When a Failure to Deny an Allegation Constitutes and Admission – Kule-Rubin v. Bahari Group

A defendant’s failure to deny allegations in a responsive pleading to a complaint can serve as an admission of those allegations. In Kule-Rubin, et al v. Bahari Group, Limited, the U.S. District Court for the Southern District of New York granted the plaintiffs’ motion for judgment on the pleadings as to four of the claims asserted in their complaint for wage violations. The plaintiffs argued in their motion that the defendant, in its answer to their original complaint, had not expressly denied certain allegations. The court deemed those allegations admitted by the defendants, and granted judgment on the plaintiffs’ claims that were supported by those admissions. The court also dismissed two counterclaims by the defendant.

The defendant is a manufacturer, distributor, and retailer of clothing. The individual owners of the company were also named as defendants. The eleven plaintiffs were employees who began working for defendant at different times beginning in 1994. According to the plaintiffs’ complaint, the defendant began withholding wages from certain plaintiffs in October 2010, and it withheld wages from all of its employees starting that November. The defendant allegedly withheld commission wages, expense reimbursements, and health insurance premiums from some plaintiffs beginning two years earlier. The defendant told the plaintiffs that if they continued to work for the defendant, it would pay them all back wages and current wages later. All eleven plaintiffs continued working for the defendant until November 30, 2010, when the defendant terminated them.

The plaintiffs filed suit against the defendant for failure to pay wages in violation of both federal and state law, failure to pay earned wages in violation of state law, and the individual liability of the owners under state law. The defendant’s answer included multiple statements that it could “neither admit nor deny” certain allegations. The defendant also asserted counterclaims for fraud and tortious interference with business relations, alleging that the plaintiffs, in the midst of the defendant’s ongoing business difficulties, communicated with the defendant’s customers. In those communications, according to the defendant, they revealed financial data and other confidential information about the defendant.

The plaintiffs filed separate motions to dismiss the defendant’s counterclaims and for judgment on the plaintiffs’ pleadings. By not denying certain allegations in their complaint, the plaintiffs argued, the defendant admitted them, and those admissions provided sufficient proof to merit judgment on their claims. The court agreed as to four of their claims, finding that specific instances where the defendant neither admitted nor denied allegations constituted admissions, and that the admission provided the factual basis sufficient to grant judgment for the plaintiffs.

The court also dismissed the defendant’s two counterclaims. On the fraud claim, it held that the defendant’s allegations did not meet the common law standard for specificity, in that the defendant did not identify specific false statements or misrepresentations by the plaintiffs, nor did it demonstrate that it relied on any statements by the plaintiffs to its detriment. The court dismissed the tortious interference claims for similar reasons. The defendant’s pleadings did not identify how the plaintiffs’ communications with third parties were improper, nor did it show how such communications might have injured the defendant.

At Lubin Austermuehle, our business litigation attorneys represent business owners and professionals in business disputes other claims throughout the Chicagoland area including Cook, DuPage, Lake, Kane, McHenry and Will Counties and in the Mid-West region including Indiana, Wisconsin and Iowa.

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