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Clayton v. Fairnak

United States District Court, D. Maryland

December 10, 2018

GREGORY T. FAIRNAK, et al., Defendants.


          James K. Bredar, Chief Judge.

         Plaintiff Cavin Clayton filed suit in state court against his former employer, Enterprise SI Corporation d/b/a Healthcare MDM Inc., [1] and Enterprise SI's owner, Gregory T. Fairnak, alleging defamation for allegedly false statements made by Defendants in conjunction with Clayton's application for increased government security clearance. (Compl., ECF No. 1-2.) Defendants subsequently removed the case based on diversity jurisdiction. (Notice of Removal, ECF No. 1.) Defendants then filed a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). (Mot. Dismiss, ECF No. 9.) No. hearing is required. See Local Rule 105.6 (D. Md. 2018). For the reasons set forth below, Defendants' Motion will be granted.

         I. Factual Background[2]

         According to the Complaint, Plaintiff Clayton is an independent contractor who provides services under contract to various federal agencies. (Compl. ¶ 7.) Clayton was employed with Defendants through his corporate entity “[f]or some time, ” but, in August 2016, Defendants informed him that “his services would no longer be required.” (Id. ¶¶ 8-9.) He now competes with Defendants for government contracts. (Id. ¶ 7.)

         Sometime after parting ways with Defendants, Clayton applied for increased security clearance from the federal government, which involved gathering information from previous companies with which he'd worked, including Enterprise SI. (Id. ¶¶ 10-11.) In mid-December 2016, Defendant Fairnak and/or other agents of Defendant Enterprise SI returned a form to the U.S. Office of Personnel Management (OPM) stating that Clayton had been “fired . . . for cause.” (Id. ¶ 12.) According to Clayton, the statement was false (id. ¶ 12), and Defendants made it either knowing it was false or negligently, with “the intent to harm [Clayton's] chances” of obtaining federal contracts. (Id. ¶¶ 13-16.)

         According to the Complaint, Defendants' statement to OPM harmed “his standing and reputation within his professional community, ” caused him “mental anguish and personal humiliation, ” and made it “significantly more difficult” for him to “obtain[] necessary federal government security clearance now and in the future.” (Id. ¶¶ 17-18.) He seeks, inter alia, compensatory and punitive damages. (Id. at 3-4.)

         II. Legal Standard

         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) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In analyzing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), courts “accept the well-pled allegations of the complaint as true, . . . constru[ing] the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). Nevertheless, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. “A pleading that offers ‘labels and conclusions' or . . . ‘naked assertion[s]' devoid of ‘further factual enhancement'” will not suffice. Iqbal, 556 U.S. at 678 (alteration in original) (citation omitted) (quoting Twombly, 550 U.S. at 555, 557). The Court must be able to infer “more than the mere possibility of misconduct.” Id. at 679.

         III. Analysis

         Defendants raise multiple grounds for dismissal, including that Plaintiff has failed to sufficiently allege the basic elements of a defamation claim under Maryland law, that Plaintiff's claim is barred by the statute of limitations, and that Defendants are protected by an absolute or qualified privilege. (Mot. Dismiss Mem. Supp. at 2-7, ECF No. 9-1.) The Court need not reach questions of limitations or privilege, because the Court agrees that Plaintiff's Complaint does not contain sufficient factual allegations that, if true, would support a more than speculative right to relief. Twombly, 550 U.S. at 555.

         To state a claim for defamation under Maryland law, a plaintiff must allege (1) that “the defendant made a defamatory statement to a third person, ” (2) that “the statement was false, ” (3) that “the defendant was legally at fault in making the statement, ” and (4) that “the plaintiff suffered harm.” Lindenmuth v. McCreer, 165 A.3d 544, 552 (Md. Ct. Spec. App. 2017). Failure to plausibly allege any one of these elements warrants dismissal. Although the Court concludes that Plaintiff cleared the first hurdle by alleging a potentially defamatory statement, he failed to allege more than speculative harm under the fourth element.[3]

         A. Defamation Per Se and Defamation Per Quod

         A defamatory statement is one that “tends to expose a person to public scorn, hatred, contempt or ridicule, ” and that “discourage[es] others in the community from having a good opinion of, or from associating or dealing with, that person.” Id. (quoting Batson v. Shiflett, 602 A.2d 1191, 1210 (Md. 1992)). Maryland law distinguishes between statements that are defamatory per se and defamatory per quod. Indep. Newspapers, Inc. v. Brodie, 966 A.2d 432, 448 (Md. 2009). “Where the words themselves impute the defamatory character, ” without the necessity of innuendo or inferences drawn from context, a statement is defamatory per se. Id. (quoting Metromedia, Inc. v. Hillman, 400 A.2d 1117, 1123 (Md. 1979)). By contrast, defamation per quod requires “extrinsic facts . . . in order to establish the defamatory character of the words” through context or innuendo. Id. (quoting Metromedia, Inc., 400 A.2d at 1123). To survive a motion to dismiss in a defamation per quod case, the complaint must allege such extrinsic facts. Id. Defamation per quod also requires allegations of special damages. See Metromedia, Inc., 400 A.2d at 1119 (quoting M & S Furniture Sales Co., Inc. v. Edward J. De Bartolo Corp., 241 A.2d 126, 128 (Md. 1968)). Whether a statement is defamatory per se or per quod is a question of law. Shapiro v. Massengill, 661 A.2d 202, 217 (Md. Ct. Spec. App. 1995).

         Plaintiff asserts that Defendants' statement to OPM that they had terminated him “for cause” was defamation per se, because it is the kind of statement that “may impair or hurt [one's] trade or livelyhood [sic]” and may “adversely affect[] [a plaintiff's] fitness for the proper conduct of business.” (Opp'n Br. at 4-5, ECF No. 12 (quoting Shapiro, 661 A.2d at 218).) However, the very case Plaintiff ...

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