Chau v. Donovan
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Opinion
CASTEL, U.S.D.J.
Plaintiff Jenny Chau alleges in her Second Amended Complaint ("SAC," Doc 21) that defendant Ryan Donovan, as principal and chief compliance officer of Granger Management LLC and Granger Management Holdings LLC (together, "Granger"), misused his position of power to tempt Ms. Chau with a lucrative job opportunity and investment while, during the same period, sexually assaulting her. In this diversity *281action, Ms. Chau brings claims against Mr. Donovan for assault, battery, intentional and negligent infliction of emotional distress ("IIED" and "NIED"), and claims pursuant to the New York State Human Rights Law,
BACKGROUND
Chau and Donovan met as co-workers in 2005 while working at the New York City offices of Bear Stearns. (SAC ¶¶ 13-14.) By 2017, Chau had moved to California and was raising capital for a new venture fund named MotiVentures. (SAC ¶¶ 16, 19-20.) Chau asked Donovan if his company, Granger, which invests money on behalf of a limited number of wealthy families, (SAC ¶ 5), "might want to invest in or partner with MotiVentures." (SAC ¶ 19.) Donovan "confidently assured Chau that Granger would probably invest $25-50 million because his partners trusted him." (SAC ¶ 26.) Donovan joked with Chau that "if Granger declined to invest then he would offer $5,000 of his own money into Chau's fund if he could have a threesome with Chau and his wife." (SAC ¶ 28.) Donovan continued to text with Chau and "divert talk of business into talk of alcohol and sex." (SAC ¶ 29; see
Chau, Donovan, and Chau's MotiVentures partners met for dinner in New York City on April 19, 2017 to discuss Granger's potential investment. (SAC ¶ 35.) After dinner, Chau and Donovan went to a hotel bar to discuss Chau's MotiVentures partners. (SAC ¶ 36.) Donovan "confessed that ... he was only using his authority and influence within Granger to steer an investment to MotiVentures 'because of her,' " and "fe[ ]d Chau drinks, with the intent to get her drunk." (SAC ¶¶ 36-37.) Donovan began "touching Chau inappropriately," "convinced Chau to ride in his Uber" where he continued to touch her inappropriately, and "forced his way onto the elevator" at her hotel despite repeated objections. (SAC ¶¶ 37-39.) When Chau opened the door to her hotel room, Donovan "powerfully pushed past her into the room," "began touching her in a sexual way," "removed his pants and forced himself on top of her," and groped, kissed, digitally penetrated her, and masturbated next to her without Chau's consent. (SAC ¶ 39.)
Following the April 19, 2017 encounter, Chau "continued communicating with Donovan because she did not want to lose the potential investment," and Donovan continued to "change[ ] the subject to sex." (SAC ¶¶ 43, 45, 47, 49, 61.) In May 2017 Donovan informed Chau that Granger would not be investing in MotiVentures. (SAC ¶ 46.) He also informed her that "he would find a spot for Chau to work for him at Granger" if her position at MotiVentures was terminated. (SAC ¶ 46.) Donovan told Chau that getting her a job would be "99% [his] call," and quoted her a starting salary of $250,000 with bonuses around $500,000. (SAC ¶¶ 51-52.) He also stated that Chau "might be able to do some things that would get [him] to pay [her] more," which Chau understood to refer to sexual acts *282with him and his wife. (SAC ¶ 53.) Donovan and Chau discussed "start dates and how Chau would have to come to New York City to interview." (SAC ¶ 53.)
Donovan informed Chau he wanted her to meet "his bosses," the two named partners of Granger, but did not want to pay for Chau to fly to New York. (SAC ¶ 56.) He instead suggested she meet him in San Diego, CA in October 2017, where he would be attending a conference, to discuss the job. (SAC ¶ 56.) In San Diego they "discussed salaries, the type of work Chau would do, and Granger in general." (SAC ¶ 58.) Donovan made Chau understand that her job responsibilities would include investment advising, sales, and operations. (SAC ¶ 59.) During the meeting, Donovan groped and touched Chau inappropriately while in San Diego at a hotel bar despite her repeated objections. (SAC ¶ 62.) Shortly after Donovan returned to New York City, he informed Chau that Granger could no longer hire her. (SAC ¶ 63.)
Chau spoke with friends and various mental health professionals about her experience and "came to realize that the treatment that she had suffered" by Donovan "was wrong." (SAC ¶¶ 65-68.) She brought suit in April 2018 (Doc 1.)
APPLICABLE LAW
To survive a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal,
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CASTEL, U.S.D.J.
Plaintiff Jenny Chau alleges in her Second Amended Complaint ("SAC," Doc 21) that defendant Ryan Donovan, as principal and chief compliance officer of Granger Management LLC and Granger Management Holdings LLC (together, "Granger"), misused his position of power to tempt Ms. Chau with a lucrative job opportunity and investment while, during the same period, sexually assaulting her. In this diversity *281action, Ms. Chau brings claims against Mr. Donovan for assault, battery, intentional and negligent infliction of emotional distress ("IIED" and "NIED"), and claims pursuant to the New York State Human Rights Law,
BACKGROUND
Chau and Donovan met as co-workers in 2005 while working at the New York City offices of Bear Stearns. (SAC ¶¶ 13-14.) By 2017, Chau had moved to California and was raising capital for a new venture fund named MotiVentures. (SAC ¶¶ 16, 19-20.) Chau asked Donovan if his company, Granger, which invests money on behalf of a limited number of wealthy families, (SAC ¶ 5), "might want to invest in or partner with MotiVentures." (SAC ¶ 19.) Donovan "confidently assured Chau that Granger would probably invest $25-50 million because his partners trusted him." (SAC ¶ 26.) Donovan joked with Chau that "if Granger declined to invest then he would offer $5,000 of his own money into Chau's fund if he could have a threesome with Chau and his wife." (SAC ¶ 28.) Donovan continued to text with Chau and "divert talk of business into talk of alcohol and sex." (SAC ¶ 29; see
Chau, Donovan, and Chau's MotiVentures partners met for dinner in New York City on April 19, 2017 to discuss Granger's potential investment. (SAC ¶ 35.) After dinner, Chau and Donovan went to a hotel bar to discuss Chau's MotiVentures partners. (SAC ¶ 36.) Donovan "confessed that ... he was only using his authority and influence within Granger to steer an investment to MotiVentures 'because of her,' " and "fe[ ]d Chau drinks, with the intent to get her drunk." (SAC ¶¶ 36-37.) Donovan began "touching Chau inappropriately," "convinced Chau to ride in his Uber" where he continued to touch her inappropriately, and "forced his way onto the elevator" at her hotel despite repeated objections. (SAC ¶¶ 37-39.) When Chau opened the door to her hotel room, Donovan "powerfully pushed past her into the room," "began touching her in a sexual way," "removed his pants and forced himself on top of her," and groped, kissed, digitally penetrated her, and masturbated next to her without Chau's consent. (SAC ¶ 39.)
Following the April 19, 2017 encounter, Chau "continued communicating with Donovan because she did not want to lose the potential investment," and Donovan continued to "change[ ] the subject to sex." (SAC ¶¶ 43, 45, 47, 49, 61.) In May 2017 Donovan informed Chau that Granger would not be investing in MotiVentures. (SAC ¶ 46.) He also informed her that "he would find a spot for Chau to work for him at Granger" if her position at MotiVentures was terminated. (SAC ¶ 46.) Donovan told Chau that getting her a job would be "99% [his] call," and quoted her a starting salary of $250,000 with bonuses around $500,000. (SAC ¶¶ 51-52.) He also stated that Chau "might be able to do some things that would get [him] to pay [her] more," which Chau understood to refer to sexual acts *282with him and his wife. (SAC ¶ 53.) Donovan and Chau discussed "start dates and how Chau would have to come to New York City to interview." (SAC ¶ 53.)
Donovan informed Chau he wanted her to meet "his bosses," the two named partners of Granger, but did not want to pay for Chau to fly to New York. (SAC ¶ 56.) He instead suggested she meet him in San Diego, CA in October 2017, where he would be attending a conference, to discuss the job. (SAC ¶ 56.) In San Diego they "discussed salaries, the type of work Chau would do, and Granger in general." (SAC ¶ 58.) Donovan made Chau understand that her job responsibilities would include investment advising, sales, and operations. (SAC ¶ 59.) During the meeting, Donovan groped and touched Chau inappropriately while in San Diego at a hotel bar despite her repeated objections. (SAC ¶ 62.) Shortly after Donovan returned to New York City, he informed Chau that Granger could no longer hire her. (SAC ¶ 63.)
Chau spoke with friends and various mental health professionals about her experience and "came to realize that the treatment that she had suffered" by Donovan "was wrong." (SAC ¶¶ 65-68.) She brought suit in April 2018 (Doc 1.)
APPLICABLE LAW
To survive a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal,
A motion to dismiss under Rule 12(b)(1), Fed. R. Civ. P., is decided under the same standards as a motion to dismiss for failure to state a claim under Rule 12(b)(6). Lerner v. Fleet Bank, N.A.,
The parties have assumed New York State law governs plaintiff's asserted claims. "[I]mplied consent ... is sufficient to establish choice of law." Alphonse Hotel Corp. v. Tran,
DISCUSSION
I. Donovan's Motion to Dismiss
Donovan moves to dismiss Counts III (intentional infliction of emotional distress), IV (negligent infliction of emotional distress), and VI (discrimination in violation of the NYCHRL and NYSHRL) of the SAC pursuant to Rules 12(b)(1) and 12(b)(6), Fed. R. Civ. P. The Court will address the statutory claims first.
a. Discrimination in violation of New York City and State Human Rights Laws
Chau claims that Donovan failed to hire her because of her gender after she refused to submit to sexual demands in violation of the NYSHRL,
i. Chau's claims meet the impact requirement of the NYSHRL and NYCHRL
"In order for a nonresident to invoke the protections of the NYSHRL and NYCHRL, she must show that the discriminatory act had an impact within the boundaries of the State and City, respectively." E.E.O.C. v. Bloomberg L.P.,
Chau concedes that at all relevant times she lived in California. (SAC ¶ 1.) She claims that the allegedly discriminatory acts had an impact in New York City because she "was denied employment by a New York City employer, for a job based in New York City, because of her refusal to engage in sexual relations with Mr. Donovan...." (Opp. Mem. at 14; Doc 42.)
Although Chau never worked in New York City for Granger or Donovan, the job for which she alleges she was not hired in violation of the NYCHRL and NYSHRL would have offered her employment within New York City. (SAC ¶ 59.) The impact requirement is "intended to protect those who work in the State and City." Bloomberg,
ii. Individual liability under
In the alternative, Donovan contends that Chau's NYSHRL claim should be dismissed for failing to allege that Donovan is an "employer," or that he meets the requirements to establish aiding and abetting liability under Executive Law section 296(6).
Claims under the NYSHRL are analyzed under the same standards as claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq, with minor exceptions. See Mandell v. Cty. of Suffolk,
In Patrowich, the New York Court of Appeals stated that an individual may not be liable as an employer if she "is not shown to have any ownership interest or any power to do more than carry out personnel decisions made by others."
The facts in the SAC, accepted as true, are sufficient to support a claim that Donovan had the requisite control over Chau to consider Donovan an "employer" for purposes of the NYSHRL. Although Donovan did not hold an ownership interest in Granger, (SAC ¶ 3), he was "Principal and Chief Compliance Officer" of Granger (SAC ¶ 49), who said that getting Chau a job at Granger was "99% my call." (SAC ¶ 51.)3 He told Chau he could "use his influence" at the company "for a potential job" for Chau. (SAC ¶ 49.) According to the SAC, Chau understood through Donovan's words and actions that he "was to be her supervisor," that "he wanted to hire her," and that "the job was real and it was hers if she wanted it." (SAC ¶ 59.) In San Diego, Donovan discussed with her "salaries, the type of work Chau would do, and Granger in general." (SAC ¶ 58.) Donovan purported to have control over salaries when he said "you might be able to do so things that would get me to pay you more" in discussing a potential job offer with Chau. (SAC ¶ 53.) After the meeting at which Chau repeatedly refused Donovan's sexual advances, Donovan called Chau and notified her that "Granger could no longer hire her." (SAC ¶ 63.) Through these statements, Donovan represented to Chau supervisory responsibilities, powers in support of hiring, firing, and salary decisions, and power to do more than carry out personnel decisions made by others.
"Experience has shown that a complaint may be sufficient to withstand a motion to dismiss, but, after discovery, the facts may look quite differently on a motion for summary judgment or at trial." Doran v. N.Y. State Dep't of Health Office of Medicaid Inspector Gen., 15 cv 7217 (PKC)(SN),
"[T]he NYSHRL also provides for 'aiding and abetting' liability." Griffin v. Sirva Inc.,
However, the Court knows of no case where an individual has been held liable for aiding and abetting under the NYSHRL where that individual is an employer under 296(1) and no others, including the corporate entity, are alleged to be in concert with the individual. See Malanga v. NYU Langone Med. Ctr., 14cv9681,
iii. Chau's belated compliance with N.Y.C. Admin. Code § 8-502(c) is not fatal to her claim
Section 8-502(c) of the New York City Administrative Code requires that "[w]ithin 10 days after having commenced a civil action pursuant to subdivision a of this section, the plaintiff shall serve a copy of the complaint upon such authorized representatives [of the city commission on human rights and the corporation counsel]." N.Y.C. Admin. Code § 8-502(c). Chau filed notice with the City Commission on Human Rights on July 20, 2018 (Declaration of Pearl Zuchlewski at Ex. C; Doc 39), nearly three months after she filed the initial complaint in this case, (Compl. of Apr. 17, 2018; Doc 1.) Although Donovan "recognizes that the courts in this District generally have concluded that failure to comply with ... § 8-502(c) does not warrant the harsh result of dismissal," he argues it is appropriate here because plaintiff was notified in Donovan's pre-motion letter to the Court of her failure to *287comply with section 8-502(c), yet filed the notice three weeks later. (Donovan's Mot. to Dismiss at 14; Doc 38; see Ltr. Re: Intent to File Mot. to Dismiss; Doc 23.)
"[M]ost courts in this district have found that failure to serve under this provision does not justify dismissal." Fakir v. Skyrise Rock Corp., 16 cv 4695 (JPO),
The Court declines to dismiss based on belated service of notice. Donovan's pre-letter motion informing Chau of her failure to give notice does not otherwise affect the Court's determination. Waiting three weeks after receipt of the pre-motion letter to file notice is not evidence of "cavalierly disregard[ing]" section 8-502(c). (Donovan's Mot. to Dismiss at 14; Doc 38.) Courts in this district have given plaintiffs similar amounts of time to serve their papers following weeks, if not months, of plaintiffs being put on notice as a result of defendants' motions to dismiss. See, e.g., Fakir,
b. Intentional infliction of emotional distress
To state a claim for IIED under New York law, a plaintiff must allege "(1) extreme and outrageous conduct; (2) intent to cause, or reckless disregard of a substantial probability of causing, severe emotional distress; (3) a causal connection between the conduct and the injury; and (4) severe emotional distress." Stuto v. Fleishman,
"[I]n the rare instances where New York courts have recognized a claim for [IIED] in the employment context, the claims have alleged not merely sexual harassment, but more significantly, battery." Wahlstrom v. Metro-North Commuter R.R. Co.,
Donovan argues that Chau's claim for IIED is duplicative of her claim for battery. According to the Second Circuit, the New York Court of Appeals has "cautioned that a claim for IIED may not be sustainable 'where the conduct complained of falls well within the ambit of other traditional tort liability.' " Turley v. ISG Lackawanna, Inc.,
Chau's IIED claim does not overlap with her battery claim to the extent that it is subsumed within the battery claim. Chau alleges, in addition to the sexual battery events of April and October 2017, that over a period of several months Donovan placed "persistent sexual pressure" on Chau by texting her about threesomes with Donovan and his wife in exchange for funding for Chau's investment group or for a possible job offer. (SAC ¶¶ 28, 33, 39, 43, 47, 53, 64.) She further alleges he masturbated next to her in the hotel room in April 2017 without her consent. (SAC ¶ 39.) Because this potentially tortious conduct is not subsumed by Ms. Chau's battery claim (or assault claim), her IIED claim may proceed. See Roelcke v. Zip Aviation, LCC, 15 cv 6284 (DAB),
Donovan also challenges Chau's claim for IIED for lack of a causal connection between the outrageous conduct and Chau's emotional distress. Chau has adequately pled causation. The campaign of distress Chau complains of took place between March and late October 2017. (SAC ¶¶ 28, 58.) Chau asserts that contemporaneous with the events of April 19, 2017 she "greatly and imminently feared [Donovan] would" engage in forced sexual intercourse, and that he performed acts of sexual battery on Chau that caused her a "great deal of pain." (SAC ¶¶ 39-40.) In June and July, she repeatedly told Donovan that his sexual comments offended her and that she felt "angry" about their non-consensual sexual encounter in April 2017. (SAC ¶¶ 54-55.) She asserts that "[t]hroughout 2017, Chau had felt uneasy about the pressure that Donovan maintained for her to engage in sex with him and/or his wife," and that the persistent sexual pressure left her "depressed," "upset," and manifested in "physical symptoms." (SAC ¶ 64.) She continued to feel "angry, upset," and suffered from "significant anxiety" in the fall of 2017 based on Donovan's conduct, which had continued through October 2017. (SAC ¶ 65; see id. at ¶¶ 58, 62.) She saw a therapist, psychiatrist, and counselor, and called a rape crisis hotline to seek help. (SAC ¶ 67.) She was "diagnosed as suffering from post-traumatic *289stress disorder and depression" as a result of Donovan's conduct. (SAC ¶ 69.) Given these facts, Chau has sufficiently pled that Donovan's alleged acts of sexual battery and continued sexual harassment were related to emotional distress experienced by Chau. See Mitchell v. Giambruno,
Donovan cites in support of his argument Ruhling v. Newsday, Inc., CV 04-2430(ARL),
c. Negligent infliction of emotional distress
Under New York law, a plaintiff may recover for the tort of NIED under either the "bystander theory" or the "direct duty theory." Mortise v. United States,
Donovan argues that Chau has not alleged Donovan owed her a special duty of care, as required, and that intentional or deliberate actions cannot create a cause of action for NIED. The Court agrees with Donovan on both points.
Under a direct duty theory of NIED, the duty "must be specific to the plaintiff, and not some amorphous, free-floating duty to society." Mortise,
*290In any event, "because the actions alleged here were intentional and deliberate and allegedly in their nature offensive, they are outside the ambit of actionable negligence." Wahlstrom,
II. Granger's Motion to Dismiss
Two counts of the SAC are directed at Granger. Count V alleges that Granger is vicariously liable for Donovan's assault, battery, IIED and NIED. (SAC ¶¶ 88-99.) Count VII alleges that Granger is liable for discrimination and retaliation in violation of the New York City Human Rights Law, N.Y.C. Admin. Code § 8-101 etseq. (SAC ¶¶ 114-28.) Granger moves to dismiss Count V under Rule 12(b)(6), Fed. R. Civ. P., and Count VII under Rule 12(b)(6) or 12(b)(1), Fed. R. Civ. P. The Court addresses each count in turn.
a. Vicarious liability (Respondeat Superior)
Granger argues that Chau's claim for vicarious liability does not state a plausible claim for relief because Donovan's conduct was based on personal motives and not in furtherance of his employer's business.
"To state claim for respondeat superior, a plaintiff must plead facts showing, among other things, that the tortious conduct causing the injury was undertaken within the scope of the employee's duties to the employer and was thus in furtherance of the employer's interests." Doe v. Alsaud,
The Court of Appeals of New York has set forth five factors to consider in evaluating whether tortious conduct is committed in the scope of employment;6 however, "[n]o decision in New York has been cited to date in which the doctrine of respondeat superior was held to apply to sexual assault."
Chau appears to concede that the alleged tortious conduct for which Granger should be held vicariously liable occurred outside the scope of Donovan's employment. See Opp. Mem. to Mot. to Dismiss at 5; Doc 41 ("Granger is liable for Mr. Donovan's tortious conduct even if it was outside the scope of his employment.") (capitalization modified). Instead, she argues that "agency principles impose liability on employers even where employees commit torts outside the scope of employment." Id. at 5 (quoting Burlington,
New York law, under which Chau brings suit, does not recognize agency principles for vicarious liability. N.X. v. Cabrini Med. Ctr.,
b. Discrimination in violation of the New York City Human Rights Law
Granger argues that Chau's claims under the NYCHRL do not meet the impact requirement. The Court has already determined that the allegations in the SAC, if taken as true, meet the impact requirement of the NYCHRL. Supra Section I(a)(i); see Bloomberg,
"[F]ederal courts must consider separately whether [claims are] actionable under the broader New York City standards" for discriminatory violations. Mihalik v. Credit Agricole Cheuvreux N. Am., Inc.,
*293Wang,
For NYSHRL failure to hire claims, "a plaintiff must allege that she applied for an available position for which she was qualified and was rejected under circumstances giving rise to an inference of unlawful discrimination."
In addition, section 13(b) of N.Y.C. Admin Code § 8-107 states that an employer "shall be liable for an unlawful discriminatory practice based upon the conduct of an employee or agent" under the following circumstances:
(1) The employee or agent exercised managerial or supervisory responsibility; or
(2) The employer knew of the employee's or agent's discriminatory conduct, and acquiesced in such conduct or failed to take immediate and appropriate corrective action ...; or
(3) The employer should have known of the employee's or agent's discriminatory conduct and failed to exercise reasonable diligence to prevent such discriminatory conduct.
N.Y.C. Admin Code § 8-107(13)(b) ; see Garrigan v. Ruby Tuesday, Inc., 14 cv 155(LGS),
The allegations of the SAC, when taken as true, satisfy the requirement that Chau be qualified for an available position. Chau alleges she was qualified for the position as an investment advisor/sales representative/operations employee, both because Mr. Donovan said as much and because she had several years of work in the industry. See SAC ¶¶ 14-15; id. at 59 ("Donovan explained that he wanted to hire her because she was senior enough to know all the[ ] structures and help him and the two managing members of Granger on [a] variety of high-level, complex investment portfolios.").
The SAC further suggests that a vacancy was not posted and that Chau attempted to apply for a position through informal channels. Chau had several communications with Donovan over a period of months about a position at Granger and expressed interest in the position to the point of meeting Donovan in San Diego "for the purpose of finalizing the details of Chau's new job at Granger." SAC ¶ 58; see SAC ¶¶ 49-59. Their communications included discussion of "salaries, the type of work Chau would do, and Granger in general." SAC ¶ 58. Through her communications with Donovan she understood that "Granger was aware that Donovan was offering her the job." SAC ¶ 59. The Court is unpersuaded by Granger's argument that Chau's failure to meet the managing *294partners of Granger and a three month gap between communications with Mr. Donovan negates Ms. Chau's attempt to apply for an unposted position. (See Granger Reply at 9; Doc 47.) These facts are sufficient to allege that Chau attempted to apply for a position through informal channels endorsed by an employer for a vacancy that was not posted. See Hughes,
Moreover, Granger may be held liable for Donovan's conduct. As stated above, supra Section I(a)(ii), Chau has alleged sufficiently that Donovan holds managerial or supervisory responsibility within Granger, and the alleged act of refusing to hire based on gender discrimination is itself a managerial act.9 Where this is the case, "local law on its face appears to impose vicarious liability on an employer ... without regard to whether the employer or another of its managers or supervisors knew or should have known" of the discriminatory acts. Zakrzewska v. The New School,
CONCLUSION
For the foregoing reasons, Donovan's motion to dismiss is GRANTED as to plaintiff's claims for negligent infliction of emotional distress and violation of
SO ORDERED.
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