Murphy v. Livingsocial, Inc.

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

)

WENDY MURPHY )

)

Plaintiff, )

) Civil Action No. 12-864(EGS)

v. )

)

LIVINGSOCIAL, INC. and )

SETH BROWN, )

)

Defendants. )

)

MEMORANDUM OPINION

Pending before the Court is defendants’ motion to dismiss

Count IV of plaintiff’s amended complaint. Upon consideration

of the motion, the response and reply thereto, the entire

record, and for the reasons explained below, defendants’ motion

is GRANTED.

I. BACKGROUND

Plaintiff Wendy Murphy is resident of the State of

Illinois. Amend. Compl. (“Compl.”) ¶ 1. Defendant

LivingSocial, Inc. (“LivingSocial”) is a Delaware corporation

with its principal place of business in Washington, D.C. Compl.

¶ 2. LivingSocial operates a group buying website wherein it

sells vouchers to people for use at local businesses, for

vacations and hotel rooms, and for other excursions. Compl. ¶

10. Defendant Seth Brown is employed as an attorney for

LivingSocial and works in its Washington, D.C. office. Compl. ¶

3.

On November 5, 2010, plaintiff was offered a position of

Marketing Consultant at LivingSocial. Compl. ¶ 13. The offer

letter, which was signed by plaintiff on November 6, 2010,

includes a choice of law clause, which states that “[r]egardless

of where you live, District of Columbia law shall apply to this

Agreement and to your employment by the Company. Choice of law

rules that might otherwise cause the application of any other

law shall not apply.” Compl. Ex. 1 (“Employment Agreement”), ¶

9. The Employment Agreement also incorporates by reference an

attachment titled “Confidentiality, Intellectual Property

Noncompetition Agreement” (the “Non-Compete Agreement”). The

Non-Compete Agreement restricts plaintiff’s ability to compete

with LivingSocial in the event of plaintiff’s termination of

employment by prohibiting her from sharing confidential

information, soliciting LivingSocial clients, and soliciting

LivingSocial employees to work elsewhere for certain periods of

time following plaintiff’s employment. The Employment Agreement

states that plaintiff’s “obligations under . . . the [Non-

Compete Agreement] shall survive the termination of

[plaintiff’s] employment.” Employment Agreement at ¶ 9. The

Non-Compete Agreement states that plaintiff “agrees that

following [plaintiff’s] employment with the Company, the Company

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shall have the right to communicate the terms of this Agreement

to any prospective or current employer of Employee. Employee

waives the right to assert any claim for damages against Company

or any officer, employee or agent of the Company arising from

such disclosure of the terms of this Agreement.” Non-Compete

Agreement, ¶ 6(b).

Plaintiff resigned from LivingSocial effective March 1,

2012. On March 6, 2012, LivingSocial sent plaintiff a letter

reminding her of her obligations under the Non-Compete

Agreement. Compl. Ex. 2. The letter set forth plaintiff’s

obligations under her Employment Agreement and demanded that

plaintiff stop immediately “any and all activities that violate

the terms” of the Non-Compete Agreement. The letter stated

LivingSocial’s understanding that plaintiff intended to begin

employment with a direct competitor of LivingSocial, Travelzoo,

Inc. (“Travelzoo”).

On March 21, 2012, defendant Seth Brown, Head of Litigation

at LivingSocial, sent another letter to plaintiff. Compl. Ex.

3. In the letter, Brown states that the Director of Human

Resources at Travelzoo had recently solicited one of

LivingSocial’s lead sales representatives to discuss job

opportunities at Travelzoo. Brown stated that he suspected

plaintiff may have shared information with Travelzoo in

violation of the Non-Compete agreement, and demanded that she

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cease and desist all solicitation of LivingSocial employees,

customers, or prospective customers. The letter further stated

that LivingSocial was considering taking legal action against

plaintiff to protect its interests.

Also on March 21, 2012, Brown sent a letter to Travelzoo’s

Human Resources Director, Kaity Benedicto, regarding the

solicitation of the LivingSocial sales representative. Compl. ¶

70 & Ex. 4 (“Travelzoo Letter”). The Travelzoo Letter outlined

plaintiff’s continuing obligations under the Non-Compete

Agreement and demanded that Travelzoo cease and desist further

solicitation of LivingSocial employees, customers, or

prospective customers. The Travelzoo Letter is the subject of

Count IV and defendants’ motion to dismiss.

On March 26, 2012, plaintiff filed a complaint against

LivingSocial in the Northern District of Illinois, alleging

claims for breach of contract and violation of the Illinois Wage

Payment and Collection Act, and seeking a declaratory judgment.

On April 11, 2012, plaintiff filed an amended complaint, adding

Seth Brown as a defendant and adding a claim of libel per se

against both defendants. On May 11, 2012, Judge Rebecca R.

Pallmeyer construed defendants’ motion to dismiss as a motion to

transfer the case, and ordered that the case be transferred to

this Court in view of the parties’ forum selection clause.

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On June 6, 2012, defendants filed a motion to dismiss Count

IV of the complaint for failure to state a claim for which

relief may be granted. The motion is now ripe for the Court’s

decision.

II. STANDARD OF REVIEW

A motion to dismiss under Federal Rule of Civil Procedure

12(b)(6) tests the legal sufficiency of a complaint. Browning

v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A complaint

must contain “a short and plain statement of the claim showing

that the pleader is entitled to relief, in order to give the

defendant fair notice of what the . . . claim is and the grounds

upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

555 (2007) (internal quotation marks and citations omitted).

While detailed factual allegations are not necessary, plaintiff

must plead enough facts “to raise a right to relief above the

speculative level.” Id.

When ruling on a Rule 12(b)(6) motion, the Court may

consider “the facts alleged in the complaint, documents attached

as exhibits or incorporated by reference in the complaint, and

matters about which the Court may take judicial notice.”

Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002).

The Court must construe the complaint liberally in plaintiff’s

favor and grant plaintiff the benefit of all reasonable

inferences deriving from the complaint. Kowal v. MCI Commc’ns

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Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). However, the Court

must not accept plaintiff’s inferences that are “unsupported by

the facts set out in the complaint.” Id. “[O]nly a complaint

that states a plausible claim for relief survives a motion to

dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

III. DISCUSSION

a. Choice of Law

As an initial matter, the parties disagree as to whether

District of Columbia or Illinois law applies to plaintiff’s

claims. As discussed above, the Employment Agreement expressly

provides that “[r]egardless of where [plaintiff] lives, District

of Columbia law shall apply to this Agreement and to

[plaintiff’s] employment by the Company. Choice of law rules

that might otherwise cause the application of any other law

shall not apply.” Employment Agreement ¶ 9.

Under District of Columbia law, courts will give effect to

a contractual choice of law clause as long as there is some

reasonable relationship with the state specified. Gray v. Am.

Exp. Co., 743 F.2d 10, 17 (D.C. Cir. 1984); see Ladd v.

Chemonics Intern., Inc., 603 F. Supp. 2d 99, 115 n.11 (D.D.C.

2009) (applying District of Columbia law where defendant’s

principal place of business was in the District and the

employment agreement specified that District of Columbia law

would apply). Here, defendant LivingSocial is headquartered in

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the District of Columbia. Accordingly, the Court finds that the

choice of law clause has a reasonable relationship with the

District of Columbia.

The cases cited by plaintiff do not compel a different

result. Plaintiff argues that District of Columbia choice of

law principles should be applied and the Court should consider

whether Illinois or the District of Columbia has a greater

interest in the dispute. Pl.’s Opp. to Defs.’ Mot. to Dismiss

at 3. Plaintiff’s argument ignores the fact that her Employment

Agreement contains a choice of law clause that expressly states

that “[c]hoice of law rules that might otherwise cause the

application of any other law shall not apply.” Employment

Agreement ¶ 9. Plaintiff does not argue that the choice of law

clause is invalid or ambiguous. Accordingly, the Court will

apply District of Columbia law.

Plaintiff also argues that the choice of law clause is

inapplicable to the libel claim against Brown for two reasons.

First, plaintiff argues that the alleged tort did not “arise

from plaintiff’s employment.” Pl.’s Opp. at 5. Plaintiff

argues that “[l]iability for tortious conduct that occurs after

termination of plaintiff’s employment is not addressed at all”

in the Employment Agreement. Id. This argument fails.

Plaintiff’s libel claim rests solely on a letter sent to

plaintiff’s current employer regarding plaintiff’s alleged

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contractual obligations to LivingSocial under the Non-Compete

Agreement. The Employment Agreement, which incorporates the

Non-Compete Agreement by reference, expressly states that

plaintiff’s obligations under the Non-Compete Agreement would

survive the termination of her employment. The Court finds,

therefore, that plaintiff’s libel claim is inextricably

intertwined with, and arises out of, plaintiff’s employment with

LivingSocial.

Plaintiff also argues in a footnote that the choice of law

clause does not apply to Brown because he was not a party to the

Employment Agreement. Plaintiff cites no case law in support of

this argument, which was made in a footnote. Courts need not

resolve arguments raised in a cursory manner and with only the

most-bare bones arguments in support. See Doe v. Siddig, 810 F.

Supp. 2d 127, 137-38 (D.D.C. 2011) (citing Wash. Legal Clinic

for the Homeless v. Barry, 107 F.3d 32, 39 (D.C. Cir. 1997)).

In any event, plaintiff’s argument lacks merit. When writing

the letter, Brown was acting as an agent of LivingSocial, and

plaintiff makes no serious attempt to argue otherwise.

Accordingly, the choice of law clause also applies to

plaintiff’s claims against Brown.

b. Plaintiff’s Libel Per Se Claim

In Count IV of the complaint, plaintiff alleges that the

Travelzoo Letter falsely accused plaintiff of violating the Non-

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Compete Agreement. Compl. ¶ 73-74. Plaintiff argues that the

letter “falsely impute[s] an inability to perform or want of

integrity by Plaintiff in the discharge of her employment and

[is] defamatory per se.” Compl. ¶ 75. Plaintiff further

contends that Brown, in drafting the letter, acted with actual

malice and caused harm to plaintiff’s professional reputation.

Compl. ¶ 76-78.

Libel is a type of defamation in which the allegedly

defamatory statement is written. See Ning Ye v. Holder, 644 F.

Supp. 2d 112, 117 (D.D.C. 2009). Under District of Columbia

law, to state a claim for defamation, plaintiff must allege (1)

that the defendant made a false and defamatory statement

concerning the plaintiff; (2) that the defendant published the

statement without privilege to a third party; (3) that the

defendant’s fault in publishing the statement amounted to at

least negligence; and (4) that the statement was either

actionable as a matter of law irrespective of special harm or

that its publication caused the plaintiff special harm.

Franklin v. Pepco Holdings, Inc., 875 F. Supp. 2d 66, 74 (D.D.C.

2012) (citing Jankovic v. Int’l Crisis Group, 494 F.3d 1080,

1091 (D.C. Cir. 2007)). Plaintiff’s claim fails the second prong

of this test. 1

1

Because the Court finds that plaintiff has failed to state a

claim because the allegedly defamatory statements were

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i. The Statements Are Privileged

Defendants argue that the allegedly defamatory statements

in the Travelzoo Letter are protected by an absolute privilege

because they were made in anticipation of litigation.

An attorney at law is absolutely privileged to publish

defamatory matter concerning another in communications

preliminary to a proposed judicial proceeding, or in

the institution of, or during the course and as part

of, a judicial proceeding in which he participates as

counsel, if it has some relation to the proceeding.

Restatement (Second) of Torts § 586 (1977); see Oparaungo v.

Watts, 884 A.2d 63, 79 (D.C. 2005) (recognizing that the

District of Columbia has adopted Section 586). 2 “Despite its

name, the judicial proceedings privilege does not protect only

statements that are made in the institution of a lawsuit or in

the course of litigation.” Finkelstein, Thompson & Loughran v.

Hemispherx Biopharma, Inc., 774 A.2d 332, 341 (D.C. 2001)

overruled in part on other grounds by McNair Builders, Inc. v.

Taylor, 3 A.3d 1132 (D.C. 2010). Rather, the privilege can

extend to “statements that are made prior to the commencement of

litigation, for instance, ‘in . . . communications preliminary

privileged, the Court does not reach defendants’ alternative

arguments that the statements were not false or were not

defamatory.

2

Even if Illinois law were to apply in this case, Section 586

has also been adopted by courts in that state, see Thompson v.

Frank, 313 Ill. App. 3d 661, 664 (3d Dist. 2000), and Illinois

courts have recognized that the privilege applies to statements

made in anticipation of litigation, see Atkinson v. Afftonti,

369 Ill. App. 3d 828, 833 (1st Dist. 2006). Accordingly,

plaintiff’s claims would also fail under Illinois law.

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to the proceeding.’” Id. (quoting Restatement § 586 cmt. a).

“[A]n actual outbreak of hostilities is not required, so long as

litigation is truly under serious consideration and the

communications in issue bear a sufficient relationship to that

potential litigation.” Finkelstein, 774 A.2d at 343; see Am.

Petrol. Inst. V. Technomedia Int’l, Inc., 699 F. Supp. 2d 258,

268 (D.D.C. 2010) (dismissing defamation claim based on letter

regarding alleged violation of non-disclosure agreement because

the letter “raised the specter of future litigation”); Messina

v. Krakower, 439 F.3d 755, 760 (D.C. Cir. 2006) (affirming

dismissal of defamation claim where letter defined the nature of

the dispute between the parties and alerted the recipient to a

potential legal claim).

Here, the Travelzoo Letter was written by LivingSocial’s

attorney, advised Travelzoo of plaintiff’s contractual

obligations, explained that plaintiff’s actions appeared to have

been taken in violation of the contract, stated that

LivingSocial reserved its rights “to take all legal and

equitable action to protect its business interests,” and

demanded that Travelzoo “immediately cease and desist from any

further solicitation of LivingSocial employees, customers, or

prospective customers.” Compl., Ex. 4. The Court finds that

the statements in the letter indicate that litigation was under

serious consideration. Furthermore, the statements in the

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letter bear a clear relationship to the dispute because they

defined the nature of the dispute. Accordingly, the Court finds

that the Travelzoo Letter is protected by the judicial

proceedings privilege. 3

Plaintiff’s claim also fails because the statements in the

letter are protected by the privilege of consent. See

Farrington v. Bureau of Nat’l Affairs, Inc., 596 A.2d 58, 59

(D.C. 1991) (“Consent is an absolute defense to a claim of

defamation.”). The publication of a defamatory statement is

privileged if “(1) there was either express or implied consent

to the publication; (2) the statements were relevant to the

purpose for which consent was given; and (3) the publication of

those statements was limited to those with a legitimate interest

in their content.” Id.

The Non-Compete Agreement contains an express provision by

which plaintiff consented to LivingSocial’s communicating the

terms of the Non-Compete Agreement “to a prospective or current

employer” of plaintiff. Non-Compete Agreement at ¶ 6(b). The

statements made in the letter, alleging plaintiff had violated

the restrictive covenants of the Non-Compete Agreement, were

directly relevant to the purpose for which consent was given.

3

Indeed, plaintiff’s argument that the letter was not sent in

anticipation of litigation is belied by the fact that she filed

this lawsuit on March 26, 2012, only five days after the date of

the letter.

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Finally, the publication of the statement was limited to

Travelzoo’s human resources director, who had a legitimate

interest in the content of the statements. Accordingly, the

letter is protected by the privilege of consent, and plaintiff’s

claim fails.

IV. CONCLUSION

For all of the foregoing reasons, defendant’s motion to

dismiss Count IV of plaintiff’s complaint is GRANTED and Count

IV is hereby DISMISSED. An appropriate Order accompanies this

Memorandum Opinion.

Signed: Emmet G. Sullivan

United States District Judge

March 18, 2013

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