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Jefferson Audio Visual Systems, Inc. v. Light

United States District Court, Sixth Circuit

May 9, 2013

JEFFERSON AUDIO VISUAL SYSTEMS, INC., Plaintiff,
v.
GUNNAR LIGHT, Defendant.

MEMORANDUM OPINION AND ORDER

JOHN G. HEYBURN II, District Judge.

The matter presently before the Court is Defendant, Gunnar Light's motion to dismiss three of the six counts in Plaintiff, Jefferson Audio Video Systems, Inc.'s ("JAVS") Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for which relief may be granted.[1] For the following reasons, the Court will sustain the motion.

I.

JAVS is a Kentucky corporation in the business of providing audiovisual equipment and services to create records in court systems. On May 26, 2010, JAVS hired Light as its Manager Director of International Sales. The letter offering Light the position was contingent upon, among other things, his execution of the Ownership, Non-Disclosure, Confidentiality, and Non-Competition Agreement (the "Agreement"), which he signed.

This lawsuit stems largely from an incident that ultimately led to Light's termination. In March 2011, as part of his employment, JAVS asked Light to travel to South Africa to attend a sales meeting with JAVS' sale agent in South Africa ("JAVS Africa"). On the table was a prospective sale to South African courts of approximately 2, 500 JAVS systems. If consummated, this sale would result in approximately $20 million in gross revenue for JAVS. Importantly, JAVS Africa is not contractually bound to exclusively sell JAVS' products, but had been doing so for over a decade. JAVS maintains that a good relationship between JAVS and JAVS Africa is crucial to JAVS' success in the South African market.

During the March 2011 sales meeting between JAVS and JAVS Africa, Light allegedly made a number of defamatory statements about JAVS to JAVS Africa. Specifically, Light allegedly stated, among other things, that: JAVS and its co-owner Jared Green were "unorganized;" "they don't know what's going on;" "they've made a mess of things;" "I unfortunately am stuck with this Company that is very dysfunctional;" and the fact that JAVS had gotten "things going is a miracle." ECF No. 1. JAVS contends that these statements had no legitimate business purpose.

Ultimately, the sales negotiations resulted in a $150, 000.00 sale, significantly less than what JAVS anticipated. JAVS alleges that Light's disparaging statements may have been the cause of this dismal sale. JAVS terminated Light for cause shortly thereafter, on March 13, 2011.

After a period of settlement negotiations between the parties, JAVS filed this lawsuit on January 11, 2012, in anticipation of Light filing suit in Arizona the following day. The Complaint advanced six Counts: (1) defamation; (2) tortious interference with actual and prospective business and economic relationships; (3) breach of fiduciary duty; (4) trade disparagement; (5) fraudulent misrepresentation; and (6) breach of contract. JAVS seeks damages, punitive damages, attorneys' fees and costs, and all other relief to which it may be entitled. Light has moved to dismiss Counts One, Four and Five.

To survive a motion to dismiss, the "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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). The Court must view the allegations in the complaint in the light most favorable to the plaintiff, treating all well-pleaded facts as true, but need not accept bare legal conclusions as definitive. See Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citing Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009)). The Agreement contains a choice of law provision requiring that all matters arising out of or relating to the Agreement be governed by and construed pursuant to Kentucky law. ECF No. 1-2.

II.

In Count One, JAVS alleges that as a result of Light's false and defamatory statements to JAVS Africa, it suffered monetary and reputational damage. Additionally, JAVS argues that the defamatory statements were made willfully, maliciously and with knowledge of their falsity, and as such, JAVS is further entitled to recover punitive damages.

To establish a cause of action for defamation in Kentucky, the plaintiff must prove four elements: "defamatory language, about the plaintiff, which is published, and which causes injury to reputation." Gibson v. Raycom TV Broad. Inc., 2012 WL 5372104, *3 (Ky. Ct. App. Nov. 2, 2012) (quoting Columbia Sussex Corp. Inc. v. Hay, 627 S.W.2d 270, 273 (Ky. Ct. App. 1981). Statements are deemed defamatory when they tend to "(1) bring a person into public hatred, contempt or ridicule; (2) cause him to be shunned or avoided; or, (3) injure him in his business or occupation." McCall v. Courier-Journal & Louisville Times Co., 623 S.W.2d 882, 884 (Ky. 1981).

Kentucky separates defamation actions into those that are actionable per se and actionable per quod. Stringer v. Wal-Mart Stores, Inc., 151 S.W.3d 781, 794 (Ky. 2004).[2] The principle difference between the two theories is that in a defamation per se action, the law presumes damages, whereas in a defamatory per quod action, no such presumption exists. Toikka v. Jones, 2013 WL 978926, *2 (E.D. Ky. Mar. 12, 2013).[ ...


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