Guttenberg v. Emery ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
DR. STEVEN A. GUTTENBERG, et al.,
Plaintiffs,
v. Civil Action No. 13-2046 (JDB)
DR. ROBERT W. EMERY, et al.,
Defendants.
MEMORANDUM OPINION
This case involves a dispute over alleged breaches of a non-disparagement provision in a
settlement agreement between two former business partners. Currently before the Court is [3]
defendants’ motion to dismiss and [3] defendants’ motion for attorney’s fees. For the reasons
described below, the Court will grant in part and deny in part defendants’ motion to dismiss, and
will deny defendants’ motion for attorney’s fees without prejudice.
BACKGROUND
Dr. Guttenberg and Dr. Emery were joint shareholders of an oral surgery practice for
about twenty years before their relationship soured. Defs.’ Mem. in Supp. of Mot. to Dismiss
[ECF No. 3-1] (“Defs.’ Mot.”) at 1. Dr. Guttenberg filed a lawsuit against Dr. Emery back in
2008 over some issues that arose during the fallout of their professional relationship, but the
parties quickly settled that case. Id. The settlement agreement entered into by Drs. Guttenberg
and Emery (the “2008 Settlement Agreement”) contained, among other things, a non-
disparagement provision. Id. at 2. That provision, and the alleged breach of that provision, is
primarily what this case is about. Plaintiffs, Dr. Guttenberg and his professional corporation,
allege that purported violations of the non-disparagement provision by defendants, Dr. Emery
1
and his wife Kathy Borg-Emery, are causing them to lose referral sources and thus prospective
clients. See Pls.’ Am. Compl. [ECF No. 24] (“Compl.”) ¶¶ 18-20. Plaintiffs also allege that
defendants violated the Virginia Business Conspiracy Statute, Virginia State Code Section 18.2-
499, and that defendants tortiously interfered with plaintiffs’ economic advantage, all through an
alleged campaign of disparagement. See id. ¶¶ 30-39.
Plaintiffs initially filed this case in D.C. Superior Court in November 2013, and
defendants removed it to this Court in late December 2013. Notice of Removal [ECF No. 1]
(“Notice of Removal”). A week later, defendants filed a motion to dismiss. See Defs.’ Mot. to
Dismiss [ECF No. 3]. Plaintiffs opposed that motion and filed a motion to amend their
complaint, which the Court granted. See Mar. 19, 2014 Mem. Op. [ECF No. 22]; Mar. 19, 2014
Order [ECF No. 23]. Some additional briefing ensued, fleshing out previously made arguments
or addressing plaintiffs’ amended complaint, saving defendants’ the trouble of filing a renewed
motion to dismiss. See Defs.’ Reply in Supp. of Mot. to Dismiss [ECF No. 25]. In their motion,
defendants argue that this Court lacks personal jurisdiction over defendant Kathy Borg-Emery
and that plaintiffs’ complaint fails to state a claim upon which relief may be granted against
either defendant. See Defs.’ Mot. at 4. Defendants also request attorney’s fees. Id.
LEGAL STANDARDS
Under Federal Rule of Civil Procedure 12(b)(2), a plaintiff bears the burden of
establishing a court’s personal jurisdiction over a defendant. Where, as here, no jurisdictional
discovery has taken place, plaintiffs need only make a prima facie showing of the pertinent
jurisdictional facts to meet that burden. See Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005);
Brunson v. Kalil & Co., Inc., 404 F. Supp. 2d 221, 226 (D.D.C. 2005). “Moreover, to establish a
prima facie case, plaintiffs are not limited to evidence that meets the standards of admissibility
required by the district court. Rather, they may rest their argument on their pleadings, bolstered
2
by such affidavits and other written materials as they can otherwise obtain.” Mwani, 417 F.3d at
7. Nevertheless, a plaintiff must allege “specific facts upon which personal jurisdiction may be
based,” Blumenthal v. Drudge, 992 F. Supp. 44, 53 (D.D.C. 1998), and cannot rely on
conclusory allegations, see Elemary v. Phillipp Holzmann AG, 533 F. Supp. 2d 116, 121 (D.D.C.
2008).
To survive a motion to dismiss under Rule 12(b)(6), a complaint need only contain “‘a
short and plain statement of the claim showing that the pleader is entitled to relief,’” such that the
defendant has “‘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) (quoting Conley v. Gibson, 355 U.S. 41, 47
(1957)). Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6)
motion to dismiss, a plaintiff must supply “more than labels and conclusions” or “a formulaic
recitation of the elements of a cause of action” to provide the “grounds” of “entitle[ment] to
relief.” Twombly, 550 U.S. at 555-56; see also Papasan v. Allain, 478 U.S. 265, 286 (1986).
Instead, “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, 677 (2009) (quoting
Twombly, 550 U.S. at 570); see also Atherton v. Dist. of Columbia Office of the Mayor, 567
F.3d 672, 681 (D.C. Cir. 2009). A complaint is considered plausible on its face “when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. This amounts to a “two-
pronged approach,” under which a court first identifies the factual allegations that are entitled to
an assumption of truth and then determines “whether they plausibly give rise to an entitlement to
relief.” Id. at 679.
3
“[I]n passing on a motion to dismiss, whether on the ground of lack of jurisdiction over
the subject matter or for failure to state a cause of action, the allegations of the complaint should
be construed favorably to the pleader.” Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see also
Leatherman v. Tarrant Cnty. Narcotics Intel. & Coord. Unit, 507 U.S. 163, 164 (1993).
Therefore, the factual allegations must be presumed true, and plaintiffs must be given every
favorable inference that reasonably may be drawn from the allegations of fact. See Scheuer, 416
U.S. at 236; Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). The Court
need not, however, accept as true “a legal conclusion couched as a factual allegation,” nor
inferences that are unsupported by the facts set out in the complaint. Trudeau v. FTC, 456 F.3d
178, 193 (D.C. Cir. 2006) (quoting Papasan, 478 U.S. at 286).
DISCUSSION
Personal jurisdiction, like subject-matter jurisdiction, “is ‘an essential element of the
jurisdiction of a district . . . court,’ without which the court is ‘powerless to proceed to an
adjudication,’” so the Court will address it first. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574,
584 (1999) (quoting Emp’rs Reins. Corp. v. Bryant, 299 U.S. 374, 382 (1937)). Then,
defendants’ arguments as to each claim will be assessed.
I. PERSONAL JURISDICTION
Defendants contend that this Court may not exercise jurisdiction over Kathy Borg-Emery,
who resides in Virginia. The Court may exercise personal jurisdiction over a non-resident
defendant either by (1) finding general jurisdiction over the defendant, thereby allowing the court
to entertain a suit against a defendant “without regard to the claim's relationship vel non to the
defendant's forum-linked activity,” or (2) finding specific jurisdiction based on “acts of a
defendant that touch and concern the forum.” Steinberg v. Int’l Criminal Police Org., 672 F.2d
927, 928 (D.C. Cir. 1981); accord Kopff v. Battaglia, 425 F. Supp. 2d 76, 81 (D.D.C. 2006).
4
Here, it is not necessary to inquire whether this Court could exercise general jurisdiction over
Borg-Emery because the Court may exercise specific jurisdiction over her. “A court must first
examine whether jurisdiction is applicable under the state’s long-arm statute and then determine
whether a finding of jurisdiction satisfies the constitutional requirements of due process.” GTE
New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1347 (D.C. Cir. 2000) (citing United
States v. Ferrara, 54 F.3d 825, 828 (D.C. Cir. 1995)). Only one provision of D.C.’s long-arm
statute dealing with specific jurisdiction is potentially applicable here: D.C. Code § 13-423(a)(4)
provides that
(a) A District of Columbia court may exercise personal jurisdiction over a person,
who acts directly or by an agent, as to a claim for relief arising from the person’s:
…
(4) causing tortious injury in the District of Columbia by an act or omission
outside the District of Columbia if he regularly does or solicits business, engages
in any other persistent course of conduct, or derives substantial revenue from
goods used or consumed, or services rendered, in the District of Columbia.1
This provision, unlike other provisions in D.C.’s long-arm statute, does not “reach as far as due
process permits.” Mwani, 417 F.3d at 9. Put otherwise, if plaintiffs can show that Borg-Emery
has the requisite contacts with the District of Columbia, the Court need not engage in the normal
due process inquiry, because it is already satisfied: “the Due Process Clause does not demand the
level of contacts required by that provision.” Id.; see also Etchebarne-Bourdin v. Radice, 982
A.2d 752, 762 (D.C. 2009) (“[T]he additional activities listed in subsection (a)(4) are ‘plus
factors’ intended to ensure that there are minimum contacts with the forum sufficient to satisfy
due process concerns.”).
1
Section 13-423(b) also contains a limiting “nexus requirement,” providing that “[w]hen jurisdiction over a
person is based solely upon this section, only a claim for relief arising from acts enumerated in this section may be
asserted against him.” Id. But once plaintiffs show that section (a)(4) is met, they need not connect Borg-Emery’s
actions with the “plus factors” contained in section (a)(4), for the “nexus requirement is subsumed in the
requirement that the ‘claim for relief aris[e]’ from an act or omission outside the forum that ‘caus[es] tortious injury
in the District of Columbia.’” Etchebarne-Bourdin v. Radice, 982 A.2d 752, 762 (D.C. 2009). In other words, unlike
the analysis under other provisions in section 13-423(a), once section (a)(4) is satisfied, so is section (b).
5
For purposes of personal jurisdiction, plaintiffs have sufficiently alleged that they have
suffered a tortious injury to their business in the District of Columbia.2 See Compl. ¶¶ 20, 29, 31,
32, 39 (alleging various injuries). They have also sufficiently alleged that their injury was caused
by Borg-Emery’s actions: disseminating the purported statements in Virginia. See id. ¶¶ 17, 18,
20, 32 (alleging that various injuries were caused by the purported statements). The relevant
question, then, is whether Borg-Emery “regularly does or solicits business, engages in any other
persistent course of conduct, or derives substantial revenue from goods used or consumed, or
services rendered, in the District of Columbia.” D.C. Code § 13-423(a)(4). These “plus factors,”
“serve to filter out cases in which the inforum impact is an isolated event and the defendant
otherwise has no, or scant, affiliations with the forum.” Crane v. Carr, 814 F.2d 758, 763 (D.C.
Cir. 1987); see also Charlton v. Mond, 987 A.2d 436, 441 (D.C. 2010) (citing Crane with
approval).
Plaintiffs allege that Borg-Emery serves as the comptroller for Emery’s dental practice,
and that she maintains her office in the District of Columbia. Compl. ¶ 5. They also allege that
Borg-Emery, along with Emery, has “engaged in an intentional scheme to disparage Guttenberg
in order to divert members of the Washington D.C. metropolitan area’s dental and medical
communities from referring patients to Guttenberg, and instead have Guttenberg’s referral
network refer patients to Emery.” Id. ¶ 20. In response, defendants argue—with the support of an
affidavit from Borg-Emery—that she works “solely and exclusively out of [her] home office in
McLean, Virginia,” and that she does not maintain any office in the District of Columbia. Defs.’
Mot. Ex. A [ECF No. 3-2] ¶ 4. Moreover, she avers that she does not own any business or
transact any business in D.C., and that she travels to D.C. “only sporadically for social reasons or
2
This is not true, as is discussed below, with respect to pleading tortious interference with economic
advantage.
6
other miscellaneous appointments, such as doctors’ appointments.” Id. ¶ 7. Yet she does not
dispute that she is the comptroller for her husband’s oral surgery practice in the District of
Columbia. As plaintiffs point out, her husband renders services in D.C., and through her position
as an employee of that practice, she “derives substantial revenue” from those services. See D.C.
Code § 13-423(a)(4).
In a case like this, where no jurisdictional discovery has taken place, plaintiffs have met
their burden to make a prima facie showing that Borg-Emery, through an act or omission outside
of D.C., caused plaintiffs a tortious injury in D.C., and that she derives substantial revenue from
services rendered in D.C. See Mwani, 417 F.3d at 9; D.C. Code § 13-423(a)(4). On the whole,
Borg-Emery cannot be said to have “no, or scant, affiliations with” the District of Columbia. See
Crane, 814 F.2d at 763. Not only does she regularly travel into D.C. for social and medical
reasons, but she is also employed by her husband’s oral surgery practice, which is located in the
District of Columbia. Further, plaintiffs have alleged that Borg-Emery has engaged in a
conspiracy to harm plaintiffs’ D.C. business to (in part) benefit Emery’s D.C. practice, which
presumably would benefit Borg-Emery as well. Compl. ¶ 20. Hence, this Court may exercise
specific jurisdiction over Borg-Emery under section 13-423(a)(4), and defendants’ motion to
dismiss for lack of personal jurisdiction will be denied.
II. BREACH OF CONTRACT CLAIM
a. Defendant Kathy Borg-Emery
Defendants’ argument that this Court should dismiss the breach of contract claim against
Borg-Emery is simple: Borg-Emery is not a party to the contract at issue, so she cannot be held
liable for breach. Plaintiffs do not dispute that Borg-Emery is neither a signatory nor a party to
the 2008 Settlement Agreement, yet they claim that she breached the Agreement when she
7
allegedly made disparaging remarks in contravention of the non-disparagement clause. “It goes
without saying that a contract cannot bind a nonparty,” but plaintiffs apparently need this Court
to say so. EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002); see also Charlton v. Mond,
987 A.2d 436, 441 (D.C. 2010) (granting summary judgment for nonparty because “[n]on-parties
owe no contractual duty to the contracting parties.”); Jones v. Quintana, 872 F. Supp. 2d 48, 58
(D.D.C. 2012) (“It is a fundamental and unobjectionable principle that a contract cannot bind a
non-party—i.e., someone who has not assented to be bound to its terms.” (citing Waffle House,
534 U.S. at 294)). Hence, defendants are correct: Borg-Emery had no duties under a contract to
which she was not a party, so she cannot be liable for any breach.
The authorities cited by plaintiffs in response are distinguishable, unpersuasive, and not
controlling. Plaintiffs contend that Brantley v. Republic Mortg. Ins. Co., 424 F.3d 392, 396 (4th
Cir. 2005), supports their argument, but it does not. That case notes only that in some instances,
an intended third-party beneficiary of an arbitration agreement may be able to compel arbitration
against a party to that agreement. Id. But plaintiffs do not argue that Borg-Emery is an intended
beneficiary of the 2008 Settlement Agreement; moreover, plaintiffs are seeking to enforce the
contract against the non-party (Borg-Emery), not the other way around as in Brantley. See Jones
v. Quintana, 872 F. Supp. 2d 48, 58 (D.D.C. 2012) (citing Restatement (Second) of Contracts §§
304, 309 (1981)) (even if plaintiff were intended beneficiary, that would only entitle non-party
plaintiff to enforce agreement, not vice versa).
Plaintiffs also rely heavily on a 1984 case from an intermediate state court, McCart v.
H&R Block, Inc., 470 N.E.2d 756, 762 (Ind. Ct. App. 1984). There, the court affirmed an order
enjoining a husband from violating a non-compete to which only his wife (and joint business
8
operator) was a signatory. That case is not controlling here, and it is inconsistent with binding3
D.C. law, under which non-parties owe no contractual duty to contracting parties.4 See Charlton,
987 A.2d at 441.
Lastly, plaintiffs argue that because, in their view, Borg-Emery was acting as Emery’s
agent in making the disparaging remarks—but not, critically, in making the contract—she can be
held liable on the contract. This misstates basic agency principles. In certain circumstances,
principals may be liable on contracts their agents make on their behalf, but an agent cannot be
held liable merely because his principal made a contract and he is her agent—and even where
agents actually make contracts on behalf of their principals, they can be held liable only in very
limited circumstances. See, e.g., Restatement (Third) of Agency § 6.01 (2006) (agent making
contract on behalf of disclosed principal liable only if agent and third party agree that agent is
party); id. § 6.02 (discussing agent’s liability in unidentified principal situation); id. § 6.03
(agent’s liability in undisclosed principal situation) id. § 6.04 (agent’s liability in nonexistent
principal situation). Even if Borg-Emery was Emery’s agent for the purpose of making the
disparaging remarks, she was not his agent for the purpose of making the contract, so she cannot
3
See infra Part IV.
4
Even if McCart were controlling, it is distinguishable. There, the husband and wife jointly operated a
business that, if run exclusively by the wife, would have violated her non-compete agreement. 470 N.E.2d at 760.
Refusing to “ignor[e] the business realities of the situation,” the trial court found that enjoining only the wife would
frustrate the non-compete agreement. Id. at 762. The appellate court agreed, noting that husband and wife engaged
in “cooperative conduct amount[ing] to mere subterfuge designed to avoid [the wife’s] obligation under the
contract.” Id. The husband-and-wife team “treated the operation as their joint business” (their joint income tax
returns indicated that nearly all of their income was from that business) and they “held themselves out to the public
that way.” Id. Put another way, the plaintiff had produced plenty of evidence that the third-party husband
“knowingly participated and aided” his wife in violating her contract. Id. Here, plaintiffs have not alleged any facts
that would show Borg-Emery knowingly participated and aided Emery in violating his contract. Plaintiffs include
one specific instance of disparagement in their complaint: Borg-Emery’s comments in a Virginia waiting room.
Compl. ¶ 17. But plaintiffs do not include any facts that show cooperation between Emery and Borg-Emery. In other
words, nothing in the complaint—other than plaintiffs’ conclusory assertions regarding a joint campaign—indicates
that Emery and Borg-Emery engaged in cooperative conduct designed to avoid Emery’s obligation under the
contract.
9
be held liable for breaching the contract. Hence, because Borg-Emery is not a party to the 2008
Settlement Agreement, the Court will dismiss plaintiffs’ claim that she breached that agreement.
b. Defendant Robert Emery
Defendants argue that plaintiffs have not pleaded their breach of contract claim against
Emery with enough specificity to satisfy Twombly and Iqbal. This is not a frivolous argument,
because one of the few allegations plaintiffs make against Emery specifically is that “[o]n
information and belief, Emery and Borg-Emery have made other disparaging representations to
third parties, including other dental and medical professionals . . . .” Compl. ¶ 20. Simply
alleging that a contract provision exists and that a party has violated it, without any more detail,
is insufficient under Rule 12(b)(6). See Twombly, 550 U.S. at 555-56 (plaintiffs must supply
“more than labels and conclusions” or “a formulaic recitation of the elements of a cause of
action” to provide the “grounds” of “entitle[ment] to relief”).
But plaintiffs have also included other allegations that allow their complaint to pass
muster. They first identified the contract between the parties. Compl. ¶ 14. Next, they identified
the specific provision of the contract Emery allegedly violated. Id. ¶ 16. That provision provides
that neither party shall, “directly or indirectly . . . make, or cause to be made,” any disparaging
statement. Id. (emphasis added). Plaintiffs next specifically alleged that Borg-Emery made a
disparaging statement. Id. ¶ 17. They included the content of the alleged statement, where it was
made, the general identity of the person to whom it was made, and when it was made. Id. If the
alleged statement had been made by Emery, not Borg-Emery, its content leaves little doubt that
plaintiffs would have a breach of contract claim based on the non-disparagement clause. In
addition, plaintiffs allege that Borg-Emery is Emery’s agent, and that husband and wife are
engaging in a joint campaign to smear plaintiffs. Id. ¶¶ 19, 20. In other words, assuming (as the
10
Court must at this stage) that plaintiffs’ allegations are true, their complaint contains “sufficient
factual matter . . . to ‘state a claim to relief that is plausible on its face’”: if, as plaintiffs allege,
Emery indirectly made the alleged statement through his wife and employee, Borg-Emery, or if
he caused her to make it, he may have breached the non-disparagement clause. Iqbal, 556 U.S. at
678 (quoting Twombly, 550 U.S. at 570). Hence, defendants’ motion to dismiss for failure to
state a claim will be denied as to the breach of contract claim against Emery. Whether that claim
will survive summary judgment after discovery remains to be seen, but that is the appropriate
place for resolution.
III. INJUNCTIVE RELIEF CLAIM
As defendants correctly point out, Count II of plaintiffs’ amended complaint is not a
separate cause of action or claim; rather, it is a request that the Court grant a particular form of
relief (an injunction) to redress the other claims plaintiffs assert. See Compl. ¶¶ 27-29. For that
reason, the Court will dismiss Count II for failure to state a claim against both defendants.5
IV. VIRGINIA BUSINESS CONSPIRACY STATUTE CLAIM
Unlike the Court’s analysis of plaintiffs’ breach of contract claim, the analysis of whether
plaintiffs have adequately pleaded their claim under the Virginia Business Conspiracy Statute6 is
the same for Emery and Borg-Emery. Defendants argue that plaintiffs do not have a cause of
action under that statute at all because, in their view, D.C. law, not Virginia law, applies to
plaintiffs’ tort claims.7
This case arises under the Court’s diversity jurisdiction, 28 U.S.C. § 1332, but the Rules
of Decision Act, 28 U.S.C. § 1652, does not apply to the District of Columbia. Gray v. Am.
5
Plaintiffs do request “[s]uch other relief as the Court deems just and proper,” Compl. ¶ 26, so if they
prevail they may be entitled to an injunction. The Court dismisses Count II because “injunctive relief” is not a
freestanding cause of action.
6
Virginia State Code Section 18.2-499.
7
Neither plaintiffs nor defendants dispute that the breach-of-contract claims are governed by D.C. law.
11
Express Co., 743 F.2d 10, 16-17 (D.C. Cir. 1984). Nonetheless, federal courts in this district
apply D.C. substantive law and choice-of-law rules for reasons of uniformity and out of respect
for the D.C. Court of Appeals. See Anchorage-Hynning & Co. v. Moringiello, 697 F.2d 356,
360-61 (D.C. Cir. 1983); see also Erie R.R. v. Tompkins, 304 U.S. 64 (1938); Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487 (1941).
For choice of law, D.C. courts employ a “modified governmental interests” analysis,
under which a court “evaluate[s] the governmental policies underlying the applicable laws and
determine[s] which jurisdiction’s policy would be more advanced by the application of its law to
the facts of the case under review.” Hercules & Co. v. Shama Rest. Corp., 566 A.2d 31, 43 (D.C.
1989) (internal quotation marks omitted); see also Moore v. Ronald Hsu Constr. Co., 576 A.2d
734, 737 (D.C. 1990). “When both jurisdictions have an interest in applying their own laws to
the facts of the case, ‘the forum law will be applied unless the foreign [jurisdiction] has a greater
interest in the controversy.’” Burke, 917 A.2d at 1117 (quoting District of Columbia v. Coleman,
667 A.2d 811, 816 (D.C. 1995)). As part of that evaluation, courts consider the factors set out in
the Restatement (Second) Conflict of Laws § 145, which apply to tort cases generally:
(a) the place where the injury occurred;
(b) the place where the conduct causing the injury occurred;
(c) the domicil[e], residence, nationality, place of incorporation and place of business of
the parties; and
(d) the place where the relationship, if any, between the parties is centered.
Restatement (Second) Conflict of Laws § 145 (1971 & Supp. 2011); see also Drs. Groover,
Christie & Merritt, PC v. Burke, 917 A.2d 1110, 1117 (D.C. 2007).
Here, the injury occurred in the District of Columbia. Plaintiffs allege that Borg-Emery
made disparaging statements in Virginia, but they contend that the effects of those statements
were felt mostly in this district, because defendants purportedly have
12
engaged in a systematic and intentional campaign to harm Guttenberg’s personal
and professional reputations, Guttenberg’s practice and interfere with
Guttenberg’s relationship with his wife. Together Emery and Borg-Emery have
engaged in an intentional scheme to disparage Guttenberg in order to divert
members of the Washington D.C. metropolitan area’s dental and medical
communities from referring patients to Guttenberg . . . .
Compl. ¶ 20. In other words, plaintiffs allege harm to their business, which is located and
incorporated in this district. Id. ¶ 3. To the extent plaintiffs allege personal harm to Guttenberg,
he resides here as well. Id. ¶ 2.
Although plaintiffs’ complaint is mostly silent on where other offending conduct took
place, plaintiffs specifically allege that some of the offending conduct occurred in Virginia:
Borg-Emery was in the public waiting room at a veterinary office in Virginia and
began talking to a woman who was a dental hygienist in Vienna, Virginia.
Defendant Borg-Emery told the hygienist, inter alia, that Dr. Guttenberg was a
sexual deviant, [that he] received oral sex under the table at his office and cheated
on his wife. She also stated that he had other affairs, including sexual intercourse
at the office. These statements were later . . . restated to a dentist in Virginia with
professional relations with Plaintiff Guttenberg.
Id. ¶ 17. This factor thus weighs in favor of applying Virginia law.8
As for where the parties reside and do business, according to plaintiffs’ complaint,
Guttenberg practices and resides in the District of Columbia. Id. ¶ 2. The other plaintiff,
Guttenberg’s professional corporation, is a D.C. corporation. Id. ¶ 3. Emery and Borg-Emery
reside in Virginia, Emery’s practice (which employs Borg-Emery) is located in the District of
Columbia, and Borg-Emery works in Virginia. Id. ¶¶ 4, 5; Defs.’ Mot. at 9 (citing Ex. A to
Defs.’ Mot.). On balance, this factor weighs somewhat in favor of applying D.C. law.
8
Plaintiffs also allege that defendants “have made other disparaging representations to third parties,
including other dental and medical professionals, and have engaged in a systematic and intentional campaign to
harm Guttenberg’s personal and professional reputations, Guttenberg’s practice and [to] interfere with Guttenberg’s
relationship with his wife.” Compl. ¶ 20. Yet nothing indicates whether those representations and that “campaign”
took place in Virginia or the District of Columbia or both.
13
The last factor, the place where the relationship between the parties is centered, also
weighs in favor of applying D.C. law. Originally, the parties’ relationship was based on their
joint dental practice, located in the District of Columbia. Yet plaintiffs seek to apply Virginia law
to address what they view as a conspiracy to divert clients from one D.C. business (Guttenberg’s
practice) to another D.C. business (Emery’s practice). Hence, the parties’ relationship is centered
in the District of Columbia.
This case, then, involves a D.C. injury resulting from conduct mostly occurring in
Virginia; plaintiffs reside and do business in D.C.; defendants reside in Virginia and do business
in D.C. (although one defendant works in Virginia); and the relationship between the parties and
the two dental practices involved here is centered in D.C. On balance, then, these factors weigh
in favor of applying D.C. law. Compare B & H Nat. Place, Inc. v. Beresford, 850 F. Supp. 2d
251, 263 (D.D.C. 2012) (where “essence” of alleged harm occurred in D.C., Virginia Business
Conspiracy Statute did not apply even though the defendants included some Virginia entities and
residents and some actions occurred in Virginia). And in this case, that rule works no unfairness
to plaintiffs, because they chose to pursue their claim in this district. Hence, plaintiffs cannot sue
under the Virginia Business Conspiracy Statute, and the Court will dismiss Count III of the
complaint.
V. TORTIOUS INTERFERENCE WITH BUSINESS EXPECTANCY CLAIM
As with the Virginia Business Conspiracy Statute, the Court’s analysis of whether
plaintiffs have adequately pleaded tortious interference is the same for both defendants. And as
discussed above, D.C. law applies. “To establish a claim for tortious interference with economic
advantage under District of Columbia law, the evidence must show: (1) the existence of a valid
business relationship or expectancy, (2) knowledge of the relationship or expectancy on the part
14
of the interferer, (3) intentional interference inducing or causing a breach of termination of the
relationship or expectancy, and (4) resultant damage.” Bennett Enters., Inc. v. Domino’s Pizza,
Inc., 45 F.3d 493, 499 (D.C. Cir. 1995) (citing Genetic Sys. Corp. v. Abbott Labs., 691 F. Supp.
407, 422-23 (D.D.C. 1988)); see also Alfred A. Altimont, Inc. v. Chatelain, Samperton & Nolan,
374 A.2d 284 (D.C. 1977).
As defendants point out, plaintiffs have not alleged the existence of a valid business
relationship or expectancy with enough specificity. Plaintiffs allege that “[t]hrough the
disparaging comments made by Defendants to individuals in the Metropolitan D.C. medical
community, Defendants knew they were interfering with Plaintiffs’ business expectancy by
causing doctors to terminate their referrals to Plaintiffs and, instead, send those referrals to
Defendants” and that “[t]he decline in referrals to Plaintiffs have [sic] damaged Plaintiffs[’]
reputation and caused economic harm.” Compl. ¶¶ 38, 39. The D.C. Circuit recently noted that
“the first element of the tort, ‘a valid business relationship or expectancy,’ appears to require
rather specific business opportunities (to be sure, however, not ones necessarily manifested in
any contract).” Jankovic v. Int’l Crisis Grp., 593 F.3d 22, 29-30 (D.C. Cir. 2010); see also
Xereas v. Heiss, 933 F. Supp. 2d 1, 11 (D.D.C. 2013) (“A claim of tort[i]ous interference with
prospective business relations cannot survive where the plaintiff does not allege any specific
future business relations or expectancies and only provides general references to potential
opportunities.”) (citations omitted). As explained in Jankovic, cases where plaintiffs have
satisfied this element of the tort involved “specific anticipated transactions” such as specific
book deals, specific sources of prospective employment, the development of a specific property,
the opportunity to represent a specific client, and so on. 593 F.3d at 29. But here, plaintiffs
simply make general allegations of harm to their business, which amount only to the “generic
15
opportunities of any successful enterprise, a type of injury that can be protected by an award of
damages in a successful defamation suit.” Id. at 29-30 (citing Robert D. Sack, Sack on
Defamation, Libel, Slander and Related Problems § 10.5.1 (3d ed. 2009)); see also Xereas, 933
F. Supp. 2d at 11-12 (finding plaintiff failed to state a claim for tortious interference because he
only generally alleged that defendants interfered with his “long standing business relationships”
and his “ability to maintain contact and relationships, and continue doing business” with “current
and prospective customers and industry players”); Nat’l R.R. Passenger Corp. v. Veolia Transp.
Servs., Inc., 791 F. Supp. 2d 33, 56 (D.D.C. 2011) (stating that the plaintiff must show a
“reasonable likelihood” of receiving a contract and “mere speculative contractual expectations or
hope are insufficient” to state a claim for tortious interference with prospective business
relationships (internal quotation marks omitted)). Plaintiffs proffer no examples of referrals
which they would have received but for defendants’ conduct. See Jankovic, 593 F.3d at 29.
Alleging generally that plaintiffs are losing referrals because of defendants’ conduct is simply
insufficient under D.C. law, and for that reason alone the Court will dismiss plaintiffs’ tortious
interference claim.
Because plaintiffs have not identified any specific business opportunities that defendants
interfered with—instead only generally alleging that they have suffered some harm to their
reputation and business—plaintiffs fail to state a claim for tortious interference with economic
advantage under D.C. law. Hence, the Court will dismiss Count IV of the complaint.
VI. MOTION FOR FEES
Citing provisions in the 2008 Settlement Agreement, defendants also moved for
attorney’s fees incurred as a result of this litigation. Granting defendants’9 motion for fees based
9
More precisely, Emery’s motion for fees because, as discussed, Borg-Emery is not a party to the
Agreement and, thus, she cannot recover fees under it.
16
on the only provision of the Agreement (the non-disparagement provision) in the record,
however, is not warranted. That provision states:
A breach of this provision, shall be considered a material breach, and the
breaching party concedes that . . . the non-prevailing party shall be liable to the
prevailing party . . . for the attorneys fees and costs required by the prevailing
party to obtain injunctive and/or compensatory relief or to enforce this provision.
Compl. ¶ 16. Because the Court does not now grant defendants’ motion to dismiss as against
Emery (the only defendant who is a party to the Agreement), no party has prevailed yet, and
awarding fees would be premature.10 Moreover, although defendants contend that other
provisions in the Agreement also entitle them to fees, the disparagement provision is the only
one in the record; the Agreement itself is not. Thus, the Court cannot determine whether
something else in the Agreement would entitle Emery, in a dispute arising out of the Agreement,
to fees at this time, although it seems unlikely.
CONCLUSION
For the foregoing reasons, the Court will grant in part and deny in part defendants’
motion to dismiss, and will deny defendants’ motion for fees without prejudice. The Court will
dismiss the entire complaint as against defendant Borg-Emery, dismissing her from the case, and
will dismiss all but one of plaintiffs’ claims against defendant Emery. A separate order has
issued on this date.
/s/
JOHN D. BATES
United States District Judge
Dated: May 16, 2014
10
In addition—subject to the existence of other, broader fee provisions in the Agreement—whether Emery
would be entitled to fees under this provision if he prevailed is not clear: on first reading, the provision appears to
entitle a prevailing party to fees incurred only “to obtain . . . relief or to enforce this provision.” Compl. ¶ 16. In
other words, it is not immediately apparent whether Emery—even if he prevails—is incurring attorney’s fees “to
obtain injunctive and/or compensatory relief or to enforce this provision”; technically, he is incurring fees to defeat
plaintiffs’ attempt to obtain relief or to enforce the non-disparagement provision. See id.
17