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CRAWFORD v. WEST JERSEY HEALTH SYS.

March 31, 1994

CAROLYN S. CRAWFORD, M.D., Plaintiff,
v.
WEST JERSEY HEALTH SYSTEMS (VOORHEES DIVISION), JAMES SHEDNO, NEWBORN PEDIATRIC ASSOCIATES, WEST JERSEY PHYSICIAN ASSOCIATES, P.A., MICHAEL STONE, STEPHEN COLEMECO, M.D., MICHAEL MUSCI, D.O., CAROL DELFAUS, M.D., DAVID WURTZEL, M.D., GLORIA DURELLI, M.D., JOHN DOES, 1-5, fictitious names, Defendants.



The opinion of the court was delivered by: STANLEY S. BROTMAN

 BROTMAN, District Judge:

 Presently before the court is defendants' motion to stay the present action pending arbitration and for partial dismissal of the complaint, as well as plaintiff's cross-motion to amend her complaint. For the reasons set forth below, defendants' motion to stay the present action pending arbitration is granted, and their motion to dismiss the complaint is granted in part, and denied in part. In addition, plaintiff's motion to amend her complaint is granted in part, and denied in part.

 I. FACTUAL BACKGROUND

 In mid-1987, the plaintiff, Carolyn S. Crawford, M.D., was hired by West Jersey Physician Associates, P.A. ("West Jersey Physician") as Medical Director of the Neonatal Intensive Care Unit. Crawford and West Jersey Physician executed an Employment Agreement (the "Agreement"). The Agreement became effective from August 2, 1990 and continued for an additional year past February 1, 1991. The Agreement, by Addendum, contained an arbitration provision, which provided as follows:

 
12. Arbitration - In the event that any dispute shall arise with regard to the interpretation or performance of any part of this Agreement, all matters in controversy shall be submitted to the American Arbitration Association located in Somerset, New Jersey, in order to give full effect to the intentions of the parties. The parties hereto shall be bound by the decision of the American Arbitration Association and shall accept any decisions by a majority of the Arbitrators as a final and binding determination of the matter in dispute. Judgment upon the award rendered by the Arbitrators may be entered in any court having jurisdiction thereof.

 In August 1991, plaintiff was fired by West Jersey Physician. On October 30, 1992, plaintiff filed suit in this court, and on January 26, 1993 she filed a First Amended Complaint, alleging sex and age discrimination, violation of 42 U.S.C. § 1983, retaliatory discharge, tortious interference with contract, defamation, and negligent and intentional infliction of emotional distress.

 Defendants moved to stay the action pending arbitration and to dismiss certain of plaintiff's claims. Plaintiff cross-moved to amend her complaint, and submitted a Proposed Second Amended Complaint ("Proposed Complaint") to the court. Defendants oppose the cross-motion to amend.

 II. DISCUSSION

 A. Motion to Dismiss and Cross-Motion to Amend the Complaint

 Defendants originally moved to dismiss the First Amended Complaint. Rather than responding to defendants' motion to dismiss, plaintiff moved for leave to amend the complaint, and submitted a Proposed Complaint to the court. As defendants point out, the Proposed Complaint remedies many, but not all, of the defects indicated by defendants. *fn1"

 Amendments to pleadings are governed by Fed. R. Civ. P. 15(a), which provides that leave to amend "shall be freely given when justice so requires." Despite this liberal standard, leave may be denied where amendment would be futile. Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962). "Futility," according to the Third Circuit, is "where the amendment would not withstand a motion to dismiss" under Fed. R. Civ. P.12(b)(6). Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir.), cert. denied, 464 U.S. 937, 78 L. Ed. 2d 314, 104 S. Ct. 348 (1983). As the discussion infra indicates, portions of the Proposed Complaint fail this test.

 Before embarking on its analysis, the court must set forth the applicable standard for a motion to dismiss for failure to state a claim. In considering a motion to dismiss, a court must view all allegations in the light most favorable to the plaintiff. Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). A complaint should only be dismissed where plaintiff can prove no set of facts in support of her claim which would entitle her to relief. Id.

 1. Counts One through Five -- Wrongful Termination

 In Counts One through Five, plaintiff alleges wrongful termination under the Age Discrimination and Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000(e) et seq., and also under the New Jersey Law Against Defamation ("NJLAD"), N.J.S.A. 10:5-1 in Counts One and Two. *fn2"

 Defendants argue correctly that "by plaintiff's own pleadings, she was employed by West Jersey Physician Associates only." *fn3" Def. Reply Br. at 8. Without citing to authority, defendants contend that plaintiff may only pursue these claims against her employer, West Jersey Physician.

 Under both Title VII and the ADEA, only employers and their agents can be held liable for discrimination. § 2000e(b) of Title VII; § 630(b) of the ADEA. The test for determining agency under either statute is the same: whether the alleged agent has "participated in the decision-making process that forms the basis of the discrimination." Hamilton v. Rodgers, 791 F.2d 439, 443 (5th Cir. 1986) (citing Jones v. Metropolitan Denver Sewage Disposal District, 537 F. Supp. 966, 970 (D. Colo. 1982)); quoted with approval in Levendos v. Stern Entertainment, Inc., 909 F.2d 747, 757 (3d Cir. 1990).

 In Counts One through Three, in addition to West Jersey Physician, plaintiff names West Jersey Health Systems (Voorhees Division) ("West Jersey Health"), and Newborn Pediatric Associates ("Newborn Pediatric") as defendants. More than one corporate entity can act as an employer. Odriozola v. Superior Cosmetic Distribs., Inc., 531 F. Supp. 1070, 1075-76 (D.P.R. 1982). However, plaintiff neither alleges that these related entities were her employers, nor that they acted as agents by "making the final decisions regarding employment matters." Id. Accordingly, Counts One through Three will be dismissed as to West Jersey Health and Newborn Pediatrics. *fn4"

 Similarly, defendants argue that Counts Four and Five must be dismissed. In Count Four, plaintiff alleges that she was unlawfully terminated from her employment with West Jersey Physician but only directs the Count against Michael Musci as an individual. First Amended Complaint, PP 38-39, Proposed Complaint, PP 38-39. In Count Five, plaintiff again alleges unlawful termination but lists many defendants by whom she was not employed. First Amended Complaint, P 43, Proposed Complaint, P 43. Except for Michael Musci, D.O., plaintiff does not allege that defendants acted as agents of West Jersey Physician. *fn5"

 Defendants do not dispute that in Count Five plaintiff has stated a claim against Michael Musci, D.O., in his official capacity. First Amended Complaint, P 41, Proposed Complaint, P 41. However, the court must consider whether plaintiff can pursue her claim in Count Four against Musci as an individual.

 District courts are split over whether the liability of an employer's agent under ADEA and Title VII is limited to his official capacity, or extends to him as an individual. Compare, e.g., Lowry v. Clark, F. Supp. , 1994 WL 43365, at *3 (E.D.N.Y. 1994) (rejecting individual liability under Title VII); Miller v. Maxwell's Intern. Inc., 991 F.2d 583, 587-88 (9th Cir. 1993), cert. denied sub nom., Miller v. La Rosa, 114 S. Ct. 1049 (1994) (liability cannot lie against individuals under either Title VII or the ADEA); Low v. Hasbro, Inc., 817 F. Supp. 249, 250 (D.R.I. 1993) (finding that "Congress intended only to make an employer liable for the acts of his agents" under the ADEA) with Bridges v. Eastman Kodak Co., 800 F. Supp. 1172, 1179-80 (S.D.N.Y. 1992) (both individual and official liability may be imposed under Title VII); Vakharia v. Swedish Covenant Hosp., 824 F. Supp. 769, 784 (N.D. Ill. 1993) (individuals may be held personally liable under both Title VII and the ADEA; Wanamaker v. Columbian Rope Co., 740 F. Supp. 127, 135 (N.D.N.Y. 1990) (corporate officers and directors may be held individually liable for violating the ADEA if they exercised control over an employee); House v. Cannon Mills Co., 713 F. Supp. 159 (M.D.N.C. 1988) (refusing to extend Title VII personal liability exclusion to ADEA). The distinction is important; under the former the liability of an agent is imputed to his employer on a theory of respondent superior, while under the latter the agent must pay damages out of his own pocket.

 Significantly, circuit courts have thus far refused to extend liability to the individual. See Miller v. Maxwell's Intern. Inc., 991 F.2d at 587-88; Harvey v. Blake, 913 F.2d 226, 227-28 (5th Cir. 1990). In Harvey, the Fifth Circuit disavowed a prior circuit court ruling imposing personal liability. The Fifth Circuit had previously ruled in Hamilton that prohibiting personal liability "would encourage supervisory personnel to believe that they may violate [antidiscrimination statutes) with impunity." Hamilton v. Rodgers, 791 F.2d at 442-43, abrogated by Harvey v. Blake, 913 F.2d at 227-28. The Harvey court agreed with Hamilton to the extent that "immediate supervisors are Employers [sic] when delegated the employer's traditional rights, such as hiring and firing." Harvey, 913 F.2d at 227. However, the Harvey court expressly limited the liability of the defendant to her official capacity. Id. at 228. In doing so, the court "noted that there is one case from this circuit, in which we failed to make the distinction between a supervisor's official and unofficial capacity," and characterized Hamilton as "non-authoritative." Id. at 228 n. 2.

 In refusing to allow personal liability, the Ninth Circuit in Miller also criticized the rationale of Hamilton: "no employer will allow supervisory or other personnel to violate Title VII [or the ADEA] when the employer is liable for the . . . violation. An employer that has incurred civil damages because one of its employees believes he can violate [either statute] with impunity will quickly correct that employee's erroneous belief." *fn6" Id.

 The court opined that Congress intended the agency "provision . . . to incorporate respondeat superior liability into the statute." Id. at 587. Pointing to Congress' exclusion of employers with less than 15 employees under Title VII, and less than 20 employees under ADEA, the court noted the illogicality of "protecting small entities with limited resources from liability," yet "allowing civil liability to run against individual employees." Id.

 This court agrees with the reasoning of the Fifth and Ninth Circuits. Holding individual employees, but not small employers, liable under these statutes is patently inconsistent. Moreover, the court is not persuaded that personal liability increases the likelihood of deterrence. Therefore, the court holds that under Title VII and the ADEA, Musci cannot be individually liable. Accordingly, Count Four will be dismissed for failure to state a claim. In addition, Count Five will be dismissed as to all defendants, except against Michael Musci in his official capacity, for failure to state a claim.

 2. Count Six -- Retaliatory Discharge

 In Count Six, plaintiff pursues a claim of retaliatory discharge. To prevail, plaintiff must establish that the discharge is "contrary to a clear mandate of public policy." Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58, 72, 417 A.2d 505 (1980). Sources of public policy include legislation, administrative rules, regulations or decisions, judicial decisions, and professional codes of conduct. Id.

 "The mere voicing of opposition to corporate policy within a corporation provides an insufficient foundation for assertion of a Pierce claim." House v. Carter-Wallace, Inc., 232 N.J. Super. 42, 49, 556 A.2d 353 (App. Div. 1989), cert. denied, 117 N.J. 154, 564 A.2d 874 (1989). An employee must bring the alleged violation of public policy to the attention of the appropriate outside authority. Id. "[A] mere difference of professional opinion between an employee and those with decision making power in a corporation" does not establish wrongful discharge. Id.

 Crawford alleges that she was fired in retaliation for (1) changing procedures "which increased the quality of care to NICU patients, but were unpopular with staff members and private pediatricians;" First Amended Complaint, P 45, Proposed Complaint, P 45, and (2) preventing various defendant doctors "from treating certain patients due to their failure to follow the generally accepted standard of care and their failure to prescribe prescriptions in accordance with the medically and legally accepted manners [sic]." Proposed Complaint, P 46.

 In both her First Amended and Proposed Complaints, Crawford alleged nothing more than a difference of opinion between herself and her professional colleagues. Moreover, she never attempted to inform an outside authority of defendants' alleged violations of public policy. Accordingly, Count Six of the First Amended Complaint is dismissed for failure to state a claim, and leave to amend Count Six is denied.

 3. Count Seven -- Tortious Interference

 In her Proposed Complaint, plaintiff amended Count Seven to withdraw the claim of tortious interference as to Stephen Colemeco, M.D., Michael Stone, and West Jersey Physician. Defendants do not challenge this amendment. Accordingly, leave to amend Count Seven is granted.

 4. Count Eight -- Defamation

 To withstand a motion to dismiss, a complaint alleging defamation must include "facts sufficient to identify the defamatory words, their utterer and the fact of their publication. A vague conclusory allegation is not enough." Zoneraich v. Overlook Hospital, 212 N.J. Super. 83, 101, 514 A.2d 53 (App. Div.), cert. denied, 107 N.J. 32, 526 A.2d 126 (1986). However, "it is not necessary that every allegation of slander contain a verbatim transcription of the words spoken, accompanied by an exhaustive narrative of the circumstances and an accounting for the damages." Kotok Building v. Charvine, 183 N.J. Super. 101, 105, 443 A.2d 260 (Law Div. 1981).

 In her First Amended Complaint, plaintiff merely alleged that "defendants undermined the authority of the plaintiff as well as questioned her methodology and altered patient charts to omit consults [sic] that were necessary. As a direct and proximate result of the actions of the defendants, the plaintiff has been defamed." First Amended Complaint, PP 54-55; see also Proposed Complaint, PP 53, 56.

 In her Proposed Complaint, plaintiff additionally alleged that

 
the defendants made false statements within the hospital as well as to other individuals in the medical field practicing in the same geographic area, which indicated that Dr. Crawford's quality of care was below standard and that ...

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