Pasternack v. Lab. Corp. of Am. Holdings, Docket No. 14–4101–cv.

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Citation807 F.3d 14
Docket NumberDocket No. 14–4101–cv.
Parties Doctor Fred L. PASTERNACK, Plaintiff–Appellant, v. LABORATORY CORPORATION OF AMERICA HOLDINGS, aka LabCorp, ChoicePoint, Inc., Defendants–Appellees.
Decision Date17 November 2015

807 F.3d 14

Doctor Fred L. PASTERNACK, Plaintiff–Appellant,
LABORATORY CORPORATION OF AMERICA HOLDINGS, aka LabCorp, ChoicePoint, Inc., Defendants–Appellees.

Docket No. 14–4101–cv.

United States Court of Appeals, Second Circuit.

Argued: June 2, 2015.
Decided: Nov. 17, 2015.

Amended: Nov. 23, 2015.

807 F.3d 15

Cynthia S. Arato (Daniel J. O'Neill, on the brief), Shapiro, Arato & Isserles LLP, N.Y., New York, for Plaintiff–Appellant.

Robert I. Steiner (Sean R. Flanagan, on the brief), Kelley Drye & Warren, LLP, New York, N.Y., for Defendant–Appellee Laboratory Corporation of America Holdings.

Frederick T. Smith, Seyfarth Shaw LLP, Atlanta, GA, for Defendant–Appellee

807 F.3d 16

LexisNexis Occupational Health Solutions Inc. (formerly ChoicePoint, Inc.).

Before: WESLEY, HALL, and CHIN, Circuit Judges.

CHIN, Circuit Judge:

In this case, plaintiff-appellant Fred Pasternack, a physician and airplane pilot, was required to submit to a random drug test in accordance with federal regulations governing aviation safety. He contends that defendants-appellees Laboratory Corporation of America Holdings ("LabCorp") and ChoicePoint, Inc. ("ChoicePoint"), the drug testing companies engaged to administer the test, mishandled it.2 He brought this action below, seeking damages for, inter alia , negligence and fraud. The district court (Gardephe, J. ) entered judgment on September 30, 2014, dismissing the action. Pasternack appeals.

The appeal presents unresolved questions of New York law:

First , whether drug testing regulations and guidelines promulgated by the Federal Aviation Agency (the "FAA") and the Department of Transportation ("DOT") create a duty of care for drug testing laboratories and test program administrators under New York negligence law; and

Second , whether a plaintiff may establish the reliance element of a fraud claim under New York law by showing that a third party relied on a defendant's false statements resulting in injury to the plaintiff.

Because these unresolved questions implicate significant New York state interests and are determinative of this appeal, we reserve decision and certify the questions to the New York Court of Appeals.


A. The Facts

The facts alleged in Pasternack's complaints are assumed to be true.3 They may be summarized as follows:

Doctor Fred Pasternack is a physician and part-time pilot for Northeastern Aviation Corporation ("Northeastern") and an aerial advertising business. Between 1978 and 2008, he was designated a Senior Aviation Medical Examiner ("AME") for the FAA, giving him the authority to conduct FAA-mandated medical examinations for pilots. He has a private medical practice in New York City, which includes performing AME certification examinations of other pilots. He holds a number of certificates issued by the FAA.

The FAA has issued regulations requiring all aviation employees to submit to random drug testing, as part of its mandate to ensure "safety in air commerce and national security." 49 U.S.C. § 44701(a)(5) (procedures for transportation workplace drug and alcohol testing programs); see also 49 C.F.R. pt. 40. On June 1, 2007, Pasternack was notified by Northeastern that he had been selected for random drug testing. At that time, ChoicePoint was responsible for administering Northeastern's drug testing program, and LabCorp was responsible for performing specimen collection and testing.

On June 5, 2007, at approximately 1:10 p.m., Pasternack arrived at LabCorp's testing site in Manhattan, with a chain-of-

807 F.3d 17

custody form ("CCF"). He provided a urine sample, but Theresa Montalvo, a LabCorp worker, informed him that the sample contained an insufficient amount of urine for testing. Montalvo told Pasternack to wait in the waiting area. Pasternack did so, but because he had a 2:30 p.m. appointment to see a patient, he believed that he would not be able to produce enough urine before he had to leave for the appointment. Consequently, he advised Montalvo that he would have to leave and that he would return later to provide the sample. Montalvo asked him when he was planning to return, and she told him that she would have to advise his employer that he was leaving the collection site. Pasternack told her she was free to tell his employer, and that he would come back the next morning. Montalvo did not tell Pasternack that if he left the collection site he would be designated a "refusal to test," and he claims that he did not know that leaving the test site could constitute a "refusal" to test. Pasternack contends that he would have waited at the site if Montalvo had told him this.

Pasternack left the testing site to meet his patient. Approximately three hours later, around 4:00 p.m., he returned. Montalvo told him that she would have to call his employer. She did so, calling the General Manager for Northeastern, who told her that LabCorp could take a second urine sample from Pasternack. She noted on Pasternack's CCF that he had left and returned, and that Northeastern had approved the second collection. Pasternack provided another urine sample; this time there was a sufficient quantity of urine. His specimen tested negative.

Pasternack's CCF was later reviewed by a Medical Review Officer (the "MRO") at ChoicePoint. Based on the notation on the CCF that Pasternack had left the testing site, the MRO determined that Pasternack had left the collection site before the test was completed. ChoicePoint then notified the FAA that Pasternack had refused a drug test. The MRO designated Pasternack as a "refusal to test" even though LabCorp had not checked the "no specimen provided" box on the CCF, and even though Northeastern had authorized Montalvo by phone to collect the second sample when Pasternack returned to the site later that day.

On June 15, 2007, Northeastern learned that Pasternack's June 5, 2007 drug test had been designated by ChoicePoint as a "refusal to test." Thereafter, the FAA conducted an investigation into Pasternack's purported refusal to test, during which Montalvo purportedly made false representations to the investigators about Pasternack's conduct. On November 20, 2007, in reliance on the misrepresentations, the FAA revoked all of Pasternack's airman certificates. By letter dated February 21, 2008, the FAA terminated his AME designation due to his "unacceptable lack of regard for the importance of" FAA regulations and for his "refusal to take a random drug test." J.A. at 56. As a consequence, Pasternack was unable to pilot any flights or perform pilot medical examinations or otherwise function as an AME.

B. Prior Proceedings

1. The Licensing Proceedings

Pasternack appealed the termination of his AME designation to the FAA, and the appeal was denied. He also appealed the FAA's revocation of his pilot certificates to an Administrative Law Judge ("ALJ") of the National Transportation Safety Board (the "NTSB"). The ALJ upheld the revocation. He then appealed to the NTSB, which also upheld the revocation.

807 F.3d 18

Pasternack appealed the NTSB's decision to the D.C. Circuit Court of Appeals. On February 26, 2010, the D.C. Circuit remanded the matter to the NTSB, holding that the NTSB's finding that Pasternack had "refused" to test was not supported by substantial evidence. Pasternack v. NTSB, 596 F.3d 836, 838 (D.C.Cir.2010). While it was undisputed that Montalvo did not advise Pasternack that he would be deemed a "refusal to test" if he left, the NTSB argued that Montalvo did not have an "opportunity" to explain the policy because of Pasternack's behavior at and hurried departure from the collection site. Id. at 837–40. The D.C. Circuit found, however, that it was "utterly implausible" that Montalvo did not have time to tell Pasternack that if he left it would be deemed a "refusal." Id. at 839.

On remand, the ALJ again held that Pasternack had refused to test. The NTSB again affirmed, and Pasternack again appealed to the D.C. Circuit. On March 22, 2013, the D.C. Circuit ruled in favor of Pasternack again, holding that "substantial evidence does not support the NTSB's determination that the collector did not impliedly give Dr. Pasternack permission to leave," and reversing the NTSB. Pasternack v. Huerta, 513 Fed.Appx. 1, 2 (D.C.Cir.2013). The FAA thereafter reinstated Pasternack's airman certificates and AME designation and expunged his record of any reference to a drug test refusal.

2. The Proceedings Below

On June 3, 2010, Pasternack commenced this action against LabCorp and ChoicePoint, seeking to recover damages for defendants' alleged tortious and fraudulent conduct in administering the random drug test.4 Specifically, Pasternack alleged that he suffered damages as a result of the loss of his AME certification and airman certificates.

On August 1, 2011, the district court granted ChoicePoint's motion to dismiss. Pasternack v. Lab. Corp. of Am., No. 10 Civ. 4426, 2011 WL 3478732,...

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