Sharon M. Porcellio ()
This quarter U.S. Magistrate Judge Marian W. Payson considered whether a claim limited to garden variety emotional distress precludes discovery of the claimant’s mental health records, and District Judge Lawrence J. Vilardo faced an array of substantive and procedural issues worthy of a law school exam in deciding whether a corporation not named in a contract had standing to proceed with its suit in the Western District of New York.
Mental Health Records
In Mitchell v. Siersma, No. 14-CV-6069G, 2017 U.S. Dist. LEXIS 109751 (W.D.N.Y. July 14, 2017), plaintiff Patrick Mitchell moved to preclude discovery of his mental health history records after he limited his claim to garden variety emotional distress. Defendant law enforcement personnel (collectively defendants) opposed the motion arguing that Mitchell’s claim of emotional distress was beyond the garden variety type and subject to discovery.
Mitchell filed this action against the defendants for unlawful arrest and imprisonment, illegal entry into his dwelling, and falsification of an arrest report. Mitchell asserted that he suffered emotional distress as a result of the defendants’ conduct. During his deposition, Mitchell testified that he was being treated by a psychiatrist for emotional distress. Notably, he stated that he “always, always, always [has to] make sure the outside door [to his apartment] is latched.” 2017 U.S. Dist. LEXIS 109751 at *3. After his deposition, Mitchell filed this motion for a protective order precluding further discovery regarding his mental health records because such information is protected by the psychotherapist-patient privilege. Following oral argument, Mitchell provided a signed statement that he was claiming only “garden variety” emotional distress, not severe emotional distress, and would not present any expert witness testimony regarding such claims. He noted he understood “garden variety” emotional distress is “nothing more than the distress that any healthy, well-adjusted person would likely feel as a result of the challenged actions.” 2017 U.S. Dist. LEXIS 109751 at *3.
Defendants opposed this motion, arguing that the Mitchell’s claimed emotional distress is more severe than garden variety and he is seeking to recover damages beyond the garden variety distress. They pointed out that Mitchell’s persistent, compulsive behavior to constantly lock his door is behavior inconsistent with garden variety emotional distress. As a result, defendants claimed they are entitled to discover his medical records because claims for severe emotional distress waive psychotherapist-patient privilege for discovery purposes.
Judge Payson explained that “[a]lthough most cases involving garden variety emotional distress claims do not involve allegations of ongoing distress, the fact that a plaintiff continues to experience ongoing symptoms does not necessarily elevate the claim beyond garden variety.” 2017 U.S. Dist. LEXIS 109751 at *6. Accordingly, she concluded that Mitchell’s emotional distress claim did not rise above the garden variety type, especially because there will be no supporting medical evidence or expert testimony. The judge then reminded Mitchell that he could not offer evidence, including his own testimony, inconsistent with his representations regarding his garden variety emotional distress claim, and granted his motion.
Issues for a Law School Exam
Standing. In a breach of contract case addressing both constitutional and prudential standing issues and a panoply of procedural rule questions, District Judge Vilardo, converted a motion to dismiss for lack of standing into a motion for summary judgment and granted it. AdsOn5th, Inc. v. Bluefin Media, No. 16-CV-143 (LJV), 2017 U.S. Dist. LEXIS 108883, at *1 (W.D.N.Y. July 13, 2017). Plaintiff AdsOn5th, Inc., d/b/a ClickPayz (AdsOn5th) commenced this action against Bluefin Media, Inc. and Brand Technologies Inc. d/b/a Bluefin Media (“defendants”) in state court. Defendants removed the case on the basis of diversity jurisdiction.
The two-page contract listed the parties to it as “ClickPayz (Payzonline Inc.)” and “Bluefin Media (Bluefin).” Defendants moved to dismiss, arguing that AdsOn5th is a different corporation from ClickPayz, and AdsOn5th therefore lacks standing to enforce the contract.
In its complaint, AdsOn5th asserted that AdsOn5th, Inc. d/b/a ClickPayz is a corporation organized under Florida state law with its principal place of business in Orchard Park, N.Y., and that under the agreement, AdsOn5th “agreed to sell internet traffic to Bluefin Media and Bluefin Media agreed to buy internet traffic from [the plaintiff].” After removal, defendants filed a motion to dismiss the complaint with prejudice pursuant to Federal Rules of Civil Procedure 12(b)(1) (for lack of subject matter jurisdiction) and 12(b)(6) (for failure to state a claim upon which relief can be granted). They premised their motion on the grounds that AdsOn5th lacked standing to sue because the contract was between Bluefin Media and a non-party Canadian corporation, Payz Online Inc.; AdsOn5th was not mentioned in the contract at all.
Defendants contended that although ClickPayz may be affiliated with AdsOn5th, it “is a separate corporation and [AdsOn5th] has no standing to assert [ClickPayz] legal rights.” Furthermore, they asserted that AdsOn5th was a non-party to the contract, and therefore it lacked standing to enforce the agreement in the absence of terms that “clearly evidence [ ] an intent to permit enforcement by the third party.” AdsOn5th did not argue that it was a third-party beneficiary or a corporate affiliate of Payz Online Inc. Instead, AdsOn5th insisted “that because it does business as ClickPayz, it must be the ClickPayz in the contract, and it must have standing to sue.” 2017 U.S. Dist. LEXIS 108883, at *6-8.
The court noted that the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute—an inquiry that involves both constitutional limitations on federal court jurisdiction and prudential limitations on its exercise. Further, because AdsOn5th brought this claim under state law, there were three issues at hand: Article III standing, prudential standing, and standing under New York law.
Article III §2 of the Constitution limits the court’s subject-matter jurisdiction to “cases and controversies.” “Article III standing has three components: injury in fact, causation, and redressability.” 2017 U.S. Dist. LEXIS 108883, at *9 (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 103-04, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (1998)). “If the plaintiff does not have Article III standing, this Court lacks subject-matter jurisdiction and therefore ‘lacks the power to adjudicate the merits of the case.’” 2017 U.S. Dist. LEXIS 108883 at *9 (quoting Carter v. HealthPort Techs., 822 F.3d 47, 54-55 (2d Cir. 2016)). Prudential standing principles are “‘judicially self-imposed limits on the exercise of federal jurisdiction, and may be altered.’” 2017 U.S. Dist. LEXIS 108883 at *9 (citations omitted). One prudential limit on standing is that a plaintiff may ordinarily assert only his own legal rights, not those of third parties.
In New York, prudential limitations on standing are similar to those in federal courts. Standing is a threshold determination, resting in part on policy considerations, that a person should be allowed access to the courts to adjudicate the merits of a particular dispute that satisfies the other justiciability criteria. Furthermore, “[w]hether a person seeking relief is a proper party to request an adjudication is an aspect of justiciability which, when challenged, must be considered at the outset of any litigation.” 2017 U.S. Dist. LEXIS 108883 at *10 (quoting Soc’y of Plastics Indus. v. Cty. of Suffolk, 77 N.Y.2d 761, 769 (1991)). “[O]ne does not, as a general rule, have standing to assert claims on behalf of another.” 2017 U.S. Dist. LEXIS 108883 at *10 (quoting Caprer v. Nussbaum, 36 A.D.3d 176, 182 (2d Dep’t 2006)).
Rule 12(b) Motions. Judge Vilardo stated that when a defendant challenges a plaintiff’s Article III standing, the proper procedural route is a motion under Rule 12(b)(1). By contrast, the proper procedural route to challenge a plaintiff’s prudential standing or standing under New York law is less clear. Further, federal courts have labeled at least three different concepts as matters of prudential standing, including (1) the rule against the adjudication of generalized grievances, (2) the rule barring claims that fall outside the zone of interests protected by a statute, and (3) the rule prohibiting plaintiffs from asserting the rights of third parties. “The prudential issue of whether a plaintiff falls within the “zone of interests” protected by a statute should be raised in a Rule 12(b)(6) motion, while the prudential issue of whether a suit is barred by the rule against the adjudication of generalized grievances ought to be raised in a Rule 12(b)(1) motion.” 2017 U.S. Dist. LEXIS 108883, at *14.
Noting that the Supreme Court found that the rule that bars a plaintiff from asserting the legal rights of another has been “harder to classify,” 2017 U.S. Dist. LEXIS 108883, at *14 (quoting Lexmark Int’l v. Static Control Components, 134 S. Ct. 1377, 1387 n.3 (2014)), this court had to make a difficult choice between the two rules because the rule barring a litigant from asserting the legal rights of another is a threshold issue that concerns neither the merits nor Article III.
Based on the arguments and evidence,1 Judge Vilardo decided that the issue at hand is more prudential than constitutional and decided that a Rule 12(b)(6) motion and conversion to summary judgment would be the more appropriate procedure. Using that analysis, he concluded that AdsOn5th failed to raise a disputed issue of material fact concerning its standing to enforce the contract and dismissed its complaint. He noted the result essentially would be the same if he were to apply Rule 12(b)(1).
The contract combined with defendants’ evidence sufficiently demonstrated to the court that Bluefin Media contracted with non-party Payz Online Inc. and not with the plaintiff AdsOn5th. The name “ClickPayz (Payzonline Inc.)” was the party named in the contract, not AdsOn5th. Defendants showed there is a Canadian corporation under that name which is an independent entity from the plaintiff.
The court determined that defendants provided convincing evidence that Payz Online Inc.—and not AdsOn5th—corresponded with the defendants, including invoices pursuing payments in accordance with terms of the agreement and tax related documentation. AdsOn5th was not mentioned in any these documents; they all were from Payz Online Inc. with a return address in Ontario, Canada—the same address as the president of Payz Online Inc. Additionally, defendants submitted an entity search, from the Florida State Department, which showed that the presidents of Payz Online Inc. and AdsOn5th were both officers of a third corporation: Retapp, Inc. This suggested that the Canadian entity, Payz Online Inc., somehow may be affiliated with the plaintiff, AdsOn5th.
Being an entity not named in the contract, AdsOn5th had the burden to explain why it had standing to enforce the contract. AdsOn5th failed to meet that burden. Although a corporation may enter into a binding contract using an assumed or trade name, the plaintiff’s evidence did not prove that it is same entity named in that contract, ClickPayz. The evidence provided merely suggested that AdsOn5th and Payz Online Inc. both use the same alias name ClickPayz. Though the president of AdsOn5th signed the contract, it did not say in what capacity he signed it. Also, AdsOn5th did not submit anything suggesting that the signatory had a relationship with Payz Online Inc.
Judge Vilardo found that those vague submissions failed to raise a disputed issue of material fact and granted the defendants summary judgment.
1. The decision contains an interesting discussion of appropriate evidence on the respective motions.