Barger v. BlueSky TelePsych, Inc.

Filing 24

MEMORANDUM OPINION AND ORDER - Defendant BlueSky TelePsych, LLC's motion to dismiss (Doc. No. 12 ) is GRANTED IN PART and DENIED IN PART. (Written Opinion) Signed by Judge Donovan W. Frank on 5/19/2023. (See Order for Specifics) (las)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Lynsey Barger,

Civil No. 22-2972 (DWF/DTS)
Plaintiff,

v.

MEMORANDUM
OPINION AND ORDER

BlueSky TelePsych, LLC,
Defendant.

Blaine L.M. Balow, Esq., Maria Victoria Olszewska, Esq., HKM Employment Attorneys,
Robyn S. Uri, Esq., Halunen Law, counsel for Plaintiff.
Pamela Abbate-Dattilo, Esq., William Thomas Wheeler, Esq., Fredrikson & Byron, PA,
counsel for Defendant.
________________________________________________________________________
INTRODUCTION
This matter is before the Court on Defendant BlueSky TelePsych, LLC’s
(“BlueSky”) motion to dismiss. (Doc. No. 12.) Plaintiff Lynsey Barger opposes the
motion. (Doc. No. 21.) For the reasons set forth below, the Court grants in part and
denies in part BlueSky’s motion.
BACKGROUND
BlueSky is a telemedicine mental health care provider, and Barger is a boardcertified physician assistant. (Doc. No. 9 (“Am. Compl.”) ¶¶ 2, 7.) In February 2022,
Barger received and accepted an offer of employment from BlueSky. (Id. ¶ 10.)
BlueSky sent Barger an employment contract (“Agreement”) that she signed on March 2,

2022. (Id. ¶ 11.) The Agreement stated that her employment would begin on April 1,
2022. (Doc. No. 1-2 (“Agreement”) § 4.1.) The Agreement required that Barger
maintain a license to practice medicine in Illinois and Minnesota. (Id. § 2.4.) The
Agreement further provided that Barger would work thirty-two clinical hours and eight
administrative hours per week. (Id. § 2.1.) Her annual salary was $127,500.00. (Id.,
Ex. A.)
After entering into the Agreement, Barger spent $561 to obtain licenses in Illinois
and Michigan.1 (Am. Compl. ¶ 31.) In an email, BlueSky’s owner, Dr. Richelle Strauss,
said that they would focus on Barger obtaining licenses in Minnesota, Illinois, and
Michigan and that “we are of course paying for all of it.” (Id. ¶ 28.) Barger was
scheduled to start seeing patients May 16, 2022. (Id. ¶ 22.) Prior to that, Barger spent
four hours completing onboarding documents. (Id. ¶ 20.) She then gained access to and
began using an employee email, and BlueSky placed Barger’s photograph and
professional biography on its website. (Id. ¶¶ 21, 27.) Additionally, she completed an
electronic health record training, and she received full access to patient records and was
encouraged to review them. (Id. ¶ 29.)
At the end of March 2022, Dr. Strauss asked Barger to interview a potential new
hire. (Id. ¶ 25.) Barger conducted the interview by herself. (Id.) Following the
interview, Barger gave Dr. Strauss a report about her impressions of the interviewee and

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While the Agreement stated that Barger had to be licensed in Illinois and
Minnesota, the complaint states that she applied for licenses in Illinois and Michigan.
(Compare Agreement § 2.4, with Am. Compl. ¶ 31.)
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recommended that BlueSky hire her. (Id.) BlueSky later offered the interviewee a job.
(Id.)
In early May 2022, Barger began to suspect that Thao Vu, BlueSky’s
credentialling specialist, “had been signing various licensing, credentialing, and medical
applications on her behalf without her knowledge of what was actually being submitted.”
(Id. ¶ 32.) Barger sent Dr. Strauss a text, expressing her concerns. (Id. ¶ 33.) Dr. Strauss
responded that she “ha[s] confidence in [Vu] and how she handles this.” (Id.) In a phone
call later that day, Vu admitted that she had filled out various forms and signed Barger’s
name. (Id. ¶ 34.) Barger reiterated that she had not given Vu permission to sign her
name. (Id.)
Barger followed-up with Dr. Strauss by email, stating again that Vu “never asked
for [her] permission” and never sent her any documents to review. (Id. ¶ 35.) The next
business day, Barger tried to log into her email account and discovered that it had been
deleted. (Id. ¶ 37.) The online schedule “noted [that] she was not available to treat any
patients.” (Id.) Barger also learned that day that another employee, Kelsey Sorenson—
who had similarly expressed concerns about Vu’s practice of completing and signing
documents on behalf of employees, without their permission—had just been terminated.
(Id. ¶ 38.)
Two days later, Dr. Strauss terminated Barger’s employment. (Id. ¶ 39.) In an
email, Dr. Strauss stated, “It is unfortunate that you still feel we have handled your
documents incorrectly. These are serious allegations. I would rather not move forward
with an employment relationship in the middle of a conflict.” (Id.)
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Barger brought this action against BlueSky, asserting seven claims: (1) violation
of the Fair Labor Standards Act (“FLSA”); (2) declaratory judgment; (3) violation of the
Minnesota Payment of Wages Act; (4) retaliation in violation of the Minnesota
Whistleblower Act; (5) breach of contract; (6) breach of the covenant of good faith and
fair dealing; and (7) unjust enrichment. BlueSky now asks the Court to dismiss the action
in its entirety.
DISCUSSION
In deciding a motion to dismiss pursuant to Rule 12(b)(6), a court assumes all
facts in the complaint to be true and construes all reasonable inferences from those facts
in the light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th
Cir. 1986). In doing so, however, a court need not accept as true wholly conclusory
allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir.
1999), or legal conclusions drawn by the pleader from the facts alleged, Westcott v. City
of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). A court may consider the complaint,
matters of public record, orders, materials embraced by the complaint, and exhibits
attached to the complaint in deciding a motion to dismiss under Rule 12(b)(6). Porous
Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999).
To survive a motion to dismiss, a complaint must contain “enough facts to state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). Although a complaint need not contain “detailed factual allegations,” it must
contain facts with enough specificity “to raise a right to relief above the speculative
level.” Id. at 555. As the United States Supreme Court reiterated, “[t]hreadbare recitals
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of the elements of a cause of action, supported by mere conclusory statements,” will not
pass muster under Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 555). In sum, this standard “calls for enough fact[s] to raise a
reasonable expectation that discovery will reveal evidence of [the claim].” Twombly, 550
U.S. at 556.
I.

Choice of Law
The Court first addresses the narrow choice-of-law provision within the

Agreement. “A federal court sitting in diversity must apply the choice of law principles
of the state in which it sits, in this case Minnesota.” Fla. State Bd. of Admin. v. L. Eng’g
& Env’t Servs., Inc., 262 F. Supp. 2d 1004, 1010 (D. Minn. 2003). Minnesota favors
enforcement of a choice-of-law provision within a contract. Hagstrom v. Am. Circuit
Breaker Corp., 518 N.W.2d 46, 48 (Minn. Ct. App. 1994). The Agreement includes the
following provision:
The parties agree that all questions concerning the validity, enforceability
or construction of this Agreement shall be determined in accordance with
the laws of Illinois.
(Agreement § 6.8.) The Court will not determine in this Order whether the Agreement is
enforceable. Thus, the Court will decide at a later date whether the enforceability of the
Agreement should be analyzed under Minnesota or Illinois law.
The specific claims in this case, however, do not relate to the validity,
enforcement, or construction of the Agreement, so the choice-of-law provision does not
govern the claims. Instead, the parties appear to agree that Minnesota law applies.
Absent an actual conflict of law, no further choice-of-law analysis is needed, and the
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Court applies the law of the forum state. Novak Mut. Ins. Co. v. Am. Fam. Mut. Ins. Co.,
590 N.W.2d 670, 672 (Minn. Ct. App. 1999), aff’d, 604 N.W.2d 91 (Minn. 2000). The
Court therefore applies Minnesota law to the specific claims.
II.

FLSA
BlueSky argues that Barger’s FLSA claim should be dismissed because Barger is a

professional employee and therefore exempt from the statute. In response, Barger
voluntarily dismisses the FLSA claim. This claim is dismissed with prejudice.
III.

Declaratory Judgment
BlueSky next argues that the Court should dismiss Barger’s declaratory judgment

claim because it is wholly duplicative of her breach of contract claim. In response,
Barger argues that the claim is an alternative theory of recovery.
“Where a party’s declaratory judgment claim is purely duplicative of its breach of
contract claim, the declaratory judgment claim may be properly dismissed.” MidCountry
Bank v. Rajchenbach, No. 15-cv-3683 (SRN/TNL), 2016 WL 3064066, at *3 (D. Minn.
May 31, 2016). But if the declaratory judgment claim is broader in scope than the breach
of contract claim, then both claims may be pled. Id. at *3-4. Here, Barger seeks a
declaration that BlueSky “materially breached Plaintiff’s rights under the Agreement.”
(Am. Compl. ¶ 77.) Because the declaratory judgment claim is wholly duplicative of the
breach of contract claim, the Court dismisses it.
IV.

Minnesota Payment of Wages Act
BlueSky also asks the Court to dismiss Barger’s claim for violation of the

Minnesota Payment of Wages Act because Barger did not make a demand for unpaid
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wages, as required by the statute, until the lawsuit was commenced. In response, Barger
argues that she was able to demand unpaid wages after the commencement of her lawsuit.
The Minnesota Payment of Wages Act requires an employer to pay an employee
unpaid wages “within 24 hours after demand.” Minn. Stat. § 181.13. If the unpaid wages
are not paid within 24 hours, “the employer is in default.” Id. “Until there is a demand
as required by the statute, after resignation or discharge, the statutory provisions have no
application.” Chatfield v. Henderson, 90 N.W.2d 227, 232 (Minn. 1958).
In Chatfield, the Supreme Court of Minnesota held that a demand for unpaid
wages must be made prior to the commencement of a lawsuit. Id.; see also Outdoor
Env’t, Inc. v. Maro, No. A04-1332, 2005 WL 1020898, at *4 (Minn. Ct. App. May 3,
2005) (concluding that no demand had been made when the respondent made the demand
after litigation had begun, in his answer to the complaint). Because Barger did not make
a demand for unpaid wages prior to the commencement of this lawsuit, the Court must
dismiss this claim.
V.

Minnesota Whistleblower Act
Barger additionally alleges retaliation under the Minnesota Whistleblower Act

(“MWA”), Minn. Stat. § 181.932. The MWA provides that an employer may not
discharge an employee because the employee, “in good faith, reports a violation,
suspected violation, or planned violation of any federal or state law or common law or
rule adopted pursuant to law to an employer.” Minn. Stat. § 181.932. An actual violation
of law is not necessary under the MWA. Instead, “the reported conduct must at least

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implicate a violation of law.” Grundtner v. Univ. of Minn., 730 N.W.2d 323, 329 (Minn.
Ct. App. 2007) (internal quotations and citation omitted).
BlueSky argues that this claim should be dismissed because Barger was not an
employee under the MWA. The MWA provides that an employee is “a person who
performs services for hire in Minnesota for an employer.” Minn. Stat. § 181.931, subd. 3.
BlueSky asserts that Barger was not an employee because her start date changed from
April 1 to May 16, 2022, and Barger was terminated May 11, five days before her
employment was to begin. Moreover, BlueSky asserts that Barger did not provide any
services for BlueSky prior to her termination; instead, she merely engaged in “typical
pre-employment activities.” (Doc. No. 14 at 12.)
BlueSky’s arguments are unavailing. The complaint states that Barger’s
employment with BlueSky was to begin on April 1, 2022; “[h]owever, she began
performing services for Defendant at the request of Dr. Strauss in the beginning of March
2022.” (Am. Compl. ¶ 41.) While BlueSky argues that the parties “changed [Barger’s]
start date from April 1, 2022, to May 16, 2022” (Doc. No. 22 at 5), Barger alleges that
her employment began prior to April 1.
Additionally, Barger alleges that she engaged in more than just pre-employment
activities. Barger gained access to an employee email account. Her photo and
professional biography were put on BlueSky’s website. She gained “full access to patient
records” and “was encouraged to review them, which she did.” (Am. Compl. ¶ 29.) She

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was also asked to interview a potential new hire, which she alleges she did alone.2 All of
this occurred before Barger’s termination on May 11, 2022. The Court concludes that
Barger has plausibly alleged that she began performing services for BlueSky prior to
May 11, 2022. More discovery is necessary before the Court may determine when
exactly Barger’s employment began. For now, however, Barger has plausibly alleged
that she was a current employee of BlueSky at the time she was terminated.
BlueSky next argues that Barger did not make a “report,” as required under the
MWA. Specifically, BlueSky contends that it knew about the alleged mishandling of
documents and that Barger “had knowledge of this fact because she learned about the
alleged issue from Kelsey Sorensen.” (Doc. No. 14 at 14.) BlueSky reads too much into
Barger’s conversations with Sorenson and Dr. Strauss. Barger alleges that she sent a text
message to Dr. Strauss, indicating that Sorenson had told her “about the document
situation” and expressing her concern that Vu was “filling out and signing documents
without [her] knowledge or consent.” (Am. Compl. ¶ 33.) Dr. Strauss responded, stating
that she “ha[d] confidence in [Vu] and how she handles this.” (Id.) The Court cannot
conclude from this message that Dr. Strauss was fully aware of Vu’s conduct. Dr.

2

BlueSky asks the Court to consider an exhibit, which it asserts “establishes that
BlueSky had offered [the interviewee] employment prior to [her] meeting with Barger.”
(Doc. No. 14 at 5 n.4.) The exhibit details an email sent to the interviewee from Dr.
Strauss, where Dr. Strauss says, “Attached please find a contract draft.” (Doc. No. 15-2.)
Contrary to BlueSky’s assertion, the Court does not find this to be an “initial documented
offer of employment” and the Court will not consider the exhibit for the purpose of this
motion to dismiss. (Doc. No. 14 at 5 n.4 (quoting Harrington v. Lesley Univ., 554 F.
Supp. 3d 211, 240 n.21 (D. Mass. 2011).)
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Strauss may have had faith in Vu, but that does not mean that she knew the extent of
what was going on.
BlueSky additionally argues that Barger’s report did not implicate a violation of
the law. The MWA does not require an employee to “identify the specific law or rule
that the employee suspects has been violated.” Abraham v. Cnty. of Hennepin, 639
N.W.2d 342, 354-55 (Minn. 2002). Here, however, Barger did identify the specific law
when she told Dr. Strauss that Vu “forged our signatures on documents.” (Am. Compl.
¶ 33.) Even if Barger had not plausibly alleged forgery, BlueSky’s conduct implicates
the Illinois Physician Assistant Practice Act, which lists a variety of disciplinary actions
that the Department may take if the licensing documents contain material misstatements
or if someone “mak[es] any misrepresentation for the purpose of obtaining licenses.”
225 ILCS 95/21. Barger has plausibly alleged a violation of this statute.
Overall, the Court concludes that Barger has sufficiently pled a violation of the
MWA. The Court therefore denies BlueSky’s request to dismiss this claim.
VI.

Breach of Contract
Barger also brings a breach of contract claim against BlueSky, arguing that

BlueSky failed to reimburse her for the licensing fees and wrongfully terminated her
without just cause. The Agreement, which was attached to the complaint, is embraced by
the pleadings. Gorog v. Best Buy Co., 760 F.3d 787, 791 (8th Cir. 2014). To prevail on a
breach of contract claim under Minnesota law, Barger must show the following:
“(1) formation of a contract, (2) performance by [Barger] of any conditions precedent to
[her] right to demand performance by [BlueSky], and (3) breach of the contract by
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[BlueSky].” Lyon Fin. Servs. Inc. v. Ill. Paper & Copier Co., 848 N.W.2d 539, 543
(Minn. 2014).
BlueSky argues that this claim should be dismissed for two reasons. First,
BlueSky argues that Barger has failed to plead that there was an enforceable written
agreement between the parties. Barger signed the Agreement, but the signature for
BlueSky has been left blank. (Agreement at 13.) Even so, Barger also alleges that she
began to perform under the contract: she reviewed patients’ medical records and
interviewed a potential new hire for BlueSky. At this time, the Court does not have
enough information to determine whether the Agreement is valid and enforceable. But
for now, Barger has sufficiently alleged that the Agreement governed the parties’
employment relationship and that BlueSky terminated Barger without cause and without
30 days’ notice, in violation of the Agreement.
Second, BlueSky argues that, under the Agreement, BlueSky had no obligation to
pay for Barger’s Illinois and Michigan licenses. As an initial matter, the Agreement did
not require that Barger be licensed in Michigan. The Agreement required Barger to be
licensed “in Illinois and Minnesota.” (Agreement § 2.4.) Any agreement between
BlueSky and Barger for Barger to become licensed in Michigan falls outside of this
Agreement. And Barger has plausibly alleged that, as part of a separate agreement,
BlueSky agreed to pay her Michigan licensing fees. As for the Illinois licensing fees, the
Court will determine the scope and enforceability of the Agreement at a later date, likely
at the summary judgment stage.

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In sum, the Court concludes that Barger has sufficiently alleged a breach of
contract claim.
VII.

Breach of the Implied Covenant of Good Faith and Fair Dealing
BlueSky contends that Barger’s breach of the covenant of good faith and fair

dealing claim should be dismissed because Barger is merely reasserting her breach of
contract claim. Barger argues that this claim involves an alternative theory of recovery.
Under Minnesota law, each contract contains an implied covenant of good faith
and fair dealing. Columbia Cas. Co. v. 3M Co., 814 N.W.2d 33, 36 (Minn. Ct. App.
2012). The implied covenant of good faith and fair dealing “requires a party in a
contractual relationship to refrain from arbitrary and unreasonable conduct that has the
effect of preventing the other party to the contract from receiving the fruits of the
contract.” i-Systems, Inc. v. Softwares, Inc., No. 02-cv-1951, 2004 WL 742082, at *12
(D. Minn. Mar. 29, 2004) (internal quotations and citation omitted).
In her breach of contract claim, Barger argues that BlueSky terminated her without
just cause, which is a breach of an express term in the Agreement. Barger asserts that
same argument for her implied covenant claim, namely that BlueSky terminated her
“without cause.” (Am. Compl. ¶ 71.) “[A] claim for breach of an implied covenant of
good faith and fair dealing implicitly assumes the parties did not expressly articulate the
covenant allegedly breached.” Grady v. Progressive Direct Ins. Co., No. 22-cv-866,
2022 WL 18494898, at *6 (D. Minn. Nov. 30, 2022) (internal quotations and citations
omitted). At this time, Barger has failed to demonstrate that BlueSky breached an
implied covenant in the Agreement and instead solely alleges a breach of an express
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covenant. The Court therefore dismisses Barger’s implied covenant claim. The dismissal
will be without prejudice, as it is possible that Barger will uncover additional evidence
that would allow her to plausibly plead this claim.
VIII. Unjust Enrichment
Barger’s last claim is for unjust enrichment. “To establish a claim for unjust
enrichment under Minnesota law, a plaintiff must demonstrate that another party
knowingly received something of value to which he was not entitled, and that the
circumstances are such that it would be unjust for that person to retain the benefit.”
Khoday v. Symantec Corp., 858 F. Supp. 2d 1004, 1019 (D. Minn. 2012) (internal
quotations and citation omitted).
Barger argues that BlueSky was unjustly enriched by (1) failing to make payments
for work performed by her and (2) failing to reimburse her for expenses related to
obtaining licenses. (Am. Compl. ¶¶ 93-96.) BlueSky argues that Barger has failed to
allege that BlueSky received anything of value. The Court rejects this argument. Barger
has sufficiently alleged that she interviewed a potential new hire for BlueSky, completed
training with a BlueSky employee, and reviewed patient records in preparation for
clinical work. Thus, Barger has plausibly alleged that she conferred a benefit to BlueSky.
Additionally, BlueSky argues that unjust enrichment may not be plead in the
alternative because Barger alleges that the Agreement governed their relationship.
“Although a party may not ultimately recover on both breach of contract and unjust
enrichment claims, it may pursue these alternative theories until it is conclusively decided
that a valid and enforceable contract exists between the parties which governs the specific
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dispute before the court.” Knotts v. Nissan N. Am., Inc., 346 F. Supp. 3d 1310, 1323 (D.
Minn. 2018) (internal quotations and citation omitted). BlueSky denies the existence of a
valid and enforceable agreement between the parties. Moreover, it is unclear whether a
valid and enforceable agreement existed between Barger and BlueSky regarding the
Michigan licensure requirement and fee reimbursement. At this time, the Court will not
make a finding about the scope, validity, or enforceability of the Agreement or the
existence of a second agreement regarding licensing fees. Instead, these findings will
likely be made at the summary judgment stage, at which point the Court will address
whether the unjust enrichment claim should be dismissed. Until then, Barger has
sufficiently pled this alternative claim.
CONCLUSION
For the reasons outlined above, the Court grants BlueSky’s motion to dismiss
Barger’s FLSA, declaratory judgment, breach of the implied covenant of good faith and
fair dealing, and Minnesota Payment of Wages Act claims. The Court denies BlueSky’s
motion with respect to Barger’s remaining claims of retaliation in violation of the
Minnesota Whistleblower Act, breach of contract, and unjust enrichment.
ORDER
Based upon the foregoing, and the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1.

Defendant BlueSky TelePsych, LLC’s motion to dismiss (Doc. No. [12]) is

GRANTED IN PART and DENIED IN PART as follows:

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a.

The Court DENIES Defendant’s motion to dismiss Plaintiff’s claim

of retaliation in violation of the Minnesota Whistleblower act (Count I).
b.

The Court DENIES Defendant’s motion to dismiss Plaintiff’s

breach of contract claim (Count II).
c.

The Court GRANTS Defendant’s motion to dismiss Plaintiff’s

breach of the covenant of good faith and fair dealing claim (Count III). This claim
is DISMISSED WITHOUT PREJUDICE.
d.

The Court GRANTS Defendant’s motion to dismiss Plaintiff’s

declaratory judgment claim (Count IV). This claim is DISMISSED WITH
PREJUDICE.
e.

The Court GRANTS Defendant’s motion to dismiss Plaintiff’s Fair

Labor Standards Act claim (Count V). This claim is DISMISSED WITH
PREJUDICE.
f.

The Court GRANTS Defendant’s motion to dismiss Plaintiff’s

violation of the Minnesota Payment of Wages Act claim (Count VI). This claim is
DISMISSED WITH PREJUDICE.
g.

The Court DENIES Defendant’s motion to dismiss Plaintiff’s unjust

enrichment claim (Count VII).
Dated: May 19, 2023

s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge

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