Barnett v. Magellan Health, Inc.

Filing 48

RULING granting in part and denying in part 23 MOTION to Dismiss for Failure to State a Claim filed by Magellan Health, Inc. The motion is GRANTED on Plaintiff's breach of contract and breach of mandate claims, and they are DISMISSED WTIH PREJUDICE. The motion is DENIED as to Plaintiff's breach of fiduciary duty and detrimental reliance claims. Signed by Judge John W. deGravelles on 6/28/2018. (SWE) (Main Document 48 replaced on 6/28/2018) (SWE).

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UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

TOM BARNETT

CIVIL ACTION

VERSUS
NO. 17-00333-JWD-RLB
MAGELLAN HEALTH INC.,
previously known as MAGELLAN
HEALTH SERVICES, INC.
Also known as MAGELLAN of
LOUISIANA and/or
MAGELLAN IN LOUISIANA

RULING
Before the Court is a Motion to Dismiss (“Motion”) filed by Magellan Health, Inc.
(“Magellan” or “Defendant”).1 Plaintiff Tom Barnett (“Plaintiff” or “Barnett”) has filed an
Opposition to Defendant’s Motion to Dismiss (“Opposition”) to which the Defendant has
filed a Reply.2 The Court has jurisdiction pursuant to 28 U.S.C. §§ 1332. Oral argument
is unnecessary. For the following reasons, the Motion is GRANTED IN PART and
DENIED IN PART.
I.

FACTUAL AND PROCEDURAL BACKGROUND
The facts taken in the light most favorable to Plaintiff are as follows. On April 24,

2017, Plaintiff filed suit in the Nineteenth Judicial District Court against the Defendant
asserting state law claims of breach of fiduciary duty, intentional and negligent
misrepresentation, negligence/fault, and detrimental reliance.

On May 26, 2017,

Magellan timely removed the action to this Court. On June 2, 2017, Magellan filed a
Motion to Dismiss Plaintiff’s suit, pursuant to Rule 12(b)(6) of the Federal Rules of Civil

1
2

Doc. 23.
Doc. 32 and Doc. 33.

1

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Procedure.3 On October 2, 2017, this Court dismissed all but Plaintiff’s detrimental
reliance claim, but allowed Plaintiff to amend his Original Complaint to remedy the
deficiencies related to his breach of fiduciary duty claim.4
Plaintiff filed a First Supplemental and Amending Complaint (“AC”) on November
27, 2017.5 In his AC, Plaintiff not only amended his breach of fiduciary duty claim, but
also amended his detrimental reliance claim.6 Plaintiff also brought for the first time
claims of breach of contract and breach of mandate.7 In his AC, Plaintiff alleges that in
or about November 2011, Magellan entered into a contract with the Louisiana Department
of Health and Hospitals (“DHH”)8 to serve as the Statewide Management Organization
(“SMO”) for behavioral health services offered by the DHH.9 In May 2012, Plaintiff applied
online for a job with Magellan.10 Barnett further contends that the online application of
employment did not “include any questions regarding or way to disclose” that his spouse
was employed by DHH’s Office of Behavioral Health (“DHH-OBH”).11
According to Plaintiff, on June 4, 2012, he had an initial telephone interview with
Magellan Human Resources Representative Terri Holub, in which he disclosed that his
wife was an employee with DHH-OBH.12 Barnett claims that he was assured that his
wife’s employment with DHH-OHB did not present a conflict of interest for Magellan to
hire him.13 Plaintiff interviewed with Magellan for the second time on June 22, 2013.

3

Doc. 2.
Doc. 17 at 13.
5
Doc. 21.
6
Id.
7
Id.
8
The Department has been renamed the Louisiana Department of Health (LDH).
9
Doc. 21 at 3.
10
Id.
11
Id.
12
Id.
13
Id. at 4. 
4

2

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Plaintiff alleges that shortly after his initial telephone interview, he disclosed his wife’s
employment for a second time during a telephone interview with Magellan representative
Brian Smock (“Smock”). Barnett contends that after he assured Smock that his wife did
not work on the Request for Proposal (“RFP”) of the contract or on the selection or scoring
committee that selected Magellan to be the SMO, Smock advised him that his wife’s
employment would not prevent him from being employed by Magellan nor would it pose
any problems.14
Plaintiff alleges that he disclosed his wife’s employment by DHH-OBH to Smock
again around June 22, 2012 during an in person meeting.15 Barnett claims that he was
once again assured by Smock that this would not present an issue with his employment
with Magellan.16 Barnett alleges that he additionally disclosed his wife’s employment in
writing as part of the pre-employment screening process.17
Plaintiff was subsequently hired and began his employment with Magellan on July
16, 2012.18 Barnett claims that once he began working for Magellan, he disclosed his
wife’s employment with DHH to nine Magellan supervisory employees.19 Plaintiff alleges
that each of these individuals assured him that he was not subject to any ethics rules or
reporting requirements because of his wife’s employment with DHH.20
Barnett claims that despite the aforementioned disclosures to Magellan, in April
2014, he and his wife were charged with ethical violations by the Louisiana Board of
Ethics, because Barnett had been hired by Magellan at the time that it was acting as the

14

Id. at 4-5.
Id. at 5.
16
Id.
17
Id.
18
Id.
19
Id. at 5-6.
20
Id. at 6. 
15

3

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SMO for DHH—which concurrently employed Plaintiff’s wife.21 According to Barnett, after
he received notice of the charges, he spoke with JoeAnn Coleman (“Coleman”), who
served as Magellan’s Corporate Compliance Administrator for Louisiana, and she
assured Barnett that she had seen the written document wherein he disclosed his wife’s
employment two years earlier.22 Plaintiff claims that he subsequently requested this
document but was told that it was a proprietary business document between Magellan
and the state of Louisiana, and was denied access to the document.23
Plaintiff alleges that because Defendant failed to provide the requested document,
he was unable to properly defend himself during the investigation.24 Barnett asserts that
because of Magellan’s alleged actions, he was forced to confront “ethics charges that
were made very public in multiple media outlets” from across the nation.25 Barnett further
alleges that this attention has damaged both his and his wife’s reputations to the point
that they “will never be able to clear their names and reputations of scandal—names and
reputations they spent a lifetime protecting.”26
Plaintiff alleges several violations by Magellan arising under the terms of the RFP
for its contract with DHH, language from its website, and excerpts from its “Compliance
Handbook.”27 According to Plaintiff’s AC, the contract RFP obligated Magellan to disclose
that it had hired Barnett and that his wife was employed by the state, and the Defendant
failed to do so.28 Plaintiff specifically references the following two sections from the RFP:

21

Id.
Id. at 6-7.
23
Id. at 7-8.
24
Id. at 9.
25
Id. at 13.
26
Id. at 14.
27
Id. at 8-12.
28
Id. at 8.
22

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Proposers are responsible for determining that there will be no conflict or
violation of the Ethics Code if their company is awarded the contract;29 [and]
Warranty of Removal of Conflict of Interest: The contractor shall warrant
that it, its officers, and employees have no interest and shall not acquire any
interest, direct or indirect, which conflicts in any manner or degree with the
performance of service hereunder. The Contractor shall disclose any dual
relationships that pose any evident or potential conflicts of interest. The
contractor shall periodically inquire of its officers, and employees
concerning such conflicts, and shall inform DHH-OBH promptly of any
potential conflict.30
Barnett further contends that the RFP obligated Magellan to disclose to him that his
employment (1) violated Louisiana state ethics laws and/or regulations, and potentially
violated state ethics laws, (2) subjected him to reporting requirements, and (3) subjected
him and his wife to investigation by the Board of Ethics.31
Plaintiff also asserts that the following language from Magellan’s website created
certain duties owed by Defendant to Plaintiff:
Under the scrutiny of Magellan’s Executive Leadership, we are responsible
for developing, implementing, and managing Magellan’s corporate
compliance program. We define the scope of appropriate business and
clinical practices as they relate to applicable state and federal laws.
Magellan’s corporate Compliance Department is responsible for the
company’s awareness of applicable state and federal laws and regulations
that impact the company.32
Barnett contends that the above language created a duty on the part of Magellan to
disclose to Plaintiff that (1) it communicated with the Louisiana Board of Ethics about him,
(2) that Barnett disclosed his wife’s employment with the State, and (3) its employment of
Plaintiff potentially violated state laws and regulations.33 Barnett maintains that Magellan

29

Id.
Id.  
31
Id. at 9.
32
Id. at 9-10. Defendant does not provide any date or citation for the language that he references as
purportedly being listed on Magellan’s Compliance website.
33
Id. at 10.
30

5

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admitted fault for failing to disclose any of the required information years after the alleged
breach during the ethics investigation.34
Finally, with regard to his breach of fiduciary duty claim, Plaintiff alleges that
Magellan created a duty owed to him by adopting and putting into effect a Corporate
Compliance Handbook (“Handbook”), which he claims applied to all Magellan employees
and detailed several responsibilities that Magellan voluntarily undertook.35 Specifically,
Barnett claims that in the Handbook, Magellan offered to undertake the duty to ensure
that its employees were aware of, understood, and were in compliance with federal and
state laws related to their jobs.36 Barnett alleges that Magellan breached its duty by (1)
failing to determine the Louisiana laws relevant to Plaintiff’s job title; (2) failing to advise
Plaintiff that it could not hire him; (3) failing to disclose the potential conflict despite the
requirements of the State RFP/contract; (4) making a representation that it would be
responsible for knowing all the federal and state laws applicable to Magellan’s business
and ensuring employees compliance with these law; and (5) failing to advise Plaintiff that
his employment with Magellan could be prohibited by law, could constitute ethics
violations, or could subject him to reporting requirements.37
II.

DISCUSSION
A. Rule 12(b)(6) Legal Standard
In Johnson v. City of Shelby, Miss., the Supreme Court explained that “[f]ederal

pleading rules call for a ‘short and plain statement of the claim showing that the pleader

34

Id.
Id. at 11. 
36
Id.
37
Id. at 12-13.
35

6

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is entitled to relief;’ they do not countenance dismissal of a complaint for imperfect
statement of the legal theory supporting the claim asserted.38
Interpreting Rule 8(a), the Fifth Circuit has explained:
The complaint (1) on its face (2) must contain enough factual matter
(taken as true) (3) to raise a reasonable hope or expectation (4) that
discovery will reveal relevant evidence of each element of a claim.
“Asking for [such] plausible grounds to infer [the element of a claim] does
not impose a probability requirement at the pleading stage; it simply calls
for enough facts to raise a reasonable expectation that discovery will
reveal [that the elements of the claim existed].”39
Applying the above case law, the Western District of Louisiana has stated:
Therefore, while the court is not to give the “assumption of truth” to
conclusions, factual allegations remain so entitled. Once those factual
allegations are identified, drawing on the court’s judicial experience and
common sense, the analysis is whether those facts, which need not be
detailed or specific, allow “the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.”40 This analysis
is not substantively different from that set forth in Lormand, supra, nor
does this jurisprudence foreclose the option that discovery must be
undertaken in order to raise relevant information to support an element
of the claim. The standard, under the specific language of Federal Rule
of Civil Procedure 8(a)(2), remains that the defendant be given adequate
notice of the claim and the grounds upon which it is based. The standard
is met by the “reasonable inference” the court must make that, with or
without discovery, the facts set forth a plausible claim for relief under a
particular theory of law provided that there is a “reasonable expectation”
that “the discovery will reveal relevant evidence of each element of the
claim.41
More recently, in Thompson v. City of Waco, Tex., the Fifth Circuit summarized the
standard for a Rule 12(b)(6) motion:

38

Johnson, 135 S. Ct. 346, 346-47, 190 L. Ed. 2d 309 (2014) (citation omitted) (quoting Fed. R. Civ. P.
8(a)(2)).
39
Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 556, 127 S. Ct. 1955, 1965, 167 L. Ed. 2d 929 (2007)). 
40
Diamond Servs. Corp. v. Oceanografia, S.A. De C.V., No. 10-00177, 2011 WL 938785, at *3 (W.D. La.
Feb. 9, 2011) (citation omitted) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009))
(quoting Twombly, 550 U.S. at 556, 127 S. Ct. at 1965).
41
Id. (quoting Lormand, 565 F.3d at 257) (quoting Twombly, 550 U.S. at 556, 127 S. Ct. at 1965).

7

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We accept all well-pleaded facts as true and view all facts in the light
most favorable to the plaintiff…To survive dismissal, a plaintiff must
plead enough facts to state a claim for relief that is plausible on its face.
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. Our task, the, is to determine
whether the plaintiff states a legally cognizable claim that is plausible,
not to evaluate the plaintiff’s likelihood of success.42
B. Parties’ Arguments
Magellan argues that each of the claims asserted by Barnett in his AC, should be
dismissed because they each fail to state a plausible claim of relief.43 Specifically, with
regard to the breach of fiduciary duty claim, Magellan asserts that Plaintiff fails to allege
any facts that would allow a reasonable inference that Magellan agreed to act primarily
for Barnett’s benefit, which is an essential element needed to successfully assert such a
claim. Magellan argues that the language contained in the RFP that Barnett references
merely required it to do the following: (1) ensure the absence of any conflicts of interest
or Ethics Code violations should it be awarded the contract; (2) warrant that its officers
and employees have no interests that conflicts with the performance of services under
the contract; and (3) disclose any dual relationship that poses an evident or potential
conflict of interest. Magellan contends that it is unreasonable to infer that by responding
to the RFP, Magellan agreed to act primarily for Barnett’s interest, especially since he
was not employed with Magellan at that time.
Magellan also disputes Barnett’s contention that the language from Magellan’s
compliance website created a fiduciary duty owed by Defendant to Plaintiff. Magellan
argues that the language cited by Barnett simply confirms that the Compliance

42
43

Thompson, 764 F.3d 500, 502-503 (5th Cir. 2014) (citations and internal quotations omitted).
Doc. 23 at 1. 

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department “works primarily for the benefit of Magellan by ensuring that the company is
aware of the laws that impact the company and its business practices.”44 Magellan
argues that it is unreasonable to infer that Magellan was agreeing to act primarily for the
benefit of Barnett based on his referenced language from the compliance website.
Magellan also disputes whether Barnett’s reference to Defendant’s Handbook—
which was not included in Plaintiff’s Original Complaint—created a fiduciary duty owed by
Magellan to Barnett. Defendant argues that Barnett’s allegation is unsupported and
conclusory since Barnett did not attach the handbook to his AC nor does he point to any
specific language contained within the handbook that he believes created a duty on the
part of Magellan to act primarily for his benefit.

Moreover, Magellan attaches and

specifically references the following excerpts from the Handbook:45
Magellan’s Corporate Compliance Program…is designed to help
employees be aware of, understand and follow federal and state laws
related to their jobs…Magellan’s Corporate Compliance Department is
responsible for the Company’s awareness of applicable state and federal
laws and regulations;46
[A]ll Magellan employees are required to:...comply with all applicable laws
and Magellan’s policies, including, but not limited to, those addressing
employees’ health, safety, and welfare in the workplace;…comply with
applicable state and federal law and cooperate with any reasonable
demands made in the course of a government investigation…;47 and
As an employee of Magellan…You must know and comply with applicable
laws….Claims of ignorance, good intentions, or use of poor judgment are
not acceptable. Maintaining ethical standards is everyone’s responsibility.48

44

Doc. 23-1 at 10.
The Court may consider all documents referenced in the Amended Complaint when adjudicating a Rule
12 Motion to Dismiss. Citing Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1017 (5th Cir. 1985)
(“[C]ourts must normally limit their inquiry to the facts stated in the complaint and the documents either
attached or incorporated in the complaint.”).
46
Doc. 23-1 at 10; Doc. 23-2 at 2.
47
Doc. 23-1 at 11; Doc. 23-2 at 2-3.
48
Id.; Doc. 23-2 at 3.
45

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Magellan asserts that the cited excerpts from the Handbook demonstrate that it did not
act primarily for the benefit of Barnett when it issued its Compliance policies.49
Additionally, Magellan contends that Barnett fails to allege any facts sufficient to
show that Defendant committed fraud, breached some trust, or took some action outside
the limits of the alleged fiduciary relationship, as necessary to successfully state such a
claim.50 Instead, Magellan maintain that all Barnett alleged was that Defendant promised
to ensure he complied with all federal and state laws and regulations relating to his job
and did not do so.51 Magellan argues that “the Amended Complaint does not contain
facts suggesting that Magellan promised to make Plaintiff aware of and comply with all
laws applicable to and obligations he may have stemming from his employment with
Magellan.”52 Magellan contends that to allege that it obligated itself to make employees
aware of all laws relating to its employment (including the state ethical rules requiring
Plaintiff to file reports disclosing his salary from Magellan) is “akin to arguing that
Defendant promised to research and ensure Plaintiff was aware of and complied with all
of the laws governing individual reporting of wages and tax forms.”53
Finally, with regard to the breach of fiduciary duty claim, Magellan argues that
Barnett fails to allege with specificity how Defendant breached the fiduciary duty.54
Magellan claims that the conclusory allegations are inadequate to support a breach of
fiduciary duty claim and should be dismissed, especially since this is the Plaintiff’s second
attempt at asserting plausible claim.55

49

Doc. 23-1 at 11.
Id.
51
Id.
52
Id. at 12.
53
Id. at fn. 6.
54
Id. at 12.
55
Id.
50

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Defendant also maintains that Plaintiff’s claims for breach of contract and breach
of mandate should likewise be dismissed for two reasons. First, Defendant contends that
these new causes of action are improperly asserted because the deadline for asserting
new claims has long passed and the Court’s previous ruling did not authorize the
assertion of any new claims.56 Second, Magellan argues that Barnett fails to plead any
facts sufficient to support either claim. Specifically, with regard to the breach of contract
claim, Magellan argues that Plaintiff’s bare-bones allegations merely recite the elements
of such a claim, and do not identify any specific contract or obligation relating to his
employment that Defendant allegedly breached.57 With regard to Barnett’s breach of
mandate claim, Magellan argues that Plaintiff failed to plead the existence of a contract
in which he authorized Magellan to transact affairs on his behalf, as required to
successfully assert such a claim.58
Finally, with regard to Barnett’s detrimental reliance claim, Magellan asserts that
the new factual allegations made in Plaintiff’s AC show that he fails to establish the
required elements necessary to support such a claim. Specifically, Magellan argues that
the ethics charge filed against Barnett was not because of any alleged breach by
Magellan, but only because Barnett failed to disclose to the State of Louisiana that he
was earning money from Magellan, which was an entity that contracted with his wife’s
employer.59 In support of its argument, Magellan attaches excerpts from the minutes of

56

Id. at 12, 14. 
Id. at 13.
58
Id. at 15.
59
Id. at 17.
57

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the Board of Ethics hearing where the Chairman of the Board explained why the ethics
charge was filed.60
Magellan argues that because Barnett does not allege in his AC that Defendant
told him that he did not need to file the required financial disclosures, it follows that Barnett
could not have relied to his detriment on any representations by Magellan when he failed
to file the required disclosure.61 Additionally, Magellan contends that the ethics charge
did not indicate that Barnett’s employment with Magellan created the conflict of interest.62
Magellan points out that Barnett kept his job with Magellan long after the ethics
proceedings were initiated.63 Accordingly, Magellan argues, Barnett’s position was not
changed because of his reliance on any of the alleged representations he claims
Magellan made to him about any possible conflict of interest with his wife’s employment
with DHH-OBH.64 Instead, Magellan asserts, the ethics charge was filed against Barnett
because Barnett violated the law.65
In his Opposition, Plaintiff maintains that he has alleged facts sufficient to support
a claim of breach of fiduciary duty. Defendant argues that Magellan voluntarily assumed
this duty through the language on its Corporate Compliance website and through its
Handbook.66 Barnett contends that, in furtherance of its voluntary assumption of this duty,
Magellan repeatedly questioned him regarding his wife’s employment while also
repeatedly advising him that such employment would not violate any Louisiana law.67

60

Id. at 17-18.
Id. at 19.
62
Id. 
63
Id.
64
Id.
65
Id.
66
Doc. 32 at 5.
67
Id.
61

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Barnett asserts that he properly placed confidence in Magellan that it would provide him
with accurate information regarding his eligibility for employment based on its assumption
of these duties.68 Barnett also argues that he reasonably believed that Magellan had
complied with these duties by virtue of its decision to hire him and the representations it
made to him.69 Accordingly, Barnett contends that he has pled all elements of a breach
of fiduciary duty claim and that Defendant’s Motion should be denied.70
With regard to his breach of contract and breach of mandate claims, Barnett
disputes that these new causes of action are untimely because they arise out of the same
factual allegations as set forth in the Original Petition.71 Barnett argues that because a
breach of contract claim has a ten (10) year prescriptive period and he can still assert this
claim in a separate action, allowing this claim to be included would allow for complete
resolution of all claims between the two parties.72 Additionally, Barnett argues that he
has stated a viable claim for breach of contract because he has alleged: (1) that Magellan
offered to ensure that its employees were aware of and followed federal and state laws
related to their jobs, creating an obligation to perform, and (2) Magellan breached this
obligation when he was charged with and had to pay fines for violating state ethics laws.73
Specifically regarding his breach of mandate claim, Barnett argues that Magellan’s
duty arose when he accepted their offer of employment. Barnett states that by doing so,
he “conferred on Defendant the authority to ensure that his employment complied with all

68

Id.
Id.
70
Id.
71
Id. at 6. 
72
Id.
73
Id.
69

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Louisiana laws.”74 Barnett claims that Magellan breached this mandate when ethic
charges were filed against him and his wife solely because Magellan employed Barnett.75
Finally, Barnett argues that nothing has changed with regard to his detrimental
reliance claim.76

Barnett argues that this Court’s previous ruling properly denied

Defendant’s attempts to dismiss his claim, and that since there have been no changes in
the facts asserted with regard to this claim, the Court’s previous denial should remain.77
Barnett also argues that the Defendant’s failure to seek reconsideration of the Court’s
previous denial is further support that this cause of action was properly asserted.78
C. Analysis
1. Breach of Fiduciary Duty Claim
As stated in the Court’s previous ruling, in order to establish a breach of fiduciary
duty claim in Louisiana, a plaintiff must allege “(1) a breach by a fiduciary of an obligation
to another; (2) a knowing collusion or participation in the breach by the fiduciary; and (3)
damages suffered by another as a result of the breach.”79 According to the Louisiana
Supreme Court, the defining characteristic of a fiduciary relationship is “the special
relationship of confidence or trust imposed by one in another who undertakes to act
primarily for the benefit of the principal in a particular endeavor.”80 While Louisiana law
provides that, in limited circumstances, an employee may owe a fiduciary duty to his

74

Id.
Id.
76
Id. at 7.
77
Id.
78
Id. 
79
Brockman v. Salt Lake Farm P’ship, 768 So.2d 836, 844 (La. App. 2 Cir. 2000) (citing Oliver v. Cent.
Bank, 658 So.2d 1316, 1324 (La. App. 2 Cir. 1995)).
80
Scheffler v. Adams and Reese, LLP. 950 So.2d 641, 648 (La. 2007) (citing Plaquemines Parish
Commission Council, 502 So.2d 1034, 1040 (La. 1987); State v. Hagerty, 205 So.2d 369, 374-375 (La.
1967)).
75

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employer, there is no general fiduciary duty owed by employers to employees recognized
in Louisiana.81
In its previous ruling, this Court found that Magellan did not owe Barnett a fiduciary
duty by virtue of the parties’ employment relationship.82 The Court further found that none
of the quoted language referenced by Plaintiff in his Petition (the RFP contract language
nor the excerpts from Magellan’s Corporate Compliance website) imposed a duty on
Magellan to its employees.83 Instead of dismissing his breach of fiduciary claim, however,
the Court allowed Barnett an opportunity to file an AC solely to remedy the deficiencies
related to his breach of fiduciary duty claim.84
Turning to Plaintiff’s AC, Barnett alleges that Magellan undertook a fiduciary duty
by offering to ensure that he and all other Magellan employees were aware of and
complied with Louisiana law.85 Specifically, Barnett alleges that in addition to agreeing to
ensure that all of its employees complied with federal and state laws vis-a-vie the
language contained in the RFP with the state as well as statements referenced on its
Corporate Compliance website, Magellan also undertook a fiduciary duty through its
Corporate Compliance Program as reflected in its Handbook.86 Although Plaintiff does
not attach or cite to any specific provision contained within the Handbook, Magellan does

81

Hardesty v. Waterworks Dist. No. 4, 954 F.Supp.2d 461, 474 (W.D. La. June 21, 2013) (internal citations
omitted) (“[T]his court can find no precedent imposing a general fiduciary duty owed by employers to
employees, nor has the plaintiff pointed to any such cases.”); see also Safford v. Painewebber, Inc., 730
F.Supp. 15, 18 (E.D. La. Feb. 8, 1990) (“Defendant argues that there is no support in the law for a fiduciary
duty owed by an employer to an employee. The Court agrees.”).
82
Doc. 17 at 13.
83
Id.
84
Id.
85
Doc. 21 at 11; Doc. 32 at 5.
86
Id. 

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not dispute the existence of the Handbook, and has even attached the following statement
contained within the Handbook:
Magellan’s Corporate Compliance Program…is designed to help
employees be aware of, understand and follow federal and state laws
related to their jobs…Magellan’s Corporate Compliance Department is
responsible for the Company’s awareness of applicable state and federal
laws and regulations.87
Accepting all of the allegations in Barnett’s AC as true, and applying the legal
principles set forth above, the Court finds that Barnett has alleged facts sufficient to state
a cause of action for breach of fiduciary duty. As the Louisiana Supreme Court has held,
“[g]enerally, whether a fiduciary duty exists, and the extent of that duty, depends upon the
facts and circumstances of the case and the relationship of the parties.”88 The court
further stated that “[a]s a basic proposition, for a fiduciary duty to exist, there must be a
fiduciary relationship between the parties.”89 A fiduciary relationship between the parties
exists, the court further held, “’when confidence is reposed on one side and there is
resulting superiority and influence on the other.’”90 “The defining characteristic of a
fiduciary relationship, therefore, is the special relationship of confidence or trust imposed
by one in another who undertakes to act primarily for the benefit of the principal in a
particular endeavor.”91
A review of Barnett’s AC reveals the existence of facts that reasonably establish
that Magellan undertook a fiduciary relationship between itself and its employees
(including Barnett). The AC clearly avers that Barnett was concerned enough about any

87

Doc. 23-1 at 10; Doc. 23-2 at 2.
Scheffler, 950 So.2d at 647.
89
Id.
90
Id. (quoting Plaquemines Parish Commission Council v. Delta Development Company, Inc., 502 So.2d
1034, 1040 (La.1987), quoting Toombs v. Daniels, 361 N.W.2d 801, 809 (Minn. 1985)).
91
Id. at 648. 
88

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potential conflicts with his wife’s employment that he felt compelled to disclose it on at
least twelve occasions to eleven different employees.92 Barnett alleges that with each
disclosure, he was assured that his wife’s employment with DHH-OBH posed no
problems, or that he would be subject to any ethics rules or reporting requirements.93
Moreover, the language quoted in the Handbook, is further evidence that can reasonably
be interpreted that Magellan’s Corporate Compliance Program was designed to ensure
the type of confidence or trust described by the Louisiana Supreme Court.

While

Magellan argues that the excerpt from the Handbook was geared toward safeguarding
the good of the overall company and not for the benefit of Barnett or any specific
employee, the Court does not draw such a distinction, especially since it specifically
references that the Compliance Program is “designed to help employees be aware of,
understand and follow federal and state laws related to their jobs….”94
These factual allegations, along with the Plaintiff’s references to the excerpts from
the website, are sufficient enough to allow this Court to find that it is plausible that a
fiduciary relationship existed between the parties. Accordingly, the Court shall DENY
Defendant’s Motion to dismiss Plaintiff’s breach of fiduciary duty claim.
2. Breach of Contract and Breach of Mandate Claims
In his AC, Plaintiff asserts two causes of action for the first time, breach of contract
and breach of mandate, against Magellan. Federal Rule of Civil Procedure 15(a)(2)
states that “a party may amend its pleadings only with the opposing party’s written

92

Doc. 21 at 4-6.
Id. at 6.
94
Doc. 23-1 at 6 (emphasis added). 
93

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consent or the court’s leave” after the time has passed for amending as a matter of
course.95
The Court’s August 1, 2017 Scheduling Order fixed the deadline for amended
pleadings in this case for October 16, 2017.96 In the Court’s ruling on November 6, 2017,
Plaintiff was granted twenty-one (21) days from the date of the ruling “to file an amended
complaint as to Plaintiff’s breach of fiduciary claim only.”97 The Court’s ruling did not
grant Plaintiff leave to file his AC with additional new causes of action. Additionally,
because the deadline to amend pleadings had already passed when the Plaintiff filed his
AC on November, 27, 2017, the Court finds that Plaintiff’s breach of contract and breach
of mandate claims are not properly before the Court. Accordingly, the Court shall GRANT
Defendant’s Motion and Plaintiff’s breach of contract and breach of mandate claims are
hereby dismissed.
3. Detrimental Reliance Claim
As stated in the Court’s previous ruling, in order to prevail on a detrimental reliance
claim in Louisiana, a plaintiff need not establish a formal, valid, and enforceable contract,
but only prove by a preponderance of the evidence the following three elements: (1) a
representation by conduct or word; (2) justifiable reliance; and (3) a change in position to
one’s detriment because of the reliance.98 In its ruling, the Court found that Plaintiff
alleges sufficient facts to establish each one of the elements necessary to plausibly state
a claim for detrimental reliance against Magellan.99

95

Fed. R. Civ. P. 15(a)(2).
Doc. 14 at 1.
97
Doc. 17 at 16 (emphasis added).
98
Doc. 17 at 14 (quoting E. Tangipahoa Dev. Co., LLC v. Bedico Junction, LLC 5 So.3d 238, 246 (La.App.
1 Cir. 2008) (citing Suire v. Lafayette City-Parish Consolidated Gov., 907 So.2d 37, 59 (La.2005)). 
99
Id. at 14-15.
96

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In its Motion, Magellan attempts to seek reconsideration of the Court’s previous
denial of its Motion to Dismiss Plaintiff’s detrimental reliance claim, arguing that because
Plaintiff incorporated new factual allegations in his AC, he amended his detrimental
reliance claim and reconsideration was warranted. Magellan then restates the same
arguments previously rejected by this Court.
The only new argument that Magellan makes is regarding its disagreement with
the Court’s previous determination that Plaintiff alleged sufficient facts to establish “a
change in position to Plaintiff’s detriment,” which is the third element of a detrimental
reliance claim. Magellan argues that the ethics charge filed against Barnett was not due
to his reliance on any assurances that Magellan made to him concerning the lawfulness
of his employment, but rather because he failed to disclose to the State of Louisiana that
he was earning money from Defendant.100 Magellan cites to publicly available minutes
from the Defendant’s hearing before the state’s Board of Ethics in support of its argument.
Magellan claims that Plaintiff has not alleged anywhere in his AC, that Defendant told
Plaintiff that he need not file financial disclosures required due to the nature of Plaintiff’s
wife’s employment.101 Therefore, according to Magellan, Plaintiff could not have relied to
his detriment on any representations by Magellan when he failed to file the requisite
disclosures.102
The Court finds that the facts incorporated into the Plaintiff’s AC do not alter or
undermine the facts that have been previously held to support a sufficient finding of each
element of Barnett’s detrimental reliance claim.

100

Doc. 23-1 at 17.
Doc. 33 at 5.
102
Id. 
101

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sufficiently plead facts to support the first and second elements has not been disputed by
Magellan.103 With regard to the third element of his detrimental reliance claim, Barnett
need only establish “a change in position to one’s detriment because of the reliance.”
The Court has previously found that Barnett’s claim that “ethics charges were filed
against him, the charges were published in articles on several media outlets, these
articles were and still are found on the Internet, and he (and his wife) ‘will never be able
to clear their names and reputations of scandal,’” were sufficient to allow the Court to
draw the reasonable inference that the third element was met.104 Defendant’s argument
that it was not the cause of Barnett’s ethics charges, as well as Defendant’s reference to
the minutes from the BOE hearing, do not change, alter, or discount any of the allegations
cited above which the Court found sufficient to establish the third element of Barnett’s
detrimental reliance claim. Therefore, the Court finds that the facts alleged in Plaintiff’s
AC do not change the Court’s previous finding that Barnett has alleged sufficient facts to
sustain a claim for detrimental reliance. Accordingly, the Defendant’s Motion shall be
DENIED as to Plaintiff’s detrimental reliance claim.
III.

CONCLUSION
For the foregoing reasons, the Defendant’s Motion to Dismiss105 is GRANTED IN

PART and DENIED IN PART.
The Motion is GRANTED on Plaintiff’s breach of contract and breach of mandate
claims, and they are hereby DISMISSED WITH PREJUDICE.

103

Doc. 23-1 at 17. The only reference that Defendant disputes in his Motion is to the third element of
Barnett’s detrimental reliance claim.
104
Doc. 17 at 15 (quoting Doc. 2-2 at 7, 11).
105
Doc. 23.

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The Motion is DENIED as to Plaintiff’s breach of fiduciary duty and detrimental
reliance claims.
IT IS SO ORDERED.
Signed in Baton Rouge, Louisiana, on June 28, 2018.

S
JUDGE JOHN W. deGRAVELLES
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

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