Tekdoc Svc LLC et al v. 3i-Infotech Inc
Filing
162
MEMORANDUM OPINION. Signed by Judge Mary L. Cooper on 8/17/2012. (gxh)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
TEKDOC SERVICES, LLC, et al.,
CIVIL ACTION NO. 09-6573 (MLC)
MEMORANDUM OPINION
Plaintiffs,
v.
3i-INFOTECH INC., et al.,
Defendants.
COOPER, District Judge
The plaintiffs, Lou Ann Naples (“Naples”) and TekDoc Services,
LLC (“TekDoc”) (collectively, “Plaintiffs”), bring this action
against the defendants, 3i-Infotech Inc. (“Infotech”, formerly
known as Innovative Business Solutions, Inc. (“IBSI”)) and Ranbaxy,
Inc. (“Ranbaxy”).
Compl.)1
(See generally dkt. entry no. 95, Second Am.
Plaintiffs assert claims against Infotech and Ranbaxy for
breach of contract, breach of the implied covenant of good faith
and fair dealing, unjust enrichment, innocent misrepresentation,
fraud in the inducement, negligent misrepresentation, and negligent
infliction of emotional distress.
(Id. at 1-9, 10-17.)
They also
assert a claim against Infotech for alleged violations of the
Connecticut Unfair Trade Practices Act, C.G.S. § 42-110(a), et seq.
(“CUTPA”).
1
(Id. at 9.)
The Court acknowledges that Plaintiffs initially interacted
and contracted with IBSI rather than Infotech. We will, for ease
of reference, nevertheless refer to that party only as “Infotech”.
Ranbaxy earlier moved for summary judgment in its favor and
against Plaintiffs on all of the claims asserted against it.
dkt. entry no. 106, First Ranbaxy Mot.)
(See
The Court, following
thorough review of the briefs filed in support of and in opposition
to that motion, and upon consideration of the claims asserted
against Ranbaxy, denied the First Ranbaxy Motion without prejudice.
(See dkt. entry no. 135, 10-27-11 Order at 5.)2
The Court noted,
inter alia, (1) the need for choice of law analysis on all of the
claims asserted against Ranbaxy, and (2) that neither Ranbaxy nor
Plaintiffs set forth such analysis.
(See id. at 2, 4.)
The Court
thus granted Ranbaxy leave to move anew for summary judgment, and
instructed the parties to include thorough choice of law analysis
in any briefs filed upon that motion.
(Id. at 5-6.)
Ranbaxy now moves again for summary judgment in its favor and
against Plaintiffs on all of the claims asserted against it.
(See
dkt. entry no. 146, Second Ranbaxy Mot.; dkt. entry no. 146-2,
Ranbaxy Br.)3
Plaintiffs oppose the motion.
151, Pls.’ Opp’n Br.)
(See dkt. entry no.
The Court has considered the Second Ranbaxy
Motion on the papers, pursuant to Local Civil Rule 78.1(b).
2
The Court also denied Infotech’s separately filed motion for
summary judgment, without prejudice. (10-27-11 Order at 5.)
3
Infotech, like Ranbaxy, has moved again for summary judgment
in its favor and against Plaintiffs on all of the claims asserted
against it. (See dkt. entry no. 137, Second Infotech Motion.) The
Court separately resolved that motion. (See dkt. entry no. 160,
8-16-12 Mem. Op.; dkt entry no. 161, 8-16-12 Order & J.)
2
I.
The Court Will Deny the Second Ranbaxy Motion Without
Prejudice
It appears that the parties have again failed, despite the
Court’s earlier instruction, to thoroughly analyze the choice of
law issues relating to each of the claims asserted against Ranbaxy.
(See Br. Supporting Second Ranbaxy Mot. at 22-36; Pls.’ Opp’n Br.
at 13-17.)
The Court will thus, for good cause appearing, issue an
appropriate Order: (1) denying the Second Ranbaxy Motion without
prejudice; (2) granting Ranbaxy leave to move anew for summary
judgment in its favor and against Plaintiffs on all of the claims
asserted against it; and (3) again instructing the parties that
they must, in any briefs filed on a motion for summary judgment in
this action, thoroughly and meaningfully analyze the choice of law
issues relating to each of the claims asserted against Ranbaxy.4
The Court believes that the parties will benefit from further
guidance and instruction on the choice of law issues inherent in
4
The Court, having considered the issues implicated by the
Second Ranbaxy Motion, intends to grant summary judgment in
Ranbaxy’s favor and against Plaintiffs insofar as the Second
Ranbaxy Motion concerns Plaintiffs’ “innocent misrepresentation”
claim. See Fed.R.Civ.P. 56(f) (permitting Court to grant summary
judgment on grounds other than those raised by the parties,
following notice and a reasonable amount of time to respond). It
appears that neither Connecticut nor New Jersey, the forums that
allegedly were affected by Plaintiffs’ “innocent misrepresentation”
claim, recognize it as an independent claim or cause of action.
(See 8-16-12 Mem. Op. at Section II.A.3.a.)
The parties may respond to this notice by incorporating
argument upon it in their respective briefs upon Ranbaxy’s
forthcoming motion for summary judgment.
3
this action.5
The remainder of this Memorandum Opinion thus serves
three purposes.
First, we set forth general choice of law rules
that govern this action.
The parties should refer to these rules
in their respective analyses.
Second, we identify the alleged
factual bases for each of the claims asserted against Ranbaxy.
We
do not, while setting forth these bases, make any findings of fact.
We merely recite the factual allegations provided by the parties.
Finally, based on the choice of law rules that apply and the
alleged factual bases for each claim, we identify the forums whose
law could control each of the claims at issue.
II.
Choice of Law
A.
General Rules
The Court recognizes that jurisdiction in this action arises
from 28 U.S.C. § 1332.
(See 8-16-12 Mem. Op. at 19 (recognizing
complete diversity of citizenship between Plaintiffs and the
defendants).)
We also recognize that the United States District
Court for the District of Connecticut (“Connecticut District
Court”) transferred the action to this Court pursuant to 28 U.S.C.
§ 1404(a) (“Section 1404(a)”).
(See dkt. entry no. 74, Receipt of
5
The Court issues this Memorandum Opinion in the exercise of
“the power inherent in every court to control the disposition of
the causes on its docket with economy of time and effort for
itself, for counsel, and for litigants.” See Landis v. N. Am. Co.,
299 U.S. 248, 254 (1936).
4
Transfer Order; dkt. entry no. 71, 12-15-09 Order at 1, 14 (stating
that the action was transferred pursuant to Section 1404(a)).)6
“In an action based on diversity of citizenship, a federal
court generally applies the choice-of-law rules of the jurisdiction
in which it sits.”
Amica Mut. Ins. Co. v. Fogel, 656 F.3d 167, 170
(3d Cir. 2011) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313
U.S. 487, 496 (1941)).
A federal court receiving a case by
transfer under Section 1404(a) must, however, apply the same choice
of law analysis that the transferor court would apply.
Ferens v.
John Deere Co., 494 U.S. 516, 524-31; Amica, 656 F.3d at 171.
The
Court will thus apply Connecticut’s choice of law rules, the same
rules that the Connecticut District Court would have applied had it
retained this action.
See Amica, 656 F.3d at 171.
Connecticut courts “apply an individualized choice of law
analysis” to each of the litigants’ claims.
Macomber v. Travelers
Prop. & Cas. Corp., 894 A.2d 240, 256 (Conn. 2006).
“The threshold
choice of law issue in Connecticut, as it is elsewhere, is whether
6
To the extent that Ranbaxy implies that the Connecticut
District Court transferred the action to this court pursuant to 28
U.S.C. § 1406, it is mistaken. (See Ranbaxy Br. at 22 (implying
without citation that the Connecticut District Court transferred
the action under 28 U.S.C. § 1406(a) because “Connecticut was an
improper forum for Plaintiffs’ claims against Ranbaxy”).) The
Connecticut District Court unambiguously stated that “the parties
agreed that . . . the Court should transfer the case to the United
States District Court for the District of New Jersey, under 28
U.S.C. § 1404(a)”. (12-15-09 Order at 1 (emphasis added).)
5
there is an outcome determinative conflict between applicable laws
of the states with a potential interest in the case.
If not, there
is no need to perform a choice of law analysis, and the law common
to the jurisdiction should be applied.”
Cohen v. Roll-A-Cover,
LLC, 27 A.3d 1, 16 (Conn. App.), certification denied, 33 A.3d 739
(Conn. 2011) (citation omitted).
B.
Choice of Law Relating to Plaintiffs’ Breach of Contract
Claims
Connecticut courts have, with respect to claims sounding in
breach of contract, adopted the “significant relationship” test set
forth in Section 188 of the Restatement (Second) of Conflict of
Laws (“Section 188”), “and presume the application of the law of
the state in which the bulk of the transaction took place.”
Macomber, 894 A.2d at 257.
See
The significant relationship test will
determine the choice of law both for Plaintiffs’ breach of contract
claims and for their breach of implied warranties claim.
See
Collins v. Anthem Health Plans, Inc., 880 A.2d 106, 119 (Conn.
2005) (finding that claim for “breach of the implied covenant of
good faith and fair dealing” “sounds in breach of contract”);
Wilson v. Amerada Hess Corp., 773 A.2d 1121, 1126-27, 1129 (N.J.
2001) (demonstrating that implied contractual covenants, like
express contractual covenants, rise from and relate to parties’
contract); 1266 Apartment Corp. v. New Horizon Deli, Inc., 847 A.2d
9, 11 (N.J. App. Div. 2004) (“The implied covenant of good faith
6
and fair dealing is used to measure a party's performance under a
contract. . . .
The implied covenant of good faith and fair
dealing is used to measure a party's performance under a
contract.”).
Section 188 instructs courts to consider five factors when
determining which forum bears the most significant relation to a
contract.
Those factors are: (1) place of contracting; (2) place
of negotiation of the contract; (3) place of performance; (4)
location of the subject matter of the contract; and (5) the
domicil, residence, nationality, place of incorporation, and place
of business of the parties.
Laws § 188(2) (1971).
Restatement (Second) of Conflict of
Each of these Section 188 factors should “be
evaluated according to their relative importance with respect to
the particular issue.”
Id.
Section 188 also provides rules for applications to certain
situations and types of contracts.
It provides, for example, that
where “the place of negotiating the contract and the place of
performance are in the same state, the local law of this state will
usually be applied”.
Id. § 188(3); see also Reichhold Chems., Inc.
v. Hartford Accident & Indem. Co., 750 A.2d 1051, 1055, 1055 n.4
(Conn. 2000).
Section 188 also directs attention to Section 196 of
the Restatement (Second) of Conflict of Laws (“Section 196”), which
provides that contracts for services will generally be governed by
7
“the local law of the state where the contract requires that the
services, or a major portion of the services, be rendered, unless .
. . some other state has a more significant relationship . . . to
the transaction and the parties”.
Restatement (Second) of Conflict
of Laws § 196; see also Reichhold Chems., 750 A.2d at 1055
(“Section 188 . . . directs [the Court] to other provisions for
specific types of contracts.”).
Plaintiffs premise the breach of contract claim on three sets
of factual allegations, i.e., those related to Ranbaxy’s alleged
failure to: (1) offer Naples permanent employment; (2) timely remit
payment; and (3) inform Naples of, respond to Naples’s complaints
about, or otherwise properly redress Naples’s living and working
conditions in the Republic of India (“India”).
(See Second Am.
Compl. at Ninth Count, ¶ 9; see also Pls.’ Opp’n Br. at 22, 24-26,
27-30.)
It appears that the breach of contract claim, insofar as
it concerns the first and second of these alleged factual bases,
will thus be controlled by the laws of either Connecticut or New
Jersey.
The place of contracting, the place of negotiation, the
place of performance, the location of the subject matter of the
contract, and citizenship of the parties all appear to implicate
either Connecticut or New Jersey.
The parties should thus
determine: (1) whether there exists a conflict of law between the
laws of Connecticut and New Jersey; and (2) if such a conflict
8
exists, which forum has the most significant relationship to these
aspects of the breach of contract claim.
It appears, however, that the breach of contract claim,
insofar as it concerns Naples’s placement and work in India, may
implicate the laws of Connecticut, New Jersey, or India.
It
appears that both the place of performance and the location of the
subject matter of the alleged contract concern India, and may
implicate its laws.
The parties should thus analyze the laws of
Connecticut, New Jersey, and India, and determine: (1) whether a
conflict of law exists between the laws of Connecticut, New Jersey,
and India; and (2) if such a conflict exists, which forum -- that
is, Connecticut, New Jersey, or India -- has the most significant
relationship to these aspects of the breach of conflict claim.
See
Ramakrishna v. Besser Co., 172 F.Supp.2d 926, 932-33 (E.D. Mich.
2001) (analyzing choice of law and determining whether India or one
of several states had the most significant contacts with the
contract at issue).
The Court believes that the above-discussed choice of law
rules may similarly apply to the Plaintiffs’ claim for breach of
the implied covenant of good faith and fair dealing.
See De La
Concha of Hartford, Inc. v. Aetna Life Ins. Co., 849 A.2d 382, 388
(Conn. 2004) (demonstrating that claims for breach of contract and
breach of the implied covenant of good faith and fair dealing are
9
intertwined); Wade v. Kessler Inst., 798 A.2d 1251, 1262 (N.J.
2002) (same).
The Court acknowledges, however, that it lacks the
resources to independently research the law of India in this
respect.
The parties must research the issue -- as they must
research all issues implicated by this action -- and incorporate
their research into their legal briefs.
C.
Choice of Law Rules Relating to Plaintiffs’ Unjust
Enrichment Claim
The Court initially notes that Plaintiffs’ unjust enrichment
claims seemingly implicate the laws of either Connecticut or New
Jersey.
The Court also notes that those claims appear to sound in
the law of contracts.
See Karo Mktg. Grp., Inc. v. Playdrome Am.,
752 A.2d 341, 347-48 (N.J. App. Div. 2000), abrogated on other
grounds by Banco Popular N. Am. v. Gandi, 876 A.2d 253, 261 (N.J.
2005) (unjust enrichment sounds in contract law); see also Town of
New Hartford v. Conn. Res. Recovery Auth., 970 A.2d 592, 611 n.25
(Conn. 2009) (noting that an unjust enrichment claim may also be
referred to as a claim for “quasi-contract” or a “contract implied
in law”); Gianetti v. Greater Bridgeport Individual Practice Ass’n,
No. 02-4001686, 2005 WL 2078546, at *8 (Conn. Super. Ct. July 21,
2005) (“unjust enrichment is a form of contract action, often
called ‘quasi-contract’”) (citing Fischer Co. v. Morrison, 78 A.2d
242, 244-45 (Conn. 1951)); but see Macomber, 894 A.2d at 256
(stating without explanation or relevant citation that unjust
10
enrichment claims sound in tort).
It thus appears that the choice
of law rules that apply to Plaintiffs’ breach of contract claims
would also apply to their unjust enrichment claim.
We note, however, that the “threshold choice of law issue in
Connecticut,” is, as noted above, “whether there is an outcome
determinative conflict between applicable laws of the states with a
potential interest in the case.”
Cohen, 27 A.3d at 16.
No such
conflict appears to exist between the laws of Connecticut and New
Jersey relating to unjust enrichment.
Both states’ courts
recognize that unjust enrichment is an equitable remedy that
applies where: (1) a defendant receives a benefit; (2) defendant’s
retention of that benefit would act to the plaintiff’s detriment;
and (3) under the circumstances, it would be inequitable for
defendant to retain that benefit.
See Gagne v. Vaccaro, 766 A.2d
416, 423-24 (Conn. 2001); Breen v. Judge, 4 A.3d 326, 335 (Conn.
App. 2010); Hipple v. Estate of Mayer, No. A-4003-05T5, 2007 WL
1080421, at *8 (N.J. App. Div. Apr. 12, 2007).
Both states’ courts
recognize that plaintiffs may raise alternative claims for unjust
enrichment and breach of contract.
See Kas Oriental Rugs, Inc. v.
Ellman, 926 A.2d 387, 392 (N.J. App. Div. 2007); Stein v Horton,
914 A.2d 606, 613-14 (Conn. App. 2007).
And both states’ courts
recognize that plaintiffs may not recover for unjust enrichment
when they premise an unjust enrichment claim on duties rising from
11
a valid and express contract.
Compare Gagne, 766 A.2d at 424
(“Unjust enrichment applies whenever justice requires compensation
to be given for property or services rendered under a contract, and
no remedy is available by an action on the contract.
Indeed, lack
of a remedy under the contract is a precondition for recovery based
upon unjust enrichment.” (citations omitted)), with Kas Oriental
Rugs, 926 A.2d at 392 (“It is a well settled rule that an express
contract excludes an implied one.
An implied contract cannot exist
when there is an existing express contract about the identical
subject.
The parties are bound by their agreement, and there is no
ground for implying a promise.”)
Plaintiffs argued in their brief upon the Second Ranbaxy
Motion that an unjust enrichment claim sounds in tort.
(Pls.’
Opp’n Br. at 15, n.2 (citing Macomber, 894 A.2d at 256-57).)
The
Court, after independently researching the issue and analyzing the
cases set forth above, disagrees.
The parties may, however, set
forth alternative choice of law arguments upon the unjust
enrichment claims as though those claims sound in tort.
D.
Choice of Law Rules Relating to Plaintiffs’ Tort
Claims
Connecticut courts, when analyzing choice of law issues
relating to tort claims, apply “the law of the state in which the
plaintiff was injured, unless to do so would produce an arbitrary
or irrational result.”
Macomber, 894 A.2d at 257.
12
This test
applies to Plaintiffs’ claims for fraud in the inducement,
negligent misrepresentation, and negligent infliction of emotional
distress.
Id. at 256-57.
1.
Plaintiffs’ Claims for Fraud in the Inducement
and Negligent Misrepresentation
Plaintiffs argue that their fraud and negligent
misrepresentation claims are premised upon Ranbaxy’s alleged,
repeated promises that it would convert Naples from a temporary
consultant to a permanent employee.
20.)
(See Pls.’ Opp’n Br. at 18-
They also argue, as such argument pertains to the negligent
misrepresentation claim, that Ranbaxy misrepresented certain facts
about the creation of the permanent position at issue and Naples’s
accommodations in India.
(Id. at 20.)
It thus appears, after a thorough review of the Second
Amended Complaint and the briefs upon the Second Ranbaxy Motion,
that Plaintiffs were injured by the alleged fraud in either New
Jersey or India.
Plaintiffs, as noted above, argue that Naples
would not have accepted Ranbaxy’s offers for temporary employment
in either Princeton, New Jersey or India but for their promises of
permanent employment.
(See id.)
Naples could thus have been
injured by continuing to work for Ranbaxy (in either New Jersey or
India), to the exclusion of other employers.
She could also have
been injured in either New Jersey or India by Ranbaxy’s alleged
13
misrepresentations about the creation of a permanent position and
about Naples’s accommodations in India.
The parties should thus determine, with respect to the fraud
claim: (1) whether there exists a conflict of law between the law
of New Jersey and the law of India; and (2) if such conflict
exists, where Plaintiffs suffered injury as a result of the alleged
fraud.
If applying the law of the forum where Plaintiffs suffered
injury would “produce an arbitrary or irrational result”, the
parties must demonstrate which other forum’s laws should apply.
See Macomber, 894 A.2d at 257.
2.
Plaintiffs’ Negligent Infliction of Emotional
Distress Claim
It appears that damages resulting from Plaintiffs’ negligent
infliction of emotional distress (“NIED”) claim may have occurred
in several forums, i.e., Connecticut, New Jersey, and India.
Naples argues that the emotional distress “caused by her treatment”
in India was “severe and enduring”.
(Pls.’ Opp’n Br. at 34.)
She
describes such distress as beginning upon her arrival in India and
continuing to today.
(See id. at 34-35.)
It thus appears that the parties must analyze the laws of
Connecticut, New Jersey, and India to determine which forum’s laws
control the Court’s resolution of the NIED claim.
The parties must
determine, with respect to the NIED claim: (1) whether there exists
a conflict of law between the law of Connecticut, New Jersey, and
14
India; and (2) if such conflict exists, where Plaintiffs suffered
injury as a result of the alleged fraud.
If applying the law of
the forum where Plaintiffs suffered injury would “produce an
arbitrary or irrational result”, the parties must demonstrate which
other forum’s laws should apply.
See Macomber, 894 A.2d at 257.
III. Conclusion
The Court is mindful that the choice of law analysis outlined
above, particularly insofar as it involves the analysis of the laws
of India, is both time-consuming and difficult.
It is, however, a
necessary predicate to the Court’s resolution of Plaintiffs’
claims.
The Court thus expects that the parties will devote
appropriate time and attention to these issues.
s/ Mary L. Cooper
.
MARY L. COOPER
United States District Judge
Dated:
August 17, 2012
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