The Guthrie Clinic v. Convergence CT, Inc.

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THE GUTHRIE CLINIC, Plaintiff, v. CONVERGENCE CT, INC., Defendant.

No. 4:23-CV-01396

United States District Court, M.D. Pennsylvania

November 3, 2023

MEMORANDUM OPINION

Matthew W. Brann Chief United States District Judge

I. BACKGROUND

On August 21, 2023, Defendant, Convergence CT, Inc. (“CCT” or “Convergence”), removed Plaintiff's five-count complaint from the Bradford County Court of Common Pleas. Defendant then filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, a motion for a more definite statement pursuant to Federal Rule of Civil Procedure 12(e) and a motion to strike pursuant to Federal Rule of Civil Procedure 12(f). These motions are now ripe for disposition; for the reasons that follow, they are denied in part and granted in part.

II. DISCUSSION

A. Motion to Dismiss Standard

Under Federal Rule of Civil Procedure 12(b)(6), courts dismiss a complaint, in whole or in part, if the plaintiff fails to “state a claim upon which relief can be granted.” Following the landmark decisions of Bell Atlantic Corp. v. Twombly^[1] and Ashcroft v. Iqbal,^[2] “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'”^[3] The United States Court of Appeals for the Third Circuit has instructed that “[u]nder the pleading regime established by Twombly and Iqbal, a court reviewing the sufficiency of a complaint must take three steps”: (1) “take note of the elements the plaintiff must plead to state a claim”; (2) “identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth”; and (3) “assume the[] veracity” of all “well-pleaded factual allegations” and then “determine whether they plausibly give rise to an entitlement to relief.”^[4]

B. Motion for a More Definite Statement Standard

Federal Rule of Civil Procedure 12(e) allows a party to “move for a more definite statement” when a pleading “is so vague or ambiguous that the party cannot reasonably prepare a response.”^[5] A “‘motion for a more definitive statement is generally disfavored, and is used to provide a remedy for an unintelligible pleading rather than as a correction for a lack of detail.'”^[6] The “prevailing standard” in the Third Circuit “is to grant a Rule 12(e) motion ‘when the pleading is so vague or ambiguous that the opposing party cannot respond, even with a simple denial, in good faith, without prejudice to [itself]'”^[7]

C. Motion to Strike Standard

A court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent or scandalous matter” under Federal Rule of Civil Procedure 12(f).^[8] Motions to strike “clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters.”^[9] “Relief under Rule 12(f) is generally disfavored and will be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties, or if the allegations confuse the issues in the case.”^[10]

D. Facts Alleged in the Complaint

The facts alleged in the complaint, which this Court must accept as true for the purposes of this motion, are as follows.

1. The Agreement

On August 30, 2018, The Guthrie Clinic (“Guthrie” or “The Clinic”) contracted with CCT to participate in its Global Healthcare Data Network (“GHDN”).^[11] Convergence “represented” the GHDN “as a patient data analytics tool that would include Guthrie's and other healthcare entities' patient data, which collectively, could be accessed by users.”^[12] Over the course of their relationship, it became clear that “the scope and capability of the GHDN” had been misrepresented.^[13]

As required by the contract (“the Agreement”), Guthrie provided Defendant with access to its “[Patient] Source Data,” defined as “clinical, administrative, operational and financial data[,] including any ancillary data that may be available through external sources.”^[14] Convergence could only use this information to create de-identified data for “research and analysis in the GHDN.”^[15] The Clinic had “the right to access” its own data and the right “to query” data from other GHDN participants.^[16] However, CCT did not provide Guthrie with access to its own data or the GHDN “in a usable format.”^[17]

2. Payment Disputes

Plaintiff paid a $350,000 implementation fee “to cover the installation, initial setup activities and license to use the GHDN Staging System[,]” but this system “was never set up in any working form.”^[18] The Agreement allowed Guthrie to “completely recover” this fee through five annual payments of $70,000.^[19] For the first year, this payment was “conditioned ‘upon [] mutual agreement [of an] Implementation Work Plan.”^[20] Guthrie was also entitled to receive a portion of “the gross revenue received by CCT for each” GHDN client and an “Early Adopter Bonus.”^[21] The Clinic fulfilled its obligations, but Defendant failed to make any of these payments.^[22]

3. Use of the Patient Source Data

Plaintiff “granted CCT a non-exclusive, non-transferrable license to use [its Patient] Source Data ‘solely'” to create de-identified data^[23] for the term of the Agreement.^[24] The Clinic avers that “CCT has used” its data “for purposes other than those permitted by the Agreement” and has retained it “in violation of the Agreement and applicable federal and state laws.”^[25]

4. Termination of the Agreement

Due to Defendant's “continuous failure to meet its material obligations[,]” Plaintiff provided “notice of non-renewal and termination of the Agreement” on September 23, 2022.^[26] “Upon termination, CCT was required to destroy or eliminate access to all of Guthrie's Source Data” and to “return or destroy and certify the destruction of all of Guthrie's confidential information.”^[27] Convergence “refuses to provide proof that it has destroyed or eliminated access to” the data and “has not returned” this information.^[28]

5. Choice of Law Provision in the Agreement

The Agreement contains a choice of law provision that specifies that it “shall be governed by the law of the state in which [Guthrie] is located, without reference to its conflict of laws rules.”^[29] Guthrie's principal place of business is in Pennsylvania.^[30]

E. Analysis

Defendant requests the following: a more definite statement regarding Count I; dismissal of Counts II, III, IV, and V; and for certain averments in Counts I, IV, and V to be stricken.^[31] If the Court declines to dismiss Counts II and III, CCT alternatively seeks more definite statements concerning these allegations.^[32] The Court will analyze each of these requests in turn. Due to the choice of law provision in the Agreement, any state law claims will be analyzed using Pennsylvania law.

1. Count I - Breach of Contract

Guthrie alleges a breach of contract claim in Count I. Defendant seeks a more definite statement concerning this claim and to strike the allegations in Paragraphs 102, 103, 111, and 112 and the demand for attorneys' fees.

a. Motion for a More Definite Statement

Convergence seeks more information concerning the timing of its alleged breaches because its rights and obligations are dependent upon whether Guthrie prematurely terminated the Agreement “due to a breach by CCT.”^[33] Without this information, Defendant concludes that it cannot respond.^[34]

“In addressing motions for a more definite statement as to the timing of alleged acts underlying a claim in a complaint, courts in the Third Circuit have reached different outcomes depending on the circumstances of a given case.”^[35]Courts “have denied motions for a more definite statement in cases in which the timing of the alleged acts underlying a claim was the proper subject of discovery.”^[36]Here, this request concerns information more properly disclosed by discovery as the Complaint puts Defendant on notice regarding the nature of the alleged breaches and, in particular, identifies the date of final termination notice.^[37]

b. Motion to Strike Paragraphs 102 and 103

In Paragraphs 102 and 103, Guthrie claims that CCT “refuses to provide proof” that it has destroyed, returned, or eliminated access to its Patient Source Data.^[38] The Agreement requires either destruction or elimination of access to the data within thirty-days following termination and “verification” of these measures.^[39]As currently alleged, Defendant contends that Plaintiff is attempting “to engineer new contractual obligations that never existed.”^[40] In response, Guthrie argues that “‘proof' and ‘verification' are one in the same” for pleading purposes.^[41] Merriam-Webster defines “verify” as to “establish the truth, accuracy, or reality of” and “proof” as “the cogency of evidence that compels acceptance by the mind of a truth or a fact.”^[42] The Court finds no material difference between these definitions for purposes of this motion. Because Paragraphs 102 and 103 are incorporated by reference into Count I, the motion to strike these allegations is denied as they may serve as the basis of the breach of contract action.^[43]

c. Motion to Strike Paragraphs 111 and 112

Defendant also seeks to strike Paragraphs 111 and 112. In these paragraphs, Plaintiff alleges that CCT violated the implied covenant of good faith and fair dealing. In “Pennsylvania[,] the general duty of all parties to a contract includes” this covenant, but it will be “subsumed in a breach of contract claim.”^[44] The Clinic does not allege an independent cause of action based on this implied covenant. Instead, these averments identify “a breach of a duty imposed by the contract” to satisfy this element of a breach of contract claim.^[45]

Although...