AA Med. v. Almansoori

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AA MEDICAL P.C., Plaintiff, v. KHALED ALMANSOORI, Defendant.

No. 20-cv-03852 (DG) (JMW)

United States District Court, E.D. New York

October 4, 2023

Appearances:

Emanuel Kataev, Esq.

Milman Labuda Law Group PLLC

Attorney for Plaintiff

Adam I. Kleinberg, Esq.

Sokoloff Stern LLP

Attorney for Defendant

Jordan Call, Esq.

Benesch Friedlander Coplan & Aronoff

Attorney for Defendant

REPORT AND RECOMMENDATION

JAMES M. WICKS, UNITED STATES MAGISTRATE JUDGE

Plaintiff AA Medical P.C., an orthopedic treatment and surgical provider, commenced suit against Defendant, Dr. Khaled Almansoori, an orthopedic surgeon, alleging various claims including fraud, prima facie tort, unjust enrichment, and violations of 18 U.S.C. §§ 1030 et seq., otherwise known as the Computer Fraud and Abuse Act (“CFAA”). Specifically, Plaintiff asserts that Defendant induced Plaintiff into signing an employment agreement with it. However, Defendant subsequently engaged in disparaging conduct and misappropriated confidential patient files, resulting in a deterioration of their professional relationship.

Presently before the Court upon referral from the Honorable Diane Gujarati is Plaintiff's motion to amend (ECF No. 89), in which it seeks to add a claim under the Defend Trade Secrets Act (“DTSA”), and Defendant's cross-motion to dismiss (ECF No. 92). The Court held Oral Argument on May 25, 2023.^[1] For the following reasons, the undersigned respectfully recommends that Plaintiff's motion to amend its first amended complaint (ECF No. 89) be DENIED, and Defendant's cross motion to dismiss (ECF No. 92) be GRANTED.

BACKGROUND

The following facts are drawn from the operative complaint and are presumed true for the purposes of the present motion (ECF No. 24).^[2] Plaintiff is a company that maintains its business in New York. (Id. ¶ 9.) Defendant, a Canadian national and Illinois resident, was hired by Plaintiff to work as a physician and orthopedic surgeon whereby Plaintiff agreed to sponsor Defendant for a H-1B visa. (Id. ¶¶ 11-12, 14-15.) Defendant worked for Plaintiff from October 1, 2018 until July 15, 2019, pursuant to an employment agreement (“Agreement”) entered into by the parties. (Id. ¶ 16.) The Agreement set out his duties, including that he would provide orthopedic services to the best of his ability and according to applicable standards and that he would fulfill the requisite work hours requirement. (ECF No. 24-2 at 2-4.) The Agreement could be terminated without cause with 120 days' notice. (ECF No. 24 ¶ 34.)

Plaintiff alleges that Defendant fraudulently induced Plaintiff to sponsor Defendant as a United States citizen, but he had no intention of working for Plaintiff and instead created a “fraudulent scheme to unlawfully obtain entry into the United States.” (Id. ¶¶ 2, 18.) Plaintiff states that Defendant rarely reported to work and when he did, he performed in an “extremely poor, unskilled and unprofessional manner,” including being hostile to Plaintiff's personnel and failing to follow hospital protocol which damaged Plaintiff's reputation. (Id. ¶¶ 19, 22, 25, 29.)

Approximately five months into his employment, Defendant submitted his 120-day notice of termination. (Id. ¶ 35.) Plaintiff alleges that Defendant had already submitted applications to other employers before giving notice to Plaintiff. (Id. ¶ 37.) Plaintiff further asserts that upon giving notice of his termination, Defendant “unlawfully accessed, downloaded and misappropriated confidential patient files” from Plaintiff's computer system which contained confidential information including patient names, and medical history. (Id. ¶¶ 49-50, 81-82.)

Around July 15, 2019, prior to Defendant's intended end date, Plaintiff fired him based on his “poor and unprofessional performance as well as his openly hostile and threatening conduct.” (Id. ¶ 38.) Plaintiff states that Defendant demanded that the Agreement be terminated; that the parties sign a non-disparagement agreement; and that they enter a new, less restrictive non-compete agreement or a new non-solicitation agreement. (Id. ¶ 40.) If Plaintiff satisfied these demands, Defendant would withdraw a suit that Defendant commenced in Suffolk County Supreme Court.^[3] (Id. ¶ 41.) However, if they were not met, Defendant would continue to disparage Plaintiff and file false whistleblower complaints against the Plaintiff. (Id. ¶ 42.) Plaintiff did not concede to Defendant's demands, so Defendant filed a complaint with the U.S. Department of Labor (“DOL”). (Id. ¶ 46.) Plaintiff states that the DOL case has since been resolved resulting in a $12,500 payment with no concession of wrongdoing. (Id. ¶ 44.)

PROCEDURAL HISTORY

Plaintiff filed the instant complaint on August 21, 2020. (ECF No. 1.) Since then, Plaintiff filed its Amended Complaint on June 14 2021 (ECF No. 24) after District Judge Gujarati consolidated this matter with two other related matters (ECF No. 21; Electronic Order dated May 11, 2021). See AA Medical P.C. v. Almansoori, M.D., 20-cv-4350; AA Medical P.C. v. Almansoori, M.D., 20-cv-4413. Specifically, the Amended Complaint alleges that Defendant committed fraud in inducing Plaintiff to sponsor his H-1B visa without having an intention of working for it; is liable for a prima facie tort motivated by malice or disinterested malevolence because he engaged in disparaging conduct which caused inexcusable harm upon the company; is liable under the CFAA for having knowingly and intentionally misappropriated Plaintiff's patient files causing millions of dollars in damages; and finally, Defendant was unjustly enriched as a result of his tortious conduct. (ECF No. 24 ¶¶ 54, 65, 74, 90, 93.)

Defendant filed a letter motion for a pre-motion conference outlining its intended motion to dismiss Plaintiff's amended complaint (ECF No. 29). Judge Gujarati set a briefing schedule for the motion to dismiss. (Electronic Order Aug. 3, 2021.) And on August 17, 2021, the Court entered a scheduling order whereby the deadline to amend the pleadings was extended to November 15, 2021. (ECF No. 34.)

Meanwhile, in a related pending state court action in Suffolk County against Defendant, Plaintiff sought leave to add, inter alia, a claim for common-law trade secret misappropriation and filed an amended complaint with this claim once leave was granted. Amended Compl. at 1315, AA Medical, P.C. v. Khaled Almansoori, M.D., No. 000092/2021 (Suffolk Cty. Sup. Ct. Sept. 23, 2021), NYSCEF 95.

In this action, Defendant filed its motion to dismiss for failure to state a claim (ECF Nos. 44-49). In the interim, the Court granted Defendant's request to file a motion to stay discovery and the motion to stay was filed on September 10, 2021. (ECF No. 36.) On March 3, 2022, the undersigned granted Defendant's motion to stay (ECF No. 59) pending resolution of his motion to dismiss.

On June 18, 2022, Plaintiff sought leave to amend the pleadings once again. (ECF No. 62.) This filing occurred months after Plaintiff's current counsel^[4] filed his notice of appearance and approximately one year after Plaintiff had already filed its amended complaint including the misappropriation of trade secrets claim in state court. However, Plaintiff subsequently withdrew its intention to amend the pleadings at the July 1, 2022 status conference and agreed to provide a revised pleading to Defendant by July 8, 2022 for consideration whether Defendant would stipulate to the amendment. (ECF No. 65.) A briefing schedule was not adopted right away since parties had undergone several settlement conferences. (Electronic Orders dated July 26, 2022, Aug. 23, 2022, Sept. 8, 2022, and Sept. 19, 2022). However, settlement was unsuccessful so the undersigned entered a briefing schedule for the instant motions. (Electronic Order dated Apr. 28, 2023.)

Plaintiff and Defendant filed their respective motions to amend and to dismiss on May 8, 2023 (ECF Nos. 89 and 92), which were referred to the undersigned by Judge Gujarati for a report and recommendation. (See Electronic Order dated May 9, 2023.) Oral argument was heard on both motions on May 25, 2023.^[5]

In its motion to amend, Plaintiff requests that the Court grant leave to amend the first complaint under the “liberal standard” afforded by the Federal Rules. Specifically, Plaintiff seeks to add a claim under the DTSA, a law enacted in 2016, which Plaintiff's prior counsel had not attempted to assert. (ECF No. 90 at 6.) Plaintiff further claims that there is no undue delay, prejudice or bad faith in seeking to amend the Complaint again because no discovery has been conducted in this case and therefore parties would not expend additional resources to conduct discovery for this new claim. (Id. at 6-7; ECF No. 95 at 19.) And Plaintiff states the newly added claim would not be futile, as it would be able to satisfy the DTSA's requirements by showing the Defendant misappropriated patient files and financial records. (ECF No. 90 at 11.)

Defendant, however, strenuously opposes, asking the Court to deny Plaintiff's belated motion for leave to amend since Plaintiff was well aware of the facts underlying the so-called new DTSA claim long ago. (ECF No. 94 at 12.) However, if the Plaintiff's motion for leave to amend the first complaint is granted, Defendant requests that the court dismiss the entire action for failure to state a claim upon which relief can be granted. (Id. at 37.)

As for the motion to dismiss, Defendant posits that Plaintiff's DTSA claim must be dismissed because Plaintiff fails to properly plead the elements and is protected by relevant statutory immunity provisions. (Id. at 13-14.) Secondly, Plaintiff's fraud claim fails to allege fraudulent statements with any degree of particularity and in any event, Plai...