Gardner v. Virtuoso Ltd.

• Decision Date: 10 December 2021
• Docket Number: INDEX 656244/2019
• Citation: Gardner v. Virtuoso Ltd., 2021 NY Slip Op 32651(U), INDEX 656244/2019 (N.Y. Sup. Ct. Dec 10, 2021)
• Parties: JENA GARDNER, JG WORLD WIDE LLC, JG BLACK BOOK OF TRAVEL LTD, CITY ESCAPES INC. D/B/A DISCOVER OUTDOORS, BIA LLC D/B/A MILLENNIUM VOYAGES USA, MERCURY ADVERTISING INC. D/B/A MERCURY CSC, REVEALED ENTERPRISES LLC D/B/A REVEALED CALIFORNIA D/B/A REVEALED AMERICA, and HERITAGE TOURS USA LLC, Plaintiffs, v. VIRTUOSO LTD and MATTHEW D. UPCHURCH, Defendants. MOTION SEQ. NO. 004
• Court: New York Supreme Court

2021 NY Slip Op 32651(U)

JENA GARDNER, JG WORLD WIDE LLC, JG BLACK BOOK OF TRAVEL LTD, CITY ESCAPES INC. D/B/A DISCOVER OUTDOORS, BIA LLC D/B/A MILLENNIUM VOYAGES USA, MERCURY ADVERTISING INC. D/B/A MERCURY CSC, REVEALED ENTERPRISES LLC D/B/A REVEALED CALIFORNIA D/B/A REVEALED AMERICA, and HERITAGE TOURS USA LLC, Plaintiffs, v. VIRTUOSO LTD and MATTHEW D. UPCHURCH, Defendants.

INDEX NO. 656244/2019 MOTION SEQ. NO. 004

Supreme Court, New York County

December 10, 2021

Unpublished Opinion

MOTION DATE: 11/13/2020

DECISION + ORDER ON MOTION

ANDREA MASLEY, J .S.C.

The following e-filed documents, listed by NYSCEF document number (Motion 004) 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 86 87, 88, 89, 90, 91, 92 were read on this motion to/for DISMISS Upon the foregoing documents, it is

In motion sequence number 004, defendantsVirtuoso Ltd(Virtuoso) and Matthew D. Upchurch move to dismiss the first amended complaint (FAC) pursuant to CPLR 3211(a)(1) and (7).PlaintiffsJena Gardner, JG World Wide LLC(JGWW), JG Black Book of Travel LTD(JGBB), City Escapes Inc.(City) d/b/a Discover Outdoors, BIA LLC(BIA) d/b/a Millennium Voyages USA, Mercury Advertising Inc.(Mercury) d/b/a Mercury CSC Revealed Enterprises LLC(Revealed) d/b/a Revealed California d/b/a Revealed America, and Heritage Tours USA LLC(Heritage) cross-move to strike the affirmation of defendants' counsel.

In the FAC, plaintiffs allege against both defendants(1) defamation, (2) product or trade disparagement, (3) tortious interference with contract, (4) tortious interference with prospective economic advantage, and (5) negligence.Additionally, plaintiff Gardner alleges against both defendants(6) negligent infliction of emotional distress and (7) intentional infliction of emotional distress.(NYSCEF Doc. No. [NYSCEF] 42, FAC ¶¶ 102-136.)

Background

Unless indicated otherwise, the following facts are taken from the FAC and for the purposes of this motion are accepted as true.

Gardner is an owner, manager, and officer for the "high-end luxury travel" branding and marketing companies she formed or acquired: JGWW, JGBB, City, BIA, Mercury, Revealed and Heritage.(Id.¶¶ 14, 16-19.)The corporate plaintiffs reported gross revenue of $28, 179, 272 in 2018.(Id.¶ 29.)In December 2016, Gardner was offered $43 million to sell the corporate plaintiffs.(Id.¶ 26.)

"Virtuoso is a for-profit network of travel agencies and suppliers" with more than 20, 000 members.(Id.¶¶ 31, 32.)Upchurch is the Chief Executive Officer of Virtuoso.(Id.¶ 36.)Members of the Virtuoso network pay a membership fee, plus a percentage of travel booked through the network.(Id.¶ 31.)Gardner did business with Virtuoso for 21 years.(Id.¶ 33.)Heritage and Revealed were members of the Virtuoso network, not Gardner's other businesses.(Id.¶ 34.)However, most of plaintiffs' business and revenue stemmed from Gardner's relationships with the Virtuoso network.(Id.)

Virtuoso's Tour Operator Preferred Supplier Agreements (Agreements) provide that Virtuoso is to "consistently review" members "on an ongoing basis," and as a result of Virtuoso's review,

"if Virtuoso determines that a member is problematic due to... outstanding commission payments, outstanding fee payments, operational problems, financial instability, service issues, or other problems determined by Virtuoso... then Virtuoso, in its sole discretion, may place [Heritage or Revealed] on 'probation.'[Heritage or Revealed] specifically consents to Virtuoso's notification to its Member Agencies of any change in status of [Heritage or Revealed] to 'probationary' as set forth herein.In such instances, Virtuoso reserves the right to advise its Member Agency base via Virtuoso.com and/or by other appropriate means."

(NYSCEF 54, Tour Operator Preferred Supplier Agreement¶ 4.6[2].)The Agreements also include a forum selection provision which states: "[v]enue of any suit brought to enforce the provisions of this Agreement shall lie exclusively in Tarrant County, Texas... hereby waive[] any and all objections to exclusive venue and jurisdiction of any dispute hereunder lying in Tarrant County, Texas."(Id.¶ 6.4.)

In February 2019, Virtuoso allegedly contacted 24 companies, some within the Virtuoso network, and told them during phone calls orally that

"(i) Gardner was not trustworthy and neither her nor her companies should be trusted; (ii) Gardner and her companies had poor business practices which had caused a deteriorating customer satisfaction rate; (iii) Gardner and her companies did not provide customers with satisfactory trips; (iv)they should wind down and terminate their business relationships with Gardner and her companies; and (v) if these entities did not stop doing business with Garner's businesses immediately, it would be at their own business' peril"(the Statements).

(NYSCEF 42, FAC ¶ 38.)In paragraphs 38(a) to (x), plaintiffs detail the subsequent calls plaintiffs received from the 24 entities, including details of when and what Virtuoso said and who made the call from Virtuoso to the members.For example,

"i.Virtuoso telephoned Gateway Travel and made the [Statements] and stated that Gardner and her companies would soon no longer be Virtuoso suppliers.These statements were made by Virtuoso on February 6, 2019. . . .Gateway Travel informed Gardner: 'I heard what happened with Virtuoso and I have to say it's got me very concerned.'" and

"p.Virtuoso telephoned Smart Flyer and made the [Statements].It advised Smart Travel that it should not do business with Heritage.These statements were made by Virtuoso on February 6, 2019.Smart Flyer put a 'Stop Sell' on any company owned by Gardner."

Virtuoso contacted nonmembers too.For example, plaintiffs allege:

"u.Virtuoso contacted the Travel Agency Management Solution(TAMS') group, which is not a Virtuoso member, which then sent a 'Stop Sell' advisory regarding Gardner and Heritage to all of its travel agency members.Upon information and belief, Virtuoso representatives were in attendance at the TAMS meeting that took place a few days after the February 6, 2019 suppression notice.Many Virtuoso agency owners were also at this meeting and were discussing what they had heard from Virtuoso."

Virtuoso also made the Statements about Gardner's other company, JGBB, which was not Virtuoso members.For example, plaintiffs allege:

"w.Costas Christ, a director at Virtuoso, telephoned Islas Secas/Belvedere Properties, a [JGBB] client who was not a client of Heritage or Revealed, and made the [Statements] on or about February 28, 2019.That client terminated JG Black Book for all trade, public relations and marketing services.The Belvedere Properties team had been in talks with [JGBB] to build out its entire hotel brand from a marketing, PR and sales perspective, but that business opportunity was irretrievably lost as a result of Virtuoso's statements."

On February 6, 2019, Virtuoso allegedly posted the following notice to its network: "'[i]n response to recent issues experienced with Heritage Tours related to late commission payments, service issues and non-responsiveness, Virtuoso has made the decision to place them on probation and suppress their profile from the network.'"(Id.¶ 42.)On February 15, 2019, Virtuoso made an identical on-line statement about Revealed.(Id.¶ 43.)Afterwards, industry contacts reduced or terminated their business relationships with Gardner and her companies.(Id.¶ 44.)

On April 17, 2019, Heritage and Revealed ended their membership in the Virtuoso network.(Id.¶ 46.)On April 19, 2019, Virtuoso emailed members acknowledging that Heritage and Revealed were no longer preferred partners but misstating that JGBB continued its membership.(Id.¶ 47.)Later that day, Virtuoso sent another email stating JGBB was no longer part of the network.(Id.¶ 48.)However, JGBB was never a member of the Virtuoso network, and a clarification was not issued.(Id.¶ 49.)Plaintiffs allege that this communication implied that JGBB was not qualified to be a member of the Virtuoso network and was being preemptively rejected.(Id.¶ 51.)Plaintiffs assert Virtuoso's statements were non-privileged, false, misleading, and designed to inhibit or destroy the plaintiffs' businesses.(Id.¶ 37.)As to Upchurch, plaintiffs complain that he directed and instructed Virtuoso's actions which were motivated by "personal antipathy and malice toward Gardner."(Id.¶ 79.)

Plaintiffs deny any late commission payments, service issues, or non-responsiveness.(Id.¶¶ 57-59, 67.)Moreover, plaintiffs contend that even if Virtuoso were to identify one or two late payments, placing the plaintiffs on probation from the network is drastic, commercially unreasonable, and malicious.(Id.¶ 60.)Rather, plaintiffs blame Virtuoso and its new invoicing procedure that went into effect on February 6, 2019.(Id.¶¶ 62, 63.)Moreover, plaintiffs complain that after 21 years without incident, in early 2019, Virtuoso suddenly emailed Gardner and her companies at the wrong addresses to resolve payment issues and failed to provide invoices to plaintiffs in a timely manner.(Id.¶¶ 63-64.)Plaintiffs assert that Virtuoso has never required instantaneous commission payments, nor have members been comparably publicly scrutinized by Virtuoso.(Id.¶¶ 65-66.)Rather, plaintiffs assert defendants"set up" or trapped plaintiffs.(Id.¶ 64.)

Plaintiffs allege that Upchurch was on a personal crusade to ruin Gardner and her businesses.(Id.¶¶ 79-80.)Plaintiffs contend that Upchurch was motivated by his anger from being excluded from a leadership council being formed by Gardner and Gardner's success in their industry.(Id.¶ 80.)Pl...