Vox Media, Inc. v. Mansfield ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
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VOX MEDIA, INC., )
)
Plaintiff, )
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v. ) Civil Action No. 17-666 (EGS)
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GRAIG MANSFIELD, )
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Defendant. )
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MEMORANDUM OPINION AND ORDER
Plaintiff Vox Media, Inc. (“Vox”) brings suit against its
former employee Defendant Graig Mansfield for allegedly
defrauding the company by taking over $200,000 of its assets for
his own use. Vox’s complaint includes four counts against Mr.
Mansfield for (1) fraud; (2) fraudulent concealment; (3)
conversion; and (4) unjust enrichment. Pending before the Court
is Mr. Mansfield’s motion to dismiss Vox’s complaint. See Def.’s
Mot., ECF No. 14. Upon consideration of the motion, the response
and reply thereto, and the relevant law, Mr. Mansfield’s motion
to dismiss is DENIED.
I. Background
Vox is a digital media company organized under Delaware law
with its principal place of business in the District of
Columbia. Compl., ECF No. 1 ¶ 2. Vox creates and distributes
news content online “covering sports, culture, technology, and
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politics, among other subjects.” Id. In August 2012, Vox hired
Mr. Mansfield to work as its “Procurement Manager” within the
finance and accounting department. Id. ¶¶ 8, 9. Mr. Mansfield
worked in that position for three years, until he left Vox in
June 2015 and moved to Atlanta, Georgia, where he currently
resides. Id. ¶¶ 3, 8, 21. As Procurement Manager, Mr. Mansfield
“coordinat[ed] procurement methods; manag[ed] data from company
cards, expense reports, and corporate accounts for budget
reporting; and monitor[ed] spend[ing] levels.” Id. ¶ 9. Mr.
Mansfield also managed Vox’s corporate credit card account and
its various frequent-flier and travel reward accounts. Id. ¶¶
10, 15. Upon joining Vox, Mr. Mansfield “acknowledged and agreed
to abide by” Vox’s “Employee Handbook.” Id. ¶ 11. In so doing,
he “agreed to ‘serve the Company faithfully and use [his] best
efforts to promote its interests.’” Id. He also agreed he would
not damage, destroy, or steal company property. Id.
Vox applied for its corporate credit card in May 2012. Id. ¶
13. The credit card had a “rewards program” under which a
customer earned “points” based on the customer’s spending. Id.
¶¶ 13, 16. The customer could use the points to purchase travel
or merchandise or simply convert the points to cash or cash-
equivalent bonus cards. Id. ¶ 16. A corporate customer could
choose to enroll the company itself in the rewards program or
allow individual employees to earn the points. Id. ¶ 13. Vox
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chose to enroll the company itself; therefore, “all points
accrued from company [credit] cards under the rewards program
would be for Vox Media’s use.” Id. Likewise, Vox enrolled itself
in travel reward accounts that operated similarly. Id. ¶¶ 15,
16. The company did not authorize individuals to redeem or
transfer the company’s travel or credit card points for personal
use. Id. ¶¶ 13, 14. During Mr. Mansfield’s tenure, Vox had not
dedicated a specific use for the rewards points; it was
“deliberating” and put the points “aside until the company had
determined a use for them.” Id. ¶ 18.
Vox alleges that Mr. Mansfield “betrayed the company” by
“secretly stealing from it throughout his employment, and even
afterwards.” Id. ¶ 19. According to Vox, Mr. Mansfield
“repeatedly use[d] his control over the corporate credit card
and travel accounts to transfer cash . . . or reward points . .
. to his personal accounts.” Id. For example, Mr. Mansfield
allegedly converted rewards points to cash-equivalent gift cards
and instructed the merchants to send the gift cards to his
personal address. Id. He also allegedly used the rewards points
to purchase luxury goods—including a watch worth over $1,700—
which he also sent to his personal address. Id. ¶¶ 19, 22. Mr.
Mansfield also allegedly bought himself airline tickets using
Vox’s frequent-flier points. Id. ¶ 19.
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According to Vox, Mr. Mansfield “continued this theft long
after he left his position” in June 2015. Id. ¶ 22. He allegedly
continued using Vox’s points until at least February 2016. Id.
From March 2013 through at least February 2016, Mr. Mansfield
allegedly stole over $210,000 worth of Vox’s assets. Id. ¶¶ 28,
30. Vox discovered Mr. Mansfield’s alleged scheme in April 2016
and filed its complaint on April 14, 2017. See id. ¶ 26-29.
II. Standard of Review
A motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6) tests the legal sufficiency of a complaint.
Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A
complaint must contain “a short and plain statement of the claim
showing that the pleader is entitled to relief, in order to give
the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (quotations and citations omitted).
Despite this liberal pleading standard, to survive a motion
to dismiss, 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, 556 U.S. 662, 678 (2009)
(internal quotations and citations omitted). A claim is facially
plausible when the facts pled in the complaint allow the court
to “draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. The standard does not amount to
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a “probability requirement,” but it does require more than a
“sheer possibility that a defendant has acted unlawfully.” Id.“[W]hen ruling on a defendant’s motion to dismiss [pursuant
to Rule 12(b)(6)], a judge must accept as true all of the
factual allegations contained in the complaint.” Atherton v.
D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009)
(internal quotations and citations omitted). In addition, the
court must give the plaintiff the “benefit of all inferences
that can be derived from the facts alleged.” Kowal v. MCI
Commc’ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Even so,
“[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements” are not sufficient to
state a claim. Iqbal, 556 U.S. at 678.
III. Analysis
Mr. Mansfield moves to dismiss Vox’s complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6). See Def.’s Mot., ECF
No. 14. He makes two arguments: (1) Vox’s complaint is time-
barred; and (2) Vox has not sufficiently pled fraudulent
concealment. See id. The Court considers each argument in turn.
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A. It is Premature to Dismiss Vox’s Complaint as Untimely
Mr. Mansfield argues that the Court should dismiss Vox’s
complaint as untimely. See Def.’s Mot., ECF No. 14 at 7. 1 He
contends that, under District of Columbia law, the statute of
limitations for fraud, conversion, and unjust enrichment is
three years. See id. According to Mr. Mansfield, Vox’s injury
“accrued in March 2013,” the date that he allegedly “began to
redeem [credit card] and travel rewards for his personal benefit
and without the company’s permission.” Id. Thus, Vox should have
filed its complaint by March 2016. Because Vox did not file its
complaint until April 14, 2017, Mr. Mansfield argues that its
complaint must be dismissed. See id. Vox responds that its
complaint is not conclusively time-barred because the statute of
limitations is tolled by the doctrine of fraudulent concealment.
See Pl.’s Opp’n, ECF No. 16 at 6-8.
Federal Rule of Civil Procedure 12(b)(6) “is the vehicle
for asserting the affirmative defense of statutory time
limitation.” Peart v. Latham & Watkins LLP, 985 F. Supp. 2d 72,
80 (D.D.C. 2013). “[B]ecause statute of limitations issues often
depend on contested questions of fact, dismissal is appropriate
only if the complaint on its face is conclusively time-barred.”
1 When citing electronic filings throughout this Opinion, the
Court cites to the ECF page number, not the page number of the
filed document.
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Bregman v. Perles, 747 F.3d 873, 875-76 (D.C. Cir. 2014)
(quoting de Csepel v. Republic of Hungary, 714 F.3d 591, 603
(D.C. Cir. 2013)). A court should therefore “‘hesitate to
dismiss a complaint on statute of limitations grounds’” unless
the defendant has met his “heavy burden” to show that the
complaint is conclusively time-barred. Feld Ent., Inc. v. Am.
Soc’y for the Prevention of Cruelty to Animals, 873 F. Supp. 2d
288, 308 (D.D.C. 2012) (quoting DePippo v. Chertoff, 453 F.
Supp. 2d 30, 33 (D.D.C. 2006)).
Vox does not dispute that its claims are governed by the
District of Columbia’s three-year statute of limitations
pursuant to D.C. Code § 12-301(8). See generally Pl.’s Opp’n,
ECF No. 16. While a claim generally accrues under District of
Columbia law “‘when the plaintiff has knowledge of (or by the
exercise of reasonable diligence should have knowledge of) (1)
the existence of the injury, (2) its cause in fact, and (3) some
evidence of wrongdoing,’” fraudulent concealment “tolls the
running of the statute of limitations.” Firestone v. Firestone,
76 F.3d 1205, 1209 (D.C. Cir. 1996)(quoting Knight v.
Furlow, 553 A.2d 1232, 1234 (D.C. 1989)). To plead fraudulent
concealment, a plaintiff must allege “(1) that defendants
engaged in a course of conduct designed to conceal evidence of
their alleged wrong-doing and that (2) the plaintiffs were not
on actual or constructive notice of that evidence, despite (3)
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their exercise of diligence.” Id. (quotations and citations
omitted). While fraudulent concealment “generally . . . requires
that the defendant made an affirmative misrepresentation tending
to prevent discovery of the wrong doing,” a “failure to disclose
by one who has a duty to do so—such as someone standing in a
fiduciary or confidential relationship—can also establish
fraudulent concealment.” Id.Whether Mr. Mansfield fraudulently concealed his alleged
fraud and conversion is a “contested question[] of fact,”
precluding dismissal at the pleadings stage. Bregman, 747 F.3d
at 875-76. Indeed, the Court finds that Vox has adequately pled
that: (1) Mr. Mansfield affirmatively concealed his actions to
prevent discovery; and/or (2) that he had a fiduciary duty to
disclose his alleged theft and failed to do so.
Specifically, Vox alleges that Mr. Mansfield gave only
himself access to Vox’s rewards accounts, plausibly in an
attempt to avoid detection. Compl., ECF No. 1 ¶¶ 17, 29
(“Mansfield had set himself up as Vox Media’s only contact with
the travel provider and used that control over the accounts to
cash in for his own personal benefit.”). Because Mr. Mansfield
was the only employee with access to the accounts, see id., it
is also plausible that Vox did not have notice of his behavior,
despite its asserted diligence in ensuring that its employees
did not steal any company property, see id. ¶ 11 (alleging
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company policies against theft). Vox also alleges that Mr.
Mansfield downplayed the benefits that the company earned via
the rewards programs, describing the benefits as “not very
good.” Id. ¶ 17. Construed in the light most favorable to Vox,
the Court must infer that Mr. Mansfield minimized Vox’s benefits
in an attempt to conceal his alleged theft. Additionally, Vox
alleges that Mr. Mansfield sent the stolen gift cards and luxury
items to his home address, rather than his work address. Id. ¶
19. Again, the Court may infer that he did so in order to
conceal his activities from his employer.
Mr. Mansfield contends that these alleged concealments
cannot meet the standard for fraudulent concealment as a matter
of law. See Def.’s Reply, ECF No. 17 at 2-3. In so arguing, he
compares the alleged misrepresentations to those at issue in
Riddell v. Riddell Washington Corp., and concludes that his
alleged deception cannot meet the Riddell “standard.” See id.
(discussing 866 F.2d 1480, 1491 (D.C. Cir. 1989)). In Riddell,
the Court of Appeals for the District of Columbia Circuit (“D.C.
Circuit”) concluded that a jury could find that the defendants
had affirmatively concealed their wrongdoing when they lied to
the plaintiff about an appraisal. 866 F.2d at 1492. In so
concluding, the D.C. Circuit held that a defendant’s affirmative
deception may be “as simple as a single lie.” Id. (quotations
omitted). It did not create a “standard for concealment,” as Mr.
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Mansfield seems to suggest. See Def.’s Reply, ECF No. 17 at 3.
Mr. Mansfield’s reliance on Riddell is also misplaced because
the D.C. Circuit reached its conclusion at the summary judgment
stage with the benefit of discovery. See id.What’s more, Vox has also alleged sufficient facts to
suggest that Mr. Mansfield was in a fiduciary relationship with
the company. As such, Mr. Mansfield may have fraudulently
concealed his theft by merely failing to disclose it to Vox. See
Firestone, 76 F.3d at 1209. For example, Vox alleges that Mr.
Mansfield was “entrusted with the management of corporate
assets,” Compl., ECF No. 1 ¶ 1, and had “a special duty of
care,” id. ¶ 23, yet “never disclosed” his actions to the
company, id. ¶ 20. Vox also alleges that Mr. Mansfield had a
duty to “serve the company faithfully” and not steal “any
company property” pursuant to its policies. Id. ¶ 11.
Mr. Mansfield contends that he was not a fiduciary because
he had a “relatively low-level position” and “was not an officer
or director, or even the head of a department.” Def.’s Mot., ECF
No. 14 at 8. Whether Mr. Mansfield was indeed a fiduciary is
“contested question[] of fact” that the Court may not resolve at
this stage of the proceedings. Feld Ent., Inc., 873 F. Supp. 2d
at 308. "District of Columbia law has deliberately left the
definition of 'fiduciary relationship' flexible.” Kemp v.
Eiland, 139 F. Supp. 3d 329, 343 (D.D.C. 2015)(citations
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omitted)(analyzing a breach of fiduciary duty claim). As such,
determining whether a fiduciary relationship exists is “a fact-
intensive question, and the fact-finder must consider ‘the
nature of the relationship, the promises made, the type of
services or advice given and the legitimate expectations of the
parties.’” Millennium Square Residential Ass’n v. 2200 M Street
LLC, 952 F. Supp. 2d 234, 248-49 (D.D.C. 2013)(quoting
Firestone, 76 F.3d at 1211) (emphasis added). Given Mr.
Mansfield’s alleged control over Vox’s credit card and travel
accounts and its alleged expectation that he would serve the
company faithfully, it is plausible that Mr. Mansfield had a
fiduciary relationship with Vox. See, e.g., id. ¶¶ 11, 29.
Therefore, the Court cannot conclude, at this stage of the
proceedings, that Vox’s complaint is conclusively time-barred.
B. Vox Sufficiently Pled Fraudulent Concealment
Relatedly, Mr. Mansfield argues that Vox failed to plead
“any element[]” of fraudulent concealment. Def.’s Mot., ECF No.
14 at 8. As discussed, the Court finds that Vox pled facts
sufficient to infer that Mr. Mansfield concealed his alleged
theft and that Vox had no notice of the concealment, despite its
due diligence. See Firestone, 76 F.3d at 1209 (discussing the
elements of fraudulent concealment).
Still, Mr. Mansfield argues that the Vox has not pled
fraudulent concealment because it has not “establish[ed] that
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[Vox] used due diligence in trying to uncover the facts.” Def.’s
Mot., ECF No. 14 at 8. Mr. Mansfield contends that Vox exercised
“no oversight” and failed to allege any steps its employees took
to supervise Mr. Mansfield, request access to the rewards
accounts, or review the accounts. Id. at 8-9. Vox responds by
arguing that the Court may not infer a lack of diligence on a
motion to dismiss. Pl.’s Opp’n, ECF No. 16 at 11.
Once a plaintiff pleads “fraudulent concealment,” a
defendant may “assert a defense based on the plaintiff’s lack of
due diligence.” Firestone, 76 F.3d at 1209 (quotations omitted).
To determine whether a plaintiff exercised due diligence in
uncovering a cause of action, a court must make “a fact-specific
judgment in each case as to what the court expects a reasonable
plaintiff to do in uncovering the elements of his claim.” United
States ex rel. Miller v. Bill Harbert Int'l Constr., Inc., 505
F. Supp. 2d 1, 13 (D.D.C. 2007)(quotations omitted). A court
must measure “the plaintiff's efforts to uncover his cause of
action against what a reasonable person would have done in his
situation given the same information.” Id. (quoting Richards v.
Mileski, 622 F.2d 65, 71 (D.C. Cir. 1981)).
At this stage, the Court cannot determine whether Vox’s
efforts were reasonable, as assessing Vox’s diligence requires
the Court to make a “fact-specific judgment.” Id. As previously
discussed, Vox alleges that it could not discover Mr.
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Mansfield’s alleged theft because he was the only employee with
access to the rewards accounts. See, e.g., Compl., ECF No. 1 ¶
29. Whether it was reasonable for Mr. Mansfield to have such
unlimited access, in light of his promise to faithfully serve
the company and not steal its property, see id. ¶ 11, is a
contested issue of fact that the Court may not resolve without
the benefit of discovery.
IV. Conclusion and Order
Accordingly, for the reasons set forth in this Memorandum
Opinion, Mr. Mansfield’s motion to dismiss Vox’s complaint is
DENIED. Mr. Mansfield is directed to file his answer to Vox’s
complaint by no later than September 10, 2018.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
August 20, 2018
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