A company failed to adequately plead fraud against a former executive who allegedly took months to update his LinkedIn profile after being fired, the U.S. District Court for the Western District of Kentucky ruled May 9 (Jefferson Audio Video Sys. Inc. v. Light , W.D. Ky., No. 3:12-cv-00019, 5/9/13).
Jefferson Audio Visual Systems Inc. fired Gunnar Light after he allegedly defamed the company during a sales meeting in South Africa, the court said. Light formerly served as managing director of international sales for JAVS.
The court added that the company believed comments from Light that it was “unorganized” and “very dysfunctional” may have caused a business opportunity with South Africa's courts to result in only $150,000 worth of sales, rather than an estimated potential of up to $20 million.
According to the opinion, counsel for JAVS contacted Light twice in May 2011 to request that he remove any indication on social media that he still worked for the company. Light, the court wrote, responded that “he intended to promptly update his employment profile,” but he did not change his information until after he received a third request in June, in which the company said it would file a formal complaint with LinkedIn.
The court dismissed the company's common law fraudulent misrepresentation claim regarding Light's LinkedIn profile, finding it failed to meet the heightened pleading standard required by Fed. R. Civ. P. 9(b). It explained that Rule 9(b) requires a plaintiff claiming fraud to “allege some facts indicating how it satisfies each element of a fraud claim.”
The court said Kentucky law requires, in part, that a plaintiff show it reasonably relied upon a defendant's material misrepresentation. The court noted, however, that JAVS admitted in its response that it “is not asserting that it was defrauded by Light but, instead, is making a claim that Light's fraudulent misrepresentation to the world damaged JAVS.”
The court said the fraud claim must therefore be dismissed because the company failed to assert that “it reasonably relied on Light's misrepresentation itself.”
The ruling was signed by Judge John G. Heyburn II.
Elisabeth S. Gray and Loren T. Prizant of Middleton Reutlinger in Louisville, Ky., represented JAVS. Tod F. Schleier of Phoenix represented Light.
By Michael O. Loatman
Text of the opinion is available at http://www.bloomberglaw.com/public/document/Jefferson_Audio_Video_Systems_Inc_v_Light_Docket_No_312cv00019_WD.
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