The opinion of the court was delivered by: Dennis M. Cavanaugh, U.S.D.J.
This matter comes before the Court upon motion by Defendant Quest Diagnostics, Inc. ("Quest") to dismiss Plaintiffs' Douglas Boyle's ("Mr. Boyle") and Anthony Gouveia's ("Mr. Gouveia") claims for breach of contract and breach of the implied covenant of good faith and fair dealing. No oral argument was held pursuant to Federal Rule of Civil Procedure 78. For the following reasons, Quest's motion is granted in part and denied in part.
Plaintiffs Douglas Boyle ("Mr. Boyle") and Anthony Gouveia ("Mr. Gouveia") brought this action against Defendant Quest Diagnostics, Inc. ("Quest") by filing a two-count complaint on March 18, 2005 in the Superior Court of California. (Defendant's Brief ("Def. Br.") at 2). Plaintiffs alleged that Quest breached their employment contracts and retaliated against them in violation of California public policy after they had expressed concerns regarding due diligence errors in Quest's financial projections. (Id.)
Quest removed the action to the United States District Court for the Central District of California on April 25, 2005 pursuant to 28 U.S.C. § 1332. (Id.) Following Quest's motion to transfer venue pursuant to 28 U.S.C. § 1404(a), the Central District of California transferred the action to the United States District Court for the District of New Jersey. (Id.) After the District of New Jersey granted Plaintiffs' motion for leave to amend their complaint, Plaintiffs filed their First Amended Complaint on March 9, 2006. (Id.) The First Amended Complaint asserts two causes of action: 1) Breach of Contract-Equitable Estoppel-Detrimental Reliance; and 2) Violation of the Conscientious Employee Protection Act. (Id.) Quest now moves to dismiss only Plaintiffs' common law breach of contract claim (and the breach of the implied covenant of good faith and fair dealing claim included within the breach of contract claim) pursuant to Federal Rule of Civil Procedure 12(b)(6). (Id.)
The Court accepts the following factual allegations to be true for purposes of this motion to dismiss only. Mr. Boyle joined Quest in 1995. (First Amended Complaint ("Complaint") at ¶ 6). His first job title was Corporate Revenue Controller. (Id.) Mr. Gouveia joined Unilab Corporation ("Unilab") in 2000. (Complaint at ¶ 7). His first job title at Unilab was Vice President of Finance and Corporate Controller. (Id.) Mr. Gouveia became a Quest employee when Quest acquired Unilab on February 28, 2003. (Id.) Quest is a corporation organized under the laws of the State of Delaware with its principal place of business in the State of New Jersey. (Complaint at ¶ 3).
During the fourth quarter of 2002, Mr. Boyle was asked by David Zewe ("Zewe"), Quest's Senior Vice President for Operations, to relocate to California and oversee the integration of Unilab into Quest. (Complaint at ¶ 8). Zewe told Mr. Boyle that if he relocated to California, he could expect to become Regional Vice President for the California area within one to two years. (Complaint at ¶ 9). Mr. Boyle accepted the relocation and was given a letter, dated January 23, 2003, which set forth the terms of his relocation and new assignment as Vice President of Finance and Administration. (Complaint at ¶¶ 11-12, see also Exhibit 1 attached to Complaint).
Mr. Boyle's first task upon relocating to California was to review the financial projections prepared by Quest's Corporate Finance Team as part of its due diligence of the Unilab acquisition. (Complaint at ¶ 12). Quest's Corporate Finance Team was under the direction of Robert Hagemann ("Hagemann"), Quest's Senior Vice President and Chief Financial Officer. (Complaint at ¶¶ 11, 12). Mr. Boyle discovered several material errors and omissions in Quest's due diligence work. (Id.) After discovering the errors, Mr. Boyle traveled to Quest's corporate headquarters in New Jersey in May 2003 to discuss his findings with Zewe, Hagemann, and Ken Freeman, Quest's CEO at the time. (Complaint at ¶¶ 10, 13).
A few months after Quest acquired Unilab, Mr. Gouveia was named Quest's Regional Controller for the California area, on June 23, 2003. (Complaint at ¶ 15). Mr. Gouveia had several reservations about accepting this position, including his concerns that he did not have adequate staffing to perform all of his tasks and that he would eventually become a scapegoat for the aforementioned due diligence errors. (Id.)
Following the discovery and subsequent reporting of the due diligence errors, Quest's upper management began to retaliate against Mr. Boyle and Mr. Gouveia. (Complaint at ¶ 16). Some of these retaliatory acts include Hagemann's decision to exclude Mr. Boyle from staff meetings, Zewe's refusal to disclose to Mr. Boyle the terms of his integration incentive bonus plan despite Zewe's assurances that the terms would be disclosed, upper management's decision to diminish Mr. Boyle's role, and upper management's refusal to provide adequate staffing to the California area despite requests for additional staffing by Mr. Boyle and Mr. Gouveia. (Complaint at ¶¶ 16a, 16b, 16c, 16e). On June 10, 2004, Mr. Boyle wrote a letter to Zewe complaining about the retaliatory acts. (Complaint at ¶ 16l). However, Zewe never took any action to remedy the situation. (Id.)
On July 12, 2004, Mr. Boyle was constructively terminated from Quest. (Complaint at ¶ 17). By this time, his role within the company had been effectively eliminated and he could no longer tolerate the hostile work environment. (Id.) In late 2004, Mr. Gouveia informed management that Quest was not going to meet the financial projections prepared by Quest's Corporate Finance Team. (Complaint at ¶ 19). Quest's management objected to Mr. Gouveia's assessment and attempted to ...