Shapiro, 7 N.Y.2d at 61, 163 N.E.2d at 336, 194 N.Y.S.2d at
Defendants dismiss plaintiff's argument that defendants were
actuated by malice as "mere conjecture [and] speculation" and
argue that plaintiff's conclusory allegations should not
prevent summary judgment here. Defendants' Memorandum, at 32.
As to their invocation of a qualified privilege, defendants
repeat their assertion that plaintiff's submissions to the
Court to the contrary do not raise any genuine issues of fact
for trial. As to the truthfulness of defendants' spoken
remarks, defendants argue that plaintiff has not presented
evidence sufficient to rebut the contention that defendants'
statements characterizing plaintiff as a "cheat and a fraud"
were factually true and their truth stands as a complete
defense to plaintiff's claims, see Guccione v. Hustler
Magazine, Inc., 800 F.2d 298, 301 (2d Cir. 1986), cert
denied, 479 U.S. 1091, 107 S.Ct. 1303, 94 L.Ed.2d 158 (1987).
Based upon the foregoing, defendants conclude that summary
judgment is appropriate. The Court disagrees.
On the issue of malice, plaintiff argues that defendant
LaRoche's allegedly defamatory statements and defendant Blair's
repetition thereof evidenced their "reckless disregard for the
truth or falsity of [their] statements . . ." and were ". . .
spoken willfully and maliciously with [the] intent to damage
plaintiff's good name . . ." Complaint, ¶¶ 26, 30. In
particular, plaintiff contends that the spirit and content of
defendant LaRoche's remarks to plaintiff in the company of
other Morgan Stanley employees was part of defendants'
concerted effort to coerce plaintiff to resign so that
defendant Morgan Stanley could avoid the prospect of a
discrimination suit in the event Morgan Stanley discharged
plaintiff outright.*fn4 As an evidentiary matter, plaintiff
brings the Court's attention to discussions she had with other
Morgan Stanley employees which plaintiff contends put her on
notice of defendant LaRoche's malevolence toward plaintiff and
her supposed motivation for making the allegedly defamatory
statements. Plaintiff's Memorandum, at 7.
Plaintiff further asserts that defendant LaRoche's actions were
"so vituperative" in light of the small amount of the expenses
in question that they justify an inference of defendants'
malicious intent to damage plaintiff's reputation.
Mercedes-Benz of North America Inc. v. Finberg, 58 A.D.2d 808,
809, 396 N.Y.S.2d 260 (1977); see also Bose Corp. v.
Consumers Union of United States, Inc., 692 F.2d 189, 196 (1st
Cir. 1982), aff'd 466 U.S. 485, 104 S.Ct. 1949, 80 L.Ed.2d
502 (1984).*fn5 Whether or not the totality of plaintiff's
factual presentation justifies such an inference is a question
that must be left for trial.
As to defendants' contention that their allegedly defamatory
statements were true and that such veracity bars plaintiff's
action, the Court is not convinced that all issues of fact have
been resolved. Plaintiff's assertion that she did not
intentionally submit falsified or duplicitous expense
forms and that the relevant submissions were made by her
secretary without her knowledge presents the Court with factual
issues on the truthfulness of defendants' characterization of
plaintiff's conduct as fraudulent. Because scienter is a
necessary element of fraud, plaintiff's intent is an issue that
must be left for trial. This case is distinguishable from SEC
v. Bonastia, 614 F.2d 908, 913-14 (3d Cir. 1980) and Rinaldi
v. Holt, Rinehart & Winston, Inc., 42 N.Y.2d 369, 382,
366 N.E.2d 1299, 1306, 397 N.Y.S.2d 943, 951 (1977) in which the
plaintiff's "general denial" of wrongdoing was deemed
inadequate to create a triable issue of fact. Here, plaintiff
has gone beyond "generally" denying defendants' accusations,
and has made factual allegations which present the Court with
factual issues which make summary judgment inappropriate.
While the aggregate of plaintiff's evidence may fail in the end
to overcome the persuasiveness of defendants' assertion that no
malevolence existed or that the veracity of defendants' remarks
bars plaintiff's action, it is sufficient to stave off summary
judgment here. Recognizing that summary judgment is given every
consideration in defamation actions where the issue of free
speech is implicated, see Guitar v. Westinghouse Elec. Corp.,
396 F. Supp. 1042, 1053 (S.D.N.Y. 1975), aff'd mem.,
538 F.2d 309 (2d Cir. 1976), the Court concludes that plaintiff raises a
triable issue as to the existence of actual malice sufficient
to defeat the claim of qualified privilege. Stillman v. Ford,
22 N.Y.2d at 50, 238 N.E.2d 304, 290 N.Y.S.2d 893.
B. Plaintiff's cross-motion for sanctions.
Plaintiff cross-moves for sanctions against defendants'
attorneys for violating Rule 11 by filing a "frivolous"
counterclaim and engaging in a series of acts to (a) delay the
prosecution of plaintiff's defamation action, (b) harass
plaintiff, and (c) cause her to incur unnecessary legal fees.
Plaintiff's Memorandum, at 4. In addition to her contention
that defendants' counterclaims are without "legal merit,"
plaintiff argues that the behavior of defendants' attorneys in
connection with plaintiff's discovery requests has been
disruptive of plaintiff's prosecution of her claim and
reprehensible to the point of warranting sanctions.
After carefully reviewing the parties' submissions on this
issue, the Court concludes that defendants' counterclaims are
not so objectively unreasonable as to support the imposition of
Rule 11 sanctions. See McMahon v. Shearson/American Express,
Inc., 896 F.2d 17 (2nd Cir. 1990). Sanctions must be imposed
on the signer of a paper if either (a) the paper is filed for
an improper purpose, or (b) the paper is "frivolous." See
Zaldivar v. Los Angeles, 780 F.2d 823, 832 (9th Cir. 1986).
The term "frivolous" describes a filing that is both baseless
and made without a reasonable and competent inquiry.
Defendants' action here is not frivolous nor is it evident that
defendants' counterclaims are pursued for an improper purpose.
Rule 11 is not a license for the Court to sanction any action
by an attorney or party with which it disagrees. See F.H.
Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1268
(2d Cir. 1987). Defendants' counterclaims before this Court are
not so clearly barred by the rule of law that the Court could
conclude that defendants' counterclaims were interposed for any
improper purpose such as to harass or to cause unnecessary
delay. Moreover, the behavior of defendants' attorneys does not
warrant the imposition of sanctions. Accordingly, plaintiff's
motion for sanctions against defendants and their attorneys is
For the reasons stated above, defendants motion for summary
judgment pursuant to Rule 56, Fed.R.Civ.P. is denied.
Plaintiff's motion for sanctions pursuant to Rule 11,
Fed.R.Civ.P. is also denied.