MAKWANA v. EXPRESS SCRIPTS, INC.
OPINION. Signed by Judge John Michael Vazquez on 12/28/16. (DD, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Not for Publication
Civil Action No. 14-7096
MEDCO HEALTH SERVICES, INC.,
John Michael Vazguez, U.S.D.J.
The present matter comes before the Court on Defendant Medco Health Services. Inc.’s
(“Medco” or “Defendant”) motion for summary judgment.
Plaintiffs Kalpesh Makwana
(“Makwana”) and Hugh Mitchell (“Mitchell”) (together, “Plaintiffs”) oppose the motion) D.E.
45. This case concerns allegations that Plaintiffs, two former employees of Defendant, were
improperly terminated when Makwana shared his user ID and password with Mitchell, allegedly
in violation of Defendant’s security policy. This motion was decided without oral argument
pursuant to Federal Rule of Civil Procedure 78 and Local Civil Rule 78.1.
The Court has
considered the parties’ submissions and grants Defendant’s motion concerning Defendant’s
severance policy. Because the severance issue was the basis of the Court’s federal jurisdiction,
the Court no longer has subject matter jurisdiction over this case, and the Court declines to exercise
Defendant’s brief in support of its motion for summary judgment will be referred to hereinafter
as “Def. Br.” (D.E. 48), Plaintiffs’ opposition to Defendant’s brief will be referred to hereinafter
as ‘P1. Opp’n” (D.E. 50), and Defendant’s reply brief in support of its motion for summary’
judgment will be referred to hereinafter as “DeE R.Br.” (D.E. 54).
its discretion to retain supplemental jurisdiction over the remaining state law claims. As a result,
the Court administratively terminates the remainder of Defendant’s summary judgment motion
and remands this action to the Superior Court of New Jersey, Bergen County. See 28 U.S.C.
Plaintiffs are former employees of Medco who were terminated on approximately May 23,
2013 for allegedly violating Defendant’s policies. Compl.
1,2,16. Defendant is a corporation
that “provides clinically driven pharmacy services designed to improve the quality of care and
lower total healthcare costs for private and public employers.” D.E. 46-14. Both Plaintiffs were
hired as at-will employees. D.E. 46-25; D.E. 46-33.
Defendant has a company code that promulgates safeguards related to information security
policy and procedures, including a provision that expressly prohibits the sharing of individual user
passwords. D.E. 46-16 at 15; D.E. 46-20
2.4. In addition to Defendant’s formal policies, it also
has an unwritten policy referred to as “all hands on deck.” This policy requires all available
employees to “make maximum effort within the guidelines of the organization to solve [a] specific
problem.” Deutsch Tr. 20:07-20:09; Makwana Tr. 88:5-88:10. The policy was never reduced to
writing. Makwana Tr. 88:03-88:04 (stating that he does “not recall a document” that contained
the “all hands on deck” policy).
The facts herein come from the record in this matter, including: Plaintiffs’ Amended Complaint
(“Compl.”)(D.E. I, Ex. A), Makwana’s Deposition Transcript (“Makwana Tr.”)(D.E. 46-5), and
Gregory Deutsch (Medco employee who oversaw the integration of claims systems) Deposition
Transcript (“Deutsch Tr.”) (D.E. 46-7).
While attempting to resolve a systems integration issue, Makwana shared his personal ID
and password with Mitchell so that Mitchell could help him (Makwana) fix the problem. Makwana
Tr. 105:05-105:10. After an internal investigation of the incident, Plaintiffs were terminated on
May 23, 2012, due to Makwana sharing his information with Mitchell, allegedly in violation of
Defendant’s security policy. D.E. 46-42. Subsequently, Plaintiffi’ brought the instant action.
H. PROCEDURAL HISTORY
Makwana initiated this action in the Superior Court of New Jersey, Bergen County
vicinage. on August 29, 2013. D.E. I, Ex. A. The original complaint was amended on October
16, 2013 to add Mitchell as a plaintiff and assert a number of additional claims. D.E. I, Ex. A.
On December 20, 2013, the Superior Court entered an order limiting Plaintiffs’ claims to the
following counts in the Amended Complaint: First (Equitable Estoppel), Second (Breach of
Contract). Third (Breach of the Covenant of Good Faith and Fair Dealing), Fourth (Conscientious
Employee Protection Act (“CEPA”) as to Makwana only), Sixth (New Jersey Law Against
(Intentional/Negligent Misrepresentation). See D.E. 46-3.
Plaintiffs then moved to remand, arguing that Defendant’s notice of removal was untimely.
Plaintiffs ffirther asserted that the severance policy issue did not amount to an ERISA-govemed
policy, and, therefore, no federal subject matter jurisdiction existed. D.E. 4. Defendant opposed
this motion, arguing that its removal was timely and that federal jurisdiction was appropriate
because the severance plan was governed by ERISA. D.E. 6.
Judge Hammer subsequently issued a report and recommendation in favor of Defendant.
D.E. 11. In so recommending, Judge Hammer found that Defendant timely removed the action
under 28 U.S.C.
1441(b)(3), which gives Defendant thirty days to act upon ascertaining that the
case is removable, in light of Makwana’s deposition testimony. Id. at II, 13-14. Further, Judge
Hammer concluded that ERISA governs Defendant’s severance plan since it sets forth a “set of
standard procedures to guide processing of claims and disbursement of benefits,” and awards the
plan administrator vast discretion in its administration. Id. at 17-IS.
Thus, Judge Hammer
detern-iined that ERISA preempted Plaintiffs’ contract claims and was properly removed.
Additionally, Judge Hammer recommended exercising supplemental jurisdiction pursuant to 28
§ 1367(a) in order to retain jurisdiction over Plaintiffs’ remaining state law claims. Id. at
Plaintiffs proceeded to file a motion for reconsideration of Judge Hammer’s decision,
which Defendant opposed. D.E. 12, D.E. 15. Judge Arleo denied Plaintiffs’ request for
reconsideration, and formally adopted Judge Hammer’s report and recommendation. Judge
Arleo agreed with Judge Hammer’s conclusions that Defendant’s removal was timely and that
ERISA governed the severance plan at issue. Id. Plaintiffs contended that the alleged breach of
the severance plan merely pertained to damages rather than Plaintiffs’ substantive claim. Id. at 8.
Judge Arleo explained that Plaintiffs’ argument was “illogical” in light of Plaintiffs’ assertion
that their termination was a mere pretext by Defendant to avoid payment of the severance
package. Id. at 8.
In response to Defendant’s current motion for summary judgment, Makwana voluntarily
dismissed the Fourth (CEPA), Sixth (NJ LAD), and Eighth (Slander) Counts of the Amended
Plaintiffs voluntarily dismissed the Ninth
Misrepresentation) Count of the Complaint. P1. Opp’n at 3. Therefore, only the First (Equitable
Estoppel), Second (Breach of Contract), and Third (Breach of the Covenant of Good Faith and
Fair Dealing) Counts remain. Defendant also seeks fees and costs related to the CEPA and NJ LAD
claims, arguing that Makwana was on clear notice of the deficiency of the counts and nevertheless
unduly delayed in agreeing to dismiss them.
III. STANDARD OF REVIEW
A moving party is entitled to summary judgment where “the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). A fact in dispute is material when it “might affect the outcome of the suit
under the governing law” and is genuine “if the evidence is such that a reasonablejury could return
a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Disputes over irrelevant or unnecessary facts will not preclude granting a motion for summary
judgment. Id. “In considering a motion for summary judgment. a district court may not make
credibility determinations or engage in any weighing of the evidence; instead, the non-moving
party’s evidence ‘is to be believed and all justifiable inferences are to be drawn in his favor.”
Marino v. Inthis. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at
255)). A court’s role in deciding a motion for summary judgment is not to evaluate the evidence
and decide the truth of the matter, but rather “to determine whether there is a genuine issue for
trial.” Anderson. 477 U.S. at 249. Ultimately. there is “no genuine issue as to any material fact”
if a party “fails to make a showing sufficient to establish the existence of an element essential to
that party’s case.” C’elotex Cot p., 477 U.S. at 322. “If reasonable minds could differ as to the
import of the evidence,” however, summary judgment is not appropriate. Anderson, 477 U.S. at
The showing required to establish that there is no genuine issue of material fact depends
on whether the moving party bears the burden of proof at trial. On claims for which the moving
party does not bear the burden of proof at trial, the movant must establish “that there is an absence
of evidence to support the nonmoving party’s ease.” Celotex Corp. v. Catreti, 477 U.s. 317, 325
(1986). In contrast, “[wjhen the moving party has the burden of proof at trial, that party must
show aflir,nathely the absence of a genuine issue of material fact.” In re Bressnian, 327 F.3d
229, 238 (3d Cir. 2003) (quoting United States v. Four Parcels & Real Property, 941 F.2d 1428,
1438(11th Cir. 1991)). This affirmative showing requires the moving party to show that “‘on all
the essential elements of its case on which it bears the burden of proof at trial, no reasonable jury
could find for the non-moving party.” Id.
Once the moving party satisfies its initial burden, the burden shifts to the nonmoving party
to “go beyond the pleadings and by her own affidavits, or by the depositions, answers to
interrogatodes, and admissions on file, designate specific facts showing that there is a genuine
issue for trial.” Celotex Corp., 477 U.S. at 324 (internal quotation marks omitted). In other words,
the nonmoving party must identify specific facts and affirmative evidence that contradict the
moving party. Anderson, 477 U.S. at 250. “[hf the non-movant’s evidence is merely ‘colorable’
or is ‘not significantly probative,’ the court may grant summary judgment.” Messa
Prop. & Cas. Ins. Co.. 122 F. Supp. 2d 523, 528 (D.N.J. 2000) (quoting Anderson, 477 U.S. at
A. Breach of Contract
Defendant argues that Plaintiffs’ breach of contract claim lacks merit and should be
dismissed. Def. Br. at 6. As to the severance issue, Medco asserts that Plaintiffs did not meet the
eligibility requirements of the severance plan because Plaintiffs were not fired due to staff
reduction, closing of a company’s operation, or job elimination. Id. at 7. Defendant further claims
that Plaintiffs’ failure to exhaust their administrative remedies also dooms their claims in regard
to the severance policy. Id. at 8. Plaintiffs do not cite any facts or legal authority to contradict
Defendant’s position. In response, Plaintiffs instead reiterate their position, which was already
rejected by Judge Arleo. P1. Opp’n at 8. Specifically, Plaintiffs assert that they “have nerer alleged
that [their] breach of contract claims were based upon Defendant’s severance policy.” Id. at 18.
Defendant’s note that Plaintiffs are barred from relitigating this issue pursuant to the law of the
case doctrine. Def. R.Br. at 2 n.2.
Medco correctly notes that Plaintiffs’ contention has already been considered, and rejected,
by Judge Arleo. See In re ContlAirlines, Inc., 279 F.3d 226, 232 (3d Cir. 2002) (discussing the
law of the case doctrine). Since Plaintiffs fail to raise any genuine issue of material fact as to the
severance issue, Defendant is entitled to summary judgment regarding Defendant’s severance
Plaintiffs’ remaining claims, breach of contract (based on the “all hands on deck” policy),
breach of the covenant of good faith and fair dealing, and equitable estoppel, are state law claims.
The Court must next address whether to exercise supplemental jurisdiction over Plaintiffs’ state
B. Subject Matter Jurisdiction3
In order to adjudicate a case, a federal court must have either federal question or diversity
jurisdiction. 28 U.S.C.
1331. 1332; see also Rockefeller v. Comcasr Corp.. 424 Fed. Appx. 82,
2011). Here, the parties are not diverse. See Compl. ¶11-3 (alleging that all parties
While neither party raised the issue of remand, a federal court is obliged to notice any
jurisdictional defects and is powerless to hear any case over which it lacks jurisdiction. Bender i’.
Williamsport Area Sc/i. Dist., 475 U.S. 534, 541-42 (1986); see also Abdi i’. Verfton, No. 12-7943,
2014 WL 252104, at *4 (D.N.J. Jan. 21, 2014) (granting surnmaryjudgment on the sole remaining
federal cause of action and sua sponte remanding the remainder of the case to state court pursuant
to 28 U.s.C. § 1367(c)(3)).
are citizens of New Jersey). Instead, as noted above, the Court’s jurisdiction was based on a federal
question in light of ERISA. See Rockefeller, 424 Fed. Appx. at 83 (federal question jurisdiction
arises when a federal court has subject matter jurisdiction arising under “the Constitution, laws, or
treaties of the United States.”).
§ 1367(c) gives district courts discretion to decline to hear state law claims they
would otherwise have supplemental jurisdiction to entertain pursuant to
§ 1367(a). Specifically,
§ I 367(c)(3) provides that a “district coufl may decline to exercise supplemental jurisdiction over
a claim” if “the district court has dismissed all claims over which it has original jurisdiction.”
Thus, retaining supplemental jurisdiction is a matter of discretion. Borough of West M/flu,i
Lancaster, 45 F.3d 780, 788 (3d Cir. 1995). However, the Third Circuit has determined that
“where the claim over which the district court has original jurisdiction is dismissed before trial,
the district court ii inst decline to decide the pendent state claims unless considerations ofjudicial
economy, convenience, and fairness to the parties provide an affinnative justification for doing
so.” Id. (emphasis added). Additionally, while the determination is discretionary, “[t]he general
approach is for a district court to
hold that supplemental jurisdiction should not be exercised
where there is no longer any basis for original jurisdiction.” Shaffer
Twp. 0/Franklin. No. 09-
347, 2010 WL 715349, at * I (D.N.J. Mar. 1, 2010); see also United Mine Workers ofAm. v. Gibbs,
383 U.S. 715, 726 (1966) (encouraging federal courts to avoid “[n]eedless decisions of state law”);
Markoivitz i Northeast Land Co., 906 F.2d 100, 106 (3d Cir. 1990) (“[T]he rule within this Circuit
is that once all claims with an independent basis of federal jurisdiction have been dismissed the
case no longer belongs in federal court.”). If a district court decides it will not hear the remaining
state law claims, and the case has been removed from a state court, “remand to that court is a viable
alternative to a dismissal without prejudice.” Borough of West Mifflin, 45 F.3d at 788.
Under the present circumstances, the Court finds that remand is appropriate. No federal
cause of action remains. While remand will certainly delay decision on the remaining summary
judgment issues, the parties’ central facts and substantive arguments should remain the same.
Remand would serve the goals ofjudicial economy and comity by allowing the New Jersey courts
to apply New Jersey law. Therefore, the Court will decline to exercise supplemental jurisdiction
over Plaintiffs’ remaining state law claims pursuant to
§ 1367(c)(3) and will remand the action to
the Superior Court of New Jersey, Bergen County.
See Sc/ia/jèz 2010 WL 715349, at *1
(declining to exercise supplemental jurisdiction over plaintiffs’ remaining state law claims after
plaintiffs voluntarily dismissed sole federal claim against defendant with prejudice).
For the reasons set forth above and for good cause shown, the Court GRANTS Defendant’s
ADMINISTRATITIVELY TERMINATES the remainder of Defendant’s summary judgment
motion. The Court REMANDS this action to the Superior Court of New Jersey, Bergen County.
An appropriate form of order accompanies this opinion.
Date: December 28, 2016
JOHt MICHAEL Vk?jIJEZ
UNITED STATES DISTI1C1JUDGE
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