Aboeid et al v. Saudi Arabian Airlines Corporation
Filing
68
OPINION AND ORDER denying 31 Motion to Amend/Correct/Supplement; granting 34 Motion to Quash Notice of Deposition; granting 42 Motion for Protective Order. Ordered by Magistrate Judge Viktor V. Pohorelsky on 6/17/2011. (Pohorelsky, Viktor)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ABDELGADIR ABOEID, et al.,
Plaintiffs,
OPINION AND ORDER
-vCV-10-2518 (SJ)(VVP)
SAUDI ARABIAN AIRLINES, INC.,
Defendant.
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The plaintiffs have moved to add a fraud claim in this action, which arises from their
alleged mistreatment at the hands of the defendant during their travels from New York to
Sudan and back. In addition, the proposed fraud claim has sparked collateral disputes
concerning discovery that the court has been asked to address. As explained more fully
below, the proposed fraud claim is futile, and discovery related solely to that claim is
therefore unnecessary.
THE MOTION TO AMEND
The plaintiffs – Abdelgadir Aboeid, Mona Abdelgadir, and their seven children –
alleged in their original complaint that during their travels they were mistreated by employees
of the defendant Saudi Arabian Airlines, Inc. because of their race and color, and were
ultimately denied boarding on the defendant’s aircraft on their return trip to New York.
Their complaint, as initially amended, asserts racial discrimination claims under federal and
state law, as well as claims for breach of contractual obligations. They seek compensatory
damages for out-of-pocket expenses incurred because of the defendant’s alleged failure to
provide the transportation for which the plaintiffs had paid, and for the emotional distress
they suffered because of the defendant’s alleged discrimination. They also seek punitive
damages, injunctive relief, and attorneys’ fees.
The fraud claim the plaintiffs propose to add is based on the following additional
factual allegations. From February 2008, the defendant was aware of the plaintiffs’ travel
with the airline and continuously had the plaintiffs’ travel records in its computer and
electronic databases. Proposed Second Amended Complaint, Ex. 5 to Dkt. No. 31
(“PSAC”), ¶¶ 57-58. The plaintiffs received a letter dated August 3, 2009 from the defendant
indicating that it was processing a $590 payment to the plaintiffs in settlement for a lost
baggage claim. PSAC ¶ 57. Sometime in 2008 or 2009 (or both), the plaintiffs made
complaints to their United States Congressman Dan Miller, the Department of
Transportation (“DOT”), and others regarding their mistreatment by the defendant. PSAC
¶ 66. In October 2009, the defendant sent letters, through its counsel, to the plaintiffs and to
the DOT and Congressman Miller stating that they were “unable to identify any documents
regarding [the Plaintiffs’] claims,” which the defendant and its counsel knew to be false.
PSAC ¶ 67. In reliance on these fraudulent misrepresentations, the plaintiffs temporarily
abandoned their claims against the defendant. PSAC ¶¶ 72-73. In 2010, after seeking the
advice of counsel, the plaintiffs initiated the present suit against the defendant. PSAC ¶73.
The plaintiffs sustained “losses of approximately $200,000 by delaying and abandoning their
claims.” PSAC ¶ 72.
In evaluating whether these allegations adequately plead a viable claim for relief, the
court is mindful that “[t]he court should freely give leave [to amend] when justice so
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requires.” Fed. R. Civ. P. 15(a)(2); see also Davis v. Goord, 320 F.3d 346, 352 (2d Cir. 2003);
Simmons v. Abruzzo, 49 F.3d 83, 86-87 (2d Cir. 1995). “Where it appears that granting leave
to amend is unlikely to be productive, however, it is not an abuse of discretion to deny leave
to amend.” Lucente v. International Bus. Mach. Corp., 310 F.3d 243, 258 (2d Cir. 2002) (citation
omitted). Undue delay, prejudice, futility of the amendment, and prior opportunities to
amend the complaint, among other factors, are to be considered in determining whether
leave to amend should be granted. E.g., Foman v. Davis, 371 U.S. 178, 182 (1962); accord, e.g.,
Holmes v. Grubman, 568 F.3d 329, 334 (2d Cir. 2009); Nettis v. Levitt, 241 F.3d 186, 193 (2d
Cir. 2001); Manson v. Stacescu, 11 F.3d 1127, 1133 (2d Cir. 1993). Ultimately, the decision to
grant or deny a request to amend is within the discretion of the district court. Foman, 371
U.S. at 182; McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007); John Hancock
Mut. Life Ins. Co. v. Amerford International Corp., 22 F.3d 458, 462 (2d Cir. 1994).
A proposed amendment is futile “if the proposed claim could not withstand a motion
to dismiss pursuant to Fed. R. Civ. P. 12(b)(6).” Lucente, 310 F.3d at 258 (citing Dougherty v.
North Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 88 (2d Cir. 2002). In evaluating the
proposed amended complaint for futility, the court applies the same standards as those
applied to a motion to dismiss pursuant to Rule 12(b)(6). See id.; see also Milanese v. Rust-Oleum
Corp., 244 F.3d 104, 110 (2d Cir. 2001); Ricciuti v. N.Y.C. Transit Auth., 941 F.2d 119, 123 (2d
Cir. 1991). Thus, the court takes the allegations of the complaint as true and draws all
reasonable inferences in favor of the plaintiff. See, e.g., Hernandez v. Coughlin, 18 F.3d 133, 136
(2d Cir. 1994). If the proposed claim sets forth facts and circumstances which may entitle
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the plaintiff to relief, then futility is not a proper basis on which to deny the amendment. See
Mathon v. Marine Midland Bank, N.A., 875 F. Supp. 986, 1003 (E.D.N.Y. 1995); Allstate Ins.
Co. v. Administratia Asigurarilor De Stat, 875 F. Supp. 1022, 1029 (S.D.N.Y. 1995).
The court thus must analyze whether the plaintiff’s new allegations adequately plead a
claim for fraud under New York law.1 To state a cause of action for fraud under New York
law, a plaintiff must plead that “(1) the defendant made a material false representation, (2) the
defendant intended to defraud the plaintiff thereby, (3) the plaintiff reasonably relied upon
the representation, and (4) the plaintiff suffered damage as a result of such reliance.” Wall v.
CSX Transportation, Inc., 471 F.3d 410, 415-16 (2d Cir. 2006) (citation and internal quotation
marks omitted).
The plaintiffs’ allegations fail to satisfy the above pleading elements in several
significant respects. First, the plaintiffs have not adequately pleaded that they suffered any
cognizable damages as a result of the alleged misrepresentations. Under New York law,
plaintiffs may recover damages only for their actual “out-of-pocket” pecuniary losses. Kregos
v. Associated Press, 3 F.3d 656, 665 (2d Cir. 1993) (citing Dress Shirt Sales, Inc. v. Hotel Martinique
Associates, 12 N.Y.2d 339, 343, 239 N.Y.S.2d 660, 663 (1963)). Moreover, the losses “must
be the direct, immediate, and proximate result of the misrepresentation,” and “independent
of other causes.” Kregos, 3 F.3d at 665 (citing Goldberg v. Mallinckrodt, Inc., 792 F.2d 305, 307
1
The plaintiffs PSAC also contains paragraphs asserting that the factual allegations
constitute “mail fraud” under 18 U.S.C. 1341. PSAC ¶¶ 68, 70. To the extent that the plaintiffs
seek to assert a separate claim for mail fraud, that amendment would be futile since there is no
private right of action for violations of the federal mail fraud statute. See Pharr v. Evergreen Garden,
Inc., 123 Fed. Appx. 420, 422 (2d Cir. 2005).
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(2d Cir. 1986) and Bennett v. United States Trust Co., 770 F.2d 308, 316 (2d Cir. 1985)). The
plaintiffs here have not pleaded any out-of-pocket losses that resulted from the
misrepresentations. Although they allege that they have lost $200,000 by delaying and
abandoning their claim for damages for the other wrongful conduct of the defendants, they
make no effort to allege how that loss occurred and there is no assertion that any of that
$200,000 is made up of out-of-pocket expenditures. Rather the only injury that appears on
the face of the pleadings is the temporary delay and abandonment of their claim for damages.
That temporary delay and abandonment, however, has not caused the plaintiffs to lose
anything. They still have their claims for damages, and are pressing those claims in this
action. Moreover, mere delay in bringing a claim is not a sufficient injury, as a matter of law,
to support an action for fraud under New York law even if the delay results in the loss of the
claim because of the statute of limitations. See Kregos, 3 F.3d at 665.
Nor does it appear that the plaintiffs have adequately alleged the reliance element
necessary to make out a fraud claim. The reliance element for a fraud claim in New York
law requires a change of position by the plaintiff in reliance on the truth of the alleged
misrepresentations. CBS Inc. v. Ziff-Davis Pub. Co., 75 N.Y.2d 496, 502 (1990); accord, e.g., High
Tides, LLC v. Demichele, No. 024029/09, 2010 WL 2330385, at *6-7 (N.Y. Sup. May 11,
2010); Hecht v. Components Int’l, Inc., 22 Misc.3d 360, 365, 867 N.Y.S.2d 889, 895 (N.Y. Sup.
2008). As noted above, the only change of position that the plaintiffs have pleaded here in
reliance on the defendant’s alleged misrepresentations is the temporary delay and
abandonment of their claims. The plaintiffs’ position, however, has not changed as a result
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of that temporary delay and abandonment. They still retain their claims for damages against
the defendant.
Finally, the plaintiffs’ allegations also fail, on their face, to adequately plead that their
reliance on the defendant’s representations was reasonable. According to their allegations,
the alleged misrepresentations were made by the defendant’s attorney, acting on the
defendant’s behalf. As a matter of law, however, “it is unreasonable for one to rely on the
advice of an adversary’s counsel to the extent when both parties are aware that adverse
interests are being pursued.” Kregos, 3 F.3d at 665. According to their proposed amended
complaint, prior to October 2009 when the alleged misrepresentations were made, the
plaintiffs had complained about the defendant’s alleged denial of travel and discriminatory
mistreatment not only to the defendant, but also to their Congressman and the DOT.
Indeed, it was in response to the inquiries of the latter officials concerning those complaints
that the plaintiffs allege the misrepresentations were made. On its face then, the pleading
asserts that the misrepresentations were made by the defendant’s attorney about matters
where the parties were pursuing adverse interests of which both were aware. Thus, as a
matter of law, any reliance by the plaintiffs on those misrepresentations was not reasonable
and cannot support a claim for fraud.
THE DISCOVERY MOTIONS
Two motions concerning discovery were directly related to the plaintiffs’ motion to
amend, a motion to quash a notice of deposition seeking testimony from one of the attorneys
who represents the defendant and a motion for a protective order seeking to preclude the
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plaintiffs from deposing a former employee of the defendant. The sole purpose for the
deposition of the attorney was to obtain testimony concerning the letters he authored
containing the alleged misrepresentations that underlie the proposed fraud claim. Since that
claim will not proceed, the testimony is irrelevant and the motion to quash the notice is
GRANTED. Similarly, the sole purpose advanced by the plaintiffs for deposing the former
employee, Nahed Rashed, is because she apparently has some knowledge about the
complaint letters sent by the plaintiffs which prompted the allegedly fraudulent response sent
by the defendant’s attorney. Again, since the fraud claim will not proceed, testimony about
the events surrounding the claim is irrelevant, and the motion for a protective order is
therefore GRANTED.
CONCLUSION
For the foregoing reasons, the plaintiffs’ motion to amend the complaint is
DENIED, and the defendants’ motions for protective orders are GRANTED.2
SO ORDERED:
Viktor V. Pohorelsky
VIKTOR V. POHORELSKY
United States Magistrate Judge
Dated:
Brooklyn, New York
June 17, 2011
2
The motion to amend is docket entry 31; the defendant’s motions for protective orders are
docket entries 34 and 42.
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