proscribe specific conduct," and intentional infliction of emotional distress, which "imposes liability based on after-the-fact judgments about the actor's behavior." Banner, 916 F. Supp. at 276 (citing Howell V. New York Post Co., Inc., 81 N.Y.2d 115, 122, 596 N.Y.S.2d 350, 353, 612 NJE.2d 699, 702 (1993)).
In a claim for intentional infliction of emotional distress, "each act of harassment or discrimination . . . only reaches an actionable level when aggregated". Banner, 916 F. Supp. at 276 n. 3. By contrast, each separate act of slander in a series is in and of itself a distinct and complete wrong and constitutes a different cause of action. New York case law teaches that the republication "by another within the one year period [does] not save the cause of action in defamation against defendant on the original publication." Clark v. New York Tel. Co., 52 A.D.2d 1030, 1030, 384 N.Y.S.2d 562, 563 (4th Dep't 1976). See also Egleson v. Kalamarides, 58 N.Y.2d 682, 458 N.Y.S.2d 530, 444 N.E.2d 994 (Nov. 18, 1982).
Under New York law, plaintiff might avoid the defamation statute of limitations by proving defendants fraudulently concealed the defamatory statements. Fraudulent concealment is generally thought of as adjourning the commencement of the running of the statute of limitations, particularly in cases where equity so requires. See General Stencils, Inc. V. Chiappa, 18 N.Y.2d 125, 272 N.Y.S.2d 337, 219 N.E.2d 169 (1996); Szajna v. Rand, 131 A.D.2d 840, 517 N.Y.S.2d 201 (2d Dep't 1987). However, in a defamation claim, a party must establish its own reliance as well as affirmative concealment or a fiduciary duty on the part of the defendant. See Shamley, 869 F.2d at 172; Gleason v. Spota, 194 A.D.2d 764, 599 N.Y.S.2d 297, 299 (2d Dep't 1993) (alleging defamation through sending of "hate mail") ("Where concealment without active misrepresentation is claimed to have prevented a plaintiff from commencing a timely action, the plaintiff must demonstrate a fiduciary relationship — not present here — which gave the defendant an obligation to inform him or her of facts underlying the claim."); Five Platters, Inc. V. Williams, 81 A.D.2d 534, 438 N.Y.S.2d 107 (1st Dep't 1981) (holding that concealment does not create estoppel unless person defamed relied on misrepresentation); Memory's Garden, Inc. V. D'Amico, 84 A.D.2d 892, 445 N.Y.S.2d 45 (3d Dep't 1981) (noting that affirmative concealment may toll statute).
In any event, plaintiff does not claim fraudulent concealment in this case; nor does it seem that he could do so. According to plaintiff's Proposed Amended Complaint ¶) 23, Knoll learned of Washbura's allegedly slanderous statements and thereafter "complained of them to Merrill, specifically to defendant Koch, the V.P. for human resources." Thus it would appear that Knoll had notice of Washburn's statements.
Thus, while plaintiff may be correct in noting that the statements allegedly uttered by Washbum are nearly identical to the statements originally alleged in the complaint, this so-called "pattern of defamation" results in multiple claims against multiple parties, not a tolling of the statute of limitations as to one defendant. The Banner effect of tolling of the statute of limitations to account for a continuous wrong does not apply to defamation claims. Therefore, plaintiffs defamation claim against Washburn is time barred.
D. Remaining Issues
In his memoranda of law, plaintiff does not move that Washburn should be added as a defendant with respect to any claims save the defamation claim. However, I read plaintiffs Proposed Amended Complaint to include Washburn as a defendant in two additional claims: Plaintiffs seventh claim for relief against defendants for negligent infliction of emotional distress and his eighth claim for relief for intentional infliction of emotional distress.
See Plaintiffs Memorandum of Law in Support of Plaintiffs Motion to Amend the Complaint at 7 ("Plaintiffs Support Memorandum") ("[W]e desire to include these [allegedly defamatory] statements in the complaint simply as additional information on the defamation that occurred and include Mr. Washburn as a defendant as an individual who uttered the statements."); Plaintiffs Reply Memorandum of Law in Support of Plaintiff s Motion to Amend the Complaint at 4 ("Plaintiffs Reply Memorandum") ("Mr. Knoll moves to amend his complaint regarding the defamation issues . . .).
There are complicating factors with respect to both claims. A claim for negligent infliction of emotional distress is subject to a three-year statute of limitations. See N.Y. C.P.L.R. § 214; Tornheim v. Federal Home Loan Mortgage Corp., 988 F. Supp. 279, 286 n. 6 (S.D.N.Y. 1997). Knoll's Proposed Amended Complaint was filed on September 30, 2003. In it, he alleges that Washburn made defamatory statements "in or around August or September of 2000." Proposed Amended Complaint ¶ 23. Thus it would appear that plaintiff may have filed his amended complaint just after the three-year statute of limitations period had run. If this is so, the issue becomes whether a claim for negligent infliction of emotional distress against Washburn relates back to the initial complaint. Otherwise, it would be time barred.
With respect to the claim for intentional infliction of emotional distress, plaintiff may include Washburn as a defendant in that claim, regardless of the statute of limitations, if he can demonstrate that Washburn's actions were part and parcel of a continuing wrong collectively committed by all the defendants. Banner, 271 F. Supp. at 276.
Plaintiff is directed to file and serve a further memorandum of law to the Court, asserting whether or not he intends to include Washburn as a defendant for either negligent infliction of emotional distress or intentional infliction of emotional distress, and if so, what reasons support the addition of Washburn to either claim. Defendant shall file and serve an opposing brief. These briefs should be submitted to the Court by the following dates: Plaintiff shall file and serve his brief on or before December 4, 2003. Defendants shall file their opposing brief on or before December 18, 2003.
III. Conclusion
For the reasons set forth above, plaintiff is granted leave to amend his complaint with respect to bonus wages to include claims for Fiscal Years 2000 and 2001. Plaintiffs motion to amend his complaint with respect to the defamation claim is denied.
The parties are directed to file and serve additional briefs as directed in this Opinion.
It is SO ORDERED.