Gainsburg v. Steben & Co.

• Decision Date: 08 December 2011
• Docket Number: Civ. No. PJM 10–715.
• Citation: 838 F.Supp.2d 339
• Court: U.S. District Court — District of Maryland
• Parties: Barry R. GAINSBURG, Plaintiff, v. STEBEN & CO., INC., Defendant.

838 F.Supp.2d 339

Barry R. GAINSBURG, Plaintiff,

v.STEBEN & CO., INC., Defendant.

Civ. No. PJM 10–715.

United States District Court, D. Maryland.

Dec. 8, 2011.

Philip J. Sweitzer, Baltimore, MD, for Plaintiff.

Bruce S. Harrison, Erick Hemmendinger, Teresa D. Teare, Shawe & Rosenthal, L.L.P., Baltimore, MD, for Defendant.

MEMORANDUM OPINION

PETER J. MESSITTE, District Judge.

Barry R. Gainsburg has sued his former employer, Steben & Co., Inc. (“SCI”), and its President, Kenneth Steben, claiming abusive discharge, unpaid wages, fraud in the inducement, breach of contract, and defamation. Gainsburg filed his initial Complaint on March 23, 2010, and a First Amended Complaint on May 13, 2010 (collectively, the “Prior Complaints”). On July 22, 2010, following a hearing, the Court issued an oral opinion granting Defendants' Motion to Dismiss all counts other than those for breach of contract and defamation. On August 15, 2011, the Court heard argument on the parties' Cross–Motions for Summary Judgment. At the conclusion of the hearing, the Court issued an oral opinion denying Plaintiff's Motion for Partial Summary Judgment and granting Defendants' Motion for Summary Judgment as to Kenneth Steben on all counts and as to SCI on the counts for breach of contract and defamation, with the exception of a single purportedly defamatory statement. The Court granted Gainsburg 20 days' leave to file an Amended Complaint against SCI for the single statement that survived summary judgment.

On August 31, 2011, Gainsburg filed a Second Amended Complaint articulating a single count of defamation based on Kenneth Steben's alleged statement that Gainsburg was an “extortionist” or was committing the offense of “extortion” (the “extortionist statement”). SCI filed a Motion to Dismiss the Second Amended Complaint as barred by the applicable statute of limitations. For the reasons that follow, SCI's Motion to Dismiss will be GRANTED.

I.

Gainsburg, an attorney, worked for SCI from November 26, 2007 through November 20, 2009 in the dual roles of Chief Compliance Officer and General Counsel. From the outset of his employment, Gainsburg had a contentious relationship with Kenneth Steben, SCI's President. (Second Amended Complaint (“SAC”) ¶ 7.) Per the Second Amended Complaint, Steben criticized Gainsburg's work on a routine basis without appreciating the relevant circumstances, ignored Gainsburg's emails and telephone calls, and second-guessed or complained about decisional processes, even if they reflected Steben's own input. (SAC ¶¶ 14–15.)

On June 19, 2009, Gainsburg emailed Steben a copy of an audit report for SCI's Chicago branch office, which included a description of certain “deficiencies found.” On June 22, 2009, Steben responded to Gainsburg's email and questioned why Gainsburg had not resolved the noted deficiencies himself or had not raised them with senior management. Gainsburg responded that he had in fact raised these issues with senior management and the finance department, but that they had failed to provide him with the information necessary to rectify the deficiencies. Gainsburg attached an earlier memorandum on this issue to his email. (SAC ¶ 16.)

Later that same day, Steben sent an email to SCI Vice President Michael Bulley, in which he referred to Gainsburg as a “wild card” who was “not competent” and “not to be trusted.” Steben noted that Gainsburg has a “grudge against” him—Steben—but concluded that he—Steben—“need[s] to bite the bullet” and is “leaning towards firing and creating a vacuum.” Bulley responded: “I'm not going to talk you out of it. However I don't think we're going to get away with simply letting him go. This last issue in Chicago suggests he's building his arsenal of issues, in the event he is let go.” (SAC ¶ 17.)

The next day, Gainsburg allegedly approached Bully to discuss his deteriorating relationship with Steben. Bully allegedly informed Gainsburg that management, particularly Steben, viewed Gainsburg's habit of reducing conversations to writing as an attempt to “extort” the company. (SAC ¶ 18.) Upon hearing this, Gainsburg forwarded to Bulley his email correspondence with Steben regarding the Chicago branch office audit and noted: “from my intent and perspective in no way was it a CYA or an attempt to extort anything in any manner.” (SAC ¶ 19.)

SCI terminated Gainsburg's employment on November 20, 2009. This suit followed.

II.

A motion to dismiss filed pursuant to Rule 12(b)(6) challenges the sufficiency of the plaintiff's complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999). To survive such a motion, the complaint must show “entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 n. 3, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Accordingly, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955. In making its determination, the Court must consider all well-pled allegations in the Complaint as true and construe all factual allegations in a light most favorable to the plaintiff. See GE Inv. Private Placement Partners II v. Parker, 247 F.3d 543, 548 (4th Cir.2001). The Court need not, however, accept conclusory factual allegations devoid of any reference to actual events. See E. Shore Markets, Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.2000).

A motion to dismiss pursuant to Rule 12(b)(6) does not generally permit an analysis of the defendant's potential defenses. However, dismissal may be appropriate when a meritorious affirmative defense is clear from the face of the complaint. Brooks v. City of Winston–Salem, N.C., 85 F.3d 178, 181 (4th Cir.1996) ( citing Richmond, Fredericksburg & Potomac R.R. Co. v. Forst, 4 F.3d 244, 250 (4th Cir.1993); 5A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1357, at 352 (1990) (“A complaint showing that the statute of limitations has run on the claim is the most common situation in which the affirmative defense appears on the face of the pleading,” rendering dismissal appropriate)).

III.

SCI asserts that the Second Amended Complaint is barred by Maryland's one-year statute of limitations for defamation because the sole count is based on a statement made on June 22, 2009—more than one year before the filing of this claim. Gainsburg maintains that his claim is not barred by the statute of limitations because: (1) pursuant to Federal Rule of Civil Procedure 15(c), the claim “relates back” to his Prior Complaints, both of which were filed within one year of the defamatory statement; and (2) SCI waived any statute of limitations defense by appearing generally and arguing the merits of the claim on summary judgment.

A.

Maryland law imposes a one year limitations period for defamation actions. Md.Code Ann., Cts. & Jud. Proc. § 5–105. Although, ordinarily, the limitations period runs from the time that the defamatory statement is published, Maryland law follows the discovery rule, which provides that a cause of action accrues at the time the plaintiff “knows or reasonably should know of the wrong.” Interphase Garment Solutions, LLC v. Fox Television Stations, Inc., 566 F.Supp.2d 460, 464 (D.Md.2008) ( quoting Hecht v. Resolution Trust Corp., 333 Md. 324, 334, 635 A.2d 394 (1994)).

According to the allegations in the Second Amended Complaint, Gainsburg learned of the extortionist statement on June 23, 2009. Thus, his claim based on this statement, filed on August 31, 2011, is barred by the statute of limitations, unless it is subject to some exception.

B.

Gainsburg argues that his claim is not barred by the statute of limitations because it “relates back” to his Prior Complaints under Rule 15(c) of the Federal Rules of Civil Procedure. The Court disagrees.

Rule 15(c) provides that an amendment to a pleading “relates back to the date of the original pleading when ... the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out—or attempted to be set out—in the original pleading.” This provision allows a claim that would otherwise be barred by the statute of limitations to go forward. See Tischler v. Baltimore Bancorp, 801 F.Supp. 1493, 1497 (D.Md.1992) (“The purpose of Rule 15(c) is to provide the opportunity for a claim to be tried on its merits, rather than being dismissed on procedural technicalities, when the policy behind the statute of limitations has been addressed.”). The Fourth Circuit has identified two requirements for a claim to relate back under Rule 15(c): (1) there must be a “factual nexus between the amendment and the original complaint,” and (2) the defendant must have “notice of the claim” and must “not be prejudiced by the amendment.” Grattan v. Burnett, 710 F.2d 160, 163 (4th Cir.1983); see also Chang–Williams v. Dep't of the Navy, 766 F.Supp.2d 604, 630 (D.Md.2011).

Gainsburg proffers a two-pronged explanation of why his claim relates back to prior pleadings. First, he argues that the claim generally arises out of the same operative facts alleged in his Prior Complaints, namely that Steben and SCI made false statements about him for the purpose of bringing him into disrepute. Second, he argues that the extortionist statement arose out of a transaction described in his Prior Complaints, as follows:

On several occasions, Defendant Steben was highly complimentary of Mr. Gainsburg's work and—in particular—of correcting apparent SCI regulatory compliance deficiencies.... On other occasions Defendant Steben resisted taking required corrective action: at certain times, he would instigate contentious email exchanges and personal conversations with Mr. Gainsburg, expressing reluctance or opposition to implement required remedial measures. Mr. Gainsburg, at all relevant times, urged compliance with statutory and regulatory mandates. See, Plaintiff's Exhibits “B,” and...