The opinion of the court was delivered by: GERARD E. LYNCH, District Judge
This case, originally brought in California state court and later
removed and consolidated with the class action complaint in In re
Global Crossing Ltd. Securities Litigation, arises from alleged
accounting improprieties at the telecommunications firm Global Crossing,
Ltd. ("GC"). Plaintiff Roy Olofson, who served during the time relevant
to the complaint as Vice-President of Finance for Global Crossing
Development Company ("GCDC"), a subsidiary of GC, claims he was
wrongfully terminated in retribution for raising concerns about "swap"
used by company management to inflate the company's stock price.
Plaintiff asserts claims under California law for intentional and
negligent interference with contract and intentional and negligent
interference with prospective economic advantage against Gary Winnick,
the Chair of GC's board, and various of its officers and directors. He
further brings a claim for defamation against Winnick. Defendants move to
dismiss the complaint. For the reasons discussed below, defendants'
motions to dismiss plaintiffs claims for interference with contract and
economic advantage will be granted, and the motion to dismiss plaintiffs
defamation claim will be denied.
The facts as presented in the complaint, which must be taken as true
for purposes of this motion, are as follows.
Olofson served as Vice-President of Finance for GCDC from May 1998
until November 2001. In May 2000, defendant Joseph P. Perrone was hired
as Senior Vice President of Finance, and was soon promoted to Executive
Vice-President of Finance of GC, at which time he took over
responsibility for GC's accounting and reporting requirements from
Olofson. At around this time, Olofson became concerned about GC's
increasing use of "swap" transactions, or transactions in which GC would
sell capacity on its network to other telecommunications providers, but
would "roundtrip" the proceeds by engaging in mirror-image purchases from
those providers, with each booking the proceeds from the transaction as
revenue.*fn1 These transactions were entered into at the end of the
financial quarter, Olofson believed GC's accounting for these
transactions violated Generally Accepted Accounting Principles ("GAAP")
and that they had no
valid business purpose, but rather were entered into solely to
create the appearance that GC's revenues met Wall Street's expectations.
He was further concerned that defendant Thomas Casey, GC's Chief
Executive Officer, had falsely told analysts that there had been no swap
transactions in the first quarter of 2001.
Olofson first raised these concerns with Perrone in meetings on May 31
and June 1, 2001. At the June 1 meeting, Perrone "brushed off [Olofson's]
concerns," and angrily informed him that he was in danger of being laid
off. Olofson contacted defendant Dan Cohrs, GC's Chief Financial Officer,
after the meeting to ask whether he would be laid off; Cohrs responded
that he should contact Perrone after July 6. When Olofson attempted to do
so, Perrone did not return his calls. Thereafter, Olofson "was given no
work and was essentially cut off from any meaningful participation in the
affairs of Global Crossing Ltd. or Global Crossing Development Company."
(¶ 30.) On August 6, 2001, Olofson complained to GC's Chief Ethics
Officer, James Gorton. Gorton responded the next day, assuring plaintiff
that GC took seriously the issues he had raised.
Olofson alleges that the decision to fire him was initially made in
July or August 2001, but was "shelved" in response to his letter of
August 6. On August 15, Gorton notified him that GC had begun an
investigation into the practices he had identified, and simultaneously
demanded that he formally notify GCDC whether or not he would continue
his employment at the company. GC did not, however, provide any assurance
that it "was actually going to investigate, let alone change any of its
accounting practices." (¶ 63.) Olofson then "formally notified
defendants that he would not participate in and/or have any complicity in
a continuation of the conduct described in the August 6, 2001 letter."
(¶ 64.) He was subsequently placed on paid administrative leave, and
was fired shortly thereafter, purportedly as part of a "planned reduction
in force." (Id.)
Olofson alleges that he was not only terminated but also defamed as a
result of his attempts to seek an investigation: at a "town hall" meeting
for GC employees on February 15, 2002, following GC's bankruptcy filing,
Winnick publicly stated that "[t]he definition of an extortionist is Roy
GC declared bankruptcy in early 2002. Unable to sue GC, Olofson now
asserts claims against individual defendants Winnick, Perrone, Cohrs, and
Casey for intentional and negligent interference with contract and
intentional and negligent interference with prospective economic
advantage, arising from his firing by GCDC. He further asserts a
defamation claim against Winnick for the statement made at the February
15, 2002, town hall meeting. Defendants move to dismiss all claims.
A. Standard for Dismissal
On a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the Court must
accept "as true the facts alleged in the complaint," Jackson Nat'l
Life Ins. Co. v. Merrill. Lynch & Co., 32 F.3d 697, 699-700 (2d
Cir. 1994), and may grant the motion only if "it appears beyond doubt
that the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief." Thomas v. City of New York
143 F.3d 31, 36 (2d Cir. 1998) (citations omitted); see also
Bernheim v. Litt, 79 F.3d 318,321 (2d Cir. 1996) (whoa adjudicating
motion to dismiss under Fed.R.Civ.P. 12(b)(6), the "issue is not
whether a plaintiff will ultimately prevail but whether the claimant is
entitled to offer evidence to support the claims" (internal quotation
marks and citations omitted)). When deciding a motion to dismiss
pursuant to Rule 12(b)(6), the Court may
consider documents attached to the complaint as exhibits or
incorporated in it by reference. Brass v. American Film Techs.,
Inc., 987 F.2d ...