Jay et al v. Siemens AG et al

Filing 19

Judge Rya W. Zobel: Memorandum of Decision and ORDER entered denying 6 Motion to Dismiss for Failure to State a Claim; granting 18 Motion for Leave to File Document ; Counsel using the Electronic Case Filing System should now file the document for which leave to file has been granted in accordance with the CM/ECF Administrative Procedures. Counsel must include - Leave to file granted on (date of order)- in the caption of the document. (Urso, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

CIVIL ACTION NO. 18-10267-RWZ

ANDREW JAY
v.

SIEMENS AG, SIEMENS FINANCIAL SERVICES, INC.,
SIEMENS HEALTHINEERS and SIEMENS NEXT 47 GMBH

MEMORANDUM OF DECISION AND ORDER
August 30, 2018

ZOBEL, S.D.J.
Plaintiff Andrew Jay, formerly an at-will employee of defendants, alleges wrongful
constructive discharge in retaliation for his internal report of extortion. Defendants move
to dismiss his single-count complaint.
I.

Factual Background
The following well-pleaded facts are recited as alleged in the complaint. I accept

them as true for the purposes of resolving this motion. See Ocasio-Hernández v.
Fortuño-Burset, 640 F.3d 1, 5 (1st Cir. 2011).
Plaintiff, a Massachusetts resident, worked for 14 years in various capacities for
defendant Siemens Financial Services, Inc. (“SFS”), a German healthcare company
doing business in Massachusetts, and related entities. In his most recent role, plaintiff
worked as Managing Partner/Vice President of Siemens Medical Solutions USA, Inc.

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(referred to in the complaint and hereafter as “Healthineers”). His responsibilities
included managing healthcare venture investment efforts and supervising the Boston
office of SFS. 1 He received positive performance reviews throughout his tenure with
SFS/Healthineers and oversaw positive financial returns.
In the spring of 2017, Thomas Miller of GreyBird Investments pitched
SFS/Healthineers to invest in a British biotechnology company called Base4. Miller told
SFS/Healthineers that he was working to raise $30-50 million in venture capital for
Base4. As part of that effort, Miller had submitted a term sheet to Base4 affording him
financial incentives if he could secure a syndicate of investors. A former Siemens
Healthcare executive, Miller by this time had a consulting contract with Siemens to
deliver business proposals and investment opportunities. That contract was arranged by
David Stein, SFS Head of Strategy, and Bernd Montag, CEO of Siemens Healthcare.
Stein and his deputy, Mary Amor, “openly supported” investing in Base4 through
GreyBird. Compl. ¶ 20.
Having previously considered and rejected this investment as premature after a
site visit in the summer of 2016, plaintiff’s team revisited the possibility in light of
executive support for it. After another visit to Base4, however, plaintiff and his
colleagues “remained unimpressed.” Compl. ¶ 21. In June or July of 2017, plaintiff
received a phone call from Cameron Frayling, the CEO of Base4. According to
Frayling, Miller had told him that Siemens Healthcare would invest or not at Miller’s
instruction, and that Frayling “should sign the proposed term sheet with GreyBird if he
wanted to see any funding from Siemens Healthcare.” Compl. ¶ 22.
Although defendants complain that plaintiff “overstates both [his] position and authority,” they
do not clarify their view of his role. Docket # 18-1, at 3, n.1.
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Plaintiff discussed this call with several colleagues and determined, “based on
their advice, standing SFS policy and his own conscience” to report the matter to the
company’s compliance department. He spoke with Barbara Greenberg on the Siemens
Compliance hotline, informing her “of the Base4 situation” and expressing concern
“about personal and professional implications from his report.” Compl. ¶ 24.
Greenberg subsequently reported no compliance problem because a
Healthineers attorney had informed her that Miller had no contractual relationship with
Healthineers. When plaintiff informed her that Miller was in fact under contract as a
consultant, a “surprised” Greenberg asked that he provide a copy of the contract. 2
Compl. ¶ 25. Plaintiff received no further communication from the compliance
department, but learned that Miller’s contract “would not be renewed despite
Healthineers’ satisfaction with the value it was receiving.” Compl. ¶ 27. Despite
plaintiff’s “best efforts to remove it from consideration,” the Base4 investment remained
in play for weeks after his report, with Stein’s continued advocacy.
Thereafter, Stein and Montag, “in their capacities as SFS Head of Strategy and
CEO of Siemens Healthcare, acted in concert to concoct a pretextual reason to demote
Plaintiff, remove many of his job duties, and replace him with an outside hire, all in
retaliation for Plaintiff’s Compliance report.” Compl. ¶ 30. Pursuant to that scheme,
plaintiff was demoted in September 2017 from Vice President reporting directly to the
SFS CEO, to Director reporting to Stein’s deputy Amor, a Hiring Manager. Amor
informed him in a meeting on October 2, 2017, that Stein and Montag had decided
several weeks prior that a substantial portion of plaintiff’s job responsibilities would be

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It is not clear from the complaint whether plaintiff in fact provided Greenberg with the contract.

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transferred to a new hire acting as his direct superior. At a second meeting three days
later, Amor and a human resources employee repeated this information. They
emphasized that Stein and Montag had made the decision back in August, adding this
time that “the reason for the demotion was his presentation style in Investment
Committee Meetings.” Compl. ¶ 37. Plaintiff had never previously been informed of a
problem with his presentation style, and in the three Investment Committee Meetings he
attended with Montag, the two topics he presented advanced successfully.
Accordingly, plaintiff informed Human Resources on October 13, 2017 that he
believed his demotion to be “in retaliation for his Compliance report regarding Miller’s
extortion of Base4’s CEO.” Compl. ¶ 41. On October 25, 2017, Stein confirmed his and
Montag’s intention to demote plaintiff, again citing his presentation style. By letter dated
October 31, 2017, Siemens informed plaintiff it had found no connection between his
compliance report and demotion, and gave him until November 6, 2017 to accept the
demotion or resign. By refusing to accept the demotion, plaintiff was constructively
discharged on November 6, 2017.
On December 27, 2017, he brought this one-count complaint alleging wrongful
discharge in Suffolk Superior Court. Defendants thereafter removed to this court based
on diversity jurisdiction and now move to dismiss.
II.

Standard of Review
“To survive a motion to dismiss, a complaint must contain sufficient factual

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that

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allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. For purposes of a motion to dismiss, the court accepts all
well-pleaded factual allegations as true and draws all reasonable inferences in the
plaintiff's favor. See Rodríguez-Reyes v. Molina-Rodríguez, 711 F.3d 49, 52–53 (1st
Cir. 2013).
III.

Analysis
Defendant contends that the most plaintiff alleges is discharge for an internal

complaint about company policy for which liability may not lie. Plaintiff argues that he
reported not a mere deviation from company rules but what he reasonably perceived to
be criminal extortion, discharge for which violates a well-established public policy
protecting whistleblowers.
Massachusetts courts recognize a narrow exception to the general at-will
employment rule “when employment is terminated contrary to a well-defined public
policy.” Wright v. Shriners Hosp. for Crippled Children, 589 N.E.2d 1241, 1244 (Mass.
1992); see King v. Driscoll, 638 N.E.2d 488, 492 (Mass. 1994) (exception narrowly
construed). Under the exception, redress is most clearly available to employees
terminated “for asserting a legally guaranteed right (e.g., filing workers' compensation
claim), for doing what the law requires (e.g., serving on a jury), or for refusing to do that
which the law forbids (e.g., committing perjury).” Smith-Pfeffer v. Superintendent of the
Walter E. Fernald State Sch., 533 N.E.2d 1368, 1371 (Mass. 1989). It may also extend
in some cases to employees “terminated for performing important public deeds, even
though the law does not absolutely require the performance of such a deed.” Flesner v.
Tech. Commc’ns Corp., 575 N.E.2d 1107, 1111 (Mass. 1991). This category includes

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“whistleblowing,” or an internal complaint concerning an alleged violation of criminal law.
Hinchey v. NYNEX Corp., 144 F.3d 134, 145 (1st Cir. 1998) (citing Shea v. Emmanuel
Coll., 682 N.E.2d 1348, 1350 (Mass. 1997)). “It is well established,” however, “that
Massachusetts law does not protect at-will employees who claim to be fired for their
complaints about internal company policies or the violation of company rules, even
though the employees' actions may be considered appropriate and ‘socially
desirable.’” Falcon v. Leger, 816 N.E.2d 1010, 1017-18 (Mass. App. Ct. 2004) (quoting
Smith-Pfeffer, 533 N.E.2d at 1371). Whether a retaliatory firing violates public policy is
a question of law for the judge to decide. Wright, 589 N.E.2d at 1243.
Because internal matters cannot be the basis of a public policy exception to the
at-will rule, liability lies here only if plaintiff’s internal complaint reported an alleged
violation of criminal law. No law need actually be violated so long as the employee’s
belief of a violation is reasonable and the report is made in good faith. See Falcon, 816
N.E.2d at 1019, and cases cited; see also Mass. Gen. Laws ch. 149, § 185 (b) (“An
employer shall not take any retaliatory action against an employee [who] . . . discloses .
. . an activity . . of the employer, or of another employer with whom the employee's
employer has a business relationship, that the employee reasonably believes is in
violation of a law”) (emphasis added).
Here, plaintiff alleges that defendants constructively discharged him “in retaliation
for reporting an incident of extortion to Siemens’ Compliance Department.” Compl. ¶ 1.
He also alleges having informed Human Resources prior to his discharge that he
believed his demotion was “in retaliation for his Compliance report regarding Miller’s
extortion of Base4’s CEO.” Compl. ¶ 41.

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Plaintiff has sufficiently alleged that he made the report in good faith. He
consulted with colleagues and decided to call the compliance hotline “based on their
advice, SFS policy, and his own conscience.” Compl. ¶ 23. He stood to gain nothing by
making the report, and indeed told Goldberg he was concerned about the personal and
professional consequences of doing so. Compl. ¶ 24.
He has also pleaded sufficient facts in support of his reasonable belief that
Miller’s conduct was criminally extortionate. Extortion under Massachusetts law may be
committed by anyone who obtains a pecuniary advantage through some threat to a
person or his property, including to intangible business interests. Mass. Gen. Laws ch.
265, § 25; Commonwealth v. Matchett, 436 N.E.2d 400, 408 (Mass. 1982); see also
Commonwealth v. Downey, 429 N.E.2d 41, 43-44 (Mass. App. Ct. 1981). The threat in
question need not portend violence or put the victim in fear. See Manchester v. City of
Amesbury, 138 F. Supp. 3d 54, 68 (D. Mass. 2015). At this stage, Miller’s threat to
withhold Siemens funding from Base4 unless Base4’s CEO signed GreyBird’s term
sheet providing him with financial benefits satisfies this standard. Cf. Nardone v.
Raytheon Co., No. CIV.A. 2013-04996, 2014 WL 2159048, at *3 (Mass. Super. May 19,
2014) (allowing employee’s claim to proceed even though he was fired for reporting
violations of a statute containing only civil sanctions).
Accordingly, defendants’ motion is in substance denied. They move additionally
for the dismissal with prejudice of improperly named entities Next47GmbH and Siemens
AG. Given the complicated corporate relationships at issue and the nascent stage of
this litigation, however, the motion is denied without prejudice to its renewal after
discovery.

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IV.

Conclusion
Defendants’ motion to dismiss Count 1 (Docket # 6) is denied. Defendants’ motion

for leave to file (Docket # 18) is allowed.

_____August 30, 2018

________/s/Rya W. Zobel _________

DATE

RYA W. ZOBEL
SENIOR UNITED STATES DISTRICT JUDGE

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