Baldeo v Majeed

[*1] Baldeo v Majeed 2011 NY Slip Op 52229(U) Decided on December 13, 2011 Supreme Court, Queens County Markey, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 13, 2011
Supreme Court, Queens County

Philip Baldeo, M.D., and 125 LIBERTY MEDICAL, PLLC,

against

Muntaz Majeed, M.D., and BIBI MAJEED.



16140/2011



For the Plaintiff: Hoffman Polland & Furman PLLC, by Mark L. Furman, Esq., 220 East 42nd Street, New York, New York 10017

For the Defendants: Kaufman & Kahn, LLP, by Mark S. Kaufman, Esq., 747 Third Avenue, New York, NY 10017 11747

Charles J. Markey, J.

According to the parties herein, plaintiff 125 Liberty Medical PLLC ("Liberty") was formed on or about August 11, 2011, as a professional limited liability company ("PLLC") for the purpose of practicing medicine. It appears that plaintiff Philip Baldeo, M.D., and defendant Muntaz Majeed, M.D., jointly decided to create Liberty, but it is undisputed that, at the time of the formation of Liberty, and until December 2009, defendant Muntaz Majeed, M.D., was Liberty's sole member.

The focus of Liberty's practice is the treatment of patients receiving workers' compensation and no-fault insurance benefits. As an employee of Liberty, Dr. Majeed was primarily responsible for the patients' treatment. Although plaintiff Baldeo's formal relationship to Liberty in the years from 2000 to 2009 is not defined in the pleadings and affidavits before the Court, it is agreed that Dr. Baldeo provided administrative, management, and marketing services to Liberty. He is described by defendant Muntaz Majeed as "the only other doctor in 125 Liberty." Plaintiff Baldeo also had a family medicine practice that he conducted through a professional corporation known as "Dr. Philip R. Baldeo Medical Service PC," located at the same offices as Liberty.

It is alleged by plaintiffs that, in December, 2009, plaintiff Baldeo purchased a 98% ownership interest in Liberty, and that he and defendant Muntaz Majeed, who retained the remaining 2% interest, are the current members of Liberty.Although Dr. Majeed [*2]concedes the execution of a limited liability membership interest purchase agreement dated December 16, 2009, he contends that the transfer of the 98% interest in Liberty was not effectuated because Dr. Baldeo defaulted in payment of the amount due under the purchase agreement. Regardless of the ownership issue, the roles played by Dr. Baldeo and Dr. Majeed in the operation of Liberty continued unchanged until June 2011.

On June 24, 2011, defendant Muntaz Majeed resigned, effective July 1, 2011, as an employee of Liberty. Beginning July 5, 2011, Dr. Majeed started practicing at the offices of another physician located approximately six blocks from Liberty's office.

In the amended complaint in this action, plaintiffs allege that defendant Muntaz Majeed, aided by his codefendant, misappropriated trade secrets and confidential patient information from Liberty, improperly used this information to solicit Liberty's patients for his new practice and misrepresented to the patients that the new office is a Liberty facility.

Plaintiffs' amended complaint includes causes of action for injunctive relief and damages for unfair competition, breach of fiduciary duty, and theft of trade secrets. Defendants have interposed counterclaims for, among other things, an accounting, defamation, and violation of the right to privacy afforded under NY Civil Rights Law sections 50 and 51.

Plaintiffs, by two separate motions brought on by order to show cause, seek (1) to enjoin defendants from contacting or communicating with Liberty's patients and/or seeking to persuade Liberty's patients to obtain medical treatment from Dr. Majeed at his new office, and from using confidential patient information and trade secrets of Liberty; (2) to require defendants to return any and all confidential client information and trade secrets that were misappropriated by defendants; and (3) to recover costs and attorney's fees.

Defendants, by order to show cause, move (1) to enjoin plaintiffs from authorizing or permitting the publishing of any advertisement, commercial, infomercial, or promotional material that uses Dr. Majeed's name or likeness or uses any information about Dr. Majeed or his medical practice in a false, misleading, or defamatory way, including a particular Caribbean New Yorker advertisement; (2) to obtain expedited discovery of all advertisements published or submitted for publication since July 1, 2011, by or on behalf of plaintiffs; and (3) to recover costs and attorney's fees.

By separate notice of motion, defendants also move (1) to enjoin plaintiffs from representing to third parties that defendant Muntaz Majeed is providing medical services on behalf of Liberty or any other entity controlled by plaintiffs; (2) to direct plaintiffs to provide Dr. Majeed's forwarding address, telephone number and fax number to third parties seeking to communicate with him; (3) to direct plaintiffs to forward to Dr. Majeed, as soon as received by them, any correspondence, telephone calls and messages, or personal visits directed to Dr. Majeed; and (4) to direct plaintiffs to provide copies of all medical records necessary for Dr. Majeed to testify at Workers' Compensation proceedings. Defendants again seek costs and attorney's fees.

To prevail on an application for a preliminary injunction, the moving party has the [*3]burden of demonstrating a likelihood of success on the merits, irreparable injury in the absence of a preliminary injunction, and a balancing of the equities in movant's favor (see, Aetna Ins. Co. v Capasso, 75 NY2d 860 [1990]; W.T. Grant Co. v Srogi, 52 NY2d 496, 517 [1981]; Trump on the Ocean, LLC v Ash, 81 AD3d 713 [2nd Dept.], lv. to appeal dismissed, 17 NY3d 875 [2011]; Copart of Connecticut, Inc. v Long Island Auto Realty, LLC, 42 AD3d 420 [2nd Dept. 2007]). Plaintiffs have failed to meet this burden with regard to their requests for injunctive relief against defendants.

A PLLC, like a professional corporation, renders professional services (compare Limited Liability Company Law §§ 1203, 1204[a] with Business Corporation Law §§ 503, 504[a]). As such, a PLLC provides medical services and has a property interest in patient records and patient lists generated or maintained by the PLLC (see, Limited Liability Company Law § 1204[c]; Patients Medical, P.C. v Kellman, 2011 WL 2516757, 2011 NY Slip Op 31626(U), slip op. at 12, 2011 NY Misc LEXIS 2911, slip op. at 17 [Sup Ct NY County 2011]; Orthopaedic Assocs. of Rochester, P.C. v Nicoletta, 2005 WL 4712264 [Sup Ct Monroe County 2005]; Parsley v Associates in Internal Medicine, P.C., 126 Misc 2d 996 [Sup Ct Broome County 1985]; see, e.g., Allan Dampf, P.C. v Bloom, 127 AD2d 719 [2nd Dept.1987]).

An employee's misappropriation of confidential patient information from a PLLC, during the course of employment and the improper use of such information to solicit the PLLC's patients, may constitute unfair competition (see, Rao v Verde, 222 AD2d 569, 570 [1995]; Allan Dampf, P.C., 127 AD2d at 720, supra). An employee's duty of loyalty exists, in addition, even in the absence of a contract restriction and precludes the employee from operating a competing business while the employment relationship continues, or from improperly using the employer's time, facilities, or trade secrets to establish a competing business (see, Island Sports Physical Therapy v Kane, 84 AD3d 879 [2nd Dept. 2011]; DDS Partners, LLC v Celenza, 16 AD3d 114 [1st Dept. 2005]).

On the papers presented, however, it cannot be determined whether any confidential customer list or trade secret exists that warrants protection (see, Ashland Mgt. v Janien, 82 NY2d 395, 407 [1993]; Eastman Kodak Co. v Carmosino, 77 AD3d 1434 [4th Dept. 2010]; IVI Environmental, Inc. v McGovern, 269 AD2d 497 [2nd Dept. 2000]). The unsubstantiated assertions of plaintiff Baldeo, furthermore, as to defendants' alleged conduct are insufficient to support the drastic remedy of preliminary injunctive relief (see, EdCia Corp. v McCormack, 44 AD3d 991 [2nd Dept. 2007]; Neos v Lacey, 291 AD2d 434 [2nd Dept. 2002]; Merrell Benco Agency, Inc. v Safrin, 231 AD2d 614 [2nd Dept. 1996]).

The affidavits submitted by defendants contest plaintiffs' contentions of improper solicitation of patients and misappropriation of confidential patient lists and information or trade secrets, and demonstrate the existence of sharply disputed issues, thus precluding a finding of a likelihood of plaintiffs' success on the merits (see, Copart of Conn., Inc., 42 AD3d at 421, supra; Gagnon Bus Co., Inc. v Vallo Transp., Ltd., 13 AD3d 334 [2nd Dept. 2004]; Neos, 291 AD2d at 435, supra). Unresolved issues concerning whether any [*4]solicitation of patients by Dr. Majeed was necessary in furtherance of his ethical duties as a physician also have an impact upon the likelihood of plaintiffs' success on the merits (8 NYCRR § 29.2[a][1]; see, DDS Partners, LLC, 16 AD3d at 115, supra).

The competing claims as to whether the purported sale of 98% of Dr. Majeed's ownership interest in Liberty to Dr. Baldeo was consummated, moreover, defeats any attempt by plaintiffs to show a likelihood of success on the merits. In the absence of the sale, Dr. Majeed would remain the sole member of Liberty. Not only do the parties dispute whether payment of the purchase price was made, but plaintiffs have not provided a copy of a document evidencing an assignment of a 98% membership interest to Dr. Baldeo or a copy of the amended operating agreement contemplated by the purchase agreement.

Plaintiffs will not be irreparably harmed by the denial of the form of injunctive relief they seek since they may be adequately compensated by money damages (see, Eastman Kodak Co. v Carmosino, 77 AD3d 1434, supra; EdCia Corp., 44 AD3d at 994, supra; Dhillon v HealthNow NY, Inc., 32 AD3d 1197 [4th Dept. 2006]). However, under the circumstances presented and the goal of protecting the interests of the patients involved pending the determination of this action, the defendants are restrained from holding themselves out as employees or representatives of Liberty and from representing that Dr. Majeed's new practice is another location for Liberty.

This injunctive relief is conditioned upon plaintiffs providing an undertaking in accordance with CPLR 6312, in an amount to be fixed in the order to be entered hereon. The parties shall submit proof and recommendations as to the amount of the undertaking upon settlement of the order (see, Friedman v Clearview Gardens Second Corp., 30 Misc 3d 1221(A), 2011 WL 489545, 2011 NY Slip Op 50149(U) [Sup Ct Queens County 2011] [decision by the undersigned]; NSA, Inc. v. L.I.C. Food Court, Inc., 24 Misc 3d 1210(A), 2009 WL 1904683, 2009 NY Slip Op 51411 [U] [Sup Ct Queens County 2009] [decision by the undersigned]; Chiu Cheuk Chan v. 28-42, LLC, 22 Misc 3d 1110(A), 2009 WL 129893, 2009 NY Slip Op 50080 [U] [Sup Ct Queens County 2009] [decision by the undersigned]; Daily Bread Café Inc. v. City Lights at Queens Landing Inc., 17 Misc 3d 1126(A), 2007 WL 3375899, 2007 NY Slip Op 52158 [Sup Ct Queens County 2007]; Molyneux-Petraglia v. Northbridge Capital Mgmt. Inc., 15 Misc 3d 1125(A), 2007 WL 1203597, 2007 NY Slip Op 50845[U] [Sup Ct NY County 2007]; Citadel Mgt. Inc. v. Hertzog, 182 Misc 2d 902, 906 [Sup Ct Queens County 1999]; Connor v. Cuomo, 161 Misc 2d 889, 897 [Sup Ct Kings County 1994]; Jewelry Realty Corp. v. 55 West 47 Co., 90 Misc 2d 407, 408 [Sup Ct NY County 1977]).

In all other respects, plaintiffs' motions are denied.

The broad injunctive relief sought by defendants is not warranted by the proof offered. Injunctive relief in the form of a prior restraint on speech is disfavored and is not permissible, as here, merely to enjoin the publication of libel (see, Rosenberg Diamond Dev. Corp. v Appel, 290 AD2d 239 [1st Dept. 2002]; see, e.g., LoPresti v Florio, 71 AD3d 574 [1st Dept. 2010]; Rose v Levine, 37 AD3d 691 [2nd Dept. 2007]; see also, Data-Track Account Servs. [*5]v Lee, 17 AD3d 1115 [4th Dept.], lv. to appeal dismissed, 5 NY3d 849 [2005]). No basis exists, moreover, to direct plaintiffs to act as forwarding agents for Dr. Majeed.

With respect to the specific item concerning Dr. Majeed distributed in the Caribbean New Yorker, while the statement that Dr. Majeed "abandoned the practice" could constitute defamation per se as tending to injure him in his profession (see, Geraci v Probst, 15 NY3d 336, 344 [2010]; Liberman v Gelstein, 80 NY2d 429, 435 [1992]), defendants have not made a prima facie showing that Dr. Majeed did not abandon his employment with Liberty "without reasonable notice and under circumstances which seriously impair the delivery of professional care to patients" (8 NYCRR § 29.2). Defendants have also failed to demonstrate a likelihood of success on the merits on Dr. Majeed's counterclaim for breach of a right of privacy pursuant to sections 50 and 51 of the Civil Rights Law. It cannot be said as a matter of law that the item published, on its face, was for "advertising purposes, or for the purposes of trade" (Civil Rights Law § 51) as that phrase has been construed (see, Messenger ex rel. Messenger v Gruner + Jahr Printing & Publ., 94 NY2d 436, 441 [2000]; Beverley v Choices Women's Med. Ctr., Inc., 78 NY2d 745, 751 [1991]; Guerrero v Carva, 10 AD3d 105, 115 [2004]).

Finally, since defendants have not asserted a counterclaim under General Business Law sections 349 and 350, preliminary injunctive relief is not available pursuant thereto. In any event, defendants have not shown that they are injured parties entitled to seek relief under this consumer protection statute (General Business Law art 22-A, §§ 349[h] & 350-e[3]).

Plaintiffs, however, do not refute defendants' contention that Dr. Majeed has not been employed by Dr. Baldeo's corporation since 2001. The assertions in the Caribbean New Yorker item, including that Dr. Majeed "is no longer employed by Dr. Baldeo Medical Services PC," imply that Dr. Majeed recently left the corporation's employ. Similarly, plaintiffs do not deny that, after Dr. Majeed terminated his employment with Liberty, Dr. Baldeo sent a letter on Liberty's letterhead addressed "To All Our Patients" advising patients that Dr. Majeed continued to be a physician at Liberty and that their treatment had to be continued at Liberty's facility to ensure insurance coverage.

Based upon these undisputed facts, plaintiffs are enjoined from republishing or in any way distributing the item concerning Dr. Majeed which appeared in the July 15, 2011 edition of Caribbean New Yorker, and from representing to any person or entity that Dr. Majeed is providing medical services on behalf of Liberty and or at a facility operated by Liberty.

This injunctive relief is conditioned upon defendants providing an undertaking in accordance with CPLR 6312, in an amount to be fixed in the order to be entered hereon. The parties shall submit proof and recommendations as to the amount of the undertaking upon settlement of the order (see, Friedman v Clearview Gardens Second Corp., 30 Misc 3d 1221(A), 2011 WL 489545, 2011 NY Slip Op 50149(U) [Sup Ct Queens County 2011] [decision by the undersigned] and the other decisions cited above regarding the undertaking amount). [*6]

In all other respects, the defendants' motions are denied.

The Court also reminds plaintiffs of their obligations to release copies of medical records upon written request of, or authorizations from, a patient (Public Health Law § 17; 45 CFR 164.502, 164.408, 164.524).

Settle on notice one order.

_______________________________J.S.C.