LoanStreet, Inc. v. Troia
| Docket Number | 21 Civ. 6166 (NRB) |
| Decision Date | 08 September 2023 |
| Parties | LOANSTREET, INC., and IAN LAMPL, Individually, Plaintiffs, v. WYATT TROIA, Individually, Defendant. WYATT TROIA, Individually, Counterclaim Plaintiff, v. LOANSTREET, INC., and IAN LAMPL, Individually, Counterclaim Defendants. |
| Court | U.S. District Court — Southern District of New York |
LoanStreet Inc. (“LoanStreet”) operates an online platform that allows users to share, manage, and originate loans. Wyatt Troia (“Troia” or “defendant”) was employed as a software engineer at LoanStreet from March 2019 until June 12, 2020, when he was fired. See Complaint, ECF No. 3 (“Compl.”) ¶ 27. Throughout 2020 and 2021, Troia posted statements on several different websites disparaging LoanStreet and its CEO, Ian Lampl (“Lampl,” and together with LoanStreet “plaintiffs”), accusing them of unlawfully withholding stock options owed to Troia and other improper employment practices.[1]LoanStreet and Lampl brought suit against Troia in July 2021, asserting, inter alia that Troia's posts constituted defamation and defamation per se. See id. ¶¶ 74-101. Troia -- then represented by counsel -- filed a motion to dismiss those claims, which this Court granted with respect to some of Troia's statements and denied with respect to others. See LoanStreet, Inc. v. Troia, No. 21-cv-6166 (NRB) 2022 WL 3544170 (S.D.N.Y. Aug. 17, 2022).
Thereafter, Troia's counsel withdrew, and proceeding pro se, defendant answered and asserted four counterclaims: (i) violation of New York's anti-Strategic Lawsuits Against Public Participation (“anti-SLAPP”) law; (ii) violation of the implied covenant of good faith and fair dealing; (iii) fraudulent inducement; and (iv) securities fraud. See ECF Nos. 51 (the “Answer”), 55 (the “First Amended Answer” or “FAA”).[2]Before the Court are plaintiffs' motion to dismiss those counterclaims under Rule 12(b)(6) and motion for judgment on the pleadings under Rule 12(c) as to plaintiffs' remaining defamation claims. See ECF No. 66 ( ). For the reasons discussed herein, both motions are granted.
The following facts are drawn from the Complaint, First Amended Answer, and any exhibits or documents incorporated therein by reference.[3]Moreover, as detailed further below, the facts at issue are not seriously in dispute given Troia's admissions in his Answer, First Amended Answer Counterclaims, and opposition brief.
In February 2019, LoanStreet sent Troia an offer letter to join LoanStreet as a software engineer (the “Offer Letter”). See Compl. ¶¶ 17, 23; FAA ¶¶ 17, 23. The Offer Letter stated that Troia would be granted options to purchase LoanStreet's common stock, subject to the following conditions:
[§2(b)]. Equity Grant. Subject to the approval of the Board of Directors of the Company (the “Board”), the Company will grant you an option (the “Option”) to purchase 885 shares of common stock, $0.0001 par value per share, of the Company (the “Common Stock”). The exercise price per share of the Option will be equal to the fair market value per share of the Common Stock on the date of grant, as determined by the Board. The Option will be subject to the terms and conditions of the Company's 2016 Equity Incentive Plan (the “Plan”), as the same may be amended from time to time, and a separate stock option grant agreement between the Company and you that sets forth the terms of the option grant (e.g., exercise price, expiration date, and vesting schedule of the stock options). Subject to the terms of the Plan and the stock option grant agreement, the Option will vest and become exercisable as to 25% of the shares subject to the Option on the first anniversary of the vesting commencement date and as to 1/36th of the remaining shares subject to the Option at the end of each full month thereafter. Vesting will, of course, depend on your continued employment with the Company.
ECF No. 55-2, Ex. B to the First Amended Answer, at 1-2 (emphasis added). The Offer Letter also included an integration clause. See id. at 3. Troia accepted his offer on or around March 4, 2019, and began working at LoanStreet on March 18, 2019. See FAA, Counterclaims ¶¶ 11-12. As a condition of his employment, Troia also executed an Employee Non-Disclosure and Invention Assignment Agreement (“NDIAA”). Compl. ¶ 22; FAA ¶¶ 22.
As contemplated by the Offer Letter, the Board approved Troia's option grant four months later, see FAA, Counterclaims ¶ 27, and on January 20, 2020, Troia signed an option agreement (the “Option Agreement”) for 885 shares of LoanStreet common stock, which stated that his “date of grant” was July 22, 2019 and otherwise provided:
ECF No. 55-4, Ex. D to the First Amended Answer, at 2 (emphasis added). The Option Agreement also contained an integration clause. Id. at 6.[4]
On June 12, 2020, LoanStreet terminated Troia's employment, allegedly for, among other things, “the poor quality of his engineering, his lack of engagement with his team, and his inability to cooperate with his peers or take direction from his superiors.” Compl. ¶ 27. Troia acknowledges in his First Amended Answer that, prior to his termination: he received critiques from his coworkers that he had “overstepp[ed] his boundaries”; his team was “dysfunctional”; a coworker was “complaining about [Troia]”; there had been “tensions” with coworkers; and Troia had to be removed from the project on which he was working. FAA, Counterclaims ¶¶ 34-41. It is also undisputed that Troia's stock options had not vested when he was fired, and thus he was not entitled to any vested stock. See id. ¶¶ 27, 49.
Between April and June 2020 - while Troia was still employed by LoanStreet -- and then again starting in June 2021, Troia posted disparaging statements about LoanStreet, Lampl, and other LoanStreet employees on various websites, including Glassdoor.com, Reddit.com, and Teamblind.com. Compl. ¶¶ 24-26, 33, 34-38, 4244; FAA ¶¶ 35-36, 38, 42, 44. Troia's grievances centered on the accusation that LoanStreet and/or Lampl cheated Troia out of his stock options.
In addition, Troia took calculated steps to magnify the reach of his statements. For instance, in the body of the posts, he asked users to “follow [his] link and mark it as helpful so that the message is amplified and as many people are warned as possible.” Compl. ¶ 42; See Name and Shame: LoanStreet (NY) cheated me out of equity, https://www.reddit.com/r/cscareer questions/comments/o3jpfc/nameandshameloastreetnycheatedme outof/ (last visited September 8, 2023) (“Reddit Post I”). Troia also tagged the personal LinkedIn profiles of LoanStreet employees, spurring a flurry of hate messages sent directly to his former coworkers. Compl. ¶ 41; FAA ¶ 41. Finally, Troia purchased advertisements on Google linked to the LoanStreet name, so that when users searched for LoanStreet in Google's search engine, they were shown advertisements displaying excerpts from Troia's statements and linking to Troia's disparaging posts. Compl. ¶¶ 4849; FAA ¶¶ 48-49.
On June 24, 2021, LoanStreet served Troia with a letter demanding that he retract all defamatory statements and cease publishing any others. Compl. ¶¶ 57-58; FAA ¶¶ 57-58. Troia rebuffed LoanStreet's attempt to resolve the dispute, FAA ¶ 59, after which LoanStreet and Lampl filed suit. See Compl. Plaintiffs asserted seven causes of action in their complaint: (i) breach of contract; (ii) defamation per se; (iii) defamation; (iv) injurious falsehood; (v) unfair competition and false designation of origin under Lanham Act Section 43(a); (vi) common law unfair competition; and (vii) permanent injunctive relief. Id. Relevant to the instant motion, LoanStreet and Lampl identified fifteen allegedly defamatory statements in their complaint, seven of which plaintiffs argued constituted defamation per se. See id. ¶¶ 76(a)-(g) (defamation per se); 93(a)-(h) (defamation).[5]
Troia moved to dismiss for failure to state a claim under Rule 12(b)(6) and lack of subject matter jurisdiction under Rule 12(b)(1). See ECF No. 25. On August 17, 2022, this Court issued a Memorandum and Order granting his motion in part and denying it in part. See LoanStreet, Inc., 2022 WL 3544170. Specifically, we denied Troia's 12(b)(1) motion and held that subject matter jurisdiction existed under 28 U.S.C. § 1331. Id. at *2-*3. We then granted Troia's motion to dismiss LoanStreet and Lampl's defamation claims with respect to the statements listed in paragraphs 93(c)-(h) of the Complaint without prejudice and with leave to replead, and denied his motion with respect to the statements in paragraphs 76(a)-(g) and 93(a)-(b) of the Complaint. Id. at *3-*8.[6]Thus, the statements at issue in the wake of our prior Memorandum and Order are as follows:
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