PHILADELPHIA – A federal judge has denied a motion to dismiss from a series of corporate defendants defending themselves from a count of defamation from its former managing director.

On May 3, U.S. District Court for the Eastern District of Pennsylvania Judge John R. Padova ruled to deny a motion to dismiss from defendants Gehring-Montgomery, Inc. (GMI), TER Holding, Inc., TER Hell & Co., GMBH, Thomas Sprock, Oliver Zimmerman and Mark Bitting, towards the multi-count complaint filed by plaintiff Lawrence Biss.

“GMI is a distributor of specialty chemicals to commercial manufacturers in the automotive, coatings, adhesives, food and personal care industries. It was founded by Ruth Gehring and managed by her for many years. TER Hell & Co., GmbH (TER Hell) is the parent company of a group [of] companies…that distribute, retail, and manufacture raw chemicals.” In 1990, TER Holding, Inc., a subsidiary of TER Hell, acquired GMI,” Padova recalled.

Biss was hired by GMI in 1992 as a purchasing manager, and was later promoted to managing director in 1996, becoming responsible for overseeing the company’s sales operations. GMI’s 1995 employment agreement with Biss entitled him to “salary, reimbursement of 2 business expenses, a new automobile at company expense every three years, profit sharing equal to 10% of the company’s net profits before taxes and executive compensation, 401(k) plan contributions by the company equal to 4% of his [salary], medical insurance, and vacation of 25 days annually.”

In addition, pursuant to the Employment Agreement, Biss’s employment with GMI could only be terminated upon his death, or disability, for just cause, or with 12 months’ notice.

“Biss was born in 1955 and was 61 years old when he filed the complaint. Gehring was born in 1944 and was 72 years old when Biss filed the complaint. Beginning in 2011, the management of TER Hell made it clear that it wanted to hire younger managers to replace Gehring and Biss. In the summer of 2015, all of the defendants except Mark Bitting informed Biss that his position would be terminated and that his duties would be distributed to Thomas Sprock, Oliver Zimmerman and his replacement. Biss was also notified that he would be required to interview and train his replacement,” Padova said.

“Biss informed Sprock and Zimmerman that his termination violated the federal AgeDiscrimination in Employment Act. At the end of 2015, the company terminated Gehring due to her age. On Jan. 1, 2016, Biss’s employment agreement was terminated, his position was eliminated, and his duties were assigned to Bitting, Zimmerman, and Sprock, all of whom are younger than Biss. Biss was assigned to a meaningless position with little responsibility but high visibility to customers and existing employees,” Padova stated.

But despite this reassignment, Biss did not quit.

Defendants subsequently hired BDO Seidman (BDO) to perform an audit of GMI, and allegedly, “to find a reason to fire Biss that would not require the payment of his severance pay.”

“During its audit of GMI, representatives of BDO told GMI employees, ex-employees, and third parties that Biss was guilty of theft, crimes, incompetence at his trade or profession, and dishonesty. These representations were false and Defendants knew that they were false. On July 7, 2016, Biss’s employment was terminated,” Padova said.

According to the complaint, Biss was denied 26 months of severance pay and nearly seven weeks of unused vacation pay. Supposedly, Sprock told Biss, “We tried to settle things with you but you made all of these claims for severance and discrimination that we had no other choice but to terminate you. You won’t get any severance pay now.”

The complaint listed five claims for relief, but only Count V is at issue in the instant motion. Count V asserts a claim against GMI, TER Hell, TER Holding, Sprock, and Zimmerman for defamation, arising from the false statements made by defendants and their agents regarding Biss. The moving defendants have moved to dismiss Count V for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).

“In order to succeed on a cause of action for defamation under Pennsylvania law, a plaintiff must prove the following: (1) The defamatory character of the communication. (2) Its publication by the defendant. (3) Its application to the plaintiff. (4) The understanding by the recipient of its defamatory meaning. (5) The understanding of the recipient of it 6 as intended to be applied to the plaintiff. (6) Special harm resulting from its publication. (7) Abuse of a conditionally privileged occasion,” Padova stated.

Padova said the moving defendants argued Count V “fails to state a facially plausible claim for defamation under Pennsylvania law because it fails to include facts that would establish all of the above listed requirements and, most particularly, it does not allege the contents of the allegedly defamatory statements, the source of the statements, or the recipients of the statements” and fails to “provide them with fair notice of what the…claim is and the grounds upon which it rests.”

However, Padova explained the complaint alleges that “defendants and representatives of BDO made false statements to employees of GMI and third parties that Biss ‘had been guilty of theft, crimes, incompetence at his trade or profession, and dishonesty.”

“The complaint further alleges that defendants knew that these statements were false. The complaint thus alleges facts that, if true, would establish that defendants and representatives of BDO, who had been hired by defendants, made statements to employees of GMI about Biss that were defamatory, that these statements were published to employees of GMI and others, and that these statements were slander per se because they imputed criminal offenses and business misconduct to Biss,” Padova stated.

“We conclude, accordingly, that the allegations of the complaint are sufficient to give the defendants ‘fair notice’ of plaintiff’s defamation claim and of ‘the grounds upon which it rests,” Padova said. “We further conclude, accordingly, that Count V of the complaint states a facially plausible claim for defamation against the moving defendants. For the reasons stated above, the motion to dismiss is denied.”

The plaintiff is represented by Walter H. Flamm Jr. of Flamm Walton Heimbach & Lamm, in Blue Bell.

The defendants are represented by Shevon Rockett and K. Nichole Nesbitt of Goodell DeVries Leech & Dann, in Philadelphia and Baltimore, Md., plus Robert A. Vort of Vort Law in Hackensack, N.J.

U.S. District Court for the Eastern District of Pennsylvania case 2:16-cv-04472

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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