Clemens v. ExecuPharm, Inc.

• Jurisdiction: United States,Federal,Pennsylvania
• Parties: JENNIFER CLEMENS, individually and on behalf of all other similarly situated, Plaintiff, v. EXECUPHARM, INC. and PARAXEL INTERNATIONAL CORP., Defendants.
• Decision Date: 18 January 2024
• Court: U.S. District Court — Eastern District of Pennsylvania
• Docket Number: Civil Action 20-3383

1

JENNIFER CLEMENS, individually and on behalf of all other similarly situated, Plaintiff, v. EXECUPHARM, INC. and PARAXEL INTERNATIONAL CORP., Defendants.

Civil Action No. 20-3383

United States District Court, E.D. Pennsylvania

January 18, 2024

MEMORANDUM

GERALD J. PAPPERT, J.

The Court discussed this case's factual background in a prior opinion. (ECF No. 41.) In summary, Jennifer Clemens individually and on behalf of a purported class, sued ExecuPharm, Inc. and parent Paraxel International Corporation over a data breach at ExecuPharm, alleging negligence negligence per se, breach of implied contract breach of contract, breach of fiduciary duty and breach of confidence. (ECF Nos. 1, 49.) She also sought a declaratory judgment that Defendants' existing security measures fail to comply with their duty of care and an instruction that Defendants implement and maintain industry-standard data security measures going forward. (Id.) The Court previously dismissed without prejudice all claims against Paraxel, as well as Clemens's negligence per se breach of fiduciary duty and breach of confidence claims against ExecuPharm. (ECF Nos. 41, 42.)

Clemens filed an amended complaint against ExecuPharm alone, (ECF No. 49), which now moves to dismiss Clemens's breach of fiduciary duty (Count IV) and breach of confidence (Count V) claims. For the reasons that follow, the Court grants the motion and dismisses both claims with prejudice.

I

To avoid dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain facts sufficient to state a claim that is facially “plausible.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility when the facts pleaded permit a court to make the reasonable inference that the defendant is liable for the alleged misconduct. Id. The “mere possibility of misconduct” is not enough; the complaint “must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.'” Id. at 678-79 (quoting Twombly, 550 U.S. at 570).

Determining plausibility is a “context-specific task” requiring a court to use its “judicial experience and common sense.” Schuchardt v. President of the United States, 839 F.3d 336, 347 (3d Cir. 2016) (quotations omitted). In making this determination, the court assumes well-pleaded facts are true, construes those facts in the light most favorable to the plaintiff, and draws reasonable inferences from them. Connelly v. Lane Constr. Corp., 809 F.3d 780, 790 (3d Cir. 2016). However, “conclusory assertions of fact and legal conclusions” are not entitled to the presumption of truth. Schuchardt, 839 F.3d at 347. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. And a pleading that offers “‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Id. (quoting Twombly, 550 U.S. at 555).

II

A

The Court previously dismissed Clemens's claim for breach of fiduciary duty because she failed to allege circumstances distinguishing her relationship with ExecuPharm from any other employer-employee relationship. Clemens v ExecuPharm, Inc., No. 20-3383, 2023 WL 4139021, 2023 U.S. Dist. LEXIS 107801, at *14-16 (E.D. Pa. June 22, 2023). The Amended Complaint has the same shortcoming. Rather than alleging new facts which could establish the requisite relationship, Clemens relabels and recharacterizes her prior allegations, in conclusory fashion.

A fiduciary duty is “the highest duty implied by law.” Yenchi v. Amerirprise Fin., Inc., 161 A.3d 811, 819 (Pa. 2017). To state a claim for violation of a fiduciary duty or confidential relationship, plaintiffs must show such a relationship existed. Harold ex rel. Harold v. McGann, 406 F.Supp.2d 562, 571 (E.D. Pa. 2005). The relationship's existence is “[t]he fundamental element to establish a breach of a fiduciary duty.” Conquest v. WMC Mortg. Co., 247 F.Supp.3d 618, 634 (E.D. Pa. 2017); see also eToll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 22 (Pa. Super. Ct. 2002).

A fiduciary duty can arise in two ways, the first as a matter of law. Yenchi, 161 A.3d at 820. Common examples here include “[p]rincipal and agent, trustee and [beneficiary], attorney and client, guardian and ward[] and partners.” Id. But an employer-employee relationship, without more, does not give rise to a fiduciary duty. Wasseff v. NIH, No. 16-703, 2017 WL 495795, 2017 U.S. Dist. LEXIS 17221, at *33-34 (E.D. Pa. Feb. 6, 2017) (quoting United States v. Kensington Hosp., 760 F.Supp. 1120, 1133 (E.D. Pa. 1991).

If not as a matter of law, a fiduciary duty may still exist as a matter of fact. Yenchi, 161 A.3d at 820. Fact-based fiduciary duties arise out of “confidential” or “fiduciary relationships.” Id. at 817, 820-21; see also Basile v. H & R Block, Inc., 777 A.2d 95, 102 (Pa. Super. Ct. 2001). In Pennsylvania, these two terms are used interchangeably. Yenchi, 161 A.2d at 817 n.5; Laidlaw v. Midatlantic Converge Worldwide, 66 Pa. D. & C.5th 358, 392 n.12 (Pa. Ct. Comm. Pl. 2017) (“Because the existence of a confidential relationship is one basis for a fiduciary duty, Pennsylvania courts have for decades used the terms ‘fiduciary relationship' and ‘confidential relationship' interchangeably”).

What determines whether a relationship is confidential “cannot be reduced to a particular set of facts or circumstances.” Yenchi, 161 A.3d at 820. Although cases involving confidential relationships are “necessarily fact specific, they usually involve some special vulnerability in one person that creates a unique opportunity for another person to take advantage to their benefit.” Id. at 821. The Pennsylvania Supreme Court “has focused, consistently, on the disparity in position between the parties to determine whether their relationship is, in fact, confidential.” Basile, 777 A.2d at 102. Such a relationship exists when “the circumstances make it certain the parties do not deal on equal terms, but, on the one side there is an overmastering influence, or, on the other, weakness, dependence or trust, justifiably reposed.” Id. at 101 (quotation omitted).

Business transactions can only give rise to confidential relationships “if one party surrenders substantial control over some portion of [their] affairs to the other.” Yenchi, 161 A.3d at 823 (quoting In re Est. of Scott, 316 A.2d 883, 886 (Pa. 1974).

Accordingly, arm's-length business dealings do not typically give rise to confidential relationships, eToll, 811 A.2d at 22-23, nor do employment agreements. See Diaz v. Rent-A-Center, Inc., No. 03-3763, 2004 WL 241505, 2004 U.S. Dist. LEXIS 2250, at *7-8 (E.D. Pa. Feb. 6, 2004); see also Enslin v. Coca Cola Co., 136 F.Supp.3d 654, 658 (E.D. Pa. 2015), aff'd 739 Fed.Appx. 91 (3d Cir. 2018). In Enslin, a service technician sued the Coca-Cola Company,^[1] alleging negligence and other causes of action after his confidential information was stolen in a data breach. Enslin, 136 F.Supp.3d at 659-60. Enslin's employment contract required him to give Coca-Cola his social security number, address, credit card numbers, bank account and driver's license information and motor vehicle records. Enslin, 136 F.Supp.3d at 658, 673. Coca-Cola had “represented to [Enslin] that, in exchange for his employment, his [information] would be securely retained.” Id. at 658.

The court dismissed Enslin's negligence claim because he did not allege facts which could establish a “special relationship” with Coca-Cola that would prevent the economic loss doctrine, which bars certain negligence claims for solely “economic damages unaccompanied by physical injury or property damage,” from precluding his claim. Id. at 672-73 (quotation omitted).^[2] Enslin argued that providing his confidential information as part of his employment contract created a “relationship of special trust.” Id. at 673. Treating such a “special relationship” the same as a “confidential” or “fiduciary” one, the court rejected Enslin's argument because his allegations indicated nothing more than “a standard employment contract.” See id. at 672-73. This “arms-length business contract” did not give Coca-Cola “overmastering influence” over Enslin or place him in a position of “weakness or dependence.” Id. (quoting Valley Forge Convention & Visitors Bureau v. Visitor Servs., Inc., 28 F.Supp.2d 947, 952-53 (E.D. Pa. 1998)).^[3]

For the same reason, other courts have found no fiduciary duty in situations like Clemens's. See Purvis v. Aveanna Healthcare, LLC, 563 F.Supp.3d 1360, 1384 (N.D.Ga. 2021) (no fiduciary duty or confidential relationship where employees provided personal information “as a condition of employment” because “the gathering of such information is a common practice for almost any form of employment” and did not independently suggest the employees were “relying upon or trusting their employer in unique and exceptional ways”); see also In re Waste Mgmt. Data Breach Litig., No. 216147, 2022 WL 561734, 2022 U.S. Dist. LEXIS 32798, at *15-16 (S.D.N.Y. Feb. 24, 2022) (dismissing a claim for breach of fiduciary duty in a data breach case where the employer “required its employees to share their [personal information]” because New York courts had “consistently found that employers are not fiduciaries for their employees” and had not otherwise recognized a fiduciary duty in similar circumstances).^[4]

B

Clemens alleges she had a fiduciary relationship with ExecuPharm because she “relied upon compensation” she received from her employment, which was “‘at-will,' meaning [her] employment and means of basic financial support could be...