United States District Court, D. South Carolina, Columbia Division
Bryan Harwell Chief United States District Judge.
action is before the Court on Defendant MiMedx Group,
Inc's (“MiMedx”) motion to dismiss pursuant
to Fed.R.Civ.P. 12(b)(6). ECF No. 21. MiMedx's motion to
dismiss seeks dismissal of Plaintiff Jon Michael Vitale's
(“Vitale”) complaint in its entirety as to MiMedx
for failure to state a claim. Id. For the reasons
stated below, the Court will deny MiMedx's motion to
and Procedural Background
action arises from Vitale's termination from employment
with MiMedx. See generally ECF No. 1-1 at 3-15
(“Compl.”). Vitale is a resident of Richland
County, South Carolina. Id. ¶ 1. MiMedx is a
company registered in Florida and headquartered in Marietta,
Georgia. Id. ¶ 2. MiMedx is in the business of
selling “amniotic tissue and tissue grafts” also
know as “‘substitute skin'” throughout
the United States, including South Carolina. Id.
Parker H. Petit (“Petit”), who is or was the
Chief Executive Officer and Chairman of the Board of MiMedx,
and William C. Taylor (“Taylor”), who is or was
the President, Chief Operating Officer, and a Member of the
Board of MiMedx, are both residents of Georgia. Id.
January 27, 2014, MiMedx hired Vitale as an account
executive. Id. ¶ 9. In that position, Vitale
was responsible for placing, billing, and selling MiMedx
products to healthcare providers, including Dorn Veterans
Affairs Hospital (“Dorn”) in Columbia, South
Carolina. Id. ¶¶ 10, 20-21. Vitale was
successful in his sales role with MiMedx prior to his
termination, consistently meeting or exceeding expectations,
and had only one disciplinary incident during that time,
which is unrelated to the events at issue here. Id.
¶¶ 13-17. Vitale was paid through a combination of
base pay and commissions. Id. ¶ 11.
allegations at the root of this case concern channel
stuffing. “Channel stuffing, put simply, occurs when
MiMedx sends a larger quantity of product than purchased to a
purchaser to create the appearance of higher level sales to
investors.” Id. ¶ 18 Vitale alleges
MiMedx is currently under investigation for, and subject to
lawsuits based upon, channel stuffing. Id. Vitale
further avers MiMedx is subject to a lawsuit by employees
retaliated against for reporting channel stuffing.
Id. ¶ 19 .
place where Vitale alleges MiMedx channel stuffed is Dorn.
Id. ¶ 22. In about May, 2016, Dorn's new
Assistant Chief of Prosthetics informed Vitale Dorn could no
longer hold MiMedx products on consignment (the allegedly
“channel stuffed” items) without a consignment
agreement; at the time, Dorn was holding approximately $400,
000 worth of said product. Id. ¶¶ 23-26.
sought MiMedx's guidance regarding what to do with the
product. Id. ¶ 27. MiMedx initially said it did
not care, but then told Vitale he could not ship the product
back to MiMedx until further notice. Id. ¶ 28.
Vitale claims MiMedx did not want him to return the product
to MiMedx because it would have counted against MiMedx's
quarterly earnings. Id. ¶ 29. Vitale further
alleges the Dorn Assistant Chief of Prosthetic's stance
that Dorn could no longer hold MiMedx items on consignment
would have affected other MiMedx accounts, such that if
MiMedx had not channel stuffed, it would have had to disclose
to investors it had missed its upper end sales guidance for
the quarter. Id. Vitale avers MiMedx first told him
to “‘hide'” the product at Dorn; Vitale
refused. Id. ¶ 30. MiMedx next directed Vitale
to store the product at his home, which was inappropriate
because as a medical-grade product, it should be stored in a
controlled environment. Id. ¶¶ 30-31. In
November, 2016, MiMedx directed Vitale to ship the product
back to it, and told Vitale he could use MiMedx's FedEx
account for the shipping; shipping by FedEx was MiMedx's
preference, but not a requirement Id. ¶¶
32-33, 36. During the course of his employment with MiMedx,
Vitale had frequently used UPS, which was more convenient to
his home, to ship items to MiMedx, had never had any issues
with delivery, and was never told not to use UPS.
Id. ¶¶ 34-35.
states he shipped the product to MiMedx via UPS on November
30, 2016. Id. ¶¶ 37. MiMedx claimed it had
not received the shipment, and asked Vitale to file a loss of
shipment claim against the delivery insurance. Id.
¶ 40. Vitale claims MiMedx's request to file a loss
of shipment claim was in lieu of MiMedx properly reporting
the returned product as a lost sale. Id.
investigated the status of the delivery, and determined it
had been delivered to MiMedx and signed for by a MiMedx
employee on December 2, 2016. Id. ¶¶ 38,
42. Vitale then asked MiMedx about the package's status
via email, telephone, and text message, and received
responses including that MiMedx did not receive packages on
the loading dock, which it had done throughout Vitale's
tenure, and that the employee who had signed for the package
did not work for MiMedx, despite the employee signing for
both earlier and later sent packages. Id.
¶¶ 42-45. On December 13, 2016, while emailing
regarding the purportedly lost package and the directive to
file a loss of shipment claim, Vitale received a call from a
higher-up employee at MiMedx, who informed him MiMedx's
Executive Vice President of Compliance “‘said if
you send one more f***ing email you will be
fired.'” Following MiMedx's directions, on
December 15, 2016, Vitale filed a lost product claim with UPS
for product valued at approximately $352, 000. Id.
¶ 47. On the claim form, Vitale indicated
“‘I am the shipper & I believe Mi[M]edx is
attempting insurance fraud.'”
December 20, 2016, MiMedx's Vice President of Sales
called Vitale and asked him about whether he was employed by,
promoted the products of, or received compensation from, a
competitor while working for MiMedx, or if he knew of other
MiMedx employees who promoted competitor's products.
Id. ¶¶ 48(a)-(c). Vitale truthfully said
no to these questions as to himself, and stated he would not
discuss other employees. Id. Vitale was also asked
if he knew of a company which provides medical-grade gauze
and tape to low-income patients; Vitale did not fully answer
the question because he feared MiMedx was creating pretext to
fire him after he raised concerns about insurance and
investor fraud. Id. ¶ 48(d). Vitale was not
disciplined or counseled following the phone call.
Id. ¶ 49.
December 29, 2016, Vitale met with an attorney concerning his
worry that MiMedx was building pretext to fire him.
Id. ¶ 50. MiMedx had tracking software on
Vitale's phone, and could track his location.
Id. ¶ 51. While Vitale met with the attorney,
MiMedx wiped relevant information from Vitale's phone and
computer. Id. ¶ 52.
after Vitale met with the attorney, MiMedx's Vice
President of Sales called Vitale to tell him he was fired.
Id. ¶ 53. Vitale requested a reason for his
termination; ultimately, the Vice President of Sales told
Vitale he was being fired for sending the product to MiMedx
via UPS rather than FedEx and for lying during their earlier
phone call. Id. ¶ 54. Vitale stated he had not
competed with MiMedx. Id. The Vice President of
Sales then informed Vitale that because he was being
terminated on December 29, 2016 (one day before the last work
day of the month), he would not receive his November and
December commissions. Id. ¶ 55. Vitale avers he
lost more than $20, 000 in commissions. Id. ¶
claims the day after his termination, in a MiMedx press
release regarding MiMedx employees sued for competing with
MiMedx, Petit and Taylor made defamatory statements about
Vitale. Id. ¶¶ 62-63; ECF No. 21-3 at
Specifically, Taylor said MiMedx “‘took
employment actions with various other employees based on the
degree of transgression and the openness and willingness of
these employees to cooperate in [MiMedx's]
investigation.'” ECF No. 21-3 at 2. Petit stated:
‘[W]e have taken disciplinary action against a small
number of other individuals in our sales organization who
were also found to be associated with this or other similar
improper acts. . . . [W]hen an employee violates the duty of
loyalty and contractual obligations by selling competitive
products or other products, employment actions must be taken.
. . . we are always disappointed when individuals decide to
follow self-serving financial motives rather than adhere to
high standards of conduct and compliance that we foster and
instill at [MiMedx].'
ECF No. 20-1 at 2.
alleges in May, 2018, Petit made a statement published in the
Atlanta Journal- Constitution in which he indicated a South
Carolina MiMedx representative who had bribed Veterans
Affairs's officials had been terminated by MiMedx some
one and a half years prior . Compl . ¶ 6 4 . T h e
article at issue concerns workers at Veterans Affairs's
facilities in Greenville and Columbia, South Carolina
accepting gifts in return for pushing the use of MiMedx
products and thereby purportedly committing - and being
indicted for - conspiring to defraud the United States
government, participating in federal acts in which they had a
financial interest, and accepting bribes. ECF No. 21-3 at
5-14. The article states: “[Petit] says the allegations
in the indictment handed down in South Carolina this week
involved the dealings of just one sales representative who
MiMedx fired a year and a half ago.” ECF No. 21-3 at 6.
The article later says: “Petit declined to name the
sales rep who worked with the South Carolina
workers[;]” Petit is quoted as saying:
“‘[i]n this particular case, we terminated an
employee, a sales employee, responsible for that particular
facility about a year and a half ago.'”
Id. at 9. Vitale states he never bribed Veterans
Affairs's officials, but is the only South Carolina
MiMedx representative who was terminated during the relevant
period. Compl. ¶ 64.
January 21, 2019, Vitale filed suit against MiMedx, Petit,
and Taylor in the Court of Common Pleas for Richland County,
South Carolina. Compl. Vitale's complaint brought claims
for: (1) wrongful discharge in violation of public policy
against MiMedx; (2) defamation against all Defendants; and
(3) unjust enrichment against MiMedx. Id. On
February 19, 2019, Defendants removed to this Court. ECF No.
April 8, 2019, MiMedx filed a motion to dismiss Vitale's
complaint in its entirety as to MiMedx pursuant to
Fed.R.Civ.P. 12(b)(6). ECF No. 21. Vitale responded, ECF No.
24, and MiMedx replied, ECF No. 31. ...