ExpertConnect, L.L.C. v. Fowler

Background

ExpertConnect sued Mayokia Fowler, Dipali Parmar, and Strafluence, LLC under the federal Defend Trade Secrets Act and state law. Fowler and Parmar asserted counterclaims, and Fowler, Parmar, and Strafluence asserted third-party claims against Eric C. Broyles and Chris G. Gaudioso. The claims at issue in this order were under New York law: tortious interference with prospective contractual relations against Broyles and ExpertConnect, defamation per se against Broyles and Gaudioso, and breach of contract against ExpertConnect.

Fowler had entered a Separation Agreement with ExpertConnect containing a mutual nondisparagement provision. The provision required ExpertConnect to cause its senior management not to issue, authorize, or condone disparaging statements about Fowler that were likely to harm her business, professional, or personal reputation. After Fowler and Parmar left ExpertConnect and formed Strafluence, Broyles and Gaudioso sent emails to former ExpertConnect clients. The emails allegedly stated that Fowler, Parmar, and Strafluence had stolen confidential and proprietary information, committed trade-secret theft, used that material to serve clients, and faced possible criminal scrutiny. Broyles also told JMP Securities, LLC that ExpertConnect was already in litigation and expected an injunction soon. The pleadings alleged that JMP did not complete contract negotiations with Strafluence because of these communications.

Rule 12(b)(6) standard

The court evaluated the motion under Rule 12(b)(6), which asks whether the pleading contains enough factual allegations to state a legally plausible claim. At this stage, the court treated the pleaded facts as true and drew reasonable inferences for the parties opposing dismissal.

Defamation per se

The defamation claim against Broyles and Gaudioso survived only as to the allegedly defamatory email statements sent to JMP, Evercore ISI, and Ruane Cunniff & Goldfarb, Inc. The court held that the pleaded allegations supported an inference of actual malice—knowledge that the statements were false or reckless disregard for whether they were false. The allegations stated that no criminal action or investigation had been commenced against Fowler or Parmar and that there were no allegations of criminal conduct.

The court rejected reliance on the common-interest privilege at the motion-to-dismiss stage. It also held that the litigation privilege did not apply because Broyles and Gaudioso were not acting as attorneys making statements in connection with a court proceeding. The separate allegations that the same statements were made by telephone were not supported by enough factual detail about to whom, when, how, or why the statements were made. The defamation claim was therefore limited to the email correspondence.

Tortious interference with prospective contract relations

The interference claim against Broyles and ExpertConnect survived except for Broyles’s liability based on his statement to JMP about possible criminal conduct by Fowler and Parmar. The court dismissed that portion as duplicative of the defamation claim.

The remaining interference theory was based on statements about civil litigation, including the statement that ExpertConnect was already in litigation and expected an injunction soon, and statements that the dispute could affect JMP’s meetings or projects. The court held that these allegations were not the factual basis of the defamation claim and therefore were not duplicative. The court also rejected the asserted common-interest and litigation privileges for this claim, explaining that the common-interest privilege applies to defamation claims and that the alleged statements were not made by an attorney.

Breach of contract

The breach-of-contract claim against ExpertConnect survived as brought by both Fowler and Strafluence. The court held that Strafluence had standing as a third-party beneficiary of Fowler’s Separation Agreement. Although Strafluence did not exist when the agreement was signed, the nondisparagement provision protected Fowler’s future business, and the court found that the agreement showed an intent to permit enforcement by the business Fowler later formed.

Disposition

Judge Lorna G. Schofield’s order states that the Counterclaim and Third-Party Defendants’ motion to dismiss was granted in part and denied in part. The defamation per se claim survived solely for the email statements. The tortious-interference claim survived except as to Broyles’s liability for statements to JMP about possible criminal conduct by Fowler and Parmar. The breach-of-contract claim survived as brought by both Strafluence and Fowler. The Clerk of Court was directed to close docket number 181.