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Shah v. Meditab Software, Inc.

United States District Court, D. New Jersey

May 23, 2019

KUNAL SHAH, Plaintiff,
v.
MEDITAB SOFTWARE, INC., et al., Defendants.

          Kevin M. Costello, Esq. Drake P. Beardon, Jr., Esq. COSTELLO & MAINS Attorneys for Plaintiff

          David E. Strand, Esq. Sarah Wieselthier, Esq. FISHER & PHILLIPS LLP Attorneys for Defendant

          OPINION

          JEROME B. SIMANDLE U.S. DISTRICT JUDGE.

         I. INTRODUCTION

         Plaintiff Kunal Shah (“Plaintiff”) brings this action against Defendants Meditab Software, Inc. (“Meditab”), Medical Supply Corp., Midesh “Mike” Patel (“Defendant Patel”), and John Does 1-10 (collectively, “Defendants”) alleging that Defendants breached its contracts with Plaintiff and/or that Plaintiff was terminated from his employment with Defendant Meditab in retaliation for engaging in “whistle-blowing” activity in violation of New Jersey's Conscientious Employee Protection Act (“CEPA”). Currently pending before the Court is Defendants' motion for summary judgment. For the reasons discussed below, the motion will be granted in part and denied in part.

         II. FACTUAL AND PROCEDURAL BACKGROUND[1]

         A. Factual Background

         Meditab builds software for doctors. (Patel Dep. [Docket Item 32-5] at 20:21-22.) Defendant Patel is the Chairman of Meditab's Board of Directors. (Id. at 10:5-7.) Medical Supply Corp. d/b/a Elmhurst Pharmacy, Inc. was, at all relevant times, a business with complete control over Meditab and the owner and operator of Meditab. (Compl. [Docket Item 1] at ¶ 3.)

         Plaintiff began working for Meditab in 2001. (Pl.'s Dep. [Docket Item 38-1] at 39:25-40:3.) When he first started, his job duties and responsibilities included doing business case review, testing, and deployment. (Id. at 43:7-12.) Plaintiff was initially compensated between $36, 000 to $42, 000 per year and he was not paid any commissions at this time. (Id. at 43:13-20.)

         According to Plaintiff, in 2004 or 2005, he was promoted to a sales position and, in this role, he earned around $60, 000 in base salary plus commission for any sales he made. (Id. at 44:20-45:15.) At this time, Plaintiff's commission started at 8% of gross sales, but could go up to 12% depending on how much volume he sold. (Id. at 46:4-47:6.) The parties agreed that Plaintiff would invoice his commissions through Plaintiff's company, Aqua Healthcare. (Id. at 23:7-21.) Plaintiff would then receive his commissions as salary from Aqua Healthcare. (Id. at 23:22-24:7.)

         In 2010 or 2011, Plaintiff began running CosmetiSuite, a division (or “product line”) of Meditab, as its division head. (Id. at 47:15-48:5.) Defendant Patel agreed to provide Plaintiff with 25% of the net proceeds of the sale of CosmetiSuite, in the event it was sold. (See Apr. 20, 2013 Email [Docket Item 32-9] at 2) (“I have mentioned to you that based on your thoughts in cosmetic, I plan on giving u net proceeds of 25% from that sale.”); see also Pl.'s Dep. at 51:4-12.) To date, CosmetiSuite has not been sold and remains one of Meditab's product lines. (Id. at 55:13-15.) Accordingly, Plaintiff still retains his 25% stake in the product line.

         On or about January 15, 2015, Plaintiff became the President and CEO of Meditab. (See Jan. 15, 2015 Email [Docket Item 32-10] at 2.) The terms of Plaintiff's compensation as President and CEO of Meditab are set forth in an email thread exchanged between Plaintiff and Defendant Patel, dated February 4, 2015, wherein Plaintiff states, in relevant part:

My compensation as president & CEO: We have agreed too [sic] 10% of the net profits of Meditab with a min wage of $3, 36, 0000 [$336, 000][2] a year if the net profit does not meet the mentioned salary Am currently drawing $1, 80, 000 [$180, 000] a year. (For any reason If the net profit does not meet $1, 56, 000 [$156, 000] a year this amount will be added to my salary as a part of my salary compensation & the min compensation I will make is Three Hundred & Thirty Six Thousand dollars [$336, 000] per calendar year.

(Agreement [Docket Item 32-11] at MediTab-Shah 62-63.) Plaintiff's February 4, 2015 employment agreement was for a term of three years and required that he provide at least 3 months (90 days) notice of his resignation. (Id. at MediTab-Shah 63) (“3 months [notice] minimum or forfeit 6 months of bonus. Sorry but we cannot bend on this as you are too valuable and time consuming to replace.”).

         On December 10, 2015, Plaintiff sent an email to the Meditab Board of Directors with the subject “Time to Move on, ” wherein he wrote:

Please let this letter serve as my resignation as President & CEO of Meditab Software Inc effective March 10th with 90 day notice.
* * * *
I assure you that you will continue to enjoy same commitment from me during this transition period. Please advise me who I should work with to transition my responsibilities. I wish you and the company the best in the future.

(Dec. 10, 2015 Email [Docket Item 32-13] at 2.) Plaintiff testified that he contemplated resigning at this time due to “day-to-day interference of Mike Patel” and “the operations, you know, aggressive behavior, you know, which does not help stabilize the company.” (Pl.'s Dep [Docket Item 38-3] at 125:16-25.) According to Plaintiff, however, he did not actually resign on March 10, 2016 (90 days after he sent the December 10, 2015 email) because his resignation was never accepted. (Id. at 134:9-14.)

         Plaintiff's alleged whistle-blowing activity, which is said to have occurred between June and July of 2016, can be summarized, in the light most favorable to Plaintiff, as follows:

Bribing an Indian public official: On June 9, 2016, Plaintiff learned from Jay Shah (via email) that one of Defendants' employees, Vikas (Last Name Unknown), had paid a bribe to a labor official in India. (Pl.'s Answer to Defs.' First Set of Interrog. [Docket Item 38-6] at 5.) Plaintiff conducted an investigation into the payment of the labor officer and confirmed from Sunil Lodha that a bribe was in fact paid to the official. (Pl.'s Dep. [Docket Item 38-3] at 186:2-24.) When Plaintiff learned of this, he wrote an email stating that next time the company's attorneys will take care of any issues with the labor officer. (Id. at 186:20-25.) He also had a conversation with Paragi Patel, Sunil Lodha, Dipal Patel, and Jay Shah and told them that “this is not the way to complete an investigation, ” and that if there were fines they had to pay, they need to pay the fines and “cleanup the records, ” so they will not be fined in the future. (Id. at 185:2-24.) Plaintiff testified that after the bribe was paid, he specifically told Defendant Patel that Defendants should not be participating in the payment of bribes to the Indian Labor Office. (Pl.'s Dep. [Docket Item 38-4] at 227:4-21.)
Terminating Jay Shah's employment without cause: Jay Shah is Plaintiff's cousin. On December 1, 2015, Jay Shah signed an employment contract with Meditab that stated once he passed a three-month probation period, his employment “can be terminated on two months' notice on either side.” (Shah Employment Offer [Docket Item 38-9) at MediTab-Shah 1231.) The contract also stated Jay Shah could be “terminated without notice” if he engaged in any number of different infractions. (Id. at MediTab-Shah 1232, ¶ 6.) On July 12, 2016, Defendant Patel instructed Plaintiff to terminate Jay Shah for cause because Jay Shah had, according to Defendant Patel, hired employees who did not meet the minimum aptitude test score. (Pl.'s Dep. [Docket Item 38-3] at 194:2-195:2; see also July 12-14, 2016 Emails [Docket Item 38-10] at MediTab-Shah 83-91.) Plaintiff explained to Defendant Patel that this was incorrect because Jay Shah was not responsible for hiring people. (Pl.'s Dep. [Docket Item 38-3] at 195:4-10.) Another employee, Avinash Vyas, conducted an independent investigation and determined there was no cause to fire Jay Shah. (July 12-14, 2016 Emails [Docket Item 38-10] at MediTab-Shah 89.) Defendant Patel still insisted that Plaintiff fire Jay Shah. (Id. at MediTab-Shah 90.) Plaintiff threatened to resign rather than terminate Jay Shah without cause. (Pl.'s Dep. [Docket Item 83-4] at 202:17-21.)

         On July 14, 2016, Plaintiff's last day of employment with Meditab, Defendant ...


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