Doe 1 v. Gupta

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OHIO

WESTERN DIVISION

Jane Doe 1, et al., Case No. 3:22-cv-1122

Plaintiffs,

v. MEMORANDUM OPINION

AND ORDER

Manish Gupta, et al.,

Defendants.

I. INTRODUCTION

On March 19, 2020, Manish Raj Gupta was indicted by a federal grand jury on one count of

sex trafficking by force, fraud, or coercion, in violation of 18 U.S.C. §§ 1591(a) and (b)(1), and one

count of illegally dispensing a controlled substance, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(7).

See United States v. Gupta, Case No. 3:20-cr-208 (N.D. Ohio). These charges arose from allegations

that Manish had surreptitiously drugged women before engaging in sex acts with them without their

consent. Manish subsequently pled guilty to both charges and my colleague, Judge James G. Carr,

sentenced him to serve 235 months in prison.

On June 26, 2022, two of Manish’s alleged victims initiated this litigation,1 asserting claims

against Manish, his father (Raj Gupta), and his now-former wife (Shraddha Gupta) arising under

state and federal law for: (1) Forced Labor under 18 U.S.C. §§ 1589 and 1595; (2) Trafficking with

respect to Peonage, Slavery, Involuntary Servitude, or Forced Labor under 18 U.S.C. §§ 1590 and

1 I previously granted Plaintiffs’ motion to proceed using the pseudonyms “Jane Doe 1” and “Jane

Doe 2.” (Doc. No. 42).

1595; (3) Human Trafficking pursuant to California Civil Code § 52.5; (4) Action by Victim in

Human Trafficking pursuant to Nevada Revised Statutes Annotated § 41.1399; (5) Human

Trafficking pursuant to Ohio Revised Code § 2905.32; (6) Forced Labor and Labor Trafficking,

Michigan Human Trafficking Victims Protection Act pursuant to Michigan Compiled Laws §§

752.983 and 750.462(b); and (7) fraudulent transfer, pursuant to Ohio Revised Code § 1336.04.

(Doc. No. 1).

I previously denied Manish’s motion to dismiss, in which he argued that Plaintiffs failed to

state a plausible claim for relief in Counts 1 and 2, and that Counts 3 through 7 should be dismissed

because they did not contain a federal cause of action. (See Doc. No. 44). Manish now moves for

judgment on the pleadings, arguing Counts 3 through 6 are barred by the applicable statutes of

limitation and Count 7 should be dismissed because Plaintiffs have failed to state their claims of

fraud with particularity. (Doc. No. 57-2). Plaintiffs filed a brief in opposition to that motion. (Doc.

No. 63).

On December 13, 2023, Manish filed his answer to the First Amended Complaint and

asserted a counterclaim against Jane Doe 1, in which he alleged Jane Doe 1 submitted invoices

during his criminal sentencing proceedings which “do not represent actual damages incurred nor

paid to said providers by Plaintiff Jane Doe 1.” (Doc. No. 55 at 5). Plaintiffs move, pursuant to

Federal Rule of Civil Procedure 12(b)(6), to dismiss Manish’s counterclaim. (Doc. No. 58). Manish

opposes that motion. (Doc. No. 62). Manish subsequently filed a motion for leave to amend his

answer. (Doc. No. 82).

For the reasons stated below, I deny all three motions.

II. BACKGROUND

I previously summarized the general allegations against Manish:

Manish previously was a board-certified plastic surgeon and owner of Artisan

Surgery Center, LLC. Plaintiffs allege Manish began drugging and sexually assaulting

women, including women like Plaintiffs who worked as escorts, as early as 2013.

(Doc. No. 1 at 3). Manish allegedly used prescription drugs he obtained through his

medical practice to incapacitate the women before filming himself performing sexual

acts with them. Manish allegedly drugged and raped Jane Doe 2 in 2013, while on a

business trip to Las Vegas, Nevada, and in 2017, while on a business trip to Detroit,

Michigan. (Id. at 4-5). Manish allegedly drugged and raped Jane Doe 1 in 2016,

while on a business trip to Los Angeles, California. (Id.). Plaintiffs allege Manish

planned these assaults before his trips and that he would take a bag with sex toys,

lubricants, a camera, and narcotics with him while he traveled. (Id. at 3, 7-10, 12-13).

(Doc. No. 44 at 2-3).

On March 19, 2020, Manish was indicted by a federal grand jury on one count of sex

trafficking by force, fraud, or coercion, in violation of 18 U.S.C. §§ 1591(a) and (b)(1), and one count

of illegally dispensing a controlled substance, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(7). See

United States v. Gupta, Case No. 3:20-cr-208 (N.D. Ohio) (“Gupta”). Manish subsequently pled guilty

to both charges. My colleague, Judge James G. Carr, as I previously stated, sentenced him to serve

235 months in prison and ordered Manish to pay restitution in the amount of $57,285 and a fine in

the amount of $250,000. Gupta, Doc. No. 53, Case No. 3:20-cr-208.

III. STANDARD

A motion for judgment on the pleadings filed pursuant to Rule 12(c) of the Federal Rules of

Civil Procedure and a Rule 12(b)(6) motion to dismiss are subject to the same standard. JPMorgan

Chase Bank, N.A. v. Winget, 510 F.3d 577, 581 (6th Cir. 2007). When ruling on a motion to dismiss, a

court construes the complaint in the light most favorable to the plaintiff and accepts as true well-

pleaded factual allegations. Daily Servs., LLC v. Valentino, 756 F.3d 893, 896 (6th Cir. 2014) (citing

Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). Factual allegations must be sufficient to state a plausible

claim for relief. Iqbal, 556 U.S. at 678. Legal conclusions and unwarranted factual inferences are not

entitled to a presumption of truth. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

Courts must read Rule 12(b)(6) in conjunction with Rule 8(a)(2)’s requirement that a plaintiff

need offer “only ‘a short and plain statement of the claim showing that the pleader is entitled to

relief.’ Specific facts are not necessary; the statement need only ‘give the defendant fair notice of

what the . . . claim is and the grounds upon which it rests.’” Erickson v. Pardus, 551 U.S. 89, 93 (2007)

(quoting Twombly, 550 U.S. at 555); see also Sensations, Inc. v. City of Grand Rapids, 526 F.3d 291, 295-96

(6th Cir. 2008).

IV. ANALYSIS

A. MOTION FOR JUDGMENT ON THE PLEADINGS

1. Statute of Limitations

Manish moves for judgment on the pleadings as to Counts 3 through 6, arguing those claims

are barred by the applicable state statutes of limitation. (Doc. No. 57-2 at 2). Plaintiffs oppose the

motion, arguing (1) Manish waived this affirmative defense when he failed to include it in his

answer, (2) Manish failed to carry his burden to show the limitations period expired before Plaintiffs

filed suit, and (3) even if Manish carried his burden, Plaintiffs can establish an exception to the

statutes of limitation. (Doc. No. 63).

The Federal Rules of Civil Procedure require a defendant to state the affirmative defense of

expiration of the statute of limitations in the defendant’s response to a plaintiff’s complaint. Fed. R.

Civ. P. 8(c)(1) and 12(b). While [f]ailure to plead an affirmative defense in the first responsive

pleading to a complaint generally results in a waiver of that defense,” Horton v. Potter, 369 F.3d 906,

911 (6th Cir. 2004), this is not always true. See Smith v. Sushka, 117 F.3d 965, 969 (6th Cir. 1997)

(noting “failure to plead an affirmative defense such as the statute of limitations does not invariably

result in waiver”). Courts must look to the purpose of Rule 8(c), which is “to give the opposing

party notice of the affirmative defense and an opportunity to respond,” in determining whether an

affirmative defense should be deemed to be waived. Id.

“Accordingly, courts have allowed an affirmative defense to be raised after the first

responsive pleading when the opposing party had notice and did not demonstrate prejudice.” Clifton

v. Patrick, No. 1:17-CV-01035, 2017 WL 4478248, at *2 (W.D. Tenn. Oct. 5, 2017) (citing Stupak-

Thrall v. Glickman, 346 F.3d 579 (6th Cir. 2003), for the proposition that “the party opposing the

statute of limitations defense is not prejudiced when he ‘had a fair opportunity to respond’ and was

not ‘unfairly surprised’”). The Clifton court concluded the plaintiff was not unfairly prejudiced when

a defendant raised a statute of limitations defense that the defendant had not included in his answer

because two other defendants had already raised the statute of limitations as an affirmative defense.

Clifton, 2017 WL 4478248, at *2.

That principle holds true in this case as well. Both Shraddha and Raj raised the statute of

limitations defense in their answers. (Doc. No. 10 at 4; Doc. No. 18 at 23; Doc. No. 25 at 27).

Thus, Plaintiffs had notice this defense might be raised and have not demonstrated they suffered any

prejudice from Manish’s failure to include it in his answer.

But this does not mean Manish can prevail on his motion. Rule 12 motions are “generally

an inappropriate vehicle for dismissing a claim based upon a statute of limitations” because courts

considering such motions “may consider only the allegations in the complaint.” Snyder-Hill v. Ohio

State Univ., 48 F.4th 686, 698 (6th Cir. 2022) (citations and internal quotation marks omitted). While

claims may be dismissed if the complaint allegations “affirmatively show the claim is time-barred,” it

is the defendant’s burden to show the statute of limitations in fact has run. Id. (citations and internal

quotation marks omitted).

Manish failed to carry that burden here. An essential part of the statute-of-limitations

inquiry is determining when the clock started. There are two general rules applicable to this

question. The first is the “discovery rule,” which provides the statute of limitations begins to run

when a plaintiff knows or should have known certain facts related to the plaintiff’s injury. Id. The

second is the “occurrence rule, under which a claim accrues at the moment of injury.” Id. Manish

does not identify which of these rules might apply to Counts 3 through 6 – each of which involve a

different state’s law – and Plaintiffs were not required to include this information in their complaint.

See, e.g., Cataldo v. U.S. Steel Corp., 676 F.3d 542, 547 (6th Cir. 2012) (noting Rule 8 requires a plaintiff

make “‘a short and plan statement of the claim’” and “generally need not plead the lack of affirmative

defenses to state a valid claim”) (quoting Fed. R. Civ. P. 8(a)) (emphasis added by Cataldo).

I deny Manish’s motion for judgment on the pleadings based upon the affirmative defense

of expiration of the statute of limitations because he failed to carry his burden to show Plaintiffs’

claims are untimely.

2. Fraudulent Transfer of Assets

Manish also moves for judgment on the pleadings on Count 7, in which Plaintiffs assert a

claim for fraudulent transfer of assets pursuant to Ohio Revised Code § 1336.04. Manish first

argues Plaintiffs have failed to comply with Federal Rule of Civil Procedure 9(b), which requires

plaintiffs to plead fraud claims with particularity. (Doc. No. 57-2 at 2-3). This argument is not

persuasive.

The Supreme Court of Ohio has held a claim for fraudulent transfer pursuant to § 1336.04 is

fundamentally different from a claim of common-law fraud. Wagner v. Galipo, 553 N.E.2d 610, 613

(Ohio 1990). Thus, Ohio Rule of Civil Procedure 9(B) does not apply to § 1336.04 fraudulent

transfer claims because “many of the considerations that lead to the requirement of pleading with

particularity under [Ohio Civil Rule] 9(B) in cases of common-law fraud are not present in an action

for fraudulent conveyance.” Carter-Jones Lumber Co. v. Denune, 725 N.E.2d 330, 333 (Ohio Ct. App.

1999) (citing Wagner for the proposition that “there is a substantial difference between an action for

common-law fraud and a statutory action for fraudulent conveyance”). See also Van-American Ins. Co.

v. Schiappa, et al., 191 F.R.D. 537, 542 (S.D. Ohio 2000) (noting the Supreme Court of Ohio’s

decision in Wagner “is entitled to great deference” and holding Federal Civil Rule 9(b) does not apply

to § 1336.04 claims). I too conclude Rule 9(b) does not apply to Plaintiffs’ § 1336.04 claim and deny

Manish’s motion on this basis.

Finally, Manish argues he is entitled to judgment on Count 7 because this claim is barred by

the domestic relations exception. (Doc. No. 57-2 at 3). The domestic relations exception to federal

subject matter jurisdiction “divests the federal courts of power to issue divorce, alimony, and child

custody decrees.” Ankenbrandt v. Richards, 504 U.S. 689, 703 (1992). That exception “does not apply

when the parties do not ask the federal court to perform these status-related functions – issuing a

divorce, alimony, or child-custody decree – even if the matter involves married or once-married

parties.” Chevalier v. Est. of Barnhart, 803 F.3d 789, 797 (6th Cir. 2015).

I conclude Count 7 is not barred by the domestic relations exception because Plaintiffs do

not seek the issuance or modification of a divorce, alimony, or child custody decree. Plaintiffs plead

a claim for relief under Ohio law and seek damages for harm they allegedly suffered due to Manish’s

transfer of all of his assets to Shraddha. (Doc. No. 23 at 24-25).

Plaintiffs’ allegations are substantially similar to those before the United States District Court

for the Southern District of Texas in Whitney National Bank v. Air Ambulance By B&C Flight Mgmt.,

Inc., No. CIV.A. H-04-2220, 2006 WL 3782857 (S.D. Tex. Dec. 19, 2006). In Whitney, a debtor

sought the dismissal of a fraudulent transfer claim brought by a third-party creditor pursuant to

Texas law, in which the creditor alleged the debtor sought to “hinder, delay, or defraud his

creditors” by transferring all of his assets to his then-spouse in their divorce. Id. at *2. The court

held the plaintiff’s claims did not trigger the “application of the domestic relations exception

because they are based on Texas fraudulent conveyance law and do not seek issuance or

modification of a divorce or alimony decree.” Id. at *5.

The same holds true in this case. The domestic relations exception does not bar Plaintiffs’

fraudulent transfer claim because that claim seeks damages pursuant to an Ohio statute and does not

seek to modify Manish and Shraddha’s divorce decree. I deny Manish’s motion for judgment on the

pleadings on this basis.

B. MOTION TO DISMISS

Plaintiffs move to dismiss Manish’s counterclaim, arguing he cannot pursue his claim

because he was required to appeal Judge Carr’s restitution order in his criminal case in order to

challenge the content of that order and this court lacks subject matter jurisdiction over Manish’s

claim in these civil proceedings. (Doc. No. 58 at 1-2). Manish argues he is not challenging Judge

Carr’s order and instead seeks to recover damages he suffered when Jane Doe 1 allegedly committed

“fraud on the court,” (Doc. No. 55 at 5), by submitting fraudulent invoices during the restitution

proceedings. (Doc. No. 62 at 1-2).

Plaintiffs fail to show they are entitled to relief at this time. The party seeking relief pursuant

to Rule 12(b)(6) “has the burden of proving that no claim exists.” Total Benefits Planning Agency, Inc. v.

Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008). This burden “is a burden of

explanation; since the movant is the one seeking dismissal, it is the one that bears the burden of

explaining—with whatever degree of thoroughness is required under the circumstances—why

dismissal is appropriate for failure to state a claim.” Thomas v. Tenn. Dep’t of Human Servs., No. 3:21-

CV-00426, 2022 WL 2286780, at *5 (M.D. Tenn. June 23, 2022).

Plaintiffs have not done so. They note that a criminal defendant must challenge his

sentence, including the restitution portion, on appeal or appropriate post-conviction collateral

proceedings and that the parties are bound by Judge Carr’s entry of judgment and conviction. (Doc.

No. 58 at 1-2). But they do not explain how or why those principles of law categorically prohibit

Manish from pursing a claim for fraud on the court and it would be inappropriate for me to fashion

such an argument for them.

I conclude Plaintiffs fail to show they are entitled to relief and deny their motion to dismiss.

C. MOTION FOR LEAVE TO AMEND

Finally, Manish moves, pursuant to Rule 15, for leave to amend his answer to assert the

affirmative defenses of the statutes of limitation and lack of subject matter jurisdiction. (Doc. No.

82).

Rule 15 provides a party may amend its pleadings once as a matter of course within 21 days

of serving the pleading or, if a responsive pleading is required, 21 days after service of a responsive

pleading. Fed. R. Civ. P. 15(a)(1). “In all other cases, a party may amend its pleading only with the

opposing party’s written consent or the court’s leave. The court should freely give leave when

justice so requires.” Fed. R. Civ. P. 15(a)(2). “In the absence of any apparent or declared reason –

such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure

deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of

allowance of the amendment, futility of amendment, etc. – the leave sought should, as the rules

require, be ‘freely given.’” Foman v. Davis, 371 U.S. 178, 182 (1962); see also Head v. Jellico Hous. Auth.,

870 F.2d 1117, 1123 (6th Cir. 1989). “Notice and substantial prejudice to the opposing party are

critical factors in determining whether an amendment should be granted.” Hageman v. Signal L. P.

Gas, Inc., 486 F.2d 479, 484 (6th Cir. 1973).

Under Rule 16(b), a district court must issue a scheduling order limiting, among other things,

the time to amend the pleadings. Fed. R. Civ. P. 16(b)(3). The scheduling order “may be modified

only for good cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). In determining whether

good cause exists to modify a scheduling order, a court should consider “the diligence of the party

seeking the extension” and “whether the opposing party will suffer prejudice by virtue of the

amendment.” Leary v. Daeschner, 349 F.3d 888, 906 (6th Cir. 2003) (citing Inge v. Rock Fin. Corp., 281

F.3d 613, 625 (6th Cir. 2002)). When a scheduling order deadline has passed, “a plaintiff first must

show good cause under Rule 16(b) for failure earlier to seek leave to amend before a court will

consider whether amendment is proper under Rule 15(a).” Leary, 349 F.3d at 909.

On December 13, 2023, following a case management conference in which Manish

participated, I set a deadline of January 9, 2024, for the parties to file any amended pleadings without

leave of court. (Doc. No. 54). Therefore, Manish must first satisfy the requirements of Rule 16

before I consider whether he is entitled to leave to amend his complaint under Rule 15.

But Manish has made no effort to explain why Rule 16 does not bar his motion. In

particular, he fails to show he had good cause for failing to seek leave to amend before now. Nearly

nine months passed between the deadline to amend the pleadings and Manish’s motion for leave to

amend. And Manish has been on notice for over eight months that his initial answer did not include

the affirmative defense of expiration of the statute of limitations. (See Doc. No. 63). He offers no

explanation for the delay.

Moreover, even if Manish could establish good cause for failing to seek leave at an earlier

date, he has not shown he is entitled to leave to amend his answer. I already have permitted him to

assert the statute-of-limitations defense. And amendment of his answer to include the affirmative

defense of lack of subject matter jurisdiction would be futile. There is no question that 28 U.S.C. §

1331 provides for subject matter jurisdiction over Plaintiffs’ federal claims and that 28 U.S.C. § 1367

provides for supplemental jurisdiction over Plaintiffs’ related state-law claims.

Therefore, I deny Manish’s motion for leave to amend his answer.

V. CONCLUSION

For the reasons stated above, I deny Defendant Manish Gupta’s motion for judgment on the

pleadings and his motion for leave to amend his answer. (Doc. Nos. 57 and 82). I also deny

Plaintiffs’ motion to dismiss Manish’s counterclaim. (Doc. No. 58).

So Ordered.

s/ Jeffrey J. Helmick

United States District Judge