Gordon Grado M.D., Inc. v. Phx. Cancer & Blood Disorder Treatment Inst. PLLC

603 F.Supp.3d 799

GORDON GRADO M.D., INC. d/b/a Southwest Oncology Centers, Plaintiff,

v.PHOENIX CANCER AND BLOOD DISORDER TREATMENT INSTITUTE PLLC; and Steven L. Rosinski, Defendants.

No. CV-21-02052-PHX-DGC

United States District Court, D. Arizona.

Signed May 16, 2022

Andrew Grosso, Pro Hac Vice, Andrew Grosso & Associates, Washington, DC, for Plaintiff.

Michael E. Gerity, Israel & Gerity PLLC, Phoenix, AZ, for Defendants.

ORDER

David G. Campbell, Senior United States District Judge

Defendants Phoenix Cancer and Blood Disorder Treatment Institute, PLLC ("PCI") and Steven L. Rosinski, M.D. have moved to dismiss Plaintiff Gordon Grado, M.D., Inc., d/b/a Southwest Oncology Centers’ second amended complaint. Doc. 18. The motion is fully briefed (Docs. 18, 20, 21), and oral argument will not aid the Court's decision. See LRCiv 7.2(f). For reasons stated below, the Court will deny the motion in part.

I. Background.

Dr. Gordon Grado is a physician specializing in radiation oncology and the founder, director, and president of Plaintiff Southwest Oncology Centers, which provides radiation and medical oncology services to cancer patients in Scottsdale, Bullhead City, and Yuma, Arizona. Doc. 14 ¶¶ 3-5. Defendant Dr. Steven Rosinski is a physician specializing in internal medicine, hematology, and oncology and founder of Defendant PCI, which provides radiation and medical oncology services to cancer patients in Bullhead City, Arizona. Id. ¶¶ 7-10.

Plaintiff alleges that in 2017, Defendant Rosinski was practicing medicine in Spokane, Washington, and planning to move to Arizona. Id. ¶¶ 34-35. In November 2017, Plaintiff and Defendant Rosinski began communications and employment negotiations. Id. ¶ 37. In March 2018, Plaintiff and Defendant Rosinski entered into a locum tenens agreement (the "Agreement") under which Defendant Rosinski would work part time as an independent contractor for Plaintiff in its Bullhead City location. See id. ¶¶ 44-46. After approximately ten months, Defendant Rosinski gave notice of his intent to terminate the Agreement, stopped providing services for Plaintiff, and opened Defendant PCI, where he continued to provide cancer treatment services to patients in Bullhead City. Id. ¶¶ 46, 63.

Plaintiff alleges that prior to entering into the Agreement, Defendant Rosinski had a plan to establish his own partnership and medical practice in Arizona. Id. ¶ 35. Plaintiff alleges that, unbeknownst to it, Defendant Rosinski sought employment with it in order to learn about the medical oncology care market in Arizona, establish a name presence in Arizona, identify and hire away experienced employees, and identify and persuade away patients, all in furtherance of his desire to open his own medical practice in the area. Id. ¶ 36. Despite this, Plaintiff alleges that Defendant Rosinski, personally and through a letter of recommendation, represented that he wanted to join Plaintiff's practice for the "long term." Id. ¶¶ 42-43. Plaintiff asserts that Defendant Rosinski's purported interest in joining its practice for the "long term" was material and induced it to employ Defendant Rosinski under the Agreement. Id. ¶ 44. Plaintiff alleges that Defendant Rosinski continued to represent to Plaintiff that he wanted a "long term" employment relationship after entering into the Agreement, and that these representations were material to Plaintiff's decision to maintain Defendant Rosinski's employment under the Agreement. Id. ¶¶ 47, 51-53, 59-60, 74.

While continuing to represent that he wanted to join Plaintiff's practice for the "long term," Plaintiff alleges that Defendant Rosinski: registered the Internet domain name "phoenixcancer.com" (id. ¶ 39); filed articles of incorporation for "Phoenix Cancer and Blood Disorder Treatment Institute, PLLC" (id. ¶ 48); registered a national provider identification number for the Phoenix Cancer and Blood Disorder Treatment Institute with the Centers for Medicare and Medicaid Services (id. ¶ 50); recruited three of Plaintiff's employees to work for Defendant PCI (id. ¶¶ 54-55); directed Plaintiff's former employees, after they had left Plaintiff's employ, to access and download patient information and medical records in order to persuade patients to cease treatment with Plaintiff (id. ¶¶ 56-57); directed one of Plaintiff's former employees, while she was still employed by Plaintiff, to tell patients that Plaintiff might close and that they should obtain their medical records in order to convince them to seek treatment with Defendant PCI (id. ¶ 58); and filed applications with the U.S. Patent and Trademark Office to trademark the phrase "Phoenix Cancer Institute" and a design logo bearing the same phrase (id. ¶ 62).

Plaintiff alleges that Defendant Rosinski gave a 30-day notice of termination as required under the Agreement on January 4, 2019, but that his last day of employment was on January 18, 2019. Id. ¶¶ 61, 69. Plaintiff alleges that in communications regarding the termination of Defendant Rosinski's employment, he continued to conceal his plans to open a competing oncology practice in Bullhead City, asserting instead that he was unsure of his future employment plans. Id. ¶¶ 63, 64, 69. In the time between giving his notice and the end of his employment, Plaintiff alleges that Defendant Rosinski asked for and received a print-out of his next two weeks of appointments, which included patient phone numbers and insurance information, and used the list to solicit Plaintiff's patients to continue care with Defendant PCI. Id. ¶¶ 64-67. Ultimately, Plaintiff alleges, Defendant Rosinski used misappropriated confidential information to successfully solicit 41 of Plaintiff's patients to transfer their care to Defendant PCI. Id. ¶ 68.

Plaintiff sues Defendants Rosinski and PCI for fraudulent inducement under Arizona common law (Count I), misappropriation of trade secrets under A.R.S. § 44-401 (Count II) and 18 U.S.C. § 1832 (Count III), and tortious interference with business relationships under Arizona common law (Count V). Plaintiff also brings claims against Defendant Rosinski for breach of contract (Count IV) and breach of the implied covenant of good faith and fair dealing (Count VI) under Arizona common law.

II. Legal Standard.

When analyzing a complaint for failure to state a claim for relief under Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer , 568 F.3d 1063, 1067 (9th Cir. 2009). A successful motion to dismiss under Rule 12(b)(6) must show either that the complaint lacks a cognizable legal theory or fails to allege facts sufficient to support its theory. Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1990). A complaint that sets forth a cognizable legal theory will survive a motion to dismiss as long as it contains "sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

III. Defendants’ Motion to Dismiss.

Defendants argue that the Court lacks jurisdiction over the only federal claim asserted in Plaintiff's complaint (Count III alleging misappropriation of trade secrets under federal law) and the Court therefore lacks jurisdiction over the entire lawsuit. Defendants also argue that the statute of limitations has run on Plaintiff's tortious interference claim (Count V). Finally, Defendants argue that the rest of Plaintiff's claims fail to state plausible claims for relief.

A. Misappropriation of Trade Secrets.

1. Under Federal Law (Count III).

The Court will first consider Defendants’ arguments regarding Plaintiff's claim for federal misappropriation of trade secrets because it is the only claim upon which to base supplemental jurisdiction.

a. Jurisdiction.

Defendants argue that there is no basis for original federal jurisdiction over Plaintiff's federal misappropriation claim because the trade secrets involved are not sufficiently related to interstate commerce as required by 18 U.S.C. § 1836(b)(1). Doc. 18 at 4.¹ Citing no authority, Defendants argue that this jurisdictional requirement is "highly restrictive" and that it would be "impossible" for Plaintiff to demonstrate that the information at issue in this case "in any way involved interstate commerce." Id. Defendants assert that "[m]edical care for patients located in a small Arizona town most definitely does not implicate interstate commerce" because physicians must be licensed by each state in which they practice, rendering medical care "affirmatively prohibited from being ‘interstate commerce.’ " Id. Defendants go on to characterize Plaintiff's allegations that patient billing and payment is done across state lines, thereby implicating interstate commerce, as "exceptionally weak" and a "misrepresent[ation of] the kind of confidential information actually at issue." Id. Defendants assert that only patient names and contact information are at issue in this case, arguing that Plaintiff has not sufficiently supported its allegations that billing and insurance information was also improperly obtained by Defendants. Id. Defendants argue that they would have had "no use whatsoever" for billing or insurance records because they would have received that information directly from patients that switched their care to Defendant PCI. Id. at 5. Defendants finally argue that Plaintiff's allegations that it receives payments for the services it renders from out-of-state entities has "too tenuous and distended" a connection with interstate commerce to support federal jurisdiction. Id.

Plaintiff responds that the allegations in its complaint adequately allege a connection to interstate commerce because it alleges that the records taken by Defendants included financial and insurance records used to bill...