## Facts

- Natasha Spivack founded Encounters International (EI), an international match-making agency that matched American male clients with women from Russia and Ukraine.
- Spivack advertised EI as having a “95 percent success rate” and represented herself as a psychologist and match-making specialist.
- In 1998, Spivack introduced Nataliya Derkach (later Nataliya Fox) to James Fox and assured Nataliya that James was a good client while advising Nataliya about American customs.
- Nataliya and James married, and James later began abusing Nataliya.
- In 2000, while pregnant, Nataliya met with Spivack three times seeking help regarding the abuse.
- Spivack told Nataliya that if she left James she would be deported.
- Spivack knew that immigration law provided a battered-spouse waiver that could allow a domestic-violence victim to leave the marriage without being deported, but she did not tell Nataliya about that option.
- Nataliya remained with James, gave birth, and about three weeks later James violently attacked her, resulting in hospitalization.
- After being referred to a women’s shelter, Nataliya learned about the battered-spouse waiver.
- Nataliya sued EI and Spivack, alleging fraud and breach of fiduciary duty based on misrepresentations and nondisclosure concerning her immigration options.
- A jury found for Nataliya and awarded damages, including $341,500 in punitive damages against EI and Spivack.
- EI and Spivack appealed to the United States Court of Appeals for the Fourth Circuit.

## Issues

1. Whether the evidence was sufficient to uphold the jury’s findings that EI and Spivack committed fraud and breached a fiduciary duty by misrepresenting (and failing to disclose) Nataliya’s immigration options if she left her abusive husband.
2. Whether the punitive-damages award against EI and Spivack was legally permissible and not unconstitutionally excessive.
3. Whether the district court committed reversible error in denying post-trial relief sought by EI and Spivack from the jury’s verdict and damages award.

## Decision

- The Fourth Circuit affirmed the district court’s judgment in an unpublished per curiam decision.
- The court left intact the jury’s liability findings against EI and Spivack on Nataliya’s fraud and fiduciary-duty theories.
- The court upheld the punitive-damages award, including the $341,500 punitive award, rejecting defendants’ challenges to the amount and to the basis for punitive damages.
- The result was that Nataliya remained the prevailing party on the verdict and judgment entered in the district court.

## Legal Principles

- Fraud liability may be based on a material misrepresentation (or concealment where there is a duty to speak), made with the required state of mind, on which the plaintiff reasonably relies to her detriment.
- A fiduciary or fiduciary-like relationship can arise where one party invites trust and confidence and undertakes to counsel or guide the other on matters carrying serious personal consequences; such a relationship can create a duty of candor, including a duty to disclose material facts.
- A defendant’s knowing statement that an abused spouse will be deported if she leaves, while withholding known information about a battered-spouse immigration waiver, can support findings of deception and breach of a duty to disclose when the plaintiff is shown to have relied on the misinformation.
- Punitive damages may be sustained where the evidence supports aggravated misconduct under applicable state law and where the amount satisfies constitutional due-process limits, including consideration of the reprehensibility of the conduct and proportionality between punitive and compensatory awards.
- On appeal from a jury verdict, the appellate court does not reweigh evidence; it asks whether the record permitted a reasonable jury to reach the verdict and whether the district court properly denied post-trial relief.

## Conclusion

In *Fox v. Encounters International*, the Fourth Circuit affirmed a judgment entered on a jury verdict against an international match-making agency and its founder for fraud and breach of fiduciary duty arising from misinformation and nondisclosure about an immigrant spouse’s ability to leave an abusive marriage without deportation, and it upheld the punitive-damages award, including $341,500 in punitive damages.


Fox v. Encounters International, 2006 WL 952317 (2006)