Walsh v. Amerisource Bergen Corp., CIVIL ACTION NO. 11-7584

WALSH ET AL. v. AMERISOURCE BERGEN CORP. ET AL.

CIVIL ACTION NO. 11-7584

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JUNE 16, 2014

SURRICK, J.

MEMORANDUM

Presently before the Court is Relator Patrick Walsh's Motion to Dismiss Defendants' Amended Counterclaim for Failure to State a Claim (ECF No. 47). For the following reasons, the Motion will be denied.

I. BACKGROUND

Relator Patrick Walsh is an experienced auditor who at all relevant times has worked for Defendant Amerisource Bergen Corporation ("ABC") as a senior internal auditor. (Am. Countercl. ¶ 8, ECF No. 44.) ABC is a pharmaceutical services company that services pharmaceutical manufacturers and healthcare providers and provides drug distribution and related services. (Id. at ¶ 3.) Defendants Amerisource Bergen Drug Corporation and Belco Drug Company are wholly owned subsidiaries of ABC. (Id.)

On or about March 13, 2012, Relator filed an Amended Complaint on behalf of the United States Government and various states, alleging that Defendants' violated the federal False Claims Act ("FCA") as well as similar state FCAs. (Am. Compl. ¶¶ 21-22, ECF No. 29.) On October 22, 2012, the Government declined to intervene. (ECF No. 11.) On March 4, 2013, Defendants filed an Amended Counterclaim alleging breach of contract (Count I), breach of fiduciary duty (Count II), implied contract (Count III), and promissory estoppel (Count IV).(Am. Countercl.) On March 14, 2013, Relator filed the instant Motion to Dismiss. (Relator's Mot., ECF No. 47.) On April 1, 2013, Defendants filed a Response in opposition. (Defs.' Resp., ECF No. 48.)

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 8(a)(2), "a pleading that states a claim for relief must contain a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). A motion under Rule 12(b)(6) tests the sufficiency of the complaint against the pleading requirements of Rule 8(a). "To 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.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint that merely alleges entitlement to relief, without alleging facts that show entitlement, must be dismissed. See Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009). Courts need not accept "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements . . . ." Iqbal, 556 U.S. at 678. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. at 679. This "'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element." Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556).

In determining whether dismissal of the complaint is appropriate, courts use a two-part analysis. Fowler, 578 F.3d at 210. First, courts separate the factual and legal elements of theclaim and accept all of the complaint's well-pleaded facts as true. Id. at 210-11. Next, courts determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a "'plausible claim for relief.'" Id. at 211 (quoting Iqbal, 556 U.S. at 679). Given the nature of the two-part analysis, "'[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'" McTernan v. City of York, 577 F.3d 521, 530 (3d Cir. 2009) (quoting Iqbal, 556 U.S. at 679).

III. DISCUSSION

A. Parties' Contentions

Defendants' Amended Counterclaim is based upon the fact that Relator signed a confidentiality agreement ("Agreement") as a condition of his employment with Defendants. Defendants contend that Relator's actions in initiating this lawsuit violated that Agreement. (Am. Countercl. ¶ 17.) More specifically, Defendants contend that Relator "took and removed from [Defendants'] premises and possession a large variety of [Defendants'] confidential, proprietary and privileged information, and did so for purposes not in connection with or for the benefit of [Defendants'] business." (Id. at ¶ 27.) These documents included communications between Defendants and in-house counsel concerning legal issues involving certain customer contracts which bore "the clear and explicit admonition Attorney-Client Communication Privileged and Confidential." (Id. at ¶ 49.) Also included was an e-mail addressed to in-house counsel seeking legal advice. (Id. at ¶ 50.) Defendants allege that Relator shared this confidential information with his personal attorney and that some of this information became public when the Complaint was unsealed. (Id. at ¶¶ 32, 37.)

Relator does not contest the fact that he signed the Agreement. Rather, he argues that the information that he disclosed was not confidential and that Defendants have failed to explain why it is entitled to protection. (Relator's Mot. 5.) Relator argues that the Amended Counterclaim should be dismissed because Defendants have failed to demonstrate how they were harmed by the disclosure of the information. (Id. at 6-7.) Relator also maintains that even if the information was confidential, Defendants' Amended Counterclaim should be dismissed because there is a strong public policy against counterclaims in qui tam actions. (Id. at 7.) Finally, Relator appears to argue that if the Amended Counterclaim is not dismissed, it should be stayed until after adjudication of the qui tam claims. (Id. at 8-9.)

B. Confidential and Proprietary Information

"Under Pennsylvania law, the duty of an employee not to disclose the secrets of his employer may arise either from an express contract . . . or may be implied from the confidential relationship existing between the master and servant." Healthcare Affiliated Servs., Inc. v. Lippany, 701 F. Supp. 1142, 1152 (W.D. Pa. 1988) (citing MacBeth-Evans Glass Co. v. Schnelbach, 86 A. 688, 691 (Pa. 1913)).¹ Here, the Agreement defines as confidential any information relating to:

[T]he development, production, sale, distribution and marketing of any products developed, produced, sold, distributed or marketed by the Company . . . and the Company's methods, techniques, and processes of conducting business . . . financial and accounting data, customer lists and information.

(Defs.' Resp. 4; Agreement ¶ 4.1.) Since the Agreement explicitly describes the type of information that it seeks to maintain as confidential, we must determine whether the informationdisclosed by Relator falls within its scope. Youti v. Macy's Retail Holding, Inc., 626 F. Supp. 2d 511, 525 (E.D. Pa. 2009) ("As the agreement specifically defines what constitutes confidential information, I will consider only whether the information satisfies the provision's definition.").²

Defendants allege that Relator attached to the Amended Complaint: "(1) Prime Vendor Agreements and Customer Contracts, (2) documents containing pricing, credit transactions, and sales analysis information, (3) customer lists and customer information, (4) audit reports, and (5) documents pertaining to [Defendants'] standard operating procedures." (Am. Countercl. ¶ 34.) This is the type of information that the Agreement defines as confidential. Furthermore, Pennsylvania courts, as well as federal courts applying Pennsylvania law, have held that such information can be protected as trade secrets. See Bohler-Uddelholm Am., Inc. v. Ellwood Grp., Inc., 247 F.3d 79, 107 (3d Cir. 2001) (finding that under Pennsylvania law, information such as client lists, customer profiles, pricing information, and shipping informationcan be a trade secret); see also Robinson Elec. Supervisory Co. v. Johnson, 154 A.2d 494, 496 (1959) ("Customer lists and customer information . . . [are] highly confidential and constitute a valuable asset. Such data has been held to be property in the nature of a 'trade secret' for which an employer is entitled to protection . . . .").

The steps that an employer takes to maintain the confidentiality of its information are an important factor in determining whether that information is entitled to protection. For example, confidential customer lists have been held to be trade secrets when "[t]he degree of secrecy [is] such that it would be difficult for others to obtain the information without using improper means." Nat'l Risk Mgmt., Inc. v. Bramwell, 819 F. Supp. 417, 431 (E.D. Pa. 1993). In the instant case, Defendants contend that they utilize a number of measures to maintain confidentiality. First, "they do not share their confidential or proprietary documents with third parties unless required to do so by [c]ourt order or subpoena and, even in those circumstances, confidential information is restricted and subject to confidentiality protection to the full extent permitted by law." (Am. Countercl. ¶ 9.) Second, Defendants prohibit their customers from disclosing pricing and payment terms to third parties. (Id. at ¶ 6.) Third, Defendants enter into confidentiality agreements with employees who have access to confidential and proprietary information. (Id. at ¶ 10(a).)

Defendants argue that Relator's actions in filing his Amended Complaint were in contravention of these measures and that their confidential information "was removed from the public record only after [Defendants'] filed two motions with the Court to remove the confidential and propriety information from the public record." (Id. at ¶ 37.) Taking these assertions as true, the Amended Counterclaim...