Lally v. Klick USA, Inc.

Background

Kaitlin Lally sued Klick USA, Inc., doing business as Klick Health, and Ari Schaefer, Alexander Leavitt, Meghan Jones, Catherine MacInnis, and two John/Jane Doe defendants. Her First Amended Complaint asserted claims under the Americans with Disabilities Act, the New York State Human Rights Law, the New York City Human Rights Law, the Family and Medical Leave Act, New York Labor Law Section 215, and state-law claims for emotional distress and defamation.

The motion at issue was filed by Klick, Schaefer, Leavitt, Jones, and MacInnis. It challenged only Count Six, intentional and negligent infliction of emotional distress, and Count Seven, defamation. The court accepted the complaint’s factual allegations as true for purposes of deciding the motion to dismiss.

Lally alleged that she had panhypopituitarism, a disability affecting her endocrine system, and that she had told Klick personnel about her disability and need for leave. She alleged that Leavitt approved several days of leave, that Jones scheduled a meeting during one of those days, and that Jones terminated her during a video call while she was away from work for disability-related reasons. Lally also alleged that MacInnis later sent her a letter and that a Klick vice president, John Hastings, told another Klick employee, Gah-Jon Won, that Lally had been on a Performance Improvement Plan and was terminated because she did not improve. Lally alleged that the Performance Improvement Plan statement was false. The defendants conceded that she was not on such a plan when she was terminated.

Materials Considered on the Motion

The defendants submitted a declaration from MacInnis and two exhibits. The court declined to convert the motion to dismiss into a motion for summary judgment, which would have allowed consideration of materials outside the complaint. The court therefore did not consider the factual allegations in the declaration or the second exhibit, because they were not incorporated into or integral to the First Amended Complaint. It did consider MacInnis’s letter because the complaint incorporated that letter by reference.

Emotional-Distress Claims

The court granted the motion as to both the intentional and negligent infliction of emotional distress claims.

For intentional infliction of emotional distress, New York law requires extreme and outrageous conduct, intent or reckless disregard concerning severe emotional distress, causation, and severe emotional distress. The court held that terminating Lally while she was taking a mental-health day and sending a post-termination letter could show callousness or insensitivity, but did not meet the demanding requirement of conduct that goes beyond all possible bounds of decency. The court also held that using the alleged false Performance Improvement Plan statement as the basis for the emotional-distress claim would duplicate the defamation claim. The court rejected Lally’s argument that the defendants’ knowledge of her sensitivity to stress made the alleged conduct sufficiently outrageous, distinguishing cases involving much more substantial, deliberate, and malicious campaigns of harassment.

For negligent infliction of emotional distress, New York law requires a breach of a legally recognized duty, emotional harm, a direct causal connection, and circumstances supporting the genuineness of the harm. The court held that Lally did not allege a specific duty owed to her or a breach of such a duty. It also found that her allegations described intentional conduct and that simply adding the word “negligently” did not convert those allegations into a negligence claim.

Defamation Claim

The court denied the motion as to the defamation claim. To state a defamation claim under New York law, a plaintiff must generally allege a false defamatory statement about the plaintiff, publication to a third party, fault, falsity, and either special damages or a statement actionable without proof of special damages.

The court found Lally’s allegations sufficient at the motion-to-dismiss stage. She identified the alleged statement—that she was on a Performance Improvement Plan when terminated and had not improved—the person who allegedly made it, Hastings, the approximate time it was made, and the person who allegedly received it, Won. The court concluded that the statement plausibly could harm Lally’s professional reputation and therefore qualified as defamation per se, meaning special damages did not need to be alleged.

The court acknowledged that other allegations about unspecified defamatory statements by Klick and the John/Jane Doe defendants were too general by themselves. It nevertheless held that the specific allegations concerning Hastings and Won gave the defendants enough information to defend against the claim. The court also declined to dismiss the claim based on the defendants’ asserted qualified common-interest privilege, explaining that such a defense was generally better considered at a later stage than on a motion to dismiss.

Disposition

The court granted in part and denied in part the defendants’ motion to dismiss. It granted the motion as to Count Six, intentional and negligent infliction of emotional distress, and dismissed those claims with prejudice. It denied the motion as to Count Seven, defamation. The court concluded that further amendment would be futile because Lally had already received notice of the alleged deficiencies, had an opportunity to amend, and waived that opportunity. Judge Mary Kay Vyskocil directed the Clerk of Court to terminate the pending motion.