Emotional Distress Claim Disallowed in Business Dispute

In the absence of clear judicial guidelines, claims for intentional infliction of emotional distress would potentially become part and parcel of every civil litigation. There is little question that a business dispute can cause significant anxiety to the business people involved. However, what does it take for that anxiety to rise to the level of an actionable claim for intentional infliction of emotional distress?  In New York, the answer is "a great deal".

A commercial litigation provided an opportunity for Justice Cynthia S. Kern of New York County Supreme Court to review the required elements of a such a claim. In Steinhouse v. Lesser, 112196/10, NYLJ 1202567349247, at *1 (Sup., NY, Decided July 30, 2012), plaintiffs commenced an action to compel the defendants, two of the limited partners of a partnership, to sign an operating agreement which would convert their limited partnership to a limited liability company. When the action was brought, eighty-eight of the ninety partners, representing 98.68% of the equity of the partnership, had already signed to the conversion. The defendants were the last holdouts.

In their counterclaim for intentional infliction of emotional distress, the defendants argued that the plaintiffs had sent repeated letters and made repeated calls with requests or demands that the defendants sign the new operating agreement. In dismissing the counterclaim on summary judgment, Judge Kern held that defendants had failed to state a claim. Pursuant to Lau v. S&M Enterprises, 72 A.D.3d 497, 498 (1st Dep’t 2010), the elements for a claim of intentional infliction of emotional distress are “(1) extreme and outrageous conduct; (2) an intent to cause – or disregard of a substantial probability of causing – severe emotional distress; (3) a causal connection between the conduct and the injury; and (4) the resultant severe emotional distress.”

Based upon the facts presented in the court’s decision, the defendants’ counterclaim fell far short of meeting the requisite elements of such a claim.  However, it is certainly not inconceivable that a claim for intentional infliction of emotional distress might properly lie in a business dispute that was particularly acrimonious and personal.  But the bar is high.  How high is revealed by the New York State Court of Appeals in Howell v New York Post Co., 81 NY2d 115, 121 [1993)   

Howell arose against the backdrop of the Hedda Nussbaum story, which made tabloid headline news in 1988. Nussbaum was the “adoptive” mother of six-year-old Lisa Steinberg, whose November 1987 death from child abuse generated intense public interest. On September 1, 1988, a newspaper photographer trespassed onto the grounds of Four Winds Hospital, a private psychiatric facility in Westchester County. With a telephoto lens, the tabloid photographer took outdoor pictures of Nussbaum in the company of plaintiff Pamela J. Howell, another patient. After the photographs were taken, the hospital’s medical director telephoned the newspaper editor requesting that the paper not publish any patient photographs. It was imperative for Howell’s recovery that her hospitalization remained a secret from all but her immediate family. Despite the admonition of the hospital medical director, the newspaper published the photographs of Nussbaum, which included the plaintiff. Although plaintiff’s name was not mentioned, her face was readily discernible.

Alleging she experienced emotional distress and humiliation, plaintiff commenced an action against the newspaper, the photographer and two writers, seeking damages for alleged violations of the Civil Rights Law §§50 and 51. Even under these egregious facts, the Court of Appeals determined that plaintiff did not have a claim for intentional infliction of emotional distress. In part, the court determined that the newspaper’s publication of a newsworthy photograph fell within the contemplation of the “privileged-conduct” exception. The court reached this conclusion because it found there was a newsworthy relationship between the article and the photograph of the plaintiff in the company of Nussbaum. 

In light of the high bar, why is it that courts are occasionally willing to countenance intentional infliction claims in an environmental setting?  The may be a few explanations.  Although it is necessary to show "extreme and outrageous conduct", some judges have not fully considered whether the environmental contamination at issue poses a threat to human health or the environment.  In many instances, there may be exceedances of state regulatory levels for a particular contaminant in groundwater or soil, but far below the level that could cause actual harm. 

Thus, it is imperative that courts understand the difference between a level of contamination that may give rise to actual harm versus a level of contamination that may give rise to regulatory scrutiny, which is quite different..  In this era of sometimes sensationalized media reporting concerning environmental incidents, there is always the possibility that some excitable person will imagine that he or she has had some exposure to a harmful chemical and became emotionally distraught.  It is defense counsel’s job to ensure that the court understands that the claimed exposure is often remote or, at best, fleeting, but hardly ever the result of "extreme and outrageous" conduct..