Mahn v. Allegis Group, Inc.

26-86 Mahn v. Allegis Group, Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. At a stated term of The United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 21st day of October, two thousand twenty-six. PRESENT: DENNIS JACOBS, BARRINGTON D. PARKER, BETH ROBINSON, Circuit Judges. _________________________________________ SHARON MAHN, Plaintiff-Appellant, v. No. 26-86 ALLEGIS GROUP, INC., MAJOR, LINDSEY & AFRICA, LLC, Defendants-Appellees. _________________________________________ FOR PLAINTIFF-APPELLANT: REBECCA BRAZZANO, Brazzano Law PLLC, New York, NY. FOR DEFENDANTS-APPELLEES: DAVID J. DOYLE, Smith, Gambrell & Russell, LLP, Chicago, IL (Daniel S. Goldstein, Smith, Gambrell & Russell, LLP, New York, NY, on the brief). Appeal from a judgment of the United States District Court for the Southern District of New York (Woods, Judge). UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment entered on December 23, 2025, is AFFIRMED. Plaintiff-Appellant Sharon Mahn worked as a legal recruiter for Defendant- Appellee Major, Lindsey & Africa LLC (“MLA”) until November 2009. 1 The circumstances surrounding the termination of Mahn’s employment are disputed, but an arbitrator found Mahn liable for misappropriating MLA’s confidential information and trade secrets and in 2014 awarded MLA substantial damages, 1Allegis Group, Inc. acquired MLA Legal, LLC which, in turn, is the sole member of MLA. For simplicity, in this order we ascribe the conduct Mahn challenges to MLA, although the alleged events and conduct giving rise to this action involved agents of both MLA and Allegis. 2 interest, and costs. A New York state court confirmed the arbitration award and entered judgment for MLA in the amount of $2,863,760.67. Mahn subsequently filed for bankruptcy. In November 2023, acting through her bankruptcy trustee, Mahn commenced a state court action against MLA and several individuals associated with MLA for claims arising from an alleged sexual assault during Mahn’s employment at MLA (the “ASA Action”). Several months later, MLA initiated an adversary proceeding in the bankruptcy court seeking a determination that Mahn’s debt to MLA was not dischargeable. Mahn’s claims in this case for defamation, abuse of process, and intentional infliction of emotional distress (“IIED”) arise from MLA’s statements and conduct during this protracted conflict and litigation. The district court dismissed Mahn’s defamation claims, Mahn v. Allegis Group, Inc. (Mahn I), 1:24-cv-8326, 2025 WL 1504812 (S.D.N.Y. May 24, 2025), and later her claims for abuse of process and IIED, Mahn v. Allegis Group, Inc. (Mahn II), 1:24-cv-8326, 2025 WL 3704536 (S.D.N.Y. Dec. 22, 2025). 2 Mahn appeals. We assume the parties’ familiarity with the 2The district court also dismissed Mahn’s claim for negligent infliction of emotional distress; she does not challenge that ruling on appeal. 3 underlying facts, procedural history, and arguments on appeal, to which we refer only as necessary to explain our decision. “We review the grant of a motion to dismiss under Rule 12(b)(6) without deference to the district court’s reasoning.” Marcus & Cinelli, LLP v. Aspen American Insurance Company, 158 F.4th 333, 340 (2d Cir. 2025). 3 “If, accepting all factual allegations in the complaint as true and drawing all reasonable inferences in favor of the plaintiff, the complaint fails to plausibly state a claim, then dismissal under Rule 12(b)(6) is warranted.” Id. In conducting that review, we may consider the complaint, documents incorporated into the complaint by reference, and documents that are integral to the complaint. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152–53 (2d Cir. 2002). But, at the 12(b)(6) stage, integral documents may be considered “only to determine what the documents stated,” and “not to prove the truth of their contents.” Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007). I. Defamation Under New York law, a plaintiff alleging libel must plead “(1) a written defamatory statement of and concerning the plaintiff, (2) publication to a third 3In quotations from caselaw, this summary order omits all internal quotation marks, footnotes, and citations, and accepts all alterations, unless otherwise noted. 4 party, (3) fault, (4) falsity of the defamatory statement, and (5) special damages or per se actionability.” Palin v. New York Times Co., 940 F.3d 804, 809 (2d Cir. 2019). “[I]f an allegedly defamatory statement is substantially true, a claim of libel is legally insufficient and should be dismissed.” Tannerite Sports, LLC v. NBCUniversal News Group, 864 F.3d 236, 242 (2d Cir. 2017). A statement is substantially true if it “would not have a different effect on the mind of the reader from that which the pleaded truth would have produced.” Id. In applying that standard, courts consider “the entire publication, as well as the circumstances of its issuance . . . in terms of its effect on the ordinary reader.” Id. at 243. Mahn’s primary claim for defamation is based on a written statement by MLA that was published in The American Lawyer the day after Mahn filed the ASA Action. In the quoted statement, MLA denied the allegations in the ASA Action, reported that MLA had previously obtained a multi-million-dollar judgment against Mahn for breach of her duty of loyalty as an employee, and stated, “Ms. Mahn only now raises [the ASA Action claims] as her bankruptcy case reaches the court, and the risk that she may be forced to repay the millions of dollars she stole from MLA and her colleagues becomes real.” App’x 274. Mahn contends that the assertion that she stole millions of dollars from MLA and her 5 colleagues is false and defamatory. Assuming without deciding that the statement is defamatory if false, the critical question before us is whether Mahn has plausibly alleged that the statement is false. We conclude that she has not. Read in context, MLA’s assertion that Mahn “stole millions of dollars from MLA and her colleagues” would not bring about “a different effect on the mind of the reader” than “the pleaded truth.” 4 Tannerite, 864 F.3d at 242. The pleaded truth is that an arbitrator awarded MLA millions of dollars after determining that Mahn had misappropriated its assets—namely, trade secret information—and a state court confirmed that judgment. Mahn argues that “[t]here is a fundamental difference between owing money as the result of a civil adjudication and stealing money as a criminal act.” App. Br. at 27. Though it is true that Mahn was never criminally charged, in context it’s clear that the statement does not literally accuse Mahn of “raid[ing MLA’s] imaginary cash register” as she alleges. App’x 114 at ¶ 346. Rather, it suggests that she risks being forced to pay the judgment against her based on the arbitrator’s finding that she misappropriated—in effect, stole—assets (trade 4MLA did not invoke issue preclusion or claim preclusion in connection with its motion to dismiss, so we do not consider any preclusion arguments. Mahn I, 2025 WL 1504812 at *2 n.3. 6 secrets) from MLA. We don’t believe that readers would finely parse the distinction between a judgment for stealing money and a judgment for misappropriating other assets. 5 Mahn’s contentions that referencing a statement in the arbitration decisions (1) improperly relies on matters outside the pleadings; and (2) “depends on accepting the arbitration findings as true,” App. Br. At 22–23, are unfounded. First, given the allegations relating to the arbitration proceeding and award throughout Mahn’s complaint, the arbitration award is properly viewed as integral to the complaint. See Chambers, 282 F.3d at 153 (a document is integral to the complaint when a plaintiff heavily relies on the document’s terms and effect in drafting the complaint). Second, we make no determination as to whether the arbitrator’s findings were correct. At issue here is whether MLA’s statement suggesting that Mahn faced a significant judgment for misappropriation from MLA is substantially true. The answer to that question turns on the fact that the arbitrator issued an award, confirmed by the courts, based on its finding that 5Because we conclude that MLA’s statement, read in context, was substantially true, we do not address MLA’s argument that its statement is protected under New York Civil Rights Law § 74. 7 Mahn misappropriated MLA’s confidential information, not on whether the arbitrator’s findings were correct. The district court also properly dismissed Mahn’s two other defamation claims. Counts II and III of the FAC concern statements made in judicial filings: MLA’s reference to Mahn’s “criminal conduct” in a legal memorandum in the ASA Action, App’x 284, and allegations of “embezzlement,” “larceny,” and “defalcation” in MLA’s complaint in the bankruptcy adversary proceeding, App’x 298, 303–05. Regardless of their alleged falsity or defamatory meaning, both statements are protected by New York’s absolute privilege for material statements by counsel or parties in judicial proceedings, “irrespective of the motive with which they are made.” Wiener v. Weintraub, 22 N.Y.2d 330, 331 (1968); see also Youmans v. Smith, 153 N.Y. 214, 219–20 (1897). The privilege “embraces anything that may possibly be pertinent.” Martirano v. Frost, 25 N.Y.2d 505, 507 (1969). Only a statement “so outrageously out of context” that its utterance itself permits the conclusion “that it was motivated by no other desire than to defame” falls outside that broad protection. Id. at 508. The statement in MLA’s legal memorandum in the ASA action, which referenced “damages . . . suffered due to Mahn’s criminal conduct,” App’x 284, is 8 not so “outrageously out of context” as to defeat the privilege. Martirano, 25 N.Y.2d at 508. And MLA’s allegations in its bankruptcy court adversary complaint that Mahn engaged in embezzlement, larceny and defalcation were essential to its assertion that its judgment against Mahn was nondischargeable under § 523(a)(4) of the Bankruptcy Code. See 11 U.S.C. § 523(a)(4). Mahn’s allegation that MLA’s accusations were false or malicious does not vitiate the privilege. See Youmans, 153 N.Y. at 219 (“[W]hen such words and writings are material and pertinent to the questions involved . . . the protection is complete, irrespective of the motive with which they are used.”) (emphasis added). II. Abuse of Process We likewise readily affirm the district court’s dismissal of Mahn’s abuse-of-process claim. Under New York law, to state a claim for abuse of process, a plaintiff must allege that the defendant “(1) employ[ed] regularly issued legal process to compel performance or forbearance of some act (2) with intent to do harm without excuse o[r] justification, and (3) in order to obtain a collateral objective that is outside the legitimate ends of the process.” Hernandez v. United States, 939 F.3d 191, 204 (2d Cir. 2019). 9  For purposes of this tort, “legal process” is a term of art. It does not refer to wrongful litigation conduct generally; it means “a direction or demand that the person to whom it is directed shall perform or refrain from the doing of some prescribed act.” Williams v. Williams, 23 N.Y.2d 592, 596 (1969). Thus, “there must be an unlawful interference with one’s person or property under color of process” to support an abuse-of-process claim. Id. Examples of “process” that could support an abuse-of-process claim include attachment, execution, garnishment, arrest, or criminal prosecution. Id. at n.1 (citing William L. Prosser, Prosser on Torts, 877-78 (3d ed. 1964)). The vast majority of Mahn’s purported abuse-of-process allegations don’t involve process in this sense at all. She alleges a sustained course of vindictive litigation, unsupported legal claims, misrepresentations in court and arbitration, and harassing conduct designed to intimidate and humiliate her. Her appeal brief emphasizes allegations that MLA provided perjurious testimony, threatened to take the deposition of Mahn’s father, threatened Mahn with sanctions, and made false statements about Mahn stealing millions of dollars in support of her abuse- of-process claim—all conduct that does not involve the kind of misuse of legal process required for the abuse-of-process tort. 10  Mahn’s primary brief argues that MLA engaged in allegedly vindictive litigation practices by improperly issuing “debt collector subpoenas,” but she offers no further argument as to how issuance of those subpoenas satisfied the elements of abuse of process. Mahn’s reply brief points more specifically to allegations in her complaint that MLA improperly filed a Property Execution seeking to liquidate her retirement account, requiring her to spend attorney’s fees to unfreeze the account. But she identifies no allegations and makes no arguments—apart from the overarching theme that MLA maliciously sought to harm her—to support the other two prongs of the abuse-of-process tort with respect to MLA’s use of this process. “A malicious motive alone does not give rise to a cause of action for abuse of process.” Hernandez, 939 F.3d at 204; see also Savino v. City of New York, 331 F.3d 63, 77 (2d Cir. 2003) (“[I]t is not sufficient for a plaintiff to allege that the defendants were seeking to retaliate against him.”). III. Intentional Infliction of Emotional Distress (IIED) Finally, we affirm the district court’s dismissal of Mahn’s IIED claim. To state an IIED claim under New York law, a plaintiff must allege “(i) extreme and outrageous conduct; (ii) intent to cause, or disregard of a substantial probability of causing, severe emotional distress; (iii) a causal connection between the conduct 11 and injury; and (iv) severe emotional distress.” Howell v. New York Post Co., 81 N.Y.2d 115, 121 (1993). The New York Court of Appeals has emphasized that “[l]iability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency” and be regarded “as atrocious, and utterly intolerable in a civilized community.” Id. at 122. Mahn’s allegations of a years-long campaign to harm and intimidate her, primarily through litigation and judgment-enforcement activity, threats, and unwarranted public accusations of criminal wrongdoing do not describe conduct that meets the high bar of being “utterly intolerable in a civilized community.” Id.; see also Segall v. Sanders, 129 A.D.3d 819 (2d Dept. 2015) (dismissing IIED claim arising from “extremely acrimonious” litigation that included confrontations, police involvement, alleged repudiation of a settlement agreement, and harassment). 6 For the above reasons, the judgment of the district court is AFFIRMED. FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court 6Judge Jacobs is of the view that, on the whole, abuse of the litigation process is a charge more fairly laid against Mahn. The Court takes no position on the matter. 12