Gillaspy v. Club Newtone, Inc

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION AT LAFAYETTE

JARISSA GILLASPY,

Plaintiff,

v. CAUSE NO.: 4:20-CV-13-TLS-APR

CLUB NEWTONE, INC. and MJV GROUP,

INC.,

Defendants.

CLUB NEWTONE, INC., MARC A.

VAUGHN, and MJV GROUP, INC.,

Counter Claimants,

v.

JARISSA GILLASPY,

Counter Defendant.

OPINION AND ORDER

This matter is before the Court on Plaintiff Jarissa Gillaspy’s Objection and Appeal of

Magistrate Ruling [ECF No. 42]. For the reasons set forth below, the Plaintiff’s Objection is

overruled.

BACKGROUND

The instant case is based on an alleged campaign of sexual discrimination and harassment

against Plaintiff Jarissa Gillaspy during her term of employment as a fitness instructor for

Defendant Club Newtone, Inc. The Plaintiff initially filed her Complaint [ECF No. 1] on March

3, 2020, against Defendants Club Newtone, Inc., MJV Group, Inc., and Marc A. Vaughn. On

October 15, 2020, the Plaintiff filed a Motion for Leave to File Amended Complaint [ECF No.

36], in which she requested leave to file an amended complaint [ECF No. 36-1] to bring

additional claims of fraud, conspiracy, and defamation.1 The Defendants and Marc A. Vaughn

filed a Response [ECF No. 37] on October 20, 2020. The Plaintiff did not file a reply. On

December 7, 2020, the Court issued an Opinion and Order [ECF No. 38], signed by Magistrate

Judge Andrew P. Rodovich, denying the Plaintiff’s Motion for Leave to File Amended

Complaint. Dec. 7, 2020 Op. & Order 6, ECF No. 38.

The Plaintiff then, on December 16, 2020, filed a Renewed Motion for Leave to File

Amended Complaint [ECF No. 39]. Again, the Defendants and Vaughn filed a Response [ECF

No. 45], and the Plaintiff did not file a reply. On May 11, 2021, the Court issued an Opinion and

Order denying the Plaintiff’s Renewed Motion for Leave to File Amended Complaint. May 11,

2021 Op. & Order 4, ECF No. 50.

On December 16, 2020, in addition to her Renewed Motion, the Plaintiff also filed the

instant Objection and Appeal of Magistrate Ruling [ECF No. 42]. The Defendants and Vaughn

filed a Response [ECF No. 46]. The Plaintiff did not file a reply, and the time to do so has

passed.

LEGAL STANDARD

Pursuant to Rule 15 of the Federal Rules of Civil Procedure, a party may amend its

pleading with the court’s leave. Fed. R. Civ. P. 15(a)(2). Under the same rule, courts are

instructed to freely give leave when justice so requires. Id. “[D]istrict courts should not deny

leave absent a ‘good reason’—such as futility, undue delay, prejudice, or bad faith.” Kreg

Therapeutics, Inc. v. VitalGo, Inc., 919 F.3d 405, 417 (7th Cir. 2019) (quoting Life Plans, Inc. v.

1 The Plaintiff has filed an amended complaint on two other occasions: One to drop certain state law tort

claims and one to drop a Title VII claim that was improperly alleged against Marc A. Vaughn. See ECF

Nos. 9, 26, 27.

Sec. Life of Denver Ins. Co., 800 F.3d 343, 357 (7th Cir. 2015)). “An amendment may be futile

when it fails to state a valid theory of liability, or could not withstand a motion to dismiss.” Ball

v. Norfolk S. Ry. Co., No. 3:10-CV-177, 2011 WL 13352807, at *2 (N.D. Ind. Oct. 11, 2011)

(citing Advent Elecs., Inc. v. Buckman, 918 F. Supp. 260, 264 (N.D. Ill. 1996)). District courts

have “broad discretion” to decide whether to allow an amendment. Levan Galleries LLC v. City

of Chicago, 790 F. App’x 834, 835–36 (7th Cir. 2020) (quoting Garner v. Kinnear Mfg. Co., 37

F.3d 263, 269 (7th Cir. 1994)).

After a magistrate judge issues an order on a pretrial matter that is not dispositive of a

party’s claim or defense, “[a] party may serve and file objections to the order within 14 days

after being served with a copy.” Fed. R. Civ. P. 72(a). “The district judge in the case must

consider timely objections and modify or set aside any part of the order that is clearly erroneous

or is contrary to law.” Id.

ANALYSIS

In her Objection and Appeal of Magistrate Ruling [ECF No. 42], the Plaintiff does not

argue that the magistrate judge’s order is clearly erroneous or contrary to law. Instead, the

Plaintiff solely attempts to relitigate the issue of amending her complaint. This is not the purpose

of an objection to a magistrate judge’s ruling.2 In her Motion for Leave to File Amended

Complaint [ECF No. 36], the Plaintiff sought to add an additional claim of fraud against Vaughn

2 The Court notes that the Plaintiff included a proposed Third Amended Complaint [ECF No. 42-1] with

her Objection and Appeal of Magistrate Ruling [ECF No. 42]. However, it is not identical to the proposed

Third Amended Complaint that was considered by Judge Rodovich in connection with the Plaintiff’s

Motion for Leave to File Amended Complaint. See ECF No. 36-1. The Court already denied the Plaintiff

leave to file this altered version of the proposed Third Amended Complaint [ECF No. 42-1]. See May 11,

2021 Op. & Order, ECF No. 50. There is no reason for the Court to consider the altered Third Amended

Complaint [ECF No. 42-1] at this time, as it has no bearing on whether Judge Rodovich’s order denying

the Motion for Leave to File Amended Complaint [ECF No. 36] is clearly erroneous or contrary to law.

Accordingly, the Court only considers and refers to the proposed Third Amended Complaint [ECF No 36-

1] that was filed with the Plaintiff’s Motion for Leave to File Amended Complaint [ECF No. 36].

and a claim of defamation and civil conspiracy against Vaughn and Kari Cunningham. There are

no claims currently pending against either Vaughn or Cunningham. The Court considers the

viability of each claim in turn.

A. Fraud

Rule 9 of the Federal Rules of Civil Procedure provides: “In alleging fraud or mistake, a

party must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ.

P. 9(b). Under Indiana law, the elements of a fraud claim are “(1) a material misrepresentation of

past or existing fact which (2) was untrue, (3) was made with knowledge of or in reckless

ignorance of its falsity, (4) was made with the intent to deceive, (5) was rightfully relied upon by

the complaining party, and (6) which proximately caused the injury or damage complained of.”

Kesling v. Hubler Nissan, Inc., 997 N.E.2d 327, 335 (Ind. 2013) (quoting Lawyers Title Ins.

Corp. v. Pokraka, 595 N.E.2d 244, 249 (Ind. 1992)). “Actual fraud may not be based on

representations of future conduct, on broken promises, or on representations of existing intent

that are not executed.” Wallem v. CLS Indus. Inc., 725 N.E.2d 880, 889 (Ind. Ct. App. 2000)

(citing Anderson v. Indianapolis Ind. AAMCO Dealers Advert. Pool, 678 N.E.2d 832, 837 (Ind.

Ct. App. 1997)).

The magistrate judge provided two reasons for concluding that the Plaintiff’s fraud claim

was futile. First, the magistrate judge determined that the Plaintiff’s fraud claim did not meet the

particularity requirement of Rule 9(b). Second, the magistrate judge identified that the conduct at

issue is not actionable because the alleged fraudulent statements concerned only future facts.

Either reason could render the Plaintiff’s fraud claim futile and, thus, would be sufficient

justification to deny the Plaintiff’s request to amend her complaint to include the proposed fraud

claim. The Court addresses only the second reason—that the alleged fraudulent statements

concern only future facts—for the purpose of resolving the Plaintiff’s objection.

The Plaintiff’s fraud and defamation claims are included in the same section of the

proposed Third Amended Complaint and make the following allegations:

117. Marc Vaughn took actions and made statements to Ms. Gillaspy that were

intended to trick and deceive her and encourage her to go to Vaughn’s girlfriend’s

home where Vaughn was alone so that Vaughn could try to force sexual conduct

upon her.

118. Vaughn’s conduct includes, without limitation, sending text messages to

[Gillaspy], falsely claiming that Gillaspy would be providing Vaughn with off-site

personal training; falsely stating that he was or might be asleep when she arrived;

falsely stating that Gillaspy stole one or more items from Vaughn’s then-

girlfriend’s house; and falsely stating he did not engage in any sexual activity with

Ms. Gillaspy that was not consensual.

119. Ms. Gillaspy relied on Vaughn’s statements and conduct to her detriment,

leading her to go to the house, which caused her damages.

120. Vaughn falsely stated to one or more persons that Gillaspy made one or more

false reports of sexual misconduct.

121. Vaughn knew his statements were false.

122. Vaughn communicated to one or more persons that Gillaspy was untruthful,

that she lied about Vaughn engaging in sexual misconduct with her, and that

Vaughn did not touch her.

Proposed 3d Am. Compl. ¶¶ 117–22, ECF No. 36-1. The alleged dishonest conduct does not

amount to a material misrepresentation of past or existing fact; rather it is merely a

representation of future conduct, a broken promise, and/or a representation of existing intent that

was not executed. Not all lies amount to fraud, and not every repugnant act is actionable. If the

Court permitted the Plaintiff to amend her complaint as proposed, her fraud claim would be

defeated on a motion to dismiss because it fails to allege conduct that is actionable in a fraud

claim. Therefore, allowing the Plaintiff to amend her complaint in such a manner would be futile.

The magistrate judge’s decision is not clearly erroneous or contrary to law regarding the

Plaintiff’s fraud claim; thus, the Plaintiff’s objection is overruled.

B. Conspiracy

“A civil conspiracy is a combination of two or more persons who engage in a

concerted action to accomplish an unlawful purpose or to accomplish some lawful purpose

by unlawful means.” Bd. of Trs. of Purdue Univ. v. Eisenstein, 87 N.E.3d 481, 498 (Ind.

Ct. App. 2017) (quoting Birge v. Town of Linden, 57 N.E.3d 839, 845 (Ind. Ct. App. 2016)).

“Civil conspiracy is not an independent cause of action” and “must be alleged with an

underlying tort.” Id. (quoting Birge, 57 N.E.3d at 846). The magistrate judge determined

that the Plaintiff’s conspiracy claim was futile because the Plaintiff did not identify an

underlying tort to support her claim.

In the proposed Third Amended Complaint, the Plaintiff alleges a civil conspiracy

claim against Vaughn and Cunningham. The Plaintiff alleges that Vaughn and

Cunningham entered into an agreement to obstruct the EEOC’s investigation of the

Plaintiff’s complaint and to terminate her employment as retaliation for filing an EEOC

complaint. It is unclear what underlying tort the civil conspiracy claim is based upon, and

the Plaintiff does not offer any legal basis for an underlying tort in her objection. If the

Court permitted the Plaintiff to amend her complaint as proposed, her civil conspiracy

claim would be defeated on a motion to dismiss because civil conspiracy is not an

independent cause of action and the Plaintiff has failed to identify an underlying tort to

support her civil conspiracy claim. Therefore, allowing the Plaintiff to amend her

complaint in such a manner would be futile. The magistrate judge’s decision is not clearly

erroneous or contrary to law as to the Plaintiff’s motion to amend her complaint regarding

her civil conspiracy claim; therefore, the Plaintiff’s objection is overruled.

C. Defamation

Under Indiana law, the elements of a defamation claim are: “(1) a communication with a

defamatory imputation; (2) malice; (3) publication; and (4) damages.” Haegert v. McMullan, 953

N.E.2d 1223, 1230 (Ind. Ct. App. 2011) (citing McQueen v. Fayette Cnty. Sch. Corp., 711

N.E.2d 62, 65 (Ind. Ct. App. 1999)). The specific allegations made in the Plaintiff’s defamation

claim are set forth in Part A above.

1. Magistrate Judge’s Decision—Futility

In considering the Plaintiff’s proposed defamation claim, the magistrate judge explained:

The court finds it troubling that the plaintiff would propose a defamation

claim against Kari [Cunningham] but not include any alleged statements made by

her. As to Marc Vaughn, the plaintiff’s factual allegations are ambiguous as to the

supposed statements he made and to whom they were published. Marc Vaughn

maintains that to the extent such statements were made, they were made in

connection to the pending lawsuit which includes to the EEOC. As noted earlier,

the plaintiff has not opposed any of the defendants’ arguments as to the instant

motion, so for that reason and the reasons discussed above, the court finds the

proposed defamation claim against Marc [Vaughn] and Kari [Cunningham] to be

futile.

Dec. 7, 2020 Op. & Order 5. The Plaintiff’s Motion for Leave to File Amended

Complaint indicates that she sought to bring a “defamation [claim] against Marc Vaughn

and Kari [Cunningham].” Mot. to File Am. Compl. 1, ECF No. 36. However, the “Fraud

& Defamation” Section of her Third Amended Complaint does not reference any conduct

by Cunningham. See Proposed 3d Am. Compl. ¶¶ 117–22. Accordingly, the magistrate

judge’s determination that a defamation claim against Cunningham would be futile is not

clearly erroneous or contrary to law.

Regarding the Plaintiff’s defamation claim against Vaughn, the magistrate judge’s

decision was contrary to law when he concluded that the claim is futile. First, the fact that the

Plaintiff’s factual allegations are ambiguous as to the supposed statements Vaughn made and to

whom they were published does not render the Plaintiff’s defamation claim against Vaughn

futile. See Brock v. U.S. Steel Corp., No. 2:09-CV-344, 2010 WL 405620, at *3 (N.D. Ind. Jan.

27, 2010) (“Indeed, in Cain, Judge Lozano, laid out the various views taken by the courts within

the Seventh Circuit and noted that ‘the trend is to deny a motion to dismiss even though the

complaint does not state in detail the context in which the defamatory statements were made.”

(quoting Cain v. Elgin, Joliet & E. Ry. Co., No. 2:04-CV-347, 2005 WL 1172722, at *3 (N.D.

Ind. May 3, 2005))).

Second, the fact that the Plaintiff did not respond to the Defendants’ and Marc Vaughn’s

argument that the defamatory statements at issue were made in connection to this lawsuit does

not render her defamation claim futile. The Defendants and Vaughn argue that Vaughn’s

litigation statements are privileged and not subject to a defamation lawsuit. The Court recognizes

that this defense is viable under Indiana law. See Hartman v. Keri, 883 N.E.2d 774, 777–78 (Ind.

2008) (recognizing that “Indiana law has long recognized an absolute privilege that protects all

relevant statements made in the course of a judicial proceeding, regardless of the truth or motive

behind the statements” and applying that law to a quasi-judicial proceeding); Kelley v. Tanoos,

865 N.E.2d 593, 597 (Ind. 2007) (“A qualified privilege protects ‘communications made in good

faith on any subject matter in which the party making the communication has an interest or in

reference to which he has a duty, either public or private, either legal, moral, or social, if made to

a person having a corresponding interest or duty.” (quoting Bals v. Verduzco, 600 N.E.2d 1353,

1356 (Ind. 1992))). However, privilege is an affirmative defense, see 18 Ind. Law Encyc. Libel

and Slander § 33 (2021) (explaining that the principal defenses to an action for defamation

include absolute privilege and qualified or conditional privilege), and “[c]omplaints cannot be

dismissed for failing to anticipate an affirmative defense,” Bledsoe v. Medtronic, Inc., No. 2:18-

CV-133, 2020 WL 43107, at *5 (N.D. Ind. Jan. 3, 2020) (citing Xechem, Inc. v. Bristol-Myers

Squibb Co., 372 F.3d 899, 901 (7th Cir. 2004)). “Only when the plaintiff pleads [herself] out of

court—that is, admits all the ingredients of an impenetrable defense—may a complaint that

otherwise states a claim be dismissed under Rule 12(b)(6).” Xechem, Inc., 372 F.3d at 901 (citing

Walker v. Thompson, 288 F.3d 1005 (7th Cir. 2002)). In this case, the Plaintiff’s pleadings do not

contain sufficient factual allegations to support the Defendants and Vaughn’s proposed

affirmative defense; therefore, the possibility of an immunity defense does not render the

Plaintiff’s claim futile.

2. Undue Delay and Prejudice

Because the Court has determined that the Plaintiff’s defamation claim is not futile, it

will consider the arguments that were not addressed by the magistrate judge. In addition to the

futility argument, the Defendants and Vaughn argued that the Plaintiff’s motion should have

been denied on the basis of undue delay and prejudice.

i. Undue Delay

In her motion, the Plaintiff contends that, “[o]n August 25, 2020, Plaintiff conducted the

deposition of Marc Vaughn. Through said deposition, Vaughn testified and provided support for

additional theories.” Mot. to File Am. Compl. 1. The Plaintiff does not identify what facts have

been discovered or how they support her new claims.

The Court recognizes that the discovery of facts supporting a new legal theory is,

generally, sufficient grounds for amending a complaint. However, the Plaintiff’s representation

that new facts have been discovered is misleading. The facts alleged in the proposed Third

Amended Complaint are almost identical to the facts in her Amended Complaint [ECF No. 9],

which was filed four months prior to Vaughn’s deposition. See Am. Compl. ¶¶ 69–73; ECF No.

9. Accordingly, the Plaintiff’s explanation for failing to file this amendment sooner is wholly

inadequate, which weighs in favor of denying leave to amend. See J.P. Morgan Chase Bank,

N.A. v. Drywall Serv. & Supply Co., Inc., 265 F.R.D. 341, 347 (N.D. Ind. 2010) (“If the moving

party fails to provide any explanation for not filing its amendment sooner or if the explanation it

provides is inadequate, that will weigh towards denying leave to amend.” (citing Sanders v.

Venture Stores, Inc., 56 F.3d 771, 775 (7th Cir. 1995); Kleinhans v. Lisle Sav. Profit Sharing Tr.,

810 F.2d 618, 625 (7th Cir. 1987))).

Although the timing of the Plaintiff’s motion was less than ideal, “[u]ndue delay alone is

insufficient to support denial of leave to amend.” Id. (citing Dubicz v. Commonwealth Edison

Co., 377 F.3d 787, 793 (7th Cir. 2004)). However, “it may militate towards a denial when

combined with another factor, often unfair prejudice to the nonmoving party.” Id. (citing Dubicz,

377 F.3d at 793). Accordingly, the Plaintiff’s undue delay alone is not sufficient to deny her

motion to amend.

ii. Prejudice

In their Response, the Defendants and Vaughn argue that they are “prejudiced by these

endless tactics because it unnecessarily drags out litigation against a now closed business

especially when these new theories are barred by Plaintiff’s previous stipulations and

amendments to her pleadings as well as their complete lack of merit, as well as a previous order

declaring such.” Resp. to Obj. 11, ECF No. 46; see also Resp. to Mot. 8, ECF No. 37.

Additionally, the Defendants and Vaughn argue that Vaughn will be prejudiced because the

Plaintiff has already voluntarily dismissed her claims against him. Resp. to Obj. 11; Resp. to

Mot. 9. The Plaintiff’s motion contends that “Defendants will not be prejudiced by the filing of

the response.” Mot. to File Am. Compl. 1. Although the Plaintiff makes this representation, she

provides no justification for her assertion. The Plaintiff does not specifically address whether

Vaughn will be or will not be prejudiced.

“[I]n the Seventh Circuit, the ‘party seeking an amendment carries the burden of proof in

showing that no prejudice will result to the non-moving party.’” J.P. Morgan Chase Bank, N.A,

265 F.R.D. at 354 (quoting King v. Cooke, 26 F.3d 720, 724 (7th Cir. 1994)). The Plaintiff does

not attempt to meet this burden, as the Plaintiff did not file a reply and nothing in her motion

serves to demonstrate that the Defendants or Vaughn would not be prejudiced by her proposed

amendments. Accordingly, due to the Plaintiff’s undue delay and her failure to show that the

non-moving parties will not be prejudiced by her amendment, the Plaintiff’s motion to amend to

bring a defamation claim against Vaughn is denied.

CONCLUSION

The Court’s December 7, 2020 Opinion and Order is MODIFIED by this Opinion and

Order. For the reasons set forth above, the Plaintiff’s Motion for Leave to File Amended

Complaint [ECF No. 36] is DENIED and the Plaintiff’s Objection and Appeal of Magistrate

Ruling [ECF No. 42] is OVERRULED.

SO ORDERED on August 19, 2021.

s/ Theresa L. Springmann

JUDGE THERESA L. SPRINGMANN

UNITED STATES DISTRICT COURT