Bussing v. Legent Clearing, LLC et al

Filing 109

MEMORANDUM AND ORDER that Defendants' motion to dismiss #102 is granted in part and denied in part, as set forth above. In particular, all claims against defendant Sime are dismissed. Defendants' motion to strike #102 is denied. Ordered by Judge John M. Gerrard. (JSF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
JULIE A. BUSSING,
Plaintiff,

8:12-CV-238

vs.
MEMORANDUM AND ORDER
COR CLEARING, LLC, et al.,
Defendants.
This matter is before the Court on the defendants' motion to dismiss and
motion to strike. Filing 102. For the reasons discussed below, the defendants'
motion to dismiss will be granted in part and denied in part, and their motion to
strike will be denied. Although the Court will dismiss several claims in the
plaintiff's operative complaint (filing 96), there is no need for her to submit a
new amended complaint. She has not asked for leave to do so, and, in fact, has
expressed a desire to progress this case more quickly.
I. FACTUAL BACKGROUND
Plaintiff Julie A. Bussing has worked in the securities industry since
1989. She is licensed as a Certified Public Accountant, holds a Masters of
Business Administration, and she has been qualified to hold several licenses
with the Financial Industry Regulatory Authority (FINRA).1 Filing 96 at ¶¶ 12–
14. In 2011, Bussing began working as an independent contractor for defendant
COR Securities Holdings, Inc. ("COR"), a private investment management
company. During this period, Bussing was retained by and reported to
defendant Steven Sugarman, who was a director of COR as well as its CEO.
Filing 96 at ¶¶ 5, 15. Part of Bussing's duties involved assisting with the due
diligence for COR's plan to acquire Legent Clearing, LLC ("Legent"). Legent,
which is headquartered in Omaha, provides clearing services to brokerage
clients, and is now COR's wholly owned subsidiary. Filing 96 at ¶¶ 2, 4, 15.
Before its acquisition by COR, Legent had been involved in several
regulatory investigations and examinations. From 2009 to 2011, FINRA
FINRA is a private, non-profit corporation that is registered with the Securities and
Exchange Commission (SEC) as a "national securities association." Aslin v. FINRA, 704 F.3d
475, 476 (7th Cir. 2013). FINRA acts as a self-regulatory organization that oversees the
securities market and creates and enforces rules which govern that industry, alongside and
subject to significant oversight from the Securities and Exchange Commission. Id.
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investigated and sanctioned Legent for various violations of FINRA rules and
federal securities laws, including certain anti-money laundering provisions and
the Bank Secrecy Act of 1970, 31 U.S.C. § 5311, et seq. Filing 96 at ¶¶ 18–23.
Bussing learned of these issues through her investigation for COR. Filing 96 at
¶ 25. As part of her duties related to COR's acquisition of Legent, Bussing
worked to develop a "Change of Control Plan." Filing 96 at ¶ 15. Among other
things, the plan was designed to bring Legent's operations into compliance with
the law. COR approved the plan for implementation immediately after it
completed its acquisition of Legent, during the first half of 2012. Filing 96 at ¶¶
16–17.
Around November 2011, Sugarman recruited Bussing to work for and
lead Legent as its executive vice president. Filing 96 at ¶ 24. Bussing initially
declined, citing Legent's "'troubling regulatory history.'" Filing 96 at ¶¶ 16, 25.
Bussing claims that she was assured she would be authorized to implement the
Change of Control Plan and that Legent would sign a long-term employment
agreement with her. Filing 96 at ¶ 26.
Bussing and Legent entered into an oral employment agreement, which
provided for, among other things, a 3-year term of employment, and allowed
Bussing to report directly to Sugarman and COR's board of directors instead of
Legent's CEO, defendant Christopher Frankel. Filing 96 at ¶¶ 7, 27. On
January 1, 2012, Bussing began working for Legent as its executive vice
president. Filing 96 at ¶ 28. Later, in March 2012, Bussing and Legent entered
into a written employment agreement, which was backdated to her start date.
Filing 96 at ¶¶ 44–45.
Bussing began implementing the Change of Control Plan in January
2012. Filing 96 at ¶¶ 29, 31. Around that same time, FINRA began another
investigation of Legent, for the same types of violations that had been found in
previous years. Filing 96 at ¶ 20. From January to April, FINRA sent several
large document and information requests, and conducted onsite examinations of
Legent, all of which resulted in "significant pressure" on Legent's compliance
efforts and disrupted Legent's operations. Filing 96 at ¶¶ 36–41.
On April 23, 2012, FINRA instituted formal proceedings against Legent,
alleging that during 2009 and 2010, Legent had failed to comply with the
requirements of the Bank Secrecy Act, as well as anti-money laundering and
financial reporting responsibilities imposed by various FINRA and SEC rules.
Filing 96 at ¶¶ 21–22. On April 25, Bussing received a request from FINRA to
provide documents and information, which were to be compiled and made
available to FINRA staff when they arrived at Legent's office on April 30. Filing
96 at ¶ 50. Bussing alleges that in the course of preparing responses to the
request, she identified several potential or existing violations of FINRA rules
and federal securities regulations which FINRA was likely to discover,

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including violations of the Bank Secrecy Act and certain anti-money laundering
provisions. Filing 96 at ¶ 52.
On April 27, 2012, Bussing met with defendant Carlos Salas, a director of
COR, who told Bussing that she had the support of COR management. Filing 96
at ¶¶ 6, 54. Sugarman similarly expressed his support of Bussing's
investigations and disclosures. Filing 96 at ¶ 55. On April 27, based upon
violations identified in response to the latest document request, Bussing
directed Legent staff to cease processing penny stock certificates. Filing 96 at
57. Bussing also directed Legent staff to perform several transactional audits
and account reviews, including an audit of all third-party foreign wires from
2011 and 2012. Filing 96 at ¶ 58. Later that day, Salas met with Bussing and
expressed his dissatisfaction with Bussing's response to the document request
and her decision to cease processing penny stock certificates. Bussing alleges
that Salas advocated ignoring or responding incompletely to FINRA's document
request. Filing 96 at ¶ 59.
Bussing alleges that she explained to Salas that FINRA could
immediately restrict Legent from conducting certain activities that were not in
compliance with the applicable rules or regulations, such as processing penny
stock certificates. Bussing also predicted that negative action by FINRA was
likely, and that it would be even more likely if her actions were reversed and
certain business activities were continued without correction. So, Bussing
continued to prepare a response to FINRA's document request. Filing 96 at ¶¶
60–61.
On April 29, 2012, defendant Jeffrey Sime, an officer of Legent, instructed
Bussing to cease preparing a response to the document request and to cease her
audit of Legent's anti-money laundering compliance. Filing 96 at ¶¶ 8, 62.
Bussing alleges that Sime was so agitated during their meeting that it
prompted her to threaten to call security. Bussing also claims that Sime
telephoned Salas and then confronted her again. Filing 96 at ¶¶ 62–63.
Later that day, Bussing issued a report to COR and Legent which
detailed several violations of FINRA rules and certain anti-money laundering
provisions, as well as deficits in Legent's internal record-keeping. The report
stated that Legent had processed transactions that violated the Bank Secrecy
Act and anti-money laundering provisions on a daily basis throughout 2011 and
2012, and that Legent had likely been used to facilitate money-laundering
activities. Filing 96 at ¶¶ 64–68. Bussing discussed these findings with Legent
and COR management, including Sugarman, Salas, and Frankel. Filing 96 at ¶
69.
Bussing alleges that, in response, she "was directed by Legent and COR
management, including but not limited to Sugarman, Salas, Frankel, and
Legent's new CCO to stall, delay, stop digging, and stop responding to the
[document request] or FINRA." Filing 96 at ¶ 70. Bussing refused, and
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participated in FINRA's onsite examination of Legent's offices, which took place
from April 30 to May 3. Filing 96 at ¶¶ 70–71.
On May 4, 2012, Salas allegedly notified Bussing that he, Sugarman, and
COR's other officers and directors, including Frankel, had decided Bussing
needed a "'vacation,'" and ordered Bussing to begin taking leave immediately.
Salas also told Bussing that when she returned, she would be demoted and
Salas would become Legent's CEO. Filing 96 at ¶ 73. Then, on May 20, Bussing
was fired. Filing 96 at ¶ 77.
II. STANDARD OF REVIEW
A. MOTION TO DISMISS - FED. R. CIV. P. 12(b)(6)
To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a complaint
must contain sufficient factual matter, accepted as true, to state a claim for
relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A
claim has facial plausibility when the plaintiff pleads factual content that
allows the Court to draw the reasonable inference that the defendant is liable
for the misconduct alleged. Id. While the Court must accept as true all facts
pleaded by the nonmoving party and grant all reasonable inferences from the
pleadings in favor of the nonmoving party, Gallagher v. City of Clayton, 699
F.3d 1013, 1016 (8th Cir. 2012), a pleading that offers labels and conclusions or
a formulaic recitation of the elements of a cause of action will not do. Iqbal, 556
U.S. at 678. Determining whether a complaint states a plausible claim for relief
requires the Court to draw on its judicial experience and common sense. Id. at
679.
B. MOTION TO STRIKE - FED. R. CIV. P. 12(f)
Rule 12(f) provides that the Court may "strike from a pleading an
insufficient defense or any redundant, immaterial, impertinent, or scandalous
matter." Fed. R. Civ. P. 12(f). While the Court has considerable discretion to
strike pleadings under Rule 12(f), doing so is an extreme and disfavored
measure. BJC Health Sys. v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir.
2007).
III. ANALYSIS
A. MOTION TO STRIKE
The Court begins with defendants' motion to strike, as it requires little
discussion. Defendants first ask the Court to strike Bussing's allegations
related to the verbal employment agreement that preceded her written contract
with Legent, because the written contract contained an integration clause. The
Court finds that it is too early to determine whether this did, in fact, render the
verbal contract immaterial, as defendants claim. The enforceability of the

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written contract, and its integration clause, are not properly before the Court at
this time, and determining their status is not a proper use of a motion to strike.
Next, defendants move to strike paragraph 80 of Bussing's complaint,
which alleges that
[o]n or about December 16, 2013, FINRA accepted Legent's offer to
settle the examination and investigation described above. As part of
the settlement, Legent was required to pay a fine of $1 million,
submit certain additional certifications to FINRA regarding its
compliance, and to undergo additional compliance overhaul
(specifically related to the anti-money laundering regulations,
among other requirements) by an independent consultant. A true
and correct copy of FINRA's Order accepting the settlement is
attached hereto and incorporated herein as Exhibit "B."
Filing 96 at ¶ 80. Defendants have also moved to strike a copy of the FINRA
order accepting the settlement that Bussing has attached to her complaint.
Filing 96 at 37–65. As Bussing points out, however, these allegations relate to
the same investigation that Bussing participated in, and tend to corroborate
Bussing's allegations that Legent was violating the law. Defendants have not
explained how they are prejudiced in any manner by the inclusion of these
matters (which are public record) in the complaint, and their motion to strike
will be denied.
Finally, defendants move to strike a heading contained in Bussing's
complaint, which reads: "Retaliation Against Bussing and her Constructive
Discharge and Termination." Filing 96 at p. 15. Defendants point out that
Bussing has not brought a claim for "constructive discharge." But constructive
discharge is not a separate claim, it is a way of showing that certain actions
were tantamount to a termination, for purposes of other causes of action. And
Bussing has alleged facts that may show she was constructively discharged: she
was forced to take vacation, told she would be demoted upon her return, and
allegedly subjected to abusive behavior. See filing 96 at ¶¶ 73–77. At this time,
the Court need not determine whether these circumstances rise to a
constructive discharge. But if they do, then her constructive discharge may be
actionable as part of her claim for wrongful discharge in violation of public
policy. Cf. Trosper v. Bag 'N Save, 734 N.W.2d 704 (Neb. 2007) (demotion held
actionable). Any constructive discharge might also be actionable under
Bussing's claim under 15 U.S.C. § 78u–6(h), which states that no employer may
"discharge, demote, suspend, threaten, harass, directly or indirectly, or in any
other manner discriminate against" an employee in retaliation for certain
whistleblowing activities. (Emphasis supplied.) In sum, defendants' motion to
strike is without merit and will be denied in its entirety.
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B. MOTION TO DISMISS
Much of defendants' motion to dismiss is uncontested. In its previous
order allowing Bussing to submit a third amended complaint (filing 93), the
Court required Bussing to withdraw or replead certain claims for relief. In the
complaint that she filed, Bussing inadvertently included certain claims that she
agrees are no longer part of her case. So, Bussing agrees that her claim for
negligence is brought only against the corporate defendants, and not against
the individual defendants. Filing 105 at 4. She also consents to dismissal of her
claims for breach of contract and breach of the implied covenant of good faith
and fair dealing—as to her written employment agreement with Legent—
against all of the individual defendants. Similarly, Bussing acknowledges that
the Court previously found that she had not stated a claim for tortious
interference with any business relationship or expectancy with COR, and
agrees that any language to the contrary in her complaint was an inadvertent
inclusion. Filing 105 at 6; filing 96 at ¶ 110. Finally, Bussing agrees that all
claims against defendant Jeffrey Sime should be dismissed, with the exception
of her claim against him for tortious interference with her relationship with
Legent. Filing 105 at 8–9. That last claim is the focus of the pending motion to
dismiss. Before proceeding to that claim, the Court will take a moment to sort
through the claims that now remain in Bussing's operative complaint.
Bussing's complaint asserts eight theories of recovery, with each brought
against all of the defendants unless otherwise noted: (1) retaliation in violation
of 15 U.S.C. § 78u–6(h); (2) retaliation in violation of Neb. Rev. Stat. § 481114(3); (3) wrongful termination in violation of public policy; (4) breach of
contract and (5) breach of the covenant of good faith and fair dealing, as to the
written employment agreement (against Legent only); (6) breach of the
covenant of good faith and fair dealing, as to the verbal agreement (against
Legent only);2 (7) tortious interference with her business relationship or
expectancy with Legent (against all parties but Legent); and (8) negligence
(against COR and Legent).
1. Bussing's Claim of Tortious Interference Against Sime
Bussing claims that each of the defendants (except for Legent) tortiously
interfered with her employment relationship with Legent. Sime counters that,
as an officer of Legent and Bussing's coemployee, he was not a "third party"
Bussing has pleaded these claims as against all defendants. But her complaint alleges that
the only parties to the verbal and written employment agreements were her and Legent. See
filing 96 at ¶¶ 26–27, 44, 98, 105; and pp. 26–27, 96. Bussing acknowledges that these claims
should not have been pleaded against the individual defendants. As the Court reads Bussing's
complaint, the claim should also be dismissed as against COR, which was not a party to either
agreement. But neither party has addressed this point, and so, for the time being, the claim
will remain as against COR.
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capable of interfering in the relationship between Legent and Bussing. In its
previous Memorandum and Order of May 21, 2014, the Court expressly left this
issue unresolved. Filing 93 at 6, 19–22. As to Sime, at least, the issue is now
ripe for resolution.
To state a claim for tortious interference, Bussing must allege facts to
support the following elements: (1) the existence of a valid business relationship
or expectancy, (2) knowledge by the interferer of the relationship or expectancy,
(3) an unjustified intentional act of interference on the part of the interferer, (4)
proof that the interference caused the harm sustained, and (5) damages. Huff v.
Swartz, 606 N.W.2d 461, 466 (Neb. 2000). The first two elements are not in
dispute: Bussing was employed by Legent, and Sime was aware of this. Sime
focuses on the third element, arguing that he was not a third party capable of
interfering in Bussing's employment relationship with their common employer,
Legent. The Court agrees. As pleaded, Bussing's complaint does not state a
tortious interference claim against Sime.
The Court begins with a basic observation. A contracting party cannot be
held liable in tort for interfering with its own contract; so, a tortious
interference claim requires a "third-party" interferer. Id. at 467 (citing Nordling
v. N. States Power Co., 478 N.W.2d 498, 505 (Minn. 1991)). Applying this
seemingly straight-forward principle becomes complicated when, as here, the
allegedly interfering party is the plaintiff's supervisor or coemployee, i.e., an
agent of the contracting party.
Generally speaking, the agent of a principal cannot be held liable for
interfering with a contract between the principal and a third party. See, e.g.,
Martin v. Johnson, 975 P.2d 889, 896 (Okla. 1998). And a corporation can only
act through its directors, officers, and agents. Wiekhorst Bros. Excavating &
Equip. Co. v. Ludewig, 529 N.W.2d 33, 40 (Neb. 1995). It follows that if a
corporation's agent is acting within the scope of his authority, his acts are acts
of the corporation and there is only one actor. Id. Thus the question becomes, at
what point does the coemployee become a "third party" subject to liability for
tortious interference with the employment relationship of another on the basis
of an unjustified intentional act? Huff, 606 N.W.3d at 467.
The Huff court observed that, in determining whether a defendant was a
third party capable of interfering, other courts tend to draw a distinction
between actions which fall within the general scope of the alleged interferer's
authority as an agent of the employer and those which are in furtherance of
some individual or private purpose not related to the interests of the employer.
Id. Those courts reason that
"[i]f a corporation's officer or agent acting pursuant to his company
duties terminates or causes to be terminated an employee, the
actions are those of the corporation; the employee's dispute is with
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the company employer for breach of contract, not the agent
individually for a tort. To allow the officer or agent to be sued and to
be personally liable would chill corporate personnel from
performing their duties and would be contrary to the limited
liability accorded incorporation."
Id. (quoting Nordling, 478 N.W.2d at 505–06).
Stated differently, so long as the officer "'"acts within the general range of
his authority intending to benefit the corporation, the law identifies his actions
with the corporation."'" Id. (quoting Hickman v. Winston County Hosp. Bd., 508
So.2d 237, 239 (Ala. 1987) (quoting Wampler v. Palmerton, 439 P.2d 601, 607
(Or. 1968)). In another formulation of the rule, the plaintiff must show that the
coemployee "was serving a master other than the employer or was pursuing
'some benefit to himself, at odds with the interests' of the employer." Id. at 467–
68 (quoting Wilcox v. Niagara of Wisconsin Paper Corp., 965 F.2d 355, 365 (7th
Cir. 1992)).
These tests generally parallel the scope of employment principles set forth
in the Restatement (Second) of Agency. See, e.g., Gruhlke v. Sioux Empire
Federal Credit Union, Inc., 756 N.W.2d 399, 407–08 (S.D. 2008). Under the
Restatement approach, conduct of a servant is within the scope of employment
if, among other things, it is "actuated, at least in part, by a purpose to serve the
master."3 Restatement (Second) of Agency § 228; see also, Restatement (Second)
of Agency §§ 229, 235, 236; cf. Johnson v. Evers, 238 N.W.2d 474, 430 (Neb.
1976) (utilizing § 228).
Taking the pleadings as true, Bussing has failed to allege facts from
which a reasonable inference could be drawn that Sime's actions were taken in
furtherance of some individual or private purpose not related to Legent's
interests. Bussing alleges that, in the midst of her response to the FINRA's
inquiries, Sime confronted her and demanded that she cease her investigation.
Filing 96 at ¶¶ 62–63. Bussing claims that Sime's goal was to cover up Legent's
past and ongoing violations of various securities laws and regulations. But
according to Bussing's complaint, that was a goal shared by Legent. Bussing
claims that Frankel (Legent's CEO), COR (the sole shareholder of Legent), and
the remaining individual defendants (who ran COR) all interfered with her
relationship with Legent, and that they did so in order to prevent her from
exposing Legent's legal violations. See filing 96 at ¶¶ 59–78, 109–116.
Many of the same general principles control under the Restatement (Third) approach, but
they have been refined and consolidated. See Restatement (Third) of Agency § 7.07 cmt. b.
Under its approach, an act is not within the scope of employment "when it occurs within an
independent course of conduct not intended by the employee to serve any purpose of the
employer." Id. § 7.07(2) & cmt. b (emphasis supplied). But, as the Court explains below,
Bussing has not alleged any "mix" of motives on Sime's part. So, any difference between the
second and third Restatements is immaterial.
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Bussing has not alleged that the individual defendants were part of some
cabal within Legent or COR, which were otherwise governed by separate actors
who were dedicating to pursuing lawful business activities. Instead, she has
alleged that Sugarman, Salas, and Frankel directed COR's activities, which, in
turn (along with Frankel and, later, Salas), ran Legent. If Bussing's allegations
are true, Sime's purpose was shared by the people who ran Legent, and thus
Legent itself.
Bussing alleges generally that defendants' acts—interfering with an
official regulator's examination; terminating "a high-level employee who had
positive economic impact on Legent and positive performance feedback;" and
allocating resources and employee time to hide legal and ethical violations—
were contrary to Legent's economic interests. Filing 96 at ¶ 116. But that
confuses the point. Taking Bussing's allegations as true, the defendants were
acting to benefit Legent—albeit with an allegedly dishonest strategy that
ultimately failed. Bussing has not alleged that the defendants were attempting
to shift the blame onto Legent, away from themselves, in order to further some
private purpose at Legent's expense. Defendants were allegedly hoping that
they, and Legent, would ultimately stand to gain by keeping FINRA in the
dark.
The question is not whether Sime's alleged conduct was socially desirable,
or even legal. An action may be within the scope of employment although
"forbidden, or done in a forbidden manner," see Restatement (Second) of Agency
§ 230, or even "consciously criminal or tortious." See Restatement (Second) of
Agency § 231; see also, Davric Maine Corp. v. U.S. Postal Service, 238 F.3d 58,
66 (1st Cir. 2001); Davis v. Devereux Foundation, 37 A.3d 469, 490–91 (N.J.
2012). Sime's conduct was not forbidden by Legent. Quite the opposite—
according to Bussing, the other actors who ran Legent shared Sime's illicit
purpose and took their own steps to ensure Bussing did not ruin their plans.
Two days before she was confronted by Sime, Bussing alleges that Salas
advised her to ignore or evade FINRA's requests. Filing 96 at ¶ 59. Bussing
alleges that it was the combined management of Legent and COR, including
Sugarman, Salas, Frankel, and Legent's new CCO, who directed her to "stall,
delay, stop digging, and stop responding." Filing 96 at ¶ 70. And Bussing alleges
that it was them, not Sime, who decided to fire her. Filing 96 at ¶¶ 73–78.
The Court finds that Sime was acting within the scope of his employment.
If that were all that Huff had to say on the matter, the Court's analysis would
be at an end—since Sime was acting within the scope of his employment for
Legent, he could not be considered a third party capable of interfering with
Bussing's relationship with Legent. But, pointing to another portion of Huff,
Bussing contends that the matter is not that simple.
In Huff, the Court first discussed the scope of employment test discussed
above, citing variations of the test from several other states. See Huff, 606
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N.W.2d at 467–68. Referring to these cases, the Huff court stated "[w]e agree
with these authorities and hold that in order to constitute actionable
interference with an employment relationship, actions of a coemployee must be
shown to have been committed in furtherance of some purpose other than the
lawful purposes of the employer." Id. at 468 (emphasis supplied).
In its previous memorandum and order, the Court recognized the
potential significance of this language. Bussing has alleged a scheme by Legent,
COR, and their management, to avoid compliance with various securities
regulations and laws and to cover up their past violations. There is no way that
such a scheme could be deemed a "lawful purpose" of Legent. If the quoted
language from Huff is taken at face value, then Sime's conduct—which was
taken in furtherance of his employer's unlawful purposes—renders him a third
party for tortious interference purposes. The Court finds that, when Huff is
considered in its entirety, this isolated sentence cannot reasonably be taken at
face value.
First, this reading of a single sentence conflicts with the remainder of the
reasoning in Huff. Summarizing its holding, the court later stated that "we hold
that . . . an action [for tortious interference] may be maintained against a
coemployee who acts as a third party to the relationship by taking actions for
his or her own personal benefit, or for the benefit of an entity other than the
employer." Id. at 470. Here, the court omitted any mention of a "lawful purpose"
requirement. And the Huff court began its analysis by noting that, because a
party cannot interfere with its own contract, it is first necessary to determine
when a coemployee can be considered a "third person" capable of interfering
with the contract. Id. at 467. In considering how that determination should be
made, the Huff court discussed a variety of scope of employment tests from
other jurisdictions, and then stated its agreement with the principles set forth
in those cases. Huff, 606 N.W.2d at 467–68. But none of the cases cited in Huff
contain the sort of "lawful purpose" requirement espoused by Bussing. See,
Wilcox, 965 F.2d at 364–65; Nordling, 478 N.W.2d at 505–07; Hickman, 508
So.2d at 239–40; Wampler, 439 P.2d at 606–08. The Huff court could hardly
have been agreeing with those decisions if it appended an alternative "lawful
purpose" prong to its analysis.
Under Bussing's reading of Huff, whenever an employee acts with an
unlawful purpose, then they are automatically considered a third party—never
mind that the employee was acting within the scope of his employment, or even
acting with a purpose shared and encouraged by his employer. In such cases,
the scope of employment inquiry would be entirely unnecessary. That, in turn,
would be inconsistent with the purpose of this entire analysis—to determine if
the coemployee was acting as a third person, i.e., one not aligned with the
interests of the employer. And that analysis goes to the very thing that this tort
was meant to protect against: interference from "outside intermeddlers."
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Gruhlke, 756 N.W.2d at 404; see also, McGanty v. Staudenraus, 901 P.2d 841,
845 (Or. 1995); Printing Mart–Morristown v. Sharp Elecs. Corp., 563 A.2d 31,
38 (1989).
Moreover, the Huff court had no occasion to craft a rule for cases where
an unlawful purpose was shared by the employer and coemployee. The facts of
Huff were more straightforward. Huff alleged that his supervisor interfered
with his relationship with their common employer by, among other things,
threatening to fire him or transfer him to another facility, and by demoting him.
See Huff, 606 N.W.2d at 465. The court found that, while Huff's supervisor may
have "spoke and acted boorishly, there is no evidence that [he] did so in any
capacity other than as [a company] manager addressing a job performance issue
involving a subordinate employee." Id. at 469. In other words, the situation in
Huff was nothing like the situation here. There was no need to decide whether,
and under what circumstances, an unlawful purpose shared by an employer and
a coemployee could give rise to a tortious interference claim. Huff should not be
read as establishing a rule for such situations, as a case is not authority for any
point not necessary to be passed on to decide the case. Pribil v. Koinzan, 665
N.W.2d 567, 576 (Neb. 2003).
Finally, Bussing argues that Sime and Legent could not actually have
shared an unlawful purpose because, under Delaware's Limited Liability
Company Act, Legent was only authorized to "carry on any lawful business." 6
Del. Code § 18-106(a) (West 2014) (emphasis supplied). The Court is not
persuaded. This statute does not mean that limited liability companies are
somehow incapable of breaking the law or acting with unlawful purposes. That
would fly in the face of the well-established principle that corporate actors may
be held liable for all manner of legal wrongs. Corporations—including limit
liability corporations—may even be convicted of crimes. See, United States v.
Jorgensen, 144 F.3d 550, 560 (8th Cir. 1998); People v. Highgate LTC Mgmt.,
LLC, 69 A.D.3d 185 (N.Y. App. Ct. 2009). This holds true even for offenses that
require some degree of scienter or even specific intent (i.e., an unlawful
purpose). See, e.g., Genty v. Resolution Trust Corp., 937 F.2d 899, 909 (3d Cir.
1991); Commonwealth v. Life Care Ctrs. of Am., Inc., 926 N.E.2d 206, 212–13
(Mass. 2010); State v. Christy Pontiac-GMC, Inc., 354 N.W.2d 17 (Minn. 1984).
While Bussing has alleged that Sime acted with an unlawful purpose, it
was apparently a purpose that Sime shared with Legent. Bussing has not
pleaded any facts to suggest that Sime was acting outside the scope of his
employment. Accordingly, the Court finds that Sime was not a third party
capable of interfering with Bussing's employment relationship, and Bussing's
final claim against Sime must be dismissed.
THEREFORE, IT IS ORDERED:

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1.

Defendants' motion to dismiss (filing 102) is granted in part
and denied in part, as set forth above. In particular, all claims
against defendant Sime are dismissed.

2.

Defendants' motion to strike (filing 102) is denied.

Dated this 10th day of December, 2014.
BY THE COURT:

John M. Gerrard
United States District Judge

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