Alvin v. Suzuki

Decision Date10 January 2000
Citation227 F.3d 107
Parties(3rd Cir. 2000) JOHN D. ALVIN, GENERAL PARTNER; PHARMAKON, INC.; CLINICAL PATHOLOGY FACILITY, INC., A PENNSYLVANIA CORPORATION, FORMER GENERAL PARTNER; A DELAWARE CORPORATION, PRESENT GENERAL PARTNER AS SUCCESSOR IN INTEREST TO, CLINICAL PATHOLOGY FACILITY T/A PHARMAKON RESEARCH AND DEVELOPMENT A LIMITED PARTNERSHIP BY AND THROUGH JOHN D. ALVIN, THE MANAGING GENERAL PARTNER v. JON B. SUZUKI; UNIVERSITY OF PITTSBURGH MEDICAL CENTER; CENTRAL LABORATORIES SERVICES, INC.; UNIVERSITY OF PITTSBURGH JOHN D. ALVIN; PHARMAKON, INC.; AND PHARMAKON RESEARCH AND DEVELOPMENT, APPELLANTS NO. 99-3245 Argued:
CourtU.S. Court of Appeals — Third Circuit

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227 F.3d 107 (3rd Cir. 2000)
JOHN D. ALVIN, GENERAL PARTNER; PHARMAKON, INC.; CLINICAL PATHOLOGY FACILITY, INC., A PENNSYLVANIA CORPORATION, FORMER GENERAL PARTNER; A DELAWARE CORPORATION, PRESENT GENERAL PARTNER AS SUCCESSOR IN INTEREST TO, CLINICAL PATHOLOGY FACILITY T/A PHARMAKON RESEARCH AND DEVELOPMENT A LIMITED PARTNERSHIP BY AND THROUGH JOHN D. ALVIN, THE MANAGING GENERAL PARTNER
v.
JON B. SUZUKI; UNIVERSITY OF PITTSBURGH MEDICAL CENTER; CENTRAL LABORATORIES SERVICES, INC.; UNIVERSITY OF PITTSBURGH
JOHN D. ALVIN; PHARMAKON, INC.; AND PHARMAKON RESEARCH AND DEVELOPMENT, APPELLANTS
NO. 99-3245
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
Argued: January 10, 2000
Filed September 12, 2000

On Appeal From the United States District Court For the Western District of Pennsylvania District Judge: Honorable William L. Standish

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Counsel for Appellants: Richard G. Lewis, Esquire (argued) Richard B. Sandow, Esquire Louis Alvin, Esquire Jones, Gregg, Creehan & Gerace, Llp 411 Seventh Avenue, Suite 1200 Pittsburgh, PA 15219-2303

Counsel for Appellees: Larry A. Silverman, Esquire (argued) Dickie, McCamey & Chilcote, P.C. Two Ppg Place, Suite 400 Pittsburgh, PA 15222-5402, Lazar Palnick, Esquire University of Pittsburgh Medical Center 200 Lothrop Street Pittsburgh, PA 15213

Becker, Chief Judge, Alito and Barry, Circuit Judges.

OPINION FOR THE COURT

Becker, Chief Judge.

John D. Alvin, Ph.D, a tenured professor at the University of Pittsburgh ("UPitt" or "the University"), started and operated two successful pharmaceutical companies, Pharmakon, Inc. ("PKI") and Pharmakon, R&D ("PRD"), which competed with university-related commercial activities. He brought this civil rights action alleging that the University contrived to deny him the benefits that inhere in a tenured position to punish him for his entrepeneurial activity. Alvin alleges that he was deprived of expected pay increases, access to work with graduate students, laboratories, faculty functions, and other faculty privileges, and that his reputation was damaged in the process. He also contends that his tenure in the UPitt Pharmacology Department was improperly severed and that he was transferred to a tenured position in the Dental School without his consent.

Resolution of this appeal centers on Alvin's compliance with the University's grievance process. Alvin contends that the procedures failed him. He proffers evidence of extensive correspondence between himself and several members of the University's administration. He claims that he followed the grievance procedure laid out in the faculty handbook, but that he was never afforded a hearing in which he could defend himself and explain both the propriety of his conduct and the unjustness of the deprivations he alleges that he suffered. The gravamen of Alvin's suit is therefore that he was deprived of his Fourteenth Amendment right in the property of his tenure without due process of law. Named as defendants were UPitt, Dr. Jon B. Suzuki, Dean of UPitt's School of Dental Medicine, and two health care providers connected with the University--the University of Pittsburgh Medical Center and Central Laboratory Services, Inc. Alvin seeks damages and injunctive relief under 42 U.S.C. S 1983 and Pennsylvania state law.

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The District Court granted summary judgment for the defendants on Alvin's S 1983 claim, concluding that he had not demonstrated that he had been deprived of a property interest, and dismissed the pendent state claims without prejudice. The District Court's opinion focused largely on the question whether the alleged incidents comprised such a significant erosion of the incidents of his tenure that he was deprived of a property interest. We do not reach this difficult (and interesting) question, however, because, whether or not Alvin has alleged a property deprivation, he has failed to adduce evidence that the defendants infringed upon whatever property right he possessed without due process of law.

A careful examination of the correspondence demonstrates that, although he sent a battery of letters and complaints to several members of the UPitt faculty and administration, he did not comply with the two-step grievance procedure laid out in the faculty handbook, a procedure that, if complied with, would appear to provide due process. Furthermore, with respect to some of Alvin's claims--that he was deprived of secretarial support, that his yearly evaluations were conducted unfairly, and that his tenure was transferred--he adduced no evidence that he attempted to use the grievance procedure to resolve them. Finally, Alvin claims that pre-termination notice and a hearing was required prior to the transfer of his tenure. The context of that transfer--it was a routine matter as part of a policy decision to transfer the entire faculty--demonstrates that notice and a hearing were not required. In sum, we will affirm the District Court's grant of summary judgment on all aspects of the S 1983 claim.

PKI also sued the same defendants, claiming interference with contractual relations, unfair competition, violations of the Lanham Act, and civil conspiracy. After the plaintiffs attempted both to amend the complaint and to add PRD as a party plaintiff, the District Court dismissed the PKI complaint with prejudice and denied the motion to join PRD despite the absence of either bad faith in the efforts to amend or prejudice to the defendants. The plaintiffs also appealed this order. Given the liberal amendment provisions of Rule 15, the amendment should have been allowed. Because we conclude that the District Court abused its discretion in dismissing PKI's claims with prejudice and refusing to add PRD as a party, we will vacate the judgment and remand for consideration of those claims.

I. Facts

A. Background and Alleged Deprivations

In 1978, after three years of teaching and research at UPitt's School of Pharmacy ("SPharm"), Alvin, a pharmacist and pharmaceutical researcher, was offered, and accepted, a tenured position as an Associate Professor of Pharmacology at SPharm. In 1982, he organized PKI, a commercial venture intended to provide specialty drug services and high-tech drug research to medical organizations, the government, and the private sector. In 1983, PKI, with the knowledge of the Dean of SPharm, rented space from UPitt.

According to Alvin, PKI flourished, and its success threatened others in the University-related medical world, specifically the University of Pittsburgh Medical Center ("UPMC"), a non-profit corporation that operates the teaching hospital, and Central Laboratory Services, Inc. ("CLSI"), a non-profit corporation that provides laboratory services to UPMC. UPMC shares administrators with UPitt. Alvin alleges that, starting in 1984, UPMC and CLSI began to pressure UPitt to eliminate or purchase PKI. However, when UPitt presented a takeover package to Alvin and PKI, they were not interested.

Alvin contends that throughout the late 1980s and 90s, UPMC and CLSI provided the same services as PKI and solicited PKI's existing and prospective customer

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base. He contends that UPitt intentionally contacted PKI's customers and misrepresented the licensed status of PKI. According to Alvin, this threatened PKI's existence, and led him in the fall of 1991 to create PRD, a partnership between himself and the Clinical Pathology Facility ("CPF "). PKI indisputably sold and leased equipment to CPF and PRD, but according to Alvin it continued to exist as a separate entity throughout the early 90s.

Alvin alleges that during the same time period, UPitt deprived him of many of the benefits that inhere in tenure because of his involvement with PKI and PRD. He avers that from 1991 to 1995 he was denied a salary increase because of his refusal to discontinue his commercial ventures. He claims that from 1992 on, his use of research facilities and laboratories was cut off and the defendants made research difficult and refused to allow him to bring foreign exchange scholars to work on his projects. He contends that he was deprived of administrative services and secretarial support. He submits that his yearly evaluations were conducted unfairly and improperly and that the University refused to process his conflict of interest statements, thwarting his ability to submit grant applications. He claims that he was selectively excluded from departmental meetings, UPitt functions, departmental assignments and duties, and he alleges that he was obstructed in his ability to publish his research and conduct collaborative research. It is undisputed that in 1995, Suzuki, the Dean of UPitt's SDM, ordered Alvin to cease all research projects, on the ground that he was researching in violation of UPitt's policy on conflict of interest. However, according to Alvin, Suzuki refused to reveal the basis for this conflict of interest charge.

Alvin asserts that none of these deprivations were warranted, but rather were motivated by the threat he posed the University medical organizations and UPitt's desire to pressure him into allowing it to take over PKI and PRD. The factual record regarding these claims was not developed for this appeal because the defendants have not presented evidence contradicting Alvin's allegations regarding what happened. Instead, they argued that "even if all of the adverse personnel actions alleged in the Complaint occurred in the manner claimed by Alvin, these adverse personnel actions do not, as a matter of law, amount to deprivations of property rights under the Due Process Clause of the Fourteenth Amendment." Appellee's Br. at 11. Therefore, for the purposes of this appeal, we assume all of Alvin's allegations regarding the deprivations to be true.

B. The Faculty Grievance Procedure and Alvin's Correspondence

The facts that we do examine are those regarding the...

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