Robinson v. MSG Entertainment Group, LLC.

Background

Stevie Robinson moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a claim is sufficiently pleaded, to dismiss counterclaims brought by MSG Entertainment Group, LLC, MSG Entertainment Holdings, LLC, MSG Arena, LLC, and Darian Jennings. The court accepted the counterclaim allegations as true for purposes of the motion.

The defendants alleged that Robinson applied to work as an usher at MSG Arena and received a conditional employment offer subject to a background check. They alleged that Robinson provided Accurate Background, LLC, with a birth year of 1966 even though his actual birth year was 1963. According to the counterclaims, this difference prevented the background search from finding his criminal conviction and Level 3 sex-offender registration. The defendants alleged that the inaccurate background-check information led MSG Arena to hire Robinson, who worked there from December 2021 until his termination in August 2022.

The defendants claimed that Robinson knowingly misstated his birth year to conceal his criminal history and induce them to hire him. Their first counterclaim was labeled “Fraudulent Inducement/Fraudulent Concealment,” but the court analyzed it as a fraudulent-inducement claim because that was the theory addressed by both sides. The defendants also asserted unjust enrichment, alleging that Robinson improperly retained wages and other employment benefits.

Fraudulent Inducement

Applying New York law and the heightened pleading requirements for fraud under Rule 9(b), the court held that the defendants adequately pleaded fraudulent inducement. The counterclaims identified the alleged false statement—the birth year submitted to Accurate—identified Robinson as the person who made it, described when and where it was provided, and explained why the defendants considered it fraudulent.

The court also found sufficient allegations of fraudulent intent. Robinson allegedly stated his correct birth year on an employment-eligibility form but a different year on the form used for the background check. The court concluded that the allegations supported an inference that he had both a motive to conceal his criminal history and an opportunity to do so because the employer and the background-screening provider handled the information separately.

The court found the reliance allegations sufficient because the defendants claimed they reasonably relied on the information Robinson electronically signed and submitted to Accurate. The court also held that the damages allegations were sufficient at the pleading stage, even though the counterclaims did not specify a precise amount. It noted, however, that New York’s out-of-pocket rule would limit any eventual fraud recovery to actual financial loss directly caused by the alleged misrepresentation and would likely not permit recovery of Robinson’s entire salary. The defendants identified training and replacement costs in their opposition papers as possible damages.

Unjust Enrichment

The court dismissed the unjust-enrichment counterclaim. Unjust enrichment generally requires a benefit to the defendant at the claimant’s expense and circumstances making it unfair for the defendant to keep that benefit. Here, MSG Arena paid Robinson wages and provided employment benefits in exchange for his work. The defendants did not allege that his work was worth less because of his criminal history or that his labor was substantively affected by the alleged fraud.

Because the alleged benefits were exchanged for Robinson’s labor, the court found no pleaded imbalance requiring restitution. It therefore concluded that the defendants could not recover Robinson’s wages or benefits through unjust enrichment on the allegations before the court.

Disposition

Judge Lewis J. Liman granted in part and denied in part Robinson’s motion to dismiss. The motion was denied as to the defendants’ fraudulent-inducement counterclaim and granted as to the defendants’ unjust-enrichment counterclaim. The clerk was directed to close the motion at Dkt. No. 62.