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June 4, 1991


The opinion of the court was delivered by: William C. Conner, District Judge:

Plaintiff Lisa Bolden, a citizen of New Jersey, brings this defamation action against defendant Morgan Stanley & Co., Inc. ("Morgan Stanley"), a Delaware corporation with its principal place of business in New York, and two of its employees, defendants Elaine LaRoche ("LaRoche") and David Blair ("Blair") for damages in the amount of $2,000,000. Defendant Morgan Stanley has interposed counterclaims based of fraud, conversion and breach of contract against plaintiff and seeks to recover monies it claims to have reimbursed plaintiff based on her allegedly falsified expense reports as well as salary paid to plaintiff during the relevant period. This Court has diversity jurisdiction pursuant, to 28 U.S.C. § 1332 and therefore New York law applies.

This action is presently before the Court on defendants' motion for summary judgment pursuant to Rule 56(c), Fed.R.Civ.P. and plaintiff's cross-motion for sanctions for alleged violations of Rule 11, Fed.R. Civ.P.


Plaintiff served as an associate in the Municipal Finance Department at Morgan Stanley for nearly one year until her resignation on September 20, 1989.*fn1 Her annual salary at the commencement of her employment on September 26, 1988 was $50,000 plus an expected bonus of $25,000 per annum. Plaintiff claims to have resigned from Morgan Stanley as a result of a disagreement with her superiors over alleged discrepancies in her expense reports. The allegedly defamatory statements occurred in discussions of these perceived discrepancies. The employees of defendant Morgan Stanley who made the allegedly defamatory statements include defendant Elaine LaRoche, manager of the Municipal Finance Department, and defendant David Blair, manager of the Health Care Group where plaintiff was assigned to work from January 1989 until her departure from the company.

Plaintiff contends that on September 20, 1989, defendant LaRoche defamed her by communicating with plaintiff in the presence of defendant Blair and another Morgan Stanley employee about plaintiff's expense report of September 18, 1989 which defendants allege was falsified.*fn2 Plaintiff claims that defendant LaRoche accused her of submitting said report "[i]n a harsh, threatening and confrontational manner and without any justification or evidence. . . ." Plaintiff's Memorandum, at 13. Plaintiff alleges that defendant LaRoche denied plaintiff an opportunity to respond to the allegations and conducted herself in a "malicious manner, clearly with the intent to embarrass, insult, degrade and humiliate plaintiff in front of [defendant] David Blair and Alex Foroglou [an employee of defendant Morgan Stanley]. . ." Plaintiff's Memorandum, at 14.

Plaintiff claims that she was similarly defamed by defendant Blair during the course of his conversations with other employees of Morgan Stanley concerning the reasons for plaintiff's departure. Blair allegedly told other employees at Morgan Stanley that ". . . plaintiff had been fired for padding her expenses, defrauding the firm and lying." Plaintiff's claim against defendant Blair is based, in part, upon information acquired through a telephone conversation plaintiff had with Michael Benedict, an office mate of plaintiff at the firm. Plaintiff's Memorandum, at 15-16.

Plaintiff is now employed by the United States Department of Housing and Urban Development ("HUD"). It is alleged that plaintiff received a job offer from HUD on the same day she left the firm at a salary commensurate with her earnings at Morgan Stanley.


A. Defendants' motion for summary judgment.

The Standard for Summary Judgment.

A party seeking summary judgment must demonstrate that "there is no genuine issue as to any material fact." Fed.R. Civ.P. 56(c), Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987); see Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). It must establish that there is a "genuine issue for trial." Id. at 587, 106 S.Ct. at 1356. "In considering the motion, the court's responsibility is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight, 804 F.2d at 11. The inquiry under a motion for summary judgment is thus the same as that under a motion for a directed verdict: "whether the evidence presents a sufficient disagreement to require submission to a jury or, whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).

Defendants' summary judgment motion.

Defendants' contentions.

The gravamen of defendants' summary judgment motion is that the alleged defamatory statements are qualifiedly privileged and, absent proof that defendants were actuated solely by malice, plaintiff's action must fail.*fn3 Defendants also argue that the veracity of their spoken words stands as an absolute defense to plaintiff's defamation claim ...

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