Talon Prof'l Servs. v. Centerlight Health Sys. Inc.
| Decision Date | 30 March 2021 |
| Docket Number | 20 Civ. 78 (PAE) |
| Parties | TALON PROFESSIONAL SERVICES, LLC, Plaintiff, v. CENTERLIGHT HEALTH SYSTEM INC., SQUILLION SYSTEMS LLC, OKAYA, INC., JOHN DOES 1-10, and ABC CORPS. A-J, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff Talon Professional Services, LLC ("Talon") provides computer consultants for hire on a temporary basis. It alleges here that its client, CenterLight Health System Inc. ("CenterLight"), and two of its subcontractors, Squillion Systems LLC ("Squillion") and Okaya, Inc. ("Okaya"), breached their agreements with Talon by cutting out Talon and continuing to work together without paying Talon its contractually due fees. Talon brings claims against all three defendants for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with contractual relations, and unjust enrichment.
CenterLight and Okaya now move to dismiss Talon's Complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). For the reasons below, the Court grants CenterLight's motion in its entirety, and grants in part and denies in part Okaya's motion.
Talon is a New Jersey LLC whose two members are citizens of Hawaii. SAC ¶¶ 2-3. It is "engaged in the business of providing skilled computer consultants for hire." Id. ¶ 2.
CenterLight is a New York not-for-profit corporation that provides healthcare services. Id. ¶ 4; First Agreement at 1. Squillion, a New Hampshire LLC whose sole member is a resident of New Hampshire, provides temporary staffing services. Id. ¶¶ 5-6, 30. Okaya, a New York corporation, also provides temporary staffing services. Id. ¶¶ 7, 49.
On or about October 1, 2014, Talon entered into a Consulting Agreement ("First Agreement") with CenterLight. It provided, among other things, that: (1) Talon would provide candidates for employment at CenterLight, id. ¶¶ 19-20; (2) CenterLight would inform Talon if it decided to extend an offer of employment to a Talon candidate, id. ¶ 21; and (3) CenterLight would pay Talon a recruitment fee for any candidate "who learned of the [CenterLight] jobopportunity through the direct efforts of [Talon]," with the fee equaling 20% of the candidate's first-year base salary, First Agreement at 2; SAC ¶ 22. The First Agreement was to automatically renew on an annual basis until terminated by either party upon 15 days' written notice. SAC ¶ 23.
On October 6, 2014, CenterLight and Talon entered into a separate agreement, the Independent Contractor Agreement ("Second Agreement"). Id. ¶ 24. In it, CenterLight retained Talon to provide candidates who would perform services pursuant to Statements of Work ("SOWs"), with CenterLight reimbursing Talon at an agreed-upon hourly rate or on a fixed-price basis, depending on the specific services rendered. SAC ¶¶ 25-26; Second Agreement § 3. Section 4 of the Second Agreement, "Temp to Perm Placement," stated that if Talon's candidate applied for and was selected to fill a permanent position at CenterLight, CenterLight would only owe an additional "placement fee" to Talon if the candidate had worked at CenterLight for less than 17 weeks at the time of hire:
Second Agreement § 4; SAC ¶ 27. The Second Agreement included a "Mutual Non-Solicitation Provision":
Except as set forth in Section 4 regarding temp to perm placement, during the term of a SOW and for a period of twelve (12) months thereafter, neither party shall solicit for employment any employee of the other party who was engaged in orbecame known to the other as a result of the performance of such SOW, provided that the foregoing shall not be deemed to prohibit general, non-targeted solicitations for employment.
Second Agreement § 14; SAC ¶ 28. It also included a non-exclusivity provision, allowing CenterLight to "engage the services of any individual or entity that competes with [Talon] or offers services similar to those offered by [Talon]." Second Agreement § 15. Finally relevant here, it included the following integration clause:
This Agreement, any Exhibits, and any amendments hereto, the NDA and CenterLight's Business Associate Agreement shall constitute the entire agreement between the parties hereto and set forth the entire terms and conditions under which this Agreement will be performed. There are no other agreements, oral or written, between the parties with respect to the subject matter of this Agreement, and all oral and written correspondence relating to the subject matter hereof is superseded by this Agreement.
Talon then entered into Subcontractor Agreements with Squillion and Okaya. SAC ¶¶ 29, 34. These provided that Squillion and Okaya, acting as subcontractors of Talon, would provide staff to Talon's clients. Id. ¶¶ 30, 35. The Subcontractor Agreements included a covenant against competition, providing:
Acting as subcontractors of Talon, Squillion and Okaya then, respectively, placed Altheruddin Mohammed ("Mohammed") and Mahesh Yammanur ("Yammanur") with CenterLight as computer-consultant employees. SAC ¶¶ 39-40. Squillion and Okaya maintained H1-B visas for their respective candidate. Id. Mohammed and Yammanur provided consulting services to CenterLight from 2015 until early March 2018. Id. ¶¶ 42-43. During this period, CenterLight paid Talon $125 and $120 per hour for their respective services, consistent with the SOW governing each assignment. Id. ¶¶ 41-42.
In March 2018, CenterLight informed Talon that it was terminating the placements of Mohammed and Yammanur effective March 9, 2018. Id. ¶ 43. However, without notifying Talon or explicitly availing itself of the Second Agreement's section 4 safe harbor, CenterLight continued to employ Mohammed and Yammanur through Squillion and Okaya. Id. ¶¶ 44-49.
Talon alleges that CenterLight could not have employed Mohammed and Yammanur on its own because CenterLight did not possess those employees' H-1B visas, which were held exclusively by Squillion and Okaya. Id. ¶ 48. Talon alleges that CenterLight has continued paying Squillion and Okaya for Mohammed's and Yammanur's services, but that, since CenterLight's March 9, 2018 notice to Talon that it was purportedly terminating the placements of the two, CenterLight has not paid Talon a placement fee or the hourly rate set out in the SOW for their services. Id. ¶¶ 43-44, 50-51. On July 31, 2019, Talon's counsel sent letters demanding compensation to CenterLight, stating that CenterLight was in breach of its FirstAgreement with Talon. Id. ¶ 55. On September 19, 2019, Talon sent a similar letter to Squillion and Okaya, stating that they were in breach of their Subcontractor Agreements. Id. ¶¶ 55-56. In each, Talon demanded payment. Id. ¶ 57.
Talon's Second Amended Complaint ("SAC") contains four counts, each against all three defendants.
Count One, for breach of contract, alleges that CenterLight breached both the First Agreement and Second Agreement when it continued to retain Mohammed and Yammanur through Squillion and Okaya without paying Talon for their services. Id. ¶¶ 59, 62-63. It alleges that Squillion and Okaya breached the non-compete provisions of their Subcontractor Agreements by directly providing services to a client, CenterLight, whom they had previously served through Talon. Id. ¶¶ 60-61, 64-64.
Count Two, for breach of the implied covenant of good faith and fair dealing, alleges that the defendants denied Talon its right to receive payment for staffing services it provided. Id. ¶¶ 67-74.
Count Three, for tortious interference with contractual relations, alleges that each defendant tortiously interfered with Talon's contractual relationships with the others. It alleges that each knew or should have known that the others were bound by restrictions and non-compete provisions through their contracts with Talon, and yet arranged to secure Mohammed's and Yammanur's services for CenterLight without paying Talon. Id. ¶¶ 75-87.
Count Four, for unjust enrichment, alleges that CenterLight was unjustly enriched by retaining Mohammed's and Yammanur's services without having to compensate Talon, and that Squillion and Okaya were unjustly enriched by retaining the full fees for these staffing services. Id. ¶¶ 88-93.
On January 6, 2020, Talon filed the Complaint, Dkt. 1, and on January 14, 2020, the First Amended Complaint, Dkt. 15. On April 17, 2020, CenterLight filed a motion to dismiss. Dkt. 23. On April 23,...
To continue reading
Request your trial