Guilfoile v. Shields Pharmacy, LLC

THOMAS GUILFOILE, Plaintiff, v. SHIELDS PHARMACY, LLC, et al., Defendants.

No. 16-cv-10652

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

January 21, 2020

MEMORANDUM AND ORDER

CASPER, J.

I. Introduction

Plaintiff Thomas Guilfoile ("Guilfoile") has filed this lawsuit against Defendants Shields Pharmacy, LLC, UMass Memorial Shields Pharmacy, LLC, Shields Pharmacy Equity, LLC, Shields Specialty Pharmacy Holdings, LLC, collectively d/b/a Shields Pharmacy Services, a/k/a Shields Health Solutions ("the Shields Entities") and John M. Shields, Sr., a/k/a Jack Shields ("Shields"), in his individual capacity (collectively, "Defendants"). D. 29. Guilfoile alleges that Defendants retaliated against him in violation of the federal False Claims Act, 31 U.S.C. § 3730(h) and also asserts various state law claims against Defendants. D. 29 ¶¶ 99-163. Shields now brings a counterclaim against Guilfoile alleging abuse of process. D. 89 at 25-46. Guilfoile has moved to dismiss the counterclaim pursuant to Fed. R. Civ. P. 12(b)(6). D. 91. For the following reasons, the Court DENIES Guilfoile's motion to dismiss Shields' counterclaim.

II. Standard of Review

On a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6), the Court must determine if the facts alleged "plausibly narrate a claim for relief." Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012) (citation omitted). The Court will dismiss a pleading that fails to include "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "To avoid dismissal, a [counterclaim] must provide 'a short and plain statement of the claim showing that the pleader is entitled to relief.'" García-Catalán v. United States, 734 F.3d 100, 102 (1st Cir. 2013) (quoting Fed. R. Civ. P. 8(a)(2)). "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). "Nor does a [counterclaim] suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. (second alteration in original) (quoting Twombly, 550 U.S. at 557). "In determining whether a [pleading] crosses the plausibility threshold, 'the reviewing court [must] draw on its judicial experience and common sense.'" García-Catalán, 734 F.3d at 103 (second alteration in original) (citation omitted). "This context-specific inquiry does not demand 'a high degree of factual specificity.'" Id. (citation omitted).

III. Factual Background

The following summary is based upon the allegations in the amended counterclaim, D. 89, which are accepted as true for the consideration of the motion to dismiss.

Shields founded and holds ownership interests in the Shields Entities, a specialty pharmacy business. D. 89 ¶¶ 6, 8. Shields and Guilfoile met in the early 2000s as neighbors in Duxbury, Massachusetts. D. 89 ¶ 7. In 2013, Shields and Guilfoile often discussed Shields' pharmacy business and Shields told Guilfoile that he was looking to hire an executive at the Shields Entities who had operational, financial and business development experience. D. 89 ¶ 8. Based ondiscussions about Guilfoile's prior experience and capabilities, Shields hired Guilfoile to work at the Shields Entities on or around August 26, 2013. D. 89 ¶ 12.

Shields alleges that there were numerous deficiencies in Guilfoile's work, D. 89 ¶ 13, and that Guilfoile made demands to Shields and threatened to involve the Shields Entities' boards of directors if he did not get his way. D. 89 ¶¶ 14-15. Shields terminated Guilfoile on December 22, 2015. D.89 ¶ 16. Shields alleges that Guilfoile contacted him on December 28, 2015 and pleaded with him to reinstate his employment, but that Shields refused to do so. D. 89 ¶ 18. On January 3, 2016, Guilfoile emailed Shields and stated that he felt the relationship between the two had soured because Guilfoile had objected to practices at the Shields Entities that Guilfoile alleged may be illegal. D. 89 ¶ 24. These practices included an alleged kickback scheme entered into with a consultant for the Shields Entities, the use of company funds and personnel to secure private equity deals for another of Shields' companies, which Guilfoile alleged constituted a fraud on the Shields Entities' shareholders, and the Shields Entities' inclusion of false representations in contracts with hospitals. Id.; D. 89-1 at 2-3. In the letter, Guilfoile asked Shields to "honor the terms" of his employment contract by paying him a year of compensation as severance and recognizing his vested ownership interest in the Shields Entities. D. 89-1 at 3. Guilfoile stated that he wished to "part ways amicably" and that he preferred to resolve the situation without getting lawyers involved. Id. Guilfoile then stated that, if he did not receive a response from Shields by January 5, 2016 indicating that Shields agreed, Guilfoile would retain counsel and seek to recover damages in litigation. Id. Shields refused Guilfoile's demands. See D. 89 ¶¶ 26-27.

On January 7, 2016, Guilfoile sent an email to members of the board of directors of the Shields Entities, a top executive at an entity that partnered with the Shields Entities and others stating that he had been retaliated against by Shields based on his objection to the practices at theShields Entities that he considered potentially illegal and attaching the January 3, 2016 email he had sent to Shields. D. 89 ¶ 27. Shields alleges that Guilfoile's claims regarding potential illegal activities were false and that Guilfoile was aware that they were false. D. 89 ¶ 28. A few months later, on April 1, 2016, Guilfoile filed suit against Defendants in this Court. D. 89 ¶ 34. Guilfoile and his counsel then worked with a media company, Powers MediaWorks, LLC, to release a press statement announcing and detailing Guilfoile's lawsuit against Shields. D. 89 ¶¶ 40-46. Shields alleges that the press release, which was widely circulated, included "false and defamatory" claims about Shields and the Shields Entities accusing them of engaging in potentially illegal activities. D. 89 ¶¶ 52-53.

On April 5, 2016, the same day that the press release was disseminated, Guilfoile sent what Shields has characterized as a "mass e-mail" to individuals in the Duxbury community where both Guilfoile and Shields live, as well as to Shields' son and Shields Entities employees, that discussed his lawsuit and included a link to the press release. D. 89 ¶¶ 59-60. Shields alleges that the filing of Guilfoile's lawsuit has caused Shields "significant damages, including to his business, his business reputation, his personal reputation, expenditure of attorney's fees, and emotional distress." D. 89 ¶ 68.

IV. Procedural History

Guilfoile instituted this action on April 1, 2016. D. 1. Following the filing of motions to dismiss by Defendants (D. 17 & D. 24), Guilfoile filed an amended complaint on June 10, 2016. D. 29. Defendants then filed renewed motions to dismiss the amended complaint. D. 32; D. 34. This Court allowed the motion to dismiss as to Guilfoile's False Claims Act claim and dismissed without prejudice his state claims because, having dismissed the federal claim, the Court declined to exercise supplemental jurisdiction over them. D. 55 at 5-17. Guilfoile appealed to the FirstCircuit, D. 66, which affirmed the dismissal in part and vacated it in part.¹ D. 69. Guilfoile filed a second amended complaint on April 26, 2019. D. 80. Defendants filed their amended answer with Shields' amended counterclaim at issue here, alleging abuse of process, on July 9, 2019.² D. 89. Guilfoile has now moved to dismiss the amended counterclaim. D. 91. The Court heard argument on the motion and took the matter under advisement. D. 111.

V. Discussion

A. Legal Standard

To state a claim for abuse of process, Shields must show that (1) process was used (2) the use was motivated by an ulterior purpose and (3) he suffered damages as a result. See MHA Fin. Corp. v. Varenko Invs. Ltd., 583 F. Supp. 2d 173, 178 (D. Mass. 2008) (citing Jones v. Brockton Pub. Mkts., Inc., 369 Mass. 387, 389 (1975)). Process means "causing papers to issue by a court 'to bring a party or property within its jurisdiction.'" Silvia v. Building Inspector of W. Bridgewater, 35 Mass. App. Ct. 451, 453 n.4, (1993) (quoting Jones, 369 Mass. at 390). Abuse of process involves the "malicious use of legal process to accomplish some ulterior purpose for which it was not designed or intended, or which was not the legitimate purpose of the particular process employed." LaFrenier v. Kinirey, 478 F. Supp. 2d 126, 142 (D. Mass. 2007) (quoting Carroll v. Gillespie, 14 Mass. App. Ct. 12, 26 (1982)).

Ulterior purpose exists where a party "institut[es] a civil action to achieve a collateral purpose other than winning the lawsuit." Am. Mgmt. Servs., Inc. v. George S. May Int'l Co., 933 F. Supp. 64, 69 (D. Mass. 1996) (citing Silvia, 35 Mass. App. Ct. at 453-54). The ulterior motive, however, must be "more than the intent to harass; there must be intention to use process for coercion or harassment to obtain something not properly part of the suit." Broadway Mgmt. Servs., Ltd. v. Cullinet Software, Inc., 652 F. Supp. 1501, 1503 (D. Mass. 1987).

B. Shields' Allegations of Abuse of Process

Guilfoile initiated this lawsuit, see D. 1, so the first element of process has been satisfied. As to the second element, Shields alleges that Guilfoile initiated the lawsuit based on the following ulterior motives besides winning the lawsuit:

to (i) destroy Shields' personal and business reputation; (ii) spread false information about Shields alleged in support of the federal claims so as to extort a settlement of earlier monetary and equity demands and the state-based contract and employment claims (which are collateral to the proper purpose of the

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