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Gentry v. Bioverativ U.S. LLC

United States District Court, D. South Carolina, Charleston Division

August 13, 2019

JOHN GENTRY, Plaintiff,
v.
BIOVERATIV U.S. LLC, Defendant.

          OPINION AND ORDER

          MARGARET B. SEYMOUR SENIOR UNITED STATES DISTRICT JUDGE.

         Plaintiff John Gentry (“Plaintiff”) brought the within action against Defendant Bioverativ U.S. LLC (“Defendant”) in the Court of Common Pleas for Berkeley County, South Carolina. The action was removed to this court on March 22, 2019. Plaintiff claims Defendant wrongfully terminated his employment in violation of public policy. Plaintiff also alleges the termination gives rise to a violation of the South Carolina Payment of Wages Act as well as claims of promissory estoppel, conversion, and defamation.

         This matter is before the court on Defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), filed on March 29, 2019. ECF No. 5. Plaintiff filed an opposition to Defendant's motion on April 18, 2019, ECF No. 10, to which Defendant filed a reply on April 25, 2019, ECF No. 11. The court exercises subject matter jurisdiction pursuant to 28 U.S.C. § 1332.

         FACTUAL BACKGROUND

         Plaintiff began his employment with Defendant's predecessor, Biogen, on September 3, 2013, as the company's hemophilia account executive. ECF No. 1-1 at ¶¶ 7, 9. Defendant is a company that specializes in the development and sale of pharmaceutical products to treat hemophilia and other blood disorders, ECF No. 5-1 at 1, and was formed from Biogen's hemophilia division in February 2017, ECF No. 1-1 at ¶ 8. In early January 2018, Plaintiff learned that Sanofi Genzyme had purchased or was planning to purchase Defendant for approximately $11.6 billion. Id. at ¶¶ 2, 12, 13.

         On February 22, 2018, Plaintiff received a telephone call from Jim Snider, Defendant's vice president of sales. ECF No. 1-1 at ¶¶ 11, 15. Mr. Snider told Plaintiff that a physician had complained that Plaintiff had “sent a link to a press release, letting everyone know about the publishing of a study for an off-label use of a product sold by Plaintiff's former employer.” Id. at ¶ 17. Mr. Snider told Plaintiff that “by sending the link, Plaintiff's act constituted the promotion of off-label use of the medicine, ” a compliance violation, and informed Plaintiff that he was fired as a result. Id. at ¶¶ 11, 15, 20. Plaintiff was terminated February 22, 2018, two weeks prior to the anticipated Sanofi Genzyme acquisition of Defendant. Id. at ¶ 11.

         Plaintiff asserts that Titles 33 and 35 of the South Carolina Code require business entities to “engage in mergers and acquisitions in such a manner that a shareholder and employee with stake in a company is entitled a complete transfer of rights upon merger and acquisition.” ECF No. 1-1 at ¶ 37. He alleges that with the acquisition he would have received substantial “stock rights, ” and that as a result of his termination “he suffered significant stock and value losses”; he was “also denied payment for his 2017 Fourth Quarter performance commissions/bonus in excess of $10, 000.” Id. at ¶¶ 29, 34. Plaintiff asserts that he “had a clean employment record” and “no compliance violations.” Id. at ¶¶ 21, 22. He alleges that “Defendant itself released and disseminated the same information, ” which was set forth in the public press release, and that “Defendant falsely accused Plaintiff of promoting off-label use of medicine as pretextual grounds to terminate Plaintiff's employment.” Id. at ¶ 25.

         LEGAL STANDARD

         Defendant moves to dismiss the entire complaint under Rule 12(b)(6). A Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted tests the legal sufficiency of a complaint. Schatz v. Rosenberg, 943 F.2d 455, 489 (4th Cir. 1991). While the complaint need not be minutely detailed, it must provide enough factual details to put the opposing party on fair notice of the claim and the grounds upon which it rests. Bell Atl. Corp. v. Twombly, 550 U.S 544, 555 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47 (1957)). Additionally, a complaint must contain factual content that allows the court to reasonably infer the defendant is liable for the alleged misconduct. Ashcroft v. Iqbal, 556 U.S 662, 678 (2009) (“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”). “Facts that are ‘merely consistent with' liability do not establish a plausible claim to relief.” United States ex rel. Nathan v. Takeda Pharms. N. Am., Inc., 707 F.3d 451, 455 (4th Cir. 2013) (quoting Iqbal, 556 U.S. at 678). See 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004) (“[T]he pleading must contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action”).

         The court must accept the allegations in the complaint as true and draw all reasonable factual inferences in favor of the party opposing the motion. Iqbal, 556 U.S. at 679. However, the court will not accept “legal conclusions couched as facts or unwarranted inferences, unreasonable conclusions, or arguments.” Nathan, 707 F.3d at 455 (quoting Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir. 2012)). To determine plausibility, a court is to “draw on its judicial experience and common sense”; and if the court determines that the factual allegations can “plausibly give rise to an entitlement to relief, ” dismissal is not warranted. Iqbal, 556 U.S. at 679. “But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. (citing Fed.R.Civ.P. 8(a)(2)).

         DISCUSSION

         I. Wrongful Discharge in Violation of Public Policy

         Defendant argues that Plaintiff's first cause of action should be dismissed because Plaintiff “fails to identify a clear mandate of public policy that Bioverativ violated by terminating his employment.” ECF No. 5-1 at 4. Defendant asserts that South Carolina is a state committed to at-will employment, the narrow exception to which is available only when the discharge of an employee violates a clear mandate of public policy. Defendant contends that “[w]hile Plaintiff vaguely alleges that Titles 33 and 35 of the South Carolina Code protect shareholders and employees, Plaintiff fails to identify any provision that protects employees from termination prior to an acquisition.” Id. at 7. Defendant further contends that no such provision exists and that “Plaintiff's vague reference to general code sections” falls short of “satisfying his obligation to identify a clear mandate of public policy that Defendant violated.” Id.

         In response, Plaintiff asserts that he has sufficiently pleaded a cause of action because he alleges that Defendant “terminated his employment so as to avoid paying him stock options he would be due after the acquisition was finalized.” ECF No. 10 at 5-6. Moreover, Plaintiff asserts, the issue he raises is novel in this state and “thus, deserving of further development of facts.” Id. at 6.

         In reply, Defendant reasserts that “no provision in the South Carolina Code prohibits employers from terminating employees prior to a merger or acquisition.” ECF No. 11 at 3. Defendant also argues that to the extent Plaintiff contends the issue is novel and therefore should not be decided at the pleadings stage, the court determines what constitutes public policy as a matter of law. Id. at 4.

         South Carolina has a strong policy favoring at-will employment. Taghivand v. Rite Aid Corp., 768 S.E.2d 385, 386 (S.C. 2015) (citation omitted). Therefore, “absent a contractual provision to the contrary, an employee may be terminated at any time for any reason or no reason, with or without cause.” Id. (citing Barron v. Labor Finders of S.C., 713 S.E.2d 634, 636 (S.C. 2011)). However, “[w]here the retaliatory discharge of an at-will employee constitutes violation of a clear mandate of public policy, a cause of action in tort for wrongful discharge arises.” Lawson v. South Carolina Dept. of Corrections, 532 S.E.2d 259, 350 (S.C. 2000) (quoting Ludwick v. This Minute of Carolina, Inc., 337 S.E.2d 213, 216 (S.C. 1985)). South Carolina courts have expressly recognized two examples of when the exception applies: (1) “when an employer requires an employee to violate the law”; or (2) “the reason for the employee's termination was itself a violation of criminal law.” Id. (citation omitted). In answering a question certified to it by the District of South Carolina, the South Carolina Supreme Court explained in 2015 that although the public policy exception “is not limited” to the above two examples, the court has “specifically recognized no others.” Taghivand, 768 S.E.2d at 387 (citation omitted). The Taghivand court further instructed that “[t]he primary source of the declaration of the public policy of the state is the General Assembly; the courts assume this prerogative only in the absence of legislative declaration.” Id. (quoting Citizens' Bank v. Heyward, 133 S.E. 709, 713 (S.C. 1925)).

         In Taghivand, the court examined the statutory and common law authorities governing obstruction of justice, which the plaintiff asserted established a basis for a public policy exception to protect the good faith reporting of suspected crime. The court declined to extrapolate from those authorities a “broad public policy favoring the reporting of crimes, ” noting that “the plain language of the statute does not support [the plaintiff's] assertions.” 768 S.E.2d at 387. Plaintiff argues in response to the motion to dismiss that Taghivand is inapposite because the case involved an employee who was terminated after he reported his suspicion of shoplifting to the police. ECF No. 10 at 6. While the circumstances of Plaintiff's termination are certainly different, the guidance set forth in Taghivand is clear and easily applied here.

         In essence, Plaintiff urges the court to recognize as public policy the need to protect employees from termination on the eve of acquisition when the employee stands to realize a financial gain as a result of the acquisition. See ECF No. 10 at 5-6. However, Plaintiff does not cite the court to specific statutory authority setting forth the legislature's intent to offer that sort of protection. Plaintiff contends that Titles 33 and 35 of the South Carolina Code require employers like Defendant “to engage in mergers and acquisitions in such a manner that a shareholder and employee with stake in a company is entitled a complete transfer of rights upon merger and acquisition.” ECF No. 10 at 6. Title 33 of the South Carolina Code is titled Corporations, Partnerships and Associations and contains 35 chapters; Title 35 is titled Securities and contains six chapters. As a practical matter, without a citation to the statute(s) Plaintiff relies on, the court cannot examine the statutory language Plaintiff contends gives rise to the public policy that Defendant allegedly violated. Furthermore, other courts have found that a general, imprecise reference to a body of statutory authority is insufficient to support this type of claim. See Holt v. ARES Security Corporation, No. 7:17-cv-03173-AMQ, 2018 WL 2461992, at *2 (D.S.C. Jun. 1, 2018) (“In order to allege a violation of a clear mandate of public policy, a plaintiff must identify and state a source of a clear mandate of public policy, or ‘set forth specific allegations that would enable the court to determine what public policy was violated'”) (citations omitted). See also McNeil v. South Carolina Dep't of Corrections, 743 S.E.2d 843, 847 (S.C. App. 2013) (explaining that “a litigant must allege more than a general statement that her discharge violated public policy, ” and specifying that “[t]he complaint must set forth specific allegations that would enable the court to determine what public policy was violated.”).

         In any event, the duty set forth in Titles 33 and 35, as articulated by Plaintiff, does not reflect the public policy he asserts as the basis for his claim. Plaintiff does not allege that he was an employee or shareholder at the time of the acquisition. Nor does Plaintiff allege that Defendant prevented him as a shareholder or as an employee from a complete transfer of his rights at the time he was terminated. Rather, Plaintiff alleges that he was “entitled” to receive “significant stock rights” as of the date of the acquisition; that is, Plaintiff owned fewer stocks on the date of his termination than he would have owned had he remained in Defendant's employ at the time of the acquisition. ECF No. 1-1 at ¶¶ 26-29. Indeed, Plaintiff asserts in his response that Defendant fired him “so as to avoid paying him stock options he would be due after the acquisition was finalized.” ECF No. 10 at 5-6. Even relying on Plaintiff's interpretation of the statutory authority, there is no indication that the legislature has created public policy to protect employees from termination resulting from the employer's cost/benefit analysis on the eve of a merger or acquisition. Nor has Plaintiff directed the court to controlling (or persuasive) case law to any such effect. Nor has Plaintiff persuaded the court that the matter of interest herein at issue is so firmly rooted in the mores of this state that the court should recognize it as public policy in the absence of any clear guidance from the state legislature.

         Finally, Plaintiff asserts that he raises a novel issue with this claim and even if the court finds no clear statutory authority for recognizing public policy, the matter is “deserving of further development of facts.” ECF No. 10 at 6. In two instances, South Carolina courts have held that dismissal of a claim for wrongful discharge in violation of public policy was not appropriate due to a case's procedural posture, and that the court should allow the parties to further develop the facts of the case in light of the novel issues presented. Garner v. Morrison Knudsen Corp., 456 S.E.2d 907, 909-10 (S.C. 1995); Keiger v. Citgo, Coastal Petroleum, Inc., 482 S.E.2d 792 (S.C. App. 1997). However, the court determines what constitutes public policy as a matter of law, Barron, 713 S.E.2d at 638, and the facts surrounding Plaintiff's termination here bear no resemblance to the sensitive concerns at issue in either Garner or Keiger. See Garner, 456 S.E.2d at 909-10 (holding dismissal of action for wrongful discharge in violation of public policy for failure to state a claim inappropriate where employee alleged termination in retaliation for reporting and testifying about radioactive contamination and unsafe working conditions at nuclear facility); Keiger, 482 S.E.2d at 794 (similarly holding that dismissal of action for wrongful discharge in violation of public policy for failure to state a claim was inappropriate in light of the novel issue presented of whether “an employer's retaliatory discharge of an employee who threatens to invoke her rights under the Payment of Wages Act is a violation of a clear mandate of public policy.”). See also McNeil, 743 S.E.2d at 847 (distinguishing Garner on the basis that “the existence of radioactive contamination and unsafe working conditions is a matter of public interest and public policy”; and distinguishing Keiger on the basis that “a violation of the Payment of Wages Act is a violation of a clear mandate of public policy, and the employee specifically alleged her termination was in retaliation for reporting her ...


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