Sequin, LLC v. Renk

SEQUIN, LLC, Plaintiff, v. KIMBERLY RENK, GREGORY C. DRYER,and UNLIMITED, LLC, d/b/a SEQUIN, Defendants.

C.A. No. 20-62WES

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND

January 13, 2021

REPORT AND RECOMMENDATION

PATRICIA A. SULLIVAN, United States Magistrate Judge.

"Happy families are all alike; every unhappy family is unhappy in its own way."

Leo Tolstoy, Anna Karenina (1877).¹

Now pending before the Court is the motion of Defendant Kimberly Renk ("Kim")² to dismiss two Counts - Count V (defamation per se) and Count VI (tortious interference with business relations) - asserted against her by Plaintiff Sequin, LLC ("Sequin"), for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). ECF No. 30. In Count V, Sequin alleges that Kim defamed it per se by sending an email to some of its customers that exposed the details of a dysfunctional family squabble between Kim and certain members of the Renk family³ who own and manage Sequin. ECF No. 17 at 24-26. In Count VI, Sequin claims that the email interfered with its business relationships, as well as its reputation and standing with these customers. Id. at 26-27. The motion has been referred to me pursuant to 28 U.S.C.§ 636(b)(1)(B). Finding that the verified First Amended Complaint ("FAC") fails plausibly to allege either that the email is defamatory per se (or defamatory at all) as to Sequin or that its allegedly defamatory statements interfered (causing harm resulting in damages) with Sequin's relationships with any of its customers, I recommend that the motion be granted.

I. SETTING THE STAGE

Kim's motion to dismiss arises in a case that is not new to this Court; therefore, before focusing on the instant motion, I pause to sketch in the somewhat complicated background.

The Court became familiar with the matter in the course of addressing Sequin's motion for preliminary injunction and Defendants' motion to stay Counts I-IV based on the abstention doctrine pursuant to Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976) ("Colorado River"). This work culminated in Sequin, LLC v. Renk, C.A. No. 20-62WES, 2020 WL 5995205 (D.R.I. Oct. 2, 2020) ("Sequin I").⁴ In brief, these proceedings have revealed the unpleasant details of an ugly family fight over ownership and control of Sequin, a successful New York-based seller of costume jewelry. Sequin I, at *2-5. Since 2018, the family war has been publicly waged in New York state court. See generally Renk v. Renk, Index No. 652439/2018 (N.Y. Sup. Ct.) ("Renk v. Renk I"), and Renk v. Renk, Index No. 153019/2020 (N.Y. Sup. Ct.) ("Renk v. Renk II"). The internecine strife spilled into the District of Rhode Island, when Sequin initiated this case in February 2020. In the New York cases, Kim claims that, with her sister, Linda, she co-founded Sequin in 1999 and that 50% of Sequin is rightfully hers but her interest has been held in her father's name, and that, more recently, her siblings, Linda and RJ, have wrongly forced her out of Sequin. As described by the New York Supreme Court in Renk v. Renk I:

[A]lthough [Kim] has served in a well-compensated managerial position at Sequin [since leaving her prior employment, Kim's] father never formally transferred the 50% interest to her or placed it in her name. . . . Linda . . . claims the second 50% interest was in the name of their father Richard and that any promise Richard may have made to transfer his interest to [Kim] is unenforceable. [Kim] commenced this suit after a break down in her relationship with Linda . . . as part of an internal family power struggle related to the running of the company.

Renk v. Renk I, No. 652439/2018, 2020 WL 2572384, at *1 (N.Y. Sup. Ct. May 21, 2020) (motion to dismiss denied in part, granted in part), aff'd, ___ N.Y.S.3d ___, 188 A.D.3d 502 (N.Y. App. Div. Nov. 12, 2020). While Linda, RJ and Richard have conceded that Kim was lauded as a Sequin co-founder on Sequin's website and Linda and Richard have admitted that Kim may be entitled to an interest in Sequin beyond her status as an employee holding a "well-compensated managerial position," they contend that Kim has engaged in significant misconduct that has adversely affected Sequin resulting in their decision to suspend her and bring legal claims against her; they vigorously dispute that Kim is entitled to ownership of 50% of Sequin. Sequin I, at *2, 5.

As a public airing of the Renk family troubles, the sorry spectacle began in May 2018, when Kim filed Renk v. Renk I in New York state court, claiming that she is entitled to a 50% interest in Sequin. Sequin I, at *2. After the filing (which drew an array of counterclaims), for a time, the battle seemed contained in that Kim continued to serve in a top managerial capacity at Sequin and was paid "generous compensation." FAC ¶ 52. That changed on February 7, 2020, with Sequin's filing of this case, in which it sued Kim in the District of Rhode Island for infringement based on her operation of a Sequin-branded pop-up store in Newport. Sequin I, at *4-5. Soon after, on March 6, 2020, Sequin suspended Kim's employment, sending a terse lawyer's letter advising that "due to her ongoing and unremedied misconduct in Sequin's workplace, [Kim's] employment is suspended effective immediately." ECF No. 29-18 at 84; see also FAC ¶ 49. At the same time, Linda and RJ sent a reassuring communication⁵ to Kohl's and other Sequin customers regarding Kim's departure, advising that Kim "will be on a leave of absence effective today," but allaying concerns: "[w]e have the same strong, talented and dedicated executive team, who are committed to continuity and uninterrupted execution of our business so there will be no change to our organization's functionality." ECF No. 29-18 at 86. Sequin describes this communication in its brief in opposition to the motion to dismiss: "[t]hese Sequin owners and officers merely sent an innocuous notice to their customers of [Kim's] leave of absence to ensure their customers could maintain contacts with the company during her leave." ECF No. 33 at 19.

On March 23, 2020, Kim filed Renk v. Renk II in New York state court, suing Sequin and her siblings for employment discrimination, wrongful discharge and injury to reputation. Sequin I, at *5. The filings in Renk v. Renk II describe incendiary and unsavory behavior by, and bilious exchanges among, the siblings and their attorneys, with each side accusing the other of offensive workplace misconduct. See generally Renk v. Renk II, Index No. 153019/2020 (N.Y. Sup. Ct.).⁶ Kim's pleading includes the charge that Linda's and RJ's communication to Kohl's (and others) was sent with the "specific intent of destroying whatever standing [Kim] had with customers . . . developed over the past 20 years." Sequin I, at *5 (internal quotation marks omitted). Next, on April 6, 2020, Kim sent an email to an individual ("E.E.") at Kohl's; Kim claims that this email was in response to the Kohl's communication written by Linda and RJ.⁷ ECF No. 30-1 at 8. This email contains the nine accused statements that Sequin alleges are defamatory per se. FAC ¶ 51.

The complete text of the email to E.E. (with the accused defamatory statements underscored by the Court) is as follows:

Sent: Monday, April 6, 2020, 03:55:48 PM EDT

Subject: Kim Renk & Sequin

Dear [E.E.],

I hope this finds you and your family well and staying safe during this very scary corona virus world we now find ourselves in. It is not my intent to intrude or disturb your focus on staying safe. As such I've avoided sending this to you until now.

I write because many of Sequin's clients have reached out to me after receiving an embarrassing and awkward communication recently sent to you by my sister, Linda Renk, and brother, RJ Renk, concerning my relationship with Sequin and falsely suggesting that I had reason to take a "leave of absence". In response to your kind and heartfelt concerns about my health, which I deeply appreciate, I feel I must correct the record at this time:

• I am not on a leave of absence;

• I do not have the Corona virus or any other condition;

• I'm perfectly healthy as well;

• Contrary to Linda's assertions, it is not the same strong team at Sequin.

Thank you for taking the time to reach out to me after receiving that communication. Quite simply, Linda and RJ are pushing me out of my company in retaliation for my taking legal action to reclaim my ownership in, Sequin. This has been an ongoing family issue that I have made every effort to avoid making public in order to amicably and discreetly resolve the matter. However, in 2018 I was forced to file a lawsuit with the Supreme Court of New York which is publicly available under Index #625439/2018 regarding my 50% ownership in Sequin, the Company I conceived, founded and built. In response, Linda has orchestrated a campaign of disinformation and retaliation against me seeking to publicly undermine and diminish my role in Sequin and impugning my character and reputation as a co-founder and principal contributor to Sequin's success. The retaliation and hostile atmosphere has become so toxic that I had to file a lawsuit for constructive termination which is publicly available under Index #153019/2020 and I have been forced out of the company after 20 years of giving it my all to build it to the success that it is today.

As many of you know, prior to co-founding Sequin with my sister in 1999, I had worked for 20 years in fashion jewelry first at Napier Jewelry and then for 17 years I had the unique opportunity of being the Vice President and Co-Head of Product Development in Swank, Inc.'s women's division. During that time, I launched Guess Jewelry with Paul Marciano, Kenneth Cole Jewelry with Kenneth Cole and DKNY Jewelry with Donna Karan among many other major national brands.

What you may not know was at the time of Sequin's formation, I was transitioning over from Swank which was in the process of selling its women's jewelry division. Meanwhile,

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