Suber v. VVP Services, LLC

Background

Karen Suber alleged that VVP Services and affiliated entities hired her as a transactional attorney in August 2017 and promised her equity compensation. She alleged that the equity program was never created and that she received no equity. She also alleged that she became concerned about conduct by defendants Sclavos and Raizada, including alleged financial misconduct, and that she experienced race discrimination at work. Suber resigned on January 22, 2018. She further alleged that, after her resignation, Sclavos falsely told third parties that she had been terminated for cause.

In the operative complaint, Suber asserted claims under state and federal law, including fraudulent inducement, misrepresentation, breach of contract, wrongful termination through constructive discharge, defamation, civil conspiracy, unfair-business-practices claims, and racial-discrimination claims under 42 U.S.C. § 1981. Defendants had separately moved to dismiss for lack of personal jurisdiction and failure to state a claim; the opinion states that those motions remained pending.

Suber moved for a preliminary injunction—an order providing temporary relief while a case is pending. Her motion sought, among other things, to prevent Sclavos and Prometheus Ventures from transferring, selling, or otherwise disposing of their assets and to obtain expedited discovery of financial and accounting records.

Court’s Analysis

The court stated that a plaintiff seeking a preliminary injunction must first show a reasonable probability of ultimately succeeding on personal jurisdiction. Because the request for injunctive relief clearly failed on the merits, however, the court did not decide the personal-jurisdiction issue at that stage.

The court relied on the rule that a federal district court generally cannot freeze a party’s assets to preserve funds for a possible future money judgment. An asset freeze may be available when it is tied to an equitable claim, meaning a claim for relief other than ordinary monetary damages, but the plaintiff must show a connection between the assets and that specific equitable claim.

The court found that Suber’s claims were primarily legal claims ordinarily remedied through damages, including breach of contract, fraudulent misrepresentation, and discrimination claims. The court rejected Suber’s reliance on the request for an “accounting of profits,” explaining that merely including that remedy in the complaint did not establish a claim supporting it. Suber did not identify a claim entitling her to an accounting or allege the elements of a separate accounting claim. The court also noted that damages are ordinarily the remedy for breach of contract, that Suber had not shown that specific performance was appropriate, and that she had not requested specific performance in her complaint.

The court further held that, even if Suber had stated a viable claim for an accounting of profits, she had not shown a specific connection between that remedy and all of the assets she sought to freeze. The court concluded that the requested freeze would serve only to preserve assets for a possible future money judgment, which the governing rule barred.

Disposition

Judge Nathan denied Suber’s motion for injunctive relief and stated that the ruling resolved docket entry 109. The opinion does not separately state a disposition for the expedited-discovery request apart from resolving the overall motion.