The McGraw-Hill Companies Inc. et al v. Jones et al

Filing 222

MEMORANDUM AND OPINION by Senior Judge Thomas B. Russell on 10/30/2014; re 214 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM filed by CA Jones Management Group, LLC, Charles A. Jones ; an appropriate order shall issuecc:counsel (KJA)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CIVIL ACTION NO. 5:14-CV-00042-TBR

MCGRAW-HILL GLOBAL EDUCATION,
LLC, et al.

Plaintiffs,

v.
DAVID GRIFFIN, et al.,

Defendants,

and
DAVID GRIFFIN,

Third-Party Plaintiff,

v.
CHARLES A. JONES and
C.A. JONES MANAGEMENT GROUP, LLC,

Third-Party Defendants.

MEMORANDUM OPINION
This matter comes before the Court upon the Motion to Dismiss of Third-Party Defendants
Charles A. Jones and C.A. Jones Management Group, LLC, (collectively, “Jones”), who ask the Court to
dismiss the third-party claims levied against them by Defendant David Griffin. (Docket No. 214.)
Griffin has responded, (Docket No. 214), and Jones has replied, (Docket No. 219). Fully briefed, this
matter is ripe for adjudication. For the reasons set forth below, the Court will GRANT Jones’ Motion to
Dismiss.
Factual Background
This action contributes another chapter to the continuing saga of litigation concerning Griffin,
Jones, and their soured business relationship: since 2012, the two have been involved in eight lawsuits in
Kentucky state and federal courts, to say nothing of those raised in Tennessee. As such, the Court is
familiar with the intertwined entities co-owned by Griffin and Jones. As required when deciding a
motion to dismiss, the Court presumes that the allegations in the complaint are true. Total Benefits
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Planning Agency v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008). Taking them
as true, a brief summary of the facts resulting in this action follows.
As of the filing of Griffin’s Amended Third-Party Complaint, Griffin owned a fifty-percent share
of Integrated Computer Solutions, Inc., (“ICS”) and a fifty-percent share of Blackrock Investments, LLC
(“BRI”). Jones owned the remaining fifty-percent shares of both ICS and BRI. These companies, in turn,
were each part-owners of two college textbook companies:

ICS owned 8% interests in SE Book

Company, LLC (“SEB”) and College Book Rental Company, LLC (“CBR”), with BRI owning the
remaining 92% interests in each company. In his initial capacity as manager of both SEB and CBR,
Charles A. Jones outsourced management of the companies to C.A. Jones Management Group, LLC (“the
Management Company ”), of which he served as Chief Executive Officer.
In the underlying lawsuit, Plaintiffs McGraw-Hill Global Education, LLC, Pearson Education,
Inc., Cengage Learning, Inc., and John Wiley & Sons, Inc. (“the Publishers”) allege that Griffin
collaborated with others to craft an intricate plan to maximize the profits of SEB and CBR, the textbook
companies. The Publishers contend that Griffin knowingly purchased “International Edition” textbooks
at a lower price than that available domestically. According to the Publishers, Griffin purchased these
books from nontraditional suppliers, including various companies located in the Dominican Republic.
The Publishers further allege that Griffin bought steeply discounted U.S. Edition textbooks, specially
priced for distribution in developing companies. Griffin, the Publishers say, was not a third-world
bookseller, but a bargain-hunter who intended to nefariously sell or rent the books in the United States.
Although indicia on many of the books specified that they were not authorized for sale in the
United States, the Publishers contend that Griffin and Jones instructed their employees to “remov[e] the
markings with hot irons or dremmels, cover[] them with ‘USED’ stickers, remov[e] copyright pages,
replac[e] ISBN numbers, us[e] slicers to trim edges,” and otherwise alter the books. (Docket No. 103 at
3.)

The Publishers also claim that Griffin and Jones reproduced textbook covers and other pages

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containing trademark and/or copyright information, creating “chop shop editions” to be placed in their
inventory.
The Publishers’ original Complaint alleged various claims under the Copyright Act and the
Lanham Act against numerous Defendants, including Jones and the Management Company. Griffin was
not subject to this Complaint. (See Docket No. 1.) Ultimately, the Publishers settled their claims against
Jones and the Management Company, (Docket No. 68), and named Griffin as a Defendant, (Docket No.
103).
In his Amended Third-Party Complaint against Jones and the Management Company, Griffin
elaborates upon (and distances himself from) the alleged scheme. (Docket No. 210.) According to
Griffin, in late 2008 or early 2009, he and Jones traveled to the Dominican Republic to meet business
contacts, including Michael Elmudesi. Griffin alleges that some months later, Jones, the Management
Company, and their counsel—with no involvement from Griffin—cooperated with Elmudesi to create at
least four Dominican entities (“the Dominican Companies”) that would purchase discounted International
Editions from the Publishers, falsely representing that the books would be distributed to Dominican
students. Instead, Griffin says, Jones and the Management Company then caused SEB and CBR, the
Murray, Kentucky textbook companies, to purchase the international books themselves.

Griffin denies

any involvement in the creation, operation, or ownership of the Dominican Companies, maintaining
instead that Jones, the Management Company, and others maintained full control—including oversight of
the purported purchase of international books and the sale of those books to SEB and CBR.
Griffin alleges that after Jones settled with the Publishers, who dismissed their claims against
him, Jones provided the Publishers with false information regarding Griffin’s involvement in the alleged
misdeeds. He now alleges breach of fiduciary duty and seeks common-law indemnification for the
Publishers’ claim of fraud. (Docket No. 210.)

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Standard
The Federal Rules of Civil Procedure require that pleadings, including complaints, contain a
“short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). A complaint may be attacked for failure “to state a claim upon which relief can be granted.”
Fed. R. Civ. P. 12(b)(6). “In deciding a Rule 12(b)(6) motion, a district court must (1) view the complaint
in the light most favorable to the plaintiff and (2) take all well-pleaded factual allegations as true. But the
district court need not accept a bare assertion of legal conclusions.” Tackett v. M & G Polymers, USA,
LLC, 561 F.3d 478, 488 (6th Cir. 2009) (internal citations and quotation omitted).
A complaint need not allege specific facts so long as it provides a defendant with fair notice of
the claim and the basis thereof. See Erickson v. Pardus, 551 U.S. 89. 93 (2007). However, even though a
“complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v.
Twombly, 550 US. 544, 555 (2007) (citations omitted). Instead, the plaintiff’s [f]actual allegations must
be enough to raise a right to relief above the speculative level on the assumption that all the allegations in
the complaint are true (even if doubtful in fact).” Id. (citations omitted). A complaint should contain
enough facts “to state a claim to relief that is plausible on its face.” Id. at 570. A claim becomes
plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)
(citing Twombly, 550 U.S. at 556). If, from the well-pleaded facts, the court cannot “infer more than the
mere possibility of misconduct, the complaint has alleged — but has not ‘show[n]— that the pleader is
entitled to relief.” Id. at 1950 (citing Fed. R. Civ. P. 8(a)(2). “Only a complaint that states a plausible
claim for relief survives a motion to dismiss.” Id.

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Analysis
In his Amended Third-Party Complaint, Griffin alleges claims against Jones and the Management
Company for breach of fiduciary duty. He also seeks indemnification in the event that he is found liable
to the Publishers for their fraud claim against him. The Court will address each of Griffin’s claims in
turn.
I.

Breach of fiduciary duty
Griffin first alleges that as manager of SEB and CBR—the Murray, Kentucky textbook

companies—both Charles A. Jones and the Management Company owed statutory and common law
fiduciary duties to SEB, CBR, and Griffin. Griffin contends that Jones breached these duties by “causing
SEB and CBR to purchase International Books from Jones’ and [the Management Company’s]
Dominican Companies after the Dominican Companies had purchased the International Books by making
misrepresentations to the Publishers.” (Docket No. 210 at 5-6.) In the instant Motion, Jones claims that
Griffin has asserted a virtually identical breach of fiduciary duty claim against them in a prior lawsuit:
Griffin v. Jones, et al., Case No. 5:12-cv-00163 (Western District of Kentucky). (See Docket No. 214-2,
First Amended Complaint.) He submits that Kentucky law precludes Griffin from prosecuting two
actions at the same time for the same cause.
Griffin claims that Jones misreads the Griffin v. Jones Complaint, which did not result from any
alleged actions in the Dominican Republic. Griffin first notes that the Publishers’ fraud claim concerning
the Dominican Companies was initially filed on June 3, 2013—almost six months after Griffin filed the
Amended Complaint in the 2012 Griffin v. Jones lawsuit. (See Docket No. 103; see also Griffin v. Jones,
Case No. 5:12-cv-00163-TBR, Docket No. 18 (filed Dec. 20, 2012).) This chronology means Griffin
could not have included the allegations concerning the Dominican Companies in his 2012 Amended
Complaint. Griffin further distinguishes the two lawsuits’ complaints by noting that the 2012 Griffin v.
Jones lawsuit does not discuss the Dominican Companies or Jones’ relationships to them. Griffin
concludes, therefore, that the breach of fiduciary duty claims in this lawsuit are rooted in facts wholly
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distinct from those underlying the 2012 breach of fiduciary duty claim. For the reasons explained below,
however, the Court cannot agree.
The Court first turns to the rule of abatement: that is, the principle when a court assumes
jurisdiction over a certain case’s subject matter, that court maintains exclusive authority and control over
the action until the case’s final disposition. Annie Gardner Foundation v. Gardner, 375 S.W.2d 705, 707
(“[A] second action based on the same cause will generally be abated where there is a prior action
pending between the same parties involving substantially the same subject matter and in which prior
action the rights of the parties may be adjudged.”) A safeguard to litigants, the doctrine was crafted to
avert the harassment of multiple actions involving the same parties and concerning the same cause. Id. at
708 (citing Conley v. Marshall, 202 S.W.2d 382 (Ky. 1947)). The rule of abatement applies only when
the cause of action, the parties, and the relief or remedy sought are identical or substantially similar: “The
rule of abatement does not apply where the second suit has merely a close connection with the other
action.” Riddle v. Howard, 357 S.W.2d 705, 708 (Ky. 1962). Moreover, because “a plea in abatement is
a technical and dilatory plea,” a district court should not permit it “unless the pleader clearly shows that
his situation comes within the reason for the rule.” Gardner, 385 S.W.2d at 708.
For a lawsuit to be abated, “it must appear that (1) the parties in the second suit are substantially
the same as the parties in the prior suit, and (2) these parties will be afforded an adequate and complete
opportunity for the adjudication of their rights and for obtaining the remedy they desired in the first suit.”
Id. Clearly, the first element is satisfied, with Griffin prosecuting and Jones and the Management
Company defending the relevant action in each case. Therefore, the Court must determine whether the
first suit affords the parties a full and adequate opportunity to effectuate their rights and remedies. See id.
Jones submits that the two lawsuits contain virtually the same allegations, with each focusing
upon the purchase and alteration of International Edition textbooks. (See Docket No. 214-2, Griffin v.
Jones First Amended Complaint, ¶¶ 68, 72-75; Docket No. 103, ¶¶ 35-52.) Griffin references the

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Publishers’ lawsuit in his filings in Griffin v. Jones and incorporates by reference their allegations.
(Docket No. 214-2, ¶¶ 73-75.)
Griffin responds that his third-party claim in the instant action is grounded upon facts and
conduct unique to this case: namely, that the Jones and the Management Company breached their
fiduciary duties to Griffin by establishing the Dominican Companies, causing them to fraudulently
purchase textbooks from the Publishers, and causing SEB and CBR to purchase such books from the
Dominican Companies. Griffin therefore argues that his rights regarding the breach of fiduciary duty
claim do not involve the same conduct alleged in the 2012 Griffin v. Jones lawsuit. Consequently, he
reasons, the claims in the instant lawsuit can be properly adjudicated only in the instant case.
The Court will consider the specific language of each of the Complaints to determine whether the
doctrine of abatement applies. In the instant action, Griffin’s Amended Third-Party Complaint includes
the following allegations:

14. Jones and [the Management Company] caused the Dominican
Companies to purchase International Books from the Publishers, and,
according to the Publishers, misrepresented to the Publishers that the
International Books were for Dominican Republic students.
15. According to the Publishers, after the Dominican Companies
purchased the International Books, Jones and CJM caused SEB and CBR
to purchase the International Books.
...
23. Jones and [the Management Company] wantonly and/or recklessly
breached those [fiduciary] duties by engaging in the conduct described
herein, including but not limited to, causing SEB and CBR to purchase
International Books from Jones’ and [the Management Company’s]
Dominican Companies after the Dominican Companies had purchased
the International Books by making misrepresentations to the Publishers.
As a result, the Publishers seek damages from Griffin for
misrepresentation.
(Docket No. 210.)
The same story unfolds in the allegations of Griffin v. Jones’s First Amended Complaint:
68. [A receiver] conducted an investigation of books in CBR’s inventory
and found that numerous textbooks which were supposed to be U.S.
editions were in reality international edition textbooks.
These
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international edition textbooks had been altered so as to appear to be U.S.
edition textbook[s] by covering the body of the international edition with
a copy of a U.S. edition cover. In other words, C. Jones and [the
Management Company] caused SEB and CBR to be used in the business
of buying and selling international editions as U.S. editions in violation
of state and federal law . . . .
...
72. Employees of SEB, CBR, and [the Management Company] have
acknowledged that C. Jones made several large purchases of
international edition textbooks from multiple sources.
Those
international edition textbooks were altered or rebound and then inserted
into SEB’s or CBR’s inventories as U.S. editions. Upon information an
belief, [the Management Company] and C. Jones then transferred
legitimate U.S. edition textbooks from SEB’s and CBR’s inventories to .
. . entities controlled by C. Jones or [the Management Company]. The
U.S. edition textbooks were then sold in direct competition with SEB and
CBR, and for the exclusive benefit and profit of C. Jones and [the
Management Company].
...
74. As alleged in the McGraw-Hill Lawsuit, Jones worked with
accomplices . . . to purchase large quantities of cheap, international
edition textbooks which could not be legally imported and sold in the
United States. Jones then oversaw the alteration or rebinding of the
textbooks to conceal their international origin. This allowed Jones to
replace legitimate (and more expensive) U.S. edition textbooks in SEB’s
and CBR’s inventories with cheaper international editions, and then sell
the more expensive U.S. editions . . . for the exclusive profit of Jones and
his co-conspirators.
(Docket No. 214-2, Griffin v. Jones First Amended Complaint, ¶¶ 68, 72, 74.)
To be sure, the level of detail of the two complaints varies: for example, the instant lawsuit
alleges that “Dominican Republic editions” were at issue, as opposed to the more general “international
editions” noted in the 2012 Griffin v. Jones lawsuit. However, Griffin v. Jones nonetheless alleges that
Jones cooperated with others “to purchase large quantities of cheap, international edition textbooks which
could not be legally imported and sold in the United States”—the same general allegation at issue here.
(Docket No. 214-2, Griffin v. Jones First Amended Complaint, ¶ 74.) In sum, both lawsuits allege that
Jones and the Management Company caused SEB and CBR to buy international books from the
Dominican Companies, which mislead the Publishers to acquire said books. Accordingly, Griffin v.
Jones affords Griffin the opportunity to fully prosecute his fiduciary duty claim against Jones for the
alleged purchase and sale of international books. He need not replicate them in this action.

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Jones also relies upon the first-to-file rule. The first-to-file rule provides that “when two lawsuits
involving nearly identical parties and issues have been filed in two different federal district courts, the
district court in which the first suit is filed should, as a general rule, proceed to judgment.” Plantronics,
Inc. v. Clarity, LLC, 2002 WL 32059746 at *2 (E.D. Tenn. July 17, 2002). The doctrine originally served
to encourage comity among co-equal district courts, preventing rulings by one that may trespass upon the
authority of another. However, the doctrine has “evolved” and now also “promote[s] judicial economy
and efficiency” by “avoid[ing] inconsistent or piecemeal resolution of legal issues that call for a uniform
result.” Id. (citations omitted). Therefore, although no comity concerns are raised as both actions have
been raised in this Court, the principles of efficiency underlying the doctrine render it applicable here.
Courts in this circuit look to three elements to determine whether the first-to-file rule applies:
“(1) the chronology of events; (2) the similarity of the parties involved; and (3) the similarity of the issues
or claims at stake.” Id. at *1. Balancing each of these equitable factors, the Court is persuaded that the
first-to-file rule also weighs in favor of dismissing Griffin’s breach of fiduciary duty claim. The two
cases are “materially on all fours” with each other, sharing parties, factual circumstances, and legal claims
such that “a determination in one leaves little or nothing to be determined in the other.” Smith v. S.E.C.,
129 F.3d 356, 361 (6th Cir. 1997) (quoting Congress Credit Corp. v. AJC Int’l, Inc., 42 F.3d 686, 689 (1st
Cir. 1994)). As discussed supra, Griffin filed his complaint in Griffin v. Jones before initiating the thirdparty action in the instant complaint; identical parties appear in each; and the same factual circumstances
give rise to breach of fiduciary duty claims in each. Accordingly, this case squarely falls within the scope
of the first-to-file rule.
Therefore, in light of the foregoing analysis, the Court will dismiss Griffin’s third-party claim for
breach of fiduciary duty. Jones’ motion to dismiss that claim in the instant action will be granted.

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II.

Indemnification
Griffin further argues that should he be found liable to the Publishers for common law fraud, he is

entitled to indemnification from Jones.

The Court must initially confront the parties’ conflicting

arguments regarding choice of law: although Jones contends that Kentucky law applies, Griffin insists
that either Tennessee or New Jersey law governs the indemnification claim.
In the Complaint, only Plaintiffs Pearson Education, Inc. and Cengage Learning, Inc. offer factual
allegations supporting the Publishers’ fraud claim. According to Griffin, none of the actions detailed in
the Complaint occurred in Kentucky. (See Docket No. 103, ¶ 56.) Instead, Griffin argues, the alleged
misrepresentations were issued from the Dominican Republic to Pearson’s principal place of business in
New Jersey, where it suffered any resulting damages. Moreover, Griffin, a Tennessee resident, contends
that he has been harmed in Tennessee by virtue of having to defend the fraud claim. As a result, Griffin
argues that the connections to New Jersey and Tennessee require the Court to apply the law of one of
these two states.1
Recognizing that Kentucky courts “are very egocentric or protective concerning choice of law
questions,” the Court must disagree with Griffin and will apply Kentucky law to this matter. Paine v. La
Quinta Motor Inns, Inc., 736 S.W.2d 355, 357 (Ky. Ct. App. 1987), overruled on other grounds by Oliver
v. Shultz, 885 S.W.2d 699 (Ky. 1994). The Sixth Circuit has routinely recognized the strong preference
1

Although Griffin admits that the principal place of business of Cengage Learning, Inc. is located in Connecticut, it
does not argue that Connecticut law applies—likely because Connecticut has not adopted the Restatement (Second)
of Torts § 914(2) (1979), upon which Griffin relies. Moreover, although both New Jersey and Tennessee have
adopted Section 914(2), see, e.g., In re Estate of Lash, 776 A.2d 765, 769 (N.J. 2001); Pullman Standard, Inc. v.
Abex Corp., 693 S.W.2d 336, 340 (Tenn. 1985), its unclear to the Court that this provision would entitle Griffin to
indemnification. This rule provides:
One who through the tort of another has been required to act in the protection of
his interests by bringing or defending an action against a third person is entitled
to recover reasonable compensation for loss of time, attorney fees and other
expenditures thereby suffered or incurred in the earlier action.
On its face, Section 914(2) concerns attorney fees and costs, not the indemnity that Griffin seeks. However, having
determined that Kentucky law applies, the Court need not address the application of these foreign states’ laws.

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articulated in Kentucky’s choice of law rules. See, e.g., Wallace Hardware Co., Inc. v. Abrams, 223 F.3d
382, 391 (6th Cir. 2000) (“On at least two occasions, we likewise have noted this provincial tendency in
Kentucky choice-of-law rules.”); Adam v. J.B. Hunt Transp., Inc., 130 F.3d 219, 230 (6th Cir. 1997)
(noting that “Kentucky does take the position that when a Kentucky court has jurisdiction over the parties,
[the court’s] primary responsibility is to follow its own substantive law.” (alteration in original)
(quotation omitted); Johnson v. S.O.S. Transp., Inc., 926 F.2d 516, 519 n.6 (6th Cir. 1991) (“Kentucky’s
conflict of law rules favor the application of its own law whenever it can be justified.”); Harris Corp. v.
Comair, Inc., 712 F.2d 1069, 1071 (6th Cir. 1983) (“Kentucky courts have apparently applied Kentucky
substantive law whenever possible . . . . [I]t is apparent that Kentucky applies its own law unless there are
overwhelming interests to the contrary.”) (emphasis in original).
Where a choice-of-law issue arises in a tort action, Kentucky courts apply the “any significant
contacts” test. See, e.g., Adam, 130 F.3d at 230. Under this test, “any significant contact with Kentucky
[is] sufficient to allow Kentucky law to be applied.” Bonnlander v. Leader Nat’l Ins. Co., 949 S.W.2d
618, 620 (Ky. Ct. App. 1996); see also Arnett v. Thompson, 433 S.W.2d 109 (Ky. 1968); Wessling v.
Paris, 417 S.W.2d 259 (Ky. 1967).

Unlike claims sounding in contract, choice-of-law questions

regarding tort claims “should not be determined on the basis of a weighing of interests, but simply on the
basis of whether Kentucky has enough contacts to justify applying Kentucky law.” Arnett, 433 S.W.2d at
113; see also Adam, 130 F.3d at 230.
Here, in light of Kentucky’s significant contacts relative to this matter, Kentucky law governs
Griffin’s indemnification claim. The Court again notes the allegations at the core of the Publishers’ fraud
claim against Griffin: that he participated in forming Dominican companies to purchase international
books, representing to the Publishers that they would be sold in the Dominican Republic, but instead
selling them to SEB and CBR. (Docket No. 210, Griffin’s Amended Third-Party Complaint, at ¶ 18.)
Likewise, in Griffin’s indemnification claim against Jones, Griffin points to Jones’ “wrongful conduct” in
establishing the Dominican Companies, defrauding the Publishers into selling international books to the
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Companies, and causing the Companies to sell these books to SEB and CBR. (Docket No. 210, Griffin’s
Amended Third-Party Complaint, at ¶ 26.)
Bearing in mind these allegations, the Commonwealth’s contacts to the purported artifice abound,
beginning first with the players’ identities:

Jones is a Kentucky resident, and the Management

Company’s principal place of business is in Calloway County, Kentucky. Both SEB and CBR located
their principal places of business in Kentucky, and SEB was formed as a Kentucky entity. At a minimum,
then, at least part of the alleged fraudulent acts that involved improper sales of international books to
Kentucky companies, which likely sold these editions from their principal places of business in Kentucky.
Accordingly, the Court will apply Kentucky law to Griffin’s claim for indemnification.
Indemnity “is simply the repayment to one party by another party who caused the loss, of such
amounts the first party was compelled to pay.” Liberty Mut. Ins. Co. v. Louisville & Nashville R.R. Co.,
455 S.W.2d 537, 541 (Ky. 1970). Unlike the statutory creations of apportionment and contribution, the
right to indemnity is born of the common law and “is available to one exposed to liability because of the
wrongful act of another with whom he/she is not in pari delicto.” Degener v. Hall Contracting Corp., 27
S.W.3d 775, 780 (Ky. 2000).

“Under Kentucky law, cases permitting recovery based on indemnity

principles ‘are exceptions to the general rule, and are based on principles of equity.’” Hengel v. Buffalo
Wild Wings, Inc., 2013 WL 3973167 at *2 (E.D. Ky. July 31, 2013) (quoting Hall v. MLS Nat. Med.
Evaluations, Inc., 2007 WL 1385943, at *3 (E.D. Ky. May 8, 2007) (internal quotation marks and
citations omitted)).
The “indemnity exception” applies in two classes of cases:
(1) Where the party claiming indemnity has not been guilty of any fault,
except technically, or constructively, as where an innocent master was
held to respond for the tort of his servant acting within the scope of his
employment; or (2) where both parties have been in fault, but not in the
same fault, towards the party injured, and the fault of the party from
whom indemnity is claimed was the primary and efficient cause of the
injury.
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Degener, 27 S.W.3d at 780 (quoting Louisville Ry. Co. v. Louisville Taxicab & Transfer Co., 77 S.W.2d
36, 39 (Ky. 1934)).
In Kentucky, common law fraud constitutes an intentional tort. See Farmers Bank & Trust Co.
of Georgetown, Ky. v. Willmott Hardwoods, Inc., 171 S.W.3d 4, 11 (“Intent to deceive is a necessary
element of actionable fraud.”); see also Hines v. Hiland, 2011 WL 2580350, at *5 (W.D. Ky. June 28,
2011) (characterizing fraud as an intentional tort). Therefore, to recover on their fraud claim against
Griffin—thereby raising the possibility of indemnity—the Publishers must establish that Griffin acted
intentionally. However, under Kentucky law, intentional tortfeasors are not entitled to indemnity. See,
e.g., Hall v. MLS Nat. Med. Evaluations, Inc., 2007 WL 1385943 at *3 (E.D. Ky. May 8, 2007)
(precluding indemnity for claims grounded upon alleged intentional conduct as a matter of law); Compton
v. City of Harrodsburg, Ky., 2013 WL 5503195, at *2 (E.D. Ky. Oct. 2, 2013) (denying an indemnity
claim for the intentional torts of outrage and failure to report child abuse). See also Baker v. BP America
Inc., 749 F. Supp. 840, 846 (N.D. Ohio 1990) (“[S]ince intent is an essential element of fraud . . .
indemnification or contribution can never be claimed for that tort as a matter of law.”) (citations omitted).
The Third-Party Defendants argue that Griffin is not entitled to indemnity if he is found liable for
fraud. The Court agrees. Should the trier of fact conclude that Griffin is guilty of common law fraud,
they will have determine that he acted intentionally: that is, neither as a “passive tortfeasor,” nor “in
fault, but not in the same fault.” Moreover the fact-finder will have determined that Griffin acted in the
same alleged intentional fault as the Jones: taking the Publishers’ allegations as true, they have asserted
that Griffin actively participated in the scheme, in pari delicto with any other tortfeasors. (See Docket
No. 103 at ¶¶ 35-36, 38.)
The Court notes that although Griffin argues against the application of Kentucky law, he does not
rebut Jones’ analysis of the indemnity principles discussed above. Therefore, in accordance with the
above discussion, Griffin’s indemnity claim must be dismissed.

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Conclusion
For the foregoing reasons, the Court will GRANT Jones’ Motion to Dismiss. (Docket No. 214.)
An appropriate Order will issue concurrently with this Memorandum Opinion.

October 30, 2014

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