Murphy v. Livingsocial, Inc.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
WENDY MURPHY )
)
Plaintiff, )
) Civil Action No. 12-864(EGS)
v. )
)
LIVINGSOCIAL, INC. and )
SETH BROWN, )
)
Defendants. )
)
MEMORANDUM OPINION
Pending before the Court is defendants’ motion to dismiss
Count IV of plaintiff’s amended complaint. Upon consideration
of the motion, the response and reply thereto, the entire
record, and for the reasons explained below, defendants’ motion
is GRANTED.
I. BACKGROUND
Plaintiff Wendy Murphy is resident of the State of
Illinois. Amend. Compl. (“Compl.”) ¶ 1. Defendant
LivingSocial, Inc. (“LivingSocial”) is a Delaware corporation
with its principal place of business in Washington, D.C. Compl.
¶ 2. LivingSocial operates a group buying website wherein it
sells vouchers to people for use at local businesses, for
vacations and hotel rooms, and for other excursions. Compl. ¶
10. Defendant Seth Brown is employed as an attorney for
LivingSocial and works in its Washington, D.C. office. Compl. ¶
3.
On November 5, 2010, plaintiff was offered a position of
Marketing Consultant at LivingSocial. Compl. ¶ 13. The offer
letter, which was signed by plaintiff on November 6, 2010,
includes a choice of law clause, which states that “[r]egardless
of where you live, District of Columbia law shall apply to this
Agreement and to your employment by the Company. Choice of law
rules that might otherwise cause the application of any other
law shall not apply.” Compl. Ex. 1 (“Employment Agreement”), ¶
9. The Employment Agreement also incorporates by reference an
attachment titled “Confidentiality, Intellectual Property
Noncompetition Agreement” (the “Non-Compete Agreement”). The
Non-Compete Agreement restricts plaintiff’s ability to compete
with LivingSocial in the event of plaintiff’s termination of
employment by prohibiting her from sharing confidential
information, soliciting LivingSocial clients, and soliciting
LivingSocial employees to work elsewhere for certain periods of
time following plaintiff’s employment. The Employment Agreement
states that plaintiff’s “obligations under . . . the [Non-
Compete Agreement] shall survive the termination of
[plaintiff’s] employment.” Employment Agreement at ¶ 9. The
Non-Compete Agreement states that plaintiff “agrees that
following [plaintiff’s] employment with the Company, the Company
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shall have the right to communicate the terms of this Agreement
to any prospective or current employer of Employee. Employee
waives the right to assert any claim for damages against Company
or any officer, employee or agent of the Company arising from
such disclosure of the terms of this Agreement.” Non-Compete
Agreement, ¶ 6(b).
Plaintiff resigned from LivingSocial effective March 1,
2012. On March 6, 2012, LivingSocial sent plaintiff a letter
reminding her of her obligations under the Non-Compete
Agreement. Compl. Ex. 2. The letter set forth plaintiff’s
obligations under her Employment Agreement and demanded that
plaintiff stop immediately “any and all activities that violate
the terms” of the Non-Compete Agreement. The letter stated
LivingSocial’s understanding that plaintiff intended to begin
employment with a direct competitor of LivingSocial, Travelzoo,
Inc. (“Travelzoo”).
On March 21, 2012, defendant Seth Brown, Head of Litigation
at LivingSocial, sent another letter to plaintiff. Compl. Ex.
3. In the letter, Brown states that the Director of Human
Resources at Travelzoo had recently solicited one of
LivingSocial’s lead sales representatives to discuss job
opportunities at Travelzoo. Brown stated that he suspected
plaintiff may have shared information with Travelzoo in
violation of the Non-Compete agreement, and demanded that she
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cease and desist all solicitation of LivingSocial employees,
customers, or prospective customers. The letter further stated
that LivingSocial was considering taking legal action against
plaintiff to protect its interests.
Also on March 21, 2012, Brown sent a letter to Travelzoo’s
Human Resources Director, Kaity Benedicto, regarding the
solicitation of the LivingSocial sales representative. Compl. ¶
70 & Ex. 4 (“Travelzoo Letter”). The Travelzoo Letter outlined
plaintiff’s continuing obligations under the Non-Compete
Agreement and demanded that Travelzoo cease and desist further
solicitation of LivingSocial employees, customers, or
prospective customers. The Travelzoo Letter is the subject of
Count IV and defendants’ motion to dismiss.
On March 26, 2012, plaintiff filed a complaint against
LivingSocial in the Northern District of Illinois, alleging
claims for breach of contract and violation of the Illinois Wage
Payment and Collection Act, and seeking a declaratory judgment.
On April 11, 2012, plaintiff filed an amended complaint, adding
Seth Brown as a defendant and adding a claim of libel per se
against both defendants. On May 11, 2012, Judge Rebecca R.
Pallmeyer construed defendants’ motion to dismiss as a motion to
transfer the case, and ordered that the case be transferred to
this Court in view of the parties’ forum selection clause.
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On June 6, 2012, defendants filed a motion to dismiss Count
IV of the complaint for failure to state a claim for which
relief may be granted. The motion is now ripe for the Court’s
decision.
II. STANDARD OF REVIEW
A motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) tests the legal sufficiency of a complaint. Browning
v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A complaint
must contain “a short and plain statement of the claim showing
that the pleader is entitled to relief, in order to give the
defendant fair notice of what the . . . claim is and the grounds
upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (internal quotation marks and citations omitted).
While detailed factual allegations are not necessary, plaintiff
must plead enough facts “to raise a right to relief above the
speculative level.” Id.When ruling on a Rule 12(b)(6) motion, the Court may
consider “the facts alleged in the complaint, documents attached
as exhibits or incorporated by reference in the complaint, and
matters about which the Court may take judicial notice.”
Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002).
The Court must construe the complaint liberally in plaintiff’s
favor and grant plaintiff the benefit of all reasonable
inferences deriving from the complaint. Kowal v. MCI Commc’ns
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Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). However, the Court
must not accept plaintiff’s inferences that are “unsupported by
the facts set out in the complaint.” Id. “[O]nly a complaint
that states a plausible claim for relief survives a motion to
dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
III. DISCUSSION
a. Choice of Law
As an initial matter, the parties disagree as to whether
District of Columbia or Illinois law applies to plaintiff’s
claims. As discussed above, the Employment Agreement expressly
provides that “[r]egardless of where [plaintiff] lives, District
of Columbia law shall apply to this Agreement and to
[plaintiff’s] employment by the Company. Choice of law rules
that might otherwise cause the application of any other law
shall not apply.” Employment Agreement ¶ 9.
Under District of Columbia law, courts will give effect to
a contractual choice of law clause as long as there is some
reasonable relationship with the state specified. Gray v. Am.
Exp. Co., 743 F.2d 10, 17 (D.C. Cir. 1984); see Ladd v.
Chemonics Intern., Inc., 603 F. Supp. 2d 99, 115 n.11 (D.D.C.
2009) (applying District of Columbia law where defendant’s
principal place of business was in the District and the
employment agreement specified that District of Columbia law
would apply). Here, defendant LivingSocial is headquartered in
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the District of Columbia. Accordingly, the Court finds that the
choice of law clause has a reasonable relationship with the
District of Columbia.
The cases cited by plaintiff do not compel a different
result. Plaintiff argues that District of Columbia choice of
law principles should be applied and the Court should consider
whether Illinois or the District of Columbia has a greater
interest in the dispute. Pl.’s Opp. to Defs.’ Mot. to Dismiss
at 3. Plaintiff’s argument ignores the fact that her Employment
Agreement contains a choice of law clause that expressly states
that “[c]hoice of law rules that might otherwise cause the
application of any other law shall not apply.” Employment
Agreement ¶ 9. Plaintiff does not argue that the choice of law
clause is invalid or ambiguous. Accordingly, the Court will
apply District of Columbia law.
Plaintiff also argues that the choice of law clause is
inapplicable to the libel claim against Brown for two reasons.
First, plaintiff argues that the alleged tort did not “arise
from plaintiff’s employment.” Pl.’s Opp. at 5. Plaintiff
argues that “[l]iability for tortious conduct that occurs after
termination of plaintiff’s employment is not addressed at all”
in the Employment Agreement. Id. This argument fails.
Plaintiff’s libel claim rests solely on a letter sent to
plaintiff’s current employer regarding plaintiff’s alleged
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contractual obligations to LivingSocial under the Non-Compete
Agreement. The Employment Agreement, which incorporates the
Non-Compete Agreement by reference, expressly states that
plaintiff’s obligations under the Non-Compete Agreement would
survive the termination of her employment. The Court finds,
therefore, that plaintiff’s libel claim is inextricably
intertwined with, and arises out of, plaintiff’s employment with
LivingSocial.
Plaintiff also argues in a footnote that the choice of law
clause does not apply to Brown because he was not a party to the
Employment Agreement. Plaintiff cites no case law in support of
this argument, which was made in a footnote. Courts need not
resolve arguments raised in a cursory manner and with only the
most-bare bones arguments in support. See Doe v. Siddig, 810 F.
Supp. 2d 127, 137-38 (D.D.C. 2011) (citing Wash. Legal Clinic
for the Homeless v. Barry, 107 F.3d 32, 39 (D.C. Cir. 1997)).
In any event, plaintiff’s argument lacks merit. When writing
the letter, Brown was acting as an agent of LivingSocial, and
plaintiff makes no serious attempt to argue otherwise.
Accordingly, the choice of law clause also applies to
plaintiff’s claims against Brown.
b. Plaintiff’s Libel Per Se Claim
In Count IV of the complaint, plaintiff alleges that the
Travelzoo Letter falsely accused plaintiff of violating the Non-
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Compete Agreement. Compl. ¶ 73-74. Plaintiff argues that the
letter “falsely impute[s] an inability to perform or want of
integrity by Plaintiff in the discharge of her employment and
[is] defamatory per se.” Compl. ¶ 75. Plaintiff further
contends that Brown, in drafting the letter, acted with actual
malice and caused harm to plaintiff’s professional reputation.
Compl. ¶ 76-78.
Libel is a type of defamation in which the allegedly
defamatory statement is written. See Ning Ye v. Holder, 644 F.
Supp. 2d 112, 117 (D.D.C. 2009). Under District of Columbia
law, to state a claim for defamation, plaintiff must allege (1)
that the defendant made a false and defamatory statement
concerning the plaintiff; (2) that the defendant published the
statement without privilege to a third party; (3) that the
defendant’s fault in publishing the statement amounted to at
least negligence; and (4) that the statement was either
actionable as a matter of law irrespective of special harm or
that its publication caused the plaintiff special harm.
Franklin v. Pepco Holdings, Inc., 875 F. Supp. 2d 66, 74 (D.D.C.
2012) (citing Jankovic v. Int’l Crisis Group, 494 F.3d 1080,
1091 (D.C. Cir. 2007)). Plaintiff’s claim fails the second prong
of this test. 1
1
Because the Court finds that plaintiff has failed to state a
claim because the allegedly defamatory statements were
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i. The Statements Are Privileged
Defendants argue that the allegedly defamatory statements
in the Travelzoo Letter are protected by an absolute privilege
because they were made in anticipation of litigation.
An attorney at law is absolutely privileged to publish
defamatory matter concerning another in communications
preliminary to a proposed judicial proceeding, or in
the institution of, or during the course and as part
of, a judicial proceeding in which he participates as
counsel, if it has some relation to the proceeding.
Restatement (Second) of Torts § 586 (1977); see Oparaungo v.
Watts, 884 A.2d 63, 79 (D.C. 2005) (recognizing that the
District of Columbia has adopted Section 586). 2 “Despite its
name, the judicial proceedings privilege does not protect only
statements that are made in the institution of a lawsuit or in
the course of litigation.” Finkelstein, Thompson & Loughran v.
Hemispherx Biopharma, Inc., 774 A.2d 332, 341 (D.C. 2001)
overruled in part on other grounds by McNair Builders, Inc. v.
Taylor, 3 A.3d 1132 (D.C. 2010). Rather, the privilege can
extend to “statements that are made prior to the commencement of
litigation, for instance, ‘in . . . communications preliminary
privileged, the Court does not reach defendants’ alternative
arguments that the statements were not false or were not
defamatory.
2
Even if Illinois law were to apply in this case, Section 586
has also been adopted by courts in that state, see Thompson v.
Frank, 313 Ill. App. 3d 661, 664 (3d Dist. 2000), and Illinois
courts have recognized that the privilege applies to statements
made in anticipation of litigation, see Atkinson v. Afftonti,
369 Ill. App. 3d 828, 833 (1st Dist. 2006). Accordingly,
plaintiff’s claims would also fail under Illinois law.
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to the proceeding.’” Id. (quoting Restatement § 586 cmt. a).
“[A]n actual outbreak of hostilities is not required, so long as
litigation is truly under serious consideration and the
communications in issue bear a sufficient relationship to that
potential litigation.” Finkelstein, 774 A.2d at 343; see Am.
Petrol. Inst. V. Technomedia Int’l, Inc., 699 F. Supp. 2d 258,
268 (D.D.C. 2010) (dismissing defamation claim based on letter
regarding alleged violation of non-disclosure agreement because
the letter “raised the specter of future litigation”); Messina
v. Krakower, 439 F.3d 755, 760 (D.C. Cir. 2006) (affirming
dismissal of defamation claim where letter defined the nature of
the dispute between the parties and alerted the recipient to a
potential legal claim).
Here, the Travelzoo Letter was written by LivingSocial’s
attorney, advised Travelzoo of plaintiff’s contractual
obligations, explained that plaintiff’s actions appeared to have
been taken in violation of the contract, stated that
LivingSocial reserved its rights “to take all legal and
equitable action to protect its business interests,” and
demanded that Travelzoo “immediately cease and desist from any
further solicitation of LivingSocial employees, customers, or
prospective customers.” Compl., Ex. 4. The Court finds that
the statements in the letter indicate that litigation was under
serious consideration. Furthermore, the statements in the
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letter bear a clear relationship to the dispute because they
defined the nature of the dispute. Accordingly, the Court finds
that the Travelzoo Letter is protected by the judicial
proceedings privilege. 3
Plaintiff’s claim also fails because the statements in the
letter are protected by the privilege of consent. See
Farrington v. Bureau of Nat’l Affairs, Inc., 596 A.2d 58, 59
(D.C. 1991) (“Consent is an absolute defense to a claim of
defamation.”). The publication of a defamatory statement is
privileged if “(1) there was either express or implied consent
to the publication; (2) the statements were relevant to the
purpose for which consent was given; and (3) the publication of
those statements was limited to those with a legitimate interest
in their content.” Id.The Non-Compete Agreement contains an express provision by
which plaintiff consented to LivingSocial’s communicating the
terms of the Non-Compete Agreement “to a prospective or current
employer” of plaintiff. Non-Compete Agreement at ¶ 6(b). The
statements made in the letter, alleging plaintiff had violated
the restrictive covenants of the Non-Compete Agreement, were
directly relevant to the purpose for which consent was given.
3
Indeed, plaintiff’s argument that the letter was not sent in
anticipation of litigation is belied by the fact that she filed
this lawsuit on March 26, 2012, only five days after the date of
the letter.
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Finally, the publication of the statement was limited to
Travelzoo’s human resources director, who had a legitimate
interest in the content of the statements. Accordingly, the
letter is protected by the privilege of consent, and plaintiff’s
claim fails.
IV. CONCLUSION
For all of the foregoing reasons, defendant’s motion to
dismiss Count IV of plaintiff’s complaint is GRANTED and Count
IV is hereby DISMISSED. An appropriate Order accompanies this
Memorandum Opinion.
Signed: Emmet G. Sullivan
United States District Judge
March 18, 2013
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