Brown v. Tethys Bioscience, Inc.

• Decision Date: 04 January 2013
• Docket Number: CIVIL ACTION NO. 1:10-1245
• Court: U.S. District Court — Southern District of West Virginia
• Parties: TIM BROWN, et al., Plaintiffs, v. TETHYS BIOSCIENCE, INC., Defendant.

TIM BROWN, et al., Plaintiffs,

v.TETHYS BIOSCIENCE, INC., Defendant.

CIVIL ACTION NO. 1:10-1245

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA AT BLUEFIELD

Dated: January 4, 2013

MEMORANDUM OPINION AND ORDER

By Judgment Order entered on September 28, 2012, the courtGRANTED in part and DENIED in part defendant's motion for summary judgment as to defendantBonnie Weiss.(Doc. # 98).Plaintiff filed a response in opposition to defendant's motion¹ and defendant filed a reply.The reasons for that decision follow.

I.Background

This case arises out of the circumstances leading to and surrounding plaintiffBonnie Weiss' former employment with defendantTethys Bioscience, Inc.("Tethys").Tethys is a start-up company supported by venture capital financing.Deposition ofBrian Best, August 3, 2011, at 117-18(attached as Exhibit A to Defendant's Motion for Summary Judgment).In January 2009, Tethys launched its first product, the PreDx Diabetes Risk Score ("PreDx").BestDepo. at 16.The PreDx uses blood tests to determine a patient's risk of developing Type 2 diabetes within 5 years.Deposition of Tricia Perks, August 2, 2011, at 30(attached as Exhibit C to DefendantMichael Lillie's Motion for Summary Judgment and Exhibit C to Plaintiff's Memorandum in Opposition);Complaint¶ 9.

A.Hiring of Weiss

Following the successful launch of PreDx in January 2009, Tethys began to recruit additional salespersons.BestDepo. at 16.After Weiss was recommended as a candidate for a position as a Regional Account Manager ("RAM") in West Virginia, Tethys contacted Weiss to set up an interview.Deposition of Bonnie Weiss, June 29, 2011, at 7-8(Exhibit C to Defendant's Motion and Exhibit A to Defendant's Reply Brief).On November 23, 2009, Weiss interviewed with Bonnie Zell, a consultant with Tethys who assisted with recruiting the sales team, and Tricia Perks, who was the National Sales Director at that time.WeissDepo. at 16;Deposition of Bonnie Zell, August 5, 2011, at 7-8(Exhibit D to Defendant's Motion);Deposition of Trisha Perks, August 2, 2011, at 9, 60(Exhibit B to Defendant's Motion and Exhibit C to Plaintiff's Memorandum in Opposition).

According to Weiss, during her interview, the subject of Tethys' contracts with LabCorp was discussed:

Q: What did they tell you about the pay for the job?

A: They told me the starting salary would be 115, and that I would be offered bonuses, and this is when they offered up the fact that the rep in Charlotte was making $250,000 a year.

* * *

Q: And did you do any follow-up questions about the rep in Charlotte?

A: Oh, I asked how in the world he did that, of course.And they said that he had contracts with LabCorp, and with Carilion, and that by having those contracts in place that he would be able to continue because they would actually do the blood draws for them.

Q: What was the exact language they told you, if you can recall, that he had contracts with LabCorp?Is this something he had personally arranged?

A: No, not necessary.They - - I don't remember the exact language, the verbatim discussion, but basically what they told me was that Jeff was doing really well because he had contracts with LabCorp and Carilion in his offices where they would draw the blood.

And I said, is that available to all of us?Will we all have these contracts, and Trisha's answer was, yes.

* * *

Q: When Trisha said, answered your question that the LabCorp contract was available to all of us, did she indicate the status of the arrangement with LabCorp - -

A: Yes, she did.She said, it is fully in North Carolina from what Jeff had set up and already started, and that they were doing at that time, and this is in November, and that they were actuallyrunning a pilot program, and that it was expected to launch throughout the country in December or throughout specific areas that they allotted as their territories in December.

Q: Did she indicate that North Carolina was part of this pilot program?

A: Yes.

Q: Did you ask her if West Virginia was part of the program?

A: Of course, yes, and it was not.

Q: Did you ask her what other territories were subject to the pilot program with LabCorp?

A: Absolutely.And she said, all of the territories that we are filling at this point.So all of the open territories then, they were expansion territories, like West Virginia.

Q: Okay.I'm a little confused then.I thought you just told me West Virginia was not a part of the - -

A: Pilot program.It was not.

Q: But there was something planned in the future for West Virginia; is that what you're saying?

A: Once the contract was signed, it was no longer a pilot program at that point.It would be fully in place, and they were anticipating that would happen in December, and West Virginia would be included in it.

Q: Did you ask what the status of the contract negotiations with LabCorp were?

A: I did.And they were extremely favorable, was the terminology that she used.

So they were expecting, she was expecting everything to be finalized in December.

* * *

Q: Did Trisha indicate to you that there was a particular date when the arrangement with LabCorp would be finalized?

A: She said in December.

Q: Do you know when?

A: No, I don't.

WeissDepo. at 20-24.Weiss further testified:

Q: What do you consider to be faulty information?

A: Telling us that the LabCorp contracts would be available, and that they had the contracts at LabCorp in the process of being signed, and that we would have the LabCorp agreements.

Q: When you said Trisha Perks told you there was a signed contract, was that prior to you going to work for Tethys or after you went to work for Tethys on December 14th?

A: Both.Both.She said before we started - - I asked her about Jeff Ehrlich, and how he was doing it.

And she said, He is in the pilot study, and is doing huge numbers because he has a pilot study with LabCorp.

My question was, Is that going to apply to me; am I going to have that?

And she said, Yes, the contract is at LabCorp being signed as we speak, and it should be signed any time.And then she continued to say that until about - - even at the training, in the training class.

* * *

Q: But the call you referred to from Ms. Perks was that, We have a contract, was that after your hire date?

A: It was during the interview process.

Q: She told you there was an absolute, signed contract with LabCorp?

A: Not an absolute, signed contract.She said, it is going to be a signed contract.

Q: So when did you learn there was there [sic] a signed contract; if you ever did?

A: There isn't one.There still isn't one.

Q: Well, when did you have the conversation with Ms. Perks when you allege that she said there was a signed contract?

A: She told us in - - she told me in the interview process that the contract for the pilot study, that Jeff Ehrlich was doing in Charlotte, would be applicable in West Virginia.

Those were her words, It will be applied to your customers, and you will have access to that LabCorp account as soon as we just finish up a little paperwork.That was the interview process.

* * *

A: But my next question was, Will we have this LabCorp pilot study extended into West Virginia for the contract?

And she said, Yes, absolutely.Everything is in place to expand as we speak.The contract is at LabCorp pending a signature, and you will have that.She was very, very confident.

Q: But then you just told me, but we have to finish up the paperwork?

A: But they had not signed.They had to get the signature from LabCorp to expand it.

Q: Did she expand on what she meant by the paperwork?

A: I don't remember her doing that, but my assumption was that she was talking about the contract.

WeissDepo. at 69-73.

Upon further questioning regarding exactly what Ms. Perks told her about the existence of national contracts with LabCorp, Weiss stated:

A: I think it was extremely reckless of Trisha Perks to be misleading as far as contracts that were available and insurance coverages in West Virginia

* * *

Basically, to me they willfully knew and willfully told us knowing that these contracts were not in place.And knowing that they could not do business without that, and expecting the peoplethey hired to perform a job and reach goals that could not be reached without that background material in place.

Q: But they never told you at the time you were hired that there was a contract in place; correct?

A: No, they did.She definitely said - - she had the pilot study.She says, we have this national contract.

Q: But it was a pilot study; correct?

A: Yes.But in her mind - -

Q: But it was just for a small number of territories; correct?

A: Well, that's what the - - yeah, that's what the paperwork said.But she said to me, we have this national contract.

Q: But you knew that it was just a pilot contract?

A: Well, I didn't read it.But what she told me is that it was a pilot now, but it is being extended into every other territory.

WeissDepo. at 113-14.

Perks denies telling Weiss that a national contract with LabCorp was in place during her interview.PerksDepo. at 60-62.According to Perks, any conversation regarding a LabCorp contract would have been limited to the existence of a pilot program and the hope that, should the pilot program prove successful, a national contract would be obtained.PerksDepo. at 60-62.

On December 1, 2009, Weiss interviewed with Brian Best, the then-Vice-President of Commercial Operations.WeissDepo. at 28-29.The next day, Weiss accepted a RAM position with Tethys covering West Virginia.WeissDepo. at 30-31.

Best testified that he never informed Weiss Tethys had national contracts with any laboratory.BestDepo. at 53.Weiss also does not recall discussing LabCorp contracts with Best during her interview.WeissDepo. at 30.

B. Weiss's Performance

On December 14, 2009, Weiss began her employment with Tethys.WeissDepo. at 38-39.Throughout her employment with Tethys, Weiss never met her sales goals.WeissDepo. at 59-60; 66-67; 135.On July 23, 2010, Weiss was placed on a Performance Improvement...