The opinion of the court was delivered by: Gerard E. Lynch, District Judge
Plaintiff Anucha Browne Sanders brings this employment discrimination action against defendants Madison Square Garden, L.P. ("MSG"), Isiah Lord Thomas III, and James L. Dolan, alleging that she was subjected to discrimination on the basis of sex, sexual harassment, and retaliation in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e ("Title VII"), and related state and city laws. Defendant MSG moves for leave to amend its answer to assert a counterclaim against plaintiff for breach of fiduciary duty. The motion will be denied.
The following facts are drawn from defendant MSG's and Dolan's motion for partial summary judgment and plaintiff's opposition to that motion, which MSG and plaintiff incorporate by reference in this motion. (Def. Mem. 1 n.1; Pl. Mem. 1 n.1.) Because the issue is whether MSG should be permitted to assert a claim, the relevant evidence is viewed in the light most favorable to MSG; the Court does not undertake to make findings of fact. Only facts relevant to the instant motion are recited here.
Browne Sanders was hired by MSG as Vice-President of Marketing for the New York Knickerbockers ("Knicks") in November 2000. (Pl. Dep. 13.) In this position, Browne Sanders was the chief marketing officer for the Knicks and responsible for all aspects of the Knicks' marketing and media efforts, and she had access to confidential MSG financial and business proprietary material. (Mills Aff. ¶ 7.) When she was hired, Browne Sanders signed a copy of MSG's Confidentiality, Code of Business Conduct and Proprietary Property Agreement (the "Agreement") (Pl. Dep. II 44-46), which provided that "[d]uring [her] employment, [Browne Sanders] may not engage in activities or have personal or financial interests that may impair, or appear to impair, [her] independence or judgment or otherwise conflict with [her] responsibilities to [MSG]." (Def. Exh. E.) Browne Sanders also signed MSG's "Employee Code of Conduct," which stated that "[p]ublic trust and confidence are the greatest assets held by [MSG]." (Pl. Dep. II 24; Def. Exh. F.)
On March 11, 2002, Browne Sanders was promoted to Senior Vice-President, Marketing and Business Operations. (Pl. Dep. II 266; Mills Aff. ¶ 8.) Her responsibilities expanded to include, among other things, oversight of the marketing and business operations budget. (Mills Aff. ¶ 8; Dolan Aff. ¶ 3.) Browne Sanders remained in that position until her termination in January 2006. Her total compensation for just over five years of employment with the Knicks exceeded $1,100,000. (Moran Aff. ¶ 11.)
Shortly after being fired, Browne Sanders sued defendants, alleging that she was discriminated against on the basis of her sex and terminated in retaliation for her sexual harassment complaint in violation of federal, state, and city law. (Am. Compl. ¶¶ 54-85.) During discovery, MSG sought and obtained (over Browne Sanders's objection) copies of Browne Sanders's federal, New York, and New Jersey tax returns for 2000-2005. (Def. Exh. N.)
The 2001-2004 returns originally produced to MSG included Schedule C deductions for the expenses of a "direct marketing" business, totaling approximately $73,000. (Def. Exhs. P(PL4302), Q(4321), R(PL4353), S(PL4388).) However, Browne Sanders shortly thereafter produced amended federal and state tax returns for 2003 and 2004. (Def. Exh. O.) The 2003 and 2004 tax returns had been amended the day after Browne Sanders's initial production to remove the Schedule C deductions. (Def. Exhs. W-X.) The amendment resulted in the elimination of approximately $20,000 of business deductions for 2003 and 2004. (Reimer Dep. 36-37.) Although the 2000 and 2001 tax returns included identical deductions (Def. Exhs. P(PL4302), Q(4321)), they were not similarly amended.
Browne Sanders denies that she operated a "direct marketing" business, and claims that the Schedule C deductions were due to accountant error and not a deliberate attempt to commit tax fraud. (Pl. Dep. II 43-44; Halstead Dep. 44-46, 48, 50-51, 64-65, 72.) Browne Sanders asserts that she did not amend her 2000 and 2001 tax returns on the advice of her current accountant, who informed her that there is a "three year statute of limitations" for amending tax returns. (Reimer Dep. 67; see Reimer Aff. ¶ 19.)
On April 27, 2007, MSG moved for leave to amend its answer to assert a counterclaim for breach of fiduciary duty, claiming that Browne Sanders had breached her duty, either by operating an outside business or by committing tax fraud while employed at MSG, and seeking restitution of all compensation paid to Browne Sanders during the term of her employment. Plaintiff responded on May 25, 2007; the motion was fully briefed on June 8, 2007.
I. Motions to Amend Pleadings
Federal Rule of Civil Procedure 15(a) governs the amendment of pleadings, and provides that leave to amend "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a). A "motion to amend should be denied if there is an 'apparent or declared reason -- such as undue delay, bad faith or dilatory motive . . . , repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of the allowance of an amendment, [or] futility of amendment.'" Dluhos v. Floating and Abandoned Vessel Known as New York," 162 F.3d 63, 69 (2d Cir. 1998), quoting Foman v. Davis, 371 U.S. 178, 182 (1962).
When a motion to amend is made early in the proceedings or in response to a motion to dismiss, the amendment will be deemed futile, and the motion to amend denied, where the amended pleading would be subject to "immediate dismissal" for failure to state a claim upon which relief can be granted, or on some other basis. Jones v. N.Y. State Div. of Military & Naval Affairs, 166 F.3d 45, 55 (2d Cir. 1999); S.S. Silberblatt, Inc. v. East Harlem Pilot Block-Bldg. 1 Housing Dev. Fund Co., 608 F.2d 28, 42 (2d Cir. 1979). Where, however, a summary judgment motion has been made and evidence outside the pleadings has already been submitted, the court must determine whether the amendment would be futile under the summary judgment standard. See Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001) ("[W]here . . . the parties have fully briefed the issue whether the proposed amended [pleading] could raise a genuine issue of fact and have presented all relevant evidence in support of their positions . . . the court may deny the amendment as futile when the evidence in support of [the] proposed new claim creates no triable issue of fact and the [opposing party] would be entitled to judgment as a matter of law under Fed. R. Civ. P. 56(c)."); DiPace v. Goord, 308 F. Supp. 2d 274, 279 (S.D.N.Y. 2004) (where parties submitted evidence outside the pleadings in connection with a motion to amend, ...