Novartis Pharm. Corp. v. Adesanya

645 B.R. 733

NOVARTIS PHARMACEUTICALS CORPORATION, Appellee,

v.Adenekan Olaoluwa ADESANYA, et al., Appellants.

Civil Action No. 21-3402-KSM

United States District Court, E.D. Pennsylvania.

Signed November 2, 2022

John B. McCusker, McCusker Anselmi Rosen & Carvelli PC, Florham Park, NJ, Pamela L. Cunningham, Stephen M. Hladik, Hladik, Onorato & Federman, LLP, North Wales, PA, for Appellee.

MEMORANDUM

MARSTON, J.

Pro Se Appellants Adenekan OlaOluwa Adesanya and Afoluso Aderonke Adesanya appeal multiple orders entered by the bankruptcy court. The Adesanyas primarily argue that the bankruptcy court erred by holding that the majority of their debt to Appellee Novartis Pharmaceuticals Corporation is nondischargeable. They also take issue with multiple orders the bankruptcy court entered before reaching that decision, and the court's post-trial order denying the Adesanyas' motion to stay and continue proceedings in bankruptcy. Last, the Adesanyas ask us to overturn a final judgment entered against them and in favor of Novartis in the United States District Court for the District of New Jersey (the "New Jersey Action"). For the reasons discussed below, the Court affirms the orders of the bankruptcy court in their entirety and declines to overturn the New Jersey judgment.

I. BACKGROUND

The Adesanyas' debt to Novartis arises out of a judgment entered against them in the New Jersey Action, so the Court will discuss the facts underlying that Action before addressing the orders challenged on appeal.

A. The New Jersey Action

1. Afolu so's Employment at Novartis (Feb. 2010 to Sept. 2013)

Afoluso was the Brand Safety Leader for Novartis's Oncology Business Unit between

March 2010 and September 2013. Adesanya v. Novartis Pharm. Corp. , Case No. 2:13-cv-05564(SDW)(SCM), 2016 WL 4401522, at *1–2 (D.N.J. Aug. 15, 2016).¹

In March 2010, when Novartis offered Afoluso the position, it did not know that she had lied on her job application and resume. Id. at *1. Among other things, Afoluso's application inflated her prior salaries, listed fake supervisors, and concealed a previous termination. Id.

When Afoluso accepted Novartis's offer, she signed multiple documents, including an offer letter, a Relocation Agreement, and an Employee Agreement. Id. at *2. (See also Doc. No. 21 at 547–48 (Afoluso's signed offer letter).) In those documents, she: (1) acknowledged that she had read and understood Novartis's Code of Conduct, (2) agreed to "devote [her] best efforts and full business loyalty to [her] employment with Novartis," (3) confirmed that she would "hold no other employment or engage in any other business which may adversely affect [her] ability to perform [her] job responsibilities at Novartis," and (4) accepted that her employment at Novartis was predicated on her relocating from Pennsylvania to New Jersey within 12 months of her hire date. See Adesanya , 2016 WL 4401522, at *2. (See also Doc. No. 21 at 547–48; id. at 555 (Afoluso's signed acknowledgment of having received and read Novartis's Code of Conduct).)

Despite agreeing that she would not work for Novartis's competitors while employed with the company, Afoluso, unbeknownst to Novartis, owned and worked for competing pharmaceutical companies throughout her tenure. Adesanya , 2016 WL 4401522, at *2. In March 2010, when Afoluso joined Novartis, she and her husband jointly owned a specialty pharmaceutical company called Global Drug (later renamed LaRon Pharmaceutical, Inc.). Id. Then, in August 2011, Afoluso accepted a safety consultant position with Biomedical Consulting International, Inc. Id. In that position, she provided drug safety services to Auxilium Pharmaceuticals, and through Auxilium, to direct competitors of Novartis. Id. Last, in January 2012, Afoluso, under the alias Ron Nuga, M.D., began providing drug safety services to Astellas Pharma Global Development, Inc. Id.

While working with these other companies, Afoluso received training on Novartis's Code of Conduct in January 2012, June 2012, and June 2013. (Doc. No. 21 at 557.) The Code of Conduct in effect in January 2012, like the Employee Agreement, forbids employees from holding positions that amount to a conflict of interest, stating, "Personal interests must not influence our business judgment or decision making." (Doc. No. 12-7 at 38.) It also required disclosure of "actual or potential conflicts of interest." (Id. ) Any employee aware of a situation that violates the Code of Conduct was required to report the violation to Novartis. (Id. at 41.) Last, the Code of Conduct stated that any breach of its terms "will not be tolerated and can lead to disciplinary action up to and including termination of employment." (Id. )

In addition to the provisions of the Code applicable to every Novartis employee, associates in the United States, like Afoluso, were also required to comply with the U.S. Supplemental Requirements to the Novartis Code of Conduct (the "U.S. Supplement"). (Id. at 26.) The U.S. Supplement reinforced Novartis's disclosure requirements, stating that all associates must "immediately report to the Company all complaints of misconduct, including all known and suspected violations of ... Novartis' own policies and procedures." (Id. at 30; see also id. at 31 (referencing scenario where an employee reports their own misconduct).) The U.S. Supplement stated in no uncertain terms that "employment with the Company and the Company's payment of any incentive and/or bonus compensation," including bonuses offered under the company's Annual Incentive Program ("AIP"), was "conditioned on compliance with applicable laws and associated company policies." (Id. at 33; see also id. ("Any associate found by the Company to be in violation of the law or any material provision of any Company Policy ... will not earn or receive any incentive bonus compensation for any period in which such violations occurred or were discovered.").) Indeed, the U.S. Supplement went so far as to warn associates that they "will be required to repay to the Company any ... incentive or bonus compensation already paid during a period in which the associate violates ... any material provision of any Company Policy ...." (Id. ) And "if an associate fails to repay such incentive or bonus compensation already paid to him or her, the Company may institute a lawsuit to recover the amount of incentive or bonus compensation plus costs and fees incurred in pursuing the lawsuit." (Id. )

During and after her training on the Code of Conduct, Afoluso continued to work her other pharmaceutical jobs and did not, at any point, tell Novartis that she had an ownership interest in Global Drug or that she was working for Biomedical, Auxilium, and Astellas. Adesanya , 2016 WL 4401522, at *2.

In addition to holding positions with competitors, Afoluso also failed to relocate to New Jersey in the three years that she worked for Novartis. Id. Indeed, she took no steps to relocate, despite accepting $26,000 in relocation funds from the company. Id. ; see also In re Adesanya , No. 19-00124-amc, Doc. No. 155 at 74:2–7, 75:22–79:23 (Bankr. E.D. Pa.). In April 2012, Novartis's Human Resources Business Partner, Megan Burley, told Afoluso that she needed to come into the office more frequently because her absence was negatively affecting her team. Adesanya , 2016 WL 4401522, at *2. Afoluso, however, ignored this instruction, along with a second warning in March 2013, and in September 2013, Novartis fired Afoluso for poor performance, "predominantly driven about [by] not coming into the office three days a week, which impacted her interactions and collaboration with her close functional team members." Id.

While at Novartis, Afoluso earned more than $1.2 million in cash compensation, including $210,403 in annual bonus payments under the AIP. Id.

2. The New Jersey Action (Sept. 2013–June 2017)

Not long after her termination, Afoluso filed suit² in the United States District Court for the District of New Jersey, bringing claims of discrimination and retaliation under state and federal discrimination laws. Id. at *3. With its Answer, Novartis filed eight counterclaims against Afoluso, four of which are relevant here: (1) fraud on Afoluso's employment application and resume, (2) breach of the Relocation Agreement, (3) breach of the duty of loyalty and Novartis's Conflicts Policy, and (4) breach of Novartis's AIP. Id.

After a "contentious" discovery period that was "marked by delay," id. , Novartis filed an omnibus motion for summary judgment and sanctions, seeking judgment in its favor on the counterclaims, dismissal of Afoluso's discrimination claims as a sanction for discovery misconduct, and sanctions against Adenekan for his discovery misconduct,³ see id. at *1. The Adesanyas opposed Novartis's motions, and Afoluso filed her own motion for summary judgment on Novartis's counterclaims. Id. On August 15, 2016, the New Jersey District Court granted judgment in Novartis's favor on the four counterclaims referenced above, sanctioned Afoluso by dismissing her discrimination claims, and issued a monetary sanction against Adenekan. Id.

Around 10 months later, on June 5, 2017, the district court granted Novartis's application for an award of damages on the counterclaims as well as an award of reasonable attorneys' fees and costs incurred in connection with Afoluso's claims and Adenekan's misconduct. Adesanya v. Novartis Pharm. Corp. , Case No. 2:13-cv-05564 (SDW) (SCM), 2017 WL 2443060 (D.N.J. June 5, 2017). The court awarded damages on the counterclaims totaling $1,393,918.23, and attorney's fees and costs totaling $480,754.22 (collectively, the "Judgment"). Id. at *13. The court found fee shifting appropriate because "when a party has acted in bad faith, vexatiously, wantonly or for oppressive reasons," or when the court finds "that fraud has been practiced upon it, or that the very temple of justice has been defiled, it may assess attorney's fees against the responsible party." Id. at *4. The...