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Daley v. Community Medical Center

December 12, 2006

MARY DALEY, ET AL., PLAINTIFFS,
v.
COMMUNITY MEDICAL CENTER, INC. AND ST. BARNABAS MEDICAL CENTER, INC., DEFENDANTS.



The opinion of the court was delivered by: Hughes, U.S.M.J.

MEMORANDUM OPINION

This matter is before the Court upon the Motion of Plaintiffs Mary Daley, Karen A. Seneca, Robert J. Resetar, Jr., Phyllis Smith, Joseph Giberson, IV, Susan Amburgery, Marc Bellucci, Dennis W. Smith, John Doyle, Michael Dierking, Kathy Dierking, Sandra Monaghan, Chris Divver, Brian Geoghegan, Jane Geoghegan, Kevin Geoghegan, Glenn MacDonald, Chris Carrieri, Marge Roberts, and John/Jane Doe ("Plaintiffs") for Leave to File a First Amended Complaint. Plaintiffs propose to amend their complaint to add a violation of the Employment Retirement Income Security Act, 29 U.S.C. § 1001, et seq. ("ERISA") and the following five state law claims: (1) Fraudulent Concealment; (2) Negligent Misrepresentation; (3) Promissory Estoppel; (4) Unjust Enrichment; and (5) Breach of Fiduciary Duty. Plaintiffs also seek to convert the fraud count in their original complaint into Count One - Fraudulent Misrepresentation. Defendants Community Medical Center, Inc. and St. Barnabas Medical Center, Inc. ("Defendants") oppose the motion, arguing that Plaintiffs failed to plead fraud with particularity and failed to plead claims upon which relief can be granted. The Court reviewed the written submissions of the parties and conducted oral argument on December 11, 2006. For the reasons that follow, Plaintiffs' Motion for Leave to File a First Amended Complaint is granted in part and denied in part.

I. BACKGROUND AND PROCEDURAL HISTORY

A. Factual Background

Plaintiffs were employees and paramedics in the Mobile Intensive Care Unit ("MICU") of Defendant Community Medical Center, Inc. ("CMC"), a non-profit accredited acute care hospital in New Jersey. (Pls.' Compl. at ¶¶ 1-21). In May 2003, Defendants and Monmouth-Ocean Hospital Service Corporation ("MONOC") entered into negotiations regarding MONOC's acquisition of CMC's Emergency Medical Services division. (Pls.' Compl. at ¶ 23). Plaintiffs contend that Defendants breached their severance plan and made false representations regarding the implications of a merger between MONOC and CMC. (See Pls.' Compl.).

On March 15, 2002, Nancy Jusko, CMC Administrative Secretary, distributed to all CMC employees a memorandum regarding the Human Resources Policy and Procedure Manual. (Pls.' Compl. at ¶ 26). Ms. Jusko advised that CMC would inform employees of new or changed policies via e-mail. Id. Plaintiffs contend that CMS made its decision to consolidate with MONOC in late September 2003 but purposely misrepresented to Plaintiffs that a decision was not finalized until December 2003. (Pls.' Compl. at ¶ 23). In October 2003, Defendants made changes to their longstanding severance policy for non-executive, exempt, non-exempt, and non-union employees. (Pls.' Compl. at ¶ 24; Pls.' Ex. A). Specifically, on October 1, 2003 an amendment to the policy added specific eligibility requirements for severance that were not included in the January 1999 Severance Policy. (See Pls.' Ex. A, C). Plaintiffs contend that they were not notified of the changes. (Pls.' Compl. at ¶ 26).

On October 17, 2003, Nancy Wollen, Executive Director of CMC, distributed an internal memorandum to all employees advising that CMC was "reviewing several different models for the delivery of pre-hospital care, but . . . that no formal agreement had been signed." (Pls.' Compl. at ¶ 27). Ms. Wollen further advised CMC employees on October 23, 2003 that CMC was in discussions with MONOC regarding integration of pre-hospital services. (See Pls.' Ex. G). On November 24, 2003, Ms. Wollen advised CMC employees that CMC's Emergency Medical Services ("EMS") Department would be meeting with MONOC representatives to discuss the proposed merger. (Pls.' Compl. at ¶ 29). At a MICU EMS staff meeting on November 25, 2003, Plaintiffs contend that Mr. Resetar, Director of the EMS Division, stated, "Everyone in this room has a job. Either the same position or better than they have today." (Pls.' Compl. at ¶ 30).

On December 4, 2003, Ms. Wollen sent an internal memorandum to all CMC employees advising of the "recent decision to consolidate Community Medical Center's MICU with MONOC" and informing employees that the consolidation would be effective on January 1, 2004. (See Pls.' Ex. L; Pls.' Compl. at ¶ 32). At a MICU EMS staff meeting on December 16, 2003, Mr. Resetar informed employees that the date of the merger with MONOC had been changed to December 28, 2003. (See Pls.' Ex. M). Plaintiff employees were further advised that they would not be eligible for a severance package if they refused an offer of employment with MONOC. (Pls.' Compl. at ¶ 33). At this meeting, Plaintiffs also received information indicating that MONOC would not provide employees with a 401/403b plan or pension benefits. Id.

On December 23, 2003, Plaintiffs were instructed by CMC to submit an application to MONOC which would effectively sever their employment with CMC. (Pls.' Compl. at ¶¶ 34-35). Vince Robbins, President and CEO of MONOC submitted a memorandum to all staff advising that the deadline for submitting applications was extended until December 29, 2003. (Pls.' Compl. at ¶ 37). In this memorandum, Mr. Robbins stated, in part, that MONOC's health benefits plan requires contribution from employees, unlike CDC's plan, and that MONOC only allowed CMC employees to bring over a portion of their Paid Time Off days. (Pls.' Compl. at ¶ 38).

B. Procedural History

On December 27, 2005, Plaintiffs filed a complaint with the Superior Court of New Jersey, Law Division alleging the following causes of action: (1) Breach of contract; (2) Breach of implied covenant of good faith and fair dealing; (3) Fraud; and (4) Age discrimination. (See Pls.' Compl.). Plaintiffs contend, in part, that their "severance of employment with CMC entitled Plaintiffs to a severance package" which they never received. (Pls.' Compl. at ¶ 35). On February 7, 2006, Defendants removed the case from the Superior Court of New Jersey to this Court. (Giles Certif. at ¶ 3; Docket no. 06-596, entry no. 1). Defendants' basis for removal was that the Severance Plan is governed by ERISA which provides federal jurisdiction. (Docket no. 06-596, entry no. 1). Defendants filed an Answer to Plaintiffs' Complaint on March 1, 2006. (Docket no. 06-596, entry no. 3).

On March 24, 2006, counsel for both parties submitted a Joint Discovery Plan in anticipation of an Initial Scheduling Conference. In the Joint Discovery Plan, Plaintiffs stated their intention to file a First Amended Complaint adding the following additional causes of action: (1) Fraudulent misrepresentation; (2) Fraudulent concealment; (3) Negligent misrepresentation; (4) Promissory estoppel; and (5) Breach/violation of ERISA. (Giles Certif. at ¶ 4; Exhibit A). At the Initial Scheduling Conference, this Court ordered a stay of formal discovery pending the outcome of two settlement conferences ordered to take place on or before May 26, 2006 and June 28, 2006. (Giles Certif. at ¶ 5).

The parties did not reach settlement, and on September 22, 2006, Plaintiffs filed a Motion for Leave to File an Amended Complaint. (Docket no. 06-596, entry no. 7). Plaintiffs proposed to make certain factual changes to the Complaint as well as add six causes of action. In Counts 3 through 9, Plaintiffs sought leave to add five causes of action relating to Defendants' alleged misrepresentations, breach of fiduciary duty, and fraudulent concealment and a violation of ERISA claim. Defendants opposed the Motion, arguing that Plaintiffs' proposed state law claims were preempted by ERISA, and oral argument was held on October 16, 2006. In an Order filed on October 17, 2006, this Court denied Plaintiffs' motion without prejudice, holding that Plaintiffs' state law claims were related to the severance plan and therefore, preempted by ERISA. (See Docket no. 06-596, entry no. 10).

Plaintiffs filed the present motion to amend their Complaint on November 10, 2006. (Docket no. 06-596, entry no. 12). Plaintiffs seek to amend their Complaint to add a breach of ERISA claim and five state law claims. (Pls.' Mem. at 6). Plaintiffs contend that the two fraud claims are not before the Court on this Motion to Amend because fraud was plead in the original Complaint. (Pls.' Reply Br. at 8). Plaintiffs argue that, if the fraud claims are reached, then they were plead with sufficient particularity pursuant to Federal Rule of Civil Procedure 9(b). Id. Plaintiffs further argue that the remaining state law claims were properly plead. Id. Defendants claim that Plaintiffs have not plead fraud with particularity and have failed to plead damages. (Defs.' Opp. Br. at 1). Defendants further argue that Plaintiffs' remaining state law claims make no sense in this action and therefore, Plaintiffs' motion to amend should be denied. Id.

II. DISCUSSION

Plaintiffs seek to add to their Complaint a Breach and Violations of ERISA claim and the following five state law claims: (1) Fraudulent Concealment; (2) Negligent Misrepresentation; (3) Promissory Estoppel; (4) Unjust Enrichment; and (5) Breach of Fiduciary Duty. (Pls.' Mem. at 6). Plaintiffs also seek to remove the following three state law claims from their original Complaint: (1) Breach of Contract; (2) Breach of Implied Covenant of Good Faith and Fair Dealing; and (3) Age Discrimination. (Pls.' Mem. at 6-7). ...


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