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David Schmidt v. Celgene Corporation

May 9, 2012


On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1620-10.

The opinion of the court was delivered by: Grall, J.A.D.



Argued September 19, 2011 -

Before Judges Parrillo, Grall and Skillman.

The opinion of the court was delivered by GRALL, J.A.D.

Plaintiff David Schmidt appeals from the dismissal of a complaint charging his employer, Celgene Corporation, and one of Celgene's customers, CVS/Caremark Corporation (Caremark), with violations of the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -14. Schmidt filed the complaint well beyond CEPA's one-year limitation period, N.J.S.A. 34:19-5, while he had a breach of contract action based on the same facts pending in Texas. Primarily because Schmidt's delay is attributable to his initial selection of the Texas forum and his subsequent decision to pursue a remedy for a CEPA violation in New Jersey after an unfavorable choice of law determination by a court in Texas, we conclude that the doctrines of substantial compliance and equitable tolling do not permit him to proceed in New Jersey. Accordingly, we affirm.

Schmidt is a resident of Texas, and Celgene is a Delaware corporation with headquarters in New Jersey and no offices in Texas. In 1997, Celgene hired Schmidt as an immunology specialist. Thereafter, Celgene promoted Schmidt several times. He was made manager of sales operations in 1999, business manager for Celgene's southwest unit in 2000, corporate account manager in 2003 and national account manager in 2005. Schmidt has worked and lived in Texas since 2000, but his supervisors during that period were in New Jersey.

As a national account manager, Schmidt dealt with distributors of pharmaceuticals, including Caremark. Among other drugs, Caremark distributed one developed by Celgene and approved by the Federal Drug Administration (FDA) for certain cancer patients. The FDA's approval required reports on adverse reactions, and Celgene needed the cooperation of distributors who received such reports. By federal regulation, distributors were required to report an adverse reaction to Celgene within five days, and Celgene was to file with the FDA within fifteen days of the distributor learning about the incident. Celgene expected Caremark to convey the information more promptly, within twenty-four hours. Caremark was noncompliant.

Celgene's senior manager of drug safety compliance alerted Schmidt and his supervisor to Caremark's delayed reports. From September 2006 through January 2007, Celgene filed one report received from Caremark beyond the FDA's fifteen-day deadline because Caremark transmitted the information after that deadline. Additionally, Caremark had given Celgene late notice more than thirty other times, but Celgene was able to file those reports on time. After receiving the information from the drug safety compliance manager, Schmidt's supervisor directed him to stay on top of Caremark.

Schmidt asserts that he followed that direction by acting to ensure further compliance and that his supervisor retaliated against him for doing so. He explains that Celgene made it clear that adverse-event reporting was a priority for every Celgene employee by requiring them to take online tutorials and score one hundred percent. In addition, Celgene's employee handbook states that all employees must conduct business in a lawful manner and inform his or her supervisor about failures to adhere to the law. That handbook also assures employees that Celgene will not retaliate against an employee who follows that mandate.

In May 2007, Caremark complained about Schmidt to his supervisor, and the supervisor relieved Schmidt of responsibility for Caremark's account. The following month, Schmidt's supervisor summoned him to New Jersey for a meeting on his performance. During that meeting, Schmidt came to believe that the real purpose was to encourage his resignation. A second meeting was scheduled in October 2007, but on the morning of that meeting, Schmidt notified his supervisor that he needed more time to think and would not attend. Later that month, Schmidt's supervisor wrote Schmidt, detailing his shortcomings.

He recounted complaints received from account holders and other Celgene employees. Two of Caremark's senior officers described Schmidt as aggressive, negative, argumentative, and they noted that Schmidt failed to communicate about anything other than his complaints. Representatives of two other account holders complained about Schmidt's inaccessibility, and one of them asked for a different manager for its account. A regional sales director for Celgene reported that three-quarters of his managers objected to working with Schmidt. And, the supervisor informed Schmidt that his giving late notice of his decision to miss a meeting "bordered on insubordination."

On December 20, 2007, Schmidt was relieved of all duties and responsibilities. Thereafter, Schmidt retained his title, salary and benefits but received no cash bonuses or stock options. On May 14, 2008, employees of Celgene's human resources section met with Schmidt at an airport in Texas and advised him that he was laid-off as part of a reduction ...

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