Tianbo Huang v. iTV Media, Inc., 13–CV–3439 JFBWDW.

• Court: United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
• Writing for the Court: JOSEPH F. BIANCO, District Judge
• Citation: 79 F.Supp.3d 458
• Parties: TIANBO HUANG, Plaintiff, v. iTV MEDIA, INC., iTV Media (Hong Kong), Ltd., iTV.CN, Inc., and Song Lin, Defendants.
• Docket Number: No. 13–CV–3439 JFBWDW.,13–CV–3439 JFBWDW.
• Decision Date: 16 January 2015

79 F.Supp.3d 458

TIANBO HUANG, Plaintiff
v.
iTV MEDIA, INC., iTV Media (Hong Kong), Ltd., iTV.CN, Inc., and Song Lin, Defendants.

No. 13–CV–3439 JFBWDW.

United States District Court, E.D. New York.

Signed Jan. 16, 2015.

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Eugene Meyers, Dacheng Law Offices, New York, N.Y. for Plaintiff.

Donald F. Schneider, Silverman Sclar Shin & Byrne PLLC, Charles A Michael, Brune & Richard LLP, New York, NY, for Defendants.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge:

Plaintiff Tianbo Huang (“plaintiff”) brings this action for breach of contract, fraud, and related claims based upon promises allegedly made to him before he was hired by iTV Media. In short, plaintiff alleges that defendants—various iTV entities and their President and Chief Executive Officer, Song Lin—promised him certain responsibilities and compensation in his new position, but did not keep those promises once plaintiff began working for iTV.

The Court previously granted in part and denied in part defendants' motion to dismiss. See Huang v. iTV Media, 13 F.Supp.3d 246 (E.D.N.Y.2014). As part of that order, the Court dismissed plaintiff's claim for punitive damages, but granted him leave to amend the complaint with respect to that claim. Defendants now move under Federal Rules of Civil Procedure 12(b)(6) and 12(f) to dismiss plaintiff's claim for punitive damages.¹ As set forth below, the motion to dismiss is granted because the allegations contained in the Second Amended Complaint cannot support a punitive damages award under New York law.

I. Background

A. Factual Background

The factual background of this case is set forth in the Court's prior order. Of particular relevance to this motion, plaintiff alleges that defendant Lin promised him three things in order to induce plaintiff to leave his position with one of the largest Chinese internet television companies, where he enjoyed significant responsibilities. (Second Am. Compl. ¶¶ 18–20.) Lin allegedly promised that iTV Media would hold an initial public offering within one year of plaintiff's hiring, which would increase the value of the stock options they planned to give him. (Id. ¶ 26.) Lin also promised that plaintiff would direct iTV's global operations, including responsibility for all of North America and the management of an entity to be created for that purpose. (Id. ¶ 27.) Finally, Lin allegedly promised plaintiff annual compensation of at least $300,000, apart from the stock options. (Id. ¶ 28.) According to the Second Amended Complaint, Lin never intended to keep any of these promises, and made them solely to induce plaintiff to leave his position with another company, so that defendants could exploit his expertise in internet television. (Id. ¶¶ 29–32.)

Plaintiff alleges that iTV never granted him the promised stock options (nor held an initial public offering), and that his salary was underpaid as well. (Id. ¶¶ 41–45.) Furthermore, once plaintiff began working for iTV, Lin allegedly prevented him from managing international operations. (Id. ¶ 39.) Plaintiff alleges that he complained, and that he was terminated in retaliation for those complaints. (Id. ¶ 54.)

In its previous order, the Court dismissed the punitive damages claim because it lacked any allegation that the fraud was “aimed at the public generally” and, thus, “necessary to vindicate a public right.”

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TVT Records v. Island Def Jam Music Grp., 412 F.3d 82, 93–94 (2d Cir.2005) (internal quotation marks and citations omitted). The earlier complaint included the allegation that, with the aim of masking their fraud, defendants issued plaintiff a W–2 which overstated his salary and forced him to pay more in taxes than his actual salary warranted. (Am. Compl. ¶¶ 54–55.) In the Second Amended Complaint, plaintiff adds more detail to the allegations surrounding the W–2, and also adds that defendants failed to withhold and contribute funds on plaintiff's behalf as required by the Federal Insurance Contributions Act, thereby depriving the state and federal government of payments needed for social welfare programs. (Second Am. Compl. ¶¶ 106–11.)

B. Procedural History

Plaintiff filed the original Complaint in this case on June 14, 2013, and an Amended Complaint on September 12, 2013. On April 8, 2014, the Court granted (in part) defendants' motion to dismiss. Plaintiff filed the Second Amended Complaint on May 8, 2014, and defendants moved to dismiss the punitive damages claim on July 3, 2014. Plaintiff responded in opposition on August 15, 2014, and defendants replied on August 29, 2014. The Court heard oral argument on October 29, 2014.

II. STANDARD OF REVIEW

In reviewing a motion to dismiss pursuant to Rule 12(b)(6),² the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the plaintiff. See Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir.2006) ; Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir.2005). “In order to survive a motion to dismiss under Rule 12(b)(6), a complaint must allege a plausible set of facts sufficient ‘to raise a right to relief above the speculative level.’ ” Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 91 (2d Cir.2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

The Supreme Court clarified the appropriate pleading standard in Ashcroft v. Iqbal, reaffirming two important considerations for courts deciding a motion to dismiss. 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The Court instructed district courts to first “identify[ ] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at 679, 129 S.Ct. 1937 (explaining that though “legal conclusions can provide the framework of a complaint, they must be supported by

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factual allegations”). Second, if a complaint contains “well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. A claim has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. at 678, 129 S.Ct. 1937 (quoting and citing Twombly, 550 U.S. at 556–57, 127 S.Ct. 1955 (internal citation omitted)).

On a motion to dismiss, a court may examine “documents attached to [the complaint] or incorporated in it by reference.” Nasso v. Bio Reference Labs., Inc., 892 F.Supp.2d 439, 446 (E.D.N.Y.2012) (quoting In re Merrill Lynch & Co., 273 F.Supp.2d 351, 356–57 (S.D.N.Y.2003) ) (internal citations omitted). Here, plaintiff attached his employment contract as an exhibit to the Second Amended Complaint, and the Court has considered its terms without objection by either party.

III. Discussion

In Rocanova v. Equitable Life Assur. Socy. of U.S., the New York Court of Appeals set forth the following standard applicable in cases where a contracting party seeks punitive damages:

Punitive damages are not recoverable for an ordinary breach of contract as their purpose is not to remedy private wrongs but to vindicate public rights.... However, where the breach of contract also involves a fraud evincing a “high degree of moral turpitude” and demonstrating “such wanton dishonesty as to imply a criminal indifference to civil obligations,” punitive damages are recoverable if the conduct was “aimed at the public generally.”

83 N.Y.2d 603, 613, 612 N.Y.S.2d 339, 634 N.E.2d 940 (1994). Courts have since interpreted Rocanova to impose the following requirements: “a plaintiff must establish that the defendant's conduct: (1) is actionable as an independent tort; (2) was sufficiently egregious; and (3) was directed not only against the plaintiff, but was part of a pattern of behavior aimed at the public generally.” Leviton Mfg. Co., Inc. v. Reeve, 942 F.Supp.2d 244, 270 (E.D.N.Y.2013) ; New York Univ. v. Cont'l Ins. Co., 87 N.Y.2d 308, 316, 639 N.Y.S.2d 283, 662 N.E.2d 763 (1995) (describing these requirements as “pleading elements”).

As a threshold matter, the New York Court of Appeals has clarified that the Rocanova requirements apply if the tortious conduct at issue “ ‘has its genesis in the contractual relationship.’ ” Leviton, 942 F.Supp.2d at 270 (quoting New York Univ., 87 N.Y.2d at 316, 639 N.Y.S.2d 283, 662 N.E.2d 763 ); see also Rocanova, 83 N.Y.2d at 613–14, 612 N.Y.S.2d 339, 634 N.E.2d 940 (considering whether the tortious conduct “constitute[ed], accompan[ied], or [was] associated with the breach of contract,” or was “arising out of” the contractual relationship).³ If the tortious conduct is so independent that it has no genesis in the contractual relationship, Rocanova would not apply, and the availability of punitive damages would be governed

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by the ordinary standard, without the public-aim requirement...