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Chand v. Merck & Co., Inc.

United States District Court, E.D. Pennsylvania

July 26, 2019

SASWATI N. CHAND, Plaintiff,
v.
MERCK & CO., INC., Defendant.

          MEMORANDUM

          GENE E.K. PRATTER UNITED STATES DISTRICT JUDGE

         July 26, 2019 Dr. Saswati Chand received a conditional offer of employment at Merck & Co., Inc. The offer was contingent upon, among other things, Dr. Chand's completion of paperwork regarding her immigration status and eligibility for work in the United States. Although Dr. Chand had previously told her Merck interviewers that she held a temporary work visa (effective until 2020), when Dr. Chand submitted her immigration paperwork, Merck rescinded its employment offer because Dr. Chand would eventually require sponsorship.

         Dr. Chand initially filed a complaint premised on theories of promissory estoppel, negligent misrepresentation, and breach of the implied covenant of good faith and fair dealing (the “original Complaint”). After Merck moved to dismiss all three claims and the Court held oral argument on the motion, Dr. Chand sought leave to amend her complaint (the “Amended Complaint”). Merck maintains that dismissal is proper because Dr. Chand's proposed amendments are futile.

         The Court grants Dr. Chand's motion for leave to amend the negligent misrepresentation claim. As for all of Dr. Chand's other claims, they are dismissed and leave to amend is denied with prejudice.

         Background[1]

         Dr. Chand applied for a Philadelphia-based Global Medical Information Scientist position with Merck in late 2017. While her application was pending, Dr. Chand accepted a different position in San Diego, California with Crown Bioscience.

         Dr. Chand interviewed with several Merck employees in early 2018. During that interview, Dr. Chand-a foreign citizen who came to the United States for graduate school in 2011[2]-told Heather Sutcliffe, a Merck recruiter, that she did not require sponsorship because she had a 2.5-year work visa (lasting until May 2020)[3] and because “she had a long-term boyfriend and they had plans of settling down in the near future.” Amended Compl. ¶ 12. Dr. Chand also met with an operations team of Merck medical professionals. As a result of that meeting, “[e]ach member of the Merck operations team that interviewed Dr. Chand knew she was on an F-1 student visa and had moved to the United States for her post graduate degree.” Id. ¶ 15.

         Before Merck made a hiring decision, Dr. Chand moved to San Diego to begin working for Crown Bioscience. About a month after Dr. Chand started working at Crown Bioscience, Ms. Sutcliffe contacted Dr. Chand on behalf of Merck to informally offer Dr. Chand a position with the company; Merck also told Dr. Chand that she would receive a formal “offer letter” soon. Id. ¶ 18. The subsequent offer letter (attached to Dr. Chand's original Complaint and Amended Complaint) includes the following statements (among others):

• “Your employment with Merck is ‘at will'. This means that just as you are free to leave the Company at any time, the Company retains the same right to terminate your employment at any time, with or without cause and with or without notice. Nothing herein shall be construed as creating a contractual relationship between you and Merck.”
• “This offer is contingent upon your successful completion of a pre-placement drug screen, satisfactory verification of your employment history, education, criminal history and background check results. We advise you not to alter your current employment status until we advise you that the above contingencies have been successfully completed.”
• “This offer is contingent upon proof of your identity and eligibility to work in the United States, as required by the Immigration Reform and Control Act of 1986. This includes completion of the I-9 form and production of the required documentation.”

Amended Compl., Ex. 2 (Offer Letter).

         After receiving the offer letter-but before Merck finalized her onboarding-Dr. Chand resigned from her position with Crown Bioscience. A week later, Dr. Chand and her significant other paid a $10, 000 deposit on a townhouse in Manayunk.

         Soon thereafter, Merck contacted Dr. Chand to rescind the offer of employment. In a letter emailed to Dr. Chand, Merck stated its decision was “based on information [Dr. Chand] disclosed regarding [her] visa status[.]” Amended Compl., Ex. 3 (Rescission Letter). In subsequent communications between Dr. Chand and Merck, Merck stated that “because Dr. Chand answered ‘no' to the [onboarding] question of ‘will you now or in the future require sponsorship for employment visa status?', Merck could not hire [Dr. Chand] because a person working on a F-1 student visa would require sponsorship once the visa expired.” Amended Compl. ¶ 36 (punctuation in original).

         Dr. Chand eventually secured alternative employment at Thomas Jefferson University as a Post Doc Fellow. Dr. Chand's salary at the University is about half of what her salary would have been at Merck (not counting bonuses and/or incentives she may have been entitled to).

         Legal standard

         Here, the at-issue motions include Merck's Rule 12(b)(6) motion to dismiss for failure to state a claim and Dr. Chand's motion for leave to amend the complaint, which Merck opposes as futile. The legal standards applied to both motions are the same: “In assessing ‘futility,' the district court applies the same standard of legal sufficiency as applies under Rule 12(b)(6).” In re Burlington Coat Factory Litigation, 114 F.3d 1410, 1434 (3d Cir. 1997) (citations omitted).

         Although “a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). To survive a Rule 12(b)(6) motion, therefore, the plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Specifically, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. The question is not whether the plaintiff “will ultimately prevail . . . but whether [the] complaint [is] sufficient to cross the federal court's threshold.” Skinner v. Switzer, 562 U.S. 521, 530 (2011) (citation and quotation omitted). Thus, assessing the sufficiency of a complaint is “a context-dependent exercise” because “[s]ome claims require more factual explication than others to state a plausible claim for relief.” W. Pa. Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir. 2010) (citations omitted).

         In evaluating the sufficiency of a complaint, the Court adheres to certain accepted benchmarks. For one, the Court “must consider only those facts alleged in the complaint and accept all of the allegations as true.” ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994) (citation omitted); see also Twombly, 550 U.S. at 555 (stating that courts must “assum[e] that all the allegations in the complaint are true (even if doubtful in fact)”). The Court must accept as true all reasonable inferences emanating from the allegations and view those facts and inferences in the light most favorable to the nonmoving party. Rocks v. City of Phila., 868 F.2d 644, 645 (3d Cir. 1989).

         That admonition does not demand that the Court ignore or discount reality. The Court “need not accept as true unsupported conclusions and unwarranted inferences, ” Doug Grant, Inc. v. Greate Bay Casino Corp., 232 F.3d 173, 183-84 (3d Cir. 2000) (citations and quotation omitted), and “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citation omitted). If a claim “is vulnerable to 12(b)(6) dismissal, a district court must permit a curative amendment, unless an amendment would be inequitable or futile.” Phillips v. Cty. of Allegheny, 515 F.3d 224, 236 (3d Cir. 2008) (citation omitted).

         Discussion

         Dr. Chand's original Complaint included three claims: (1) promissory estoppel, (2) negligent misrepresentation, and (3) breach of the covenant of good faith and fair dealing. Dr. Chand's proposed Amended Complaint includes revised promissory estoppel and negligent misrepresentation claims, drops the standalone claim for the breach of the covenant of good faith and fair dealing, and adds two entirely new claims for breach of implied contract. The breach of implied contract claims in the Amended Complaint are for (1) breach of employment contract and (2) breach of contract premised on the covenant of good faith and fair dealing. First, the Court addresses the promissory estoppel claims, holding that promissory estoppel is not available to Dr. Chand as a matter of law. Second, the Court addresses the negligent misrepresentation claims, holding that an exception to the economic loss rule applies and Dr. Chand is entitled to amend this claim. Third, the Court addresses the two proposed amended claims premised on the breach of an implied contract, holding that both fail as a matter of law.

         1. Dr. Chand's Promissory Estoppel Claim

         A plaintiff states a claim for promissory estoppel where she alleges that: “(1) the promisor made a promise that [it] should have reasonably expected would induce action or forbearance on the part of the promisee; (2) the promisee actually took action or refrained from taking action in reliance on the promise; and (3) injustice can be avoided only by enforcing the promise.” Sullivan v. Chartwell Inv. Partners, LP, 873 A.2d 710, 717-18 (Pa. Super. Ct. 2005) (citations omitted). Merck argues that Dr. Chand cannot state a claim for promissory estoppel for two reasons: first, promissory estoppel does not apply in the context of at-will employment, and second, Merck did not make an actionable promise. The Court agrees with Merck in each instance.

         A. Whether Promissory Estoppel Applies to At-Will Employment Offers

         Under Pennsylvania law, at-will employees cannot bring an action for promissory estoppel.[4] According to Merck, it therefore follows that prospective at-will employees, like Dr. Chand, likewise cannot state a claim for promissory estoppel. Dr. Chand's case is analogous to Woods v. Era Med LLC, 677 F.Supp.2d 806 (E.D. Pa. 2010), in which the Court held that a prospective employee could not bring a promissory estoppel claim. In Woods, the plaintiff, Roger Woods, was offered a multi-year position as a helicopter pilot but the employer rescinded its employment offer before Mr. Woods began working. Id. at 808. The Court held that Mr. Woods' promissory estoppel claim failed as a matter of law, because (1) a future at-will employment relationship was implied by the parties' negotiations, and (2) “Pennsylvania does not recognize a cause of action for promissory estoppel as an exception to the doctrine of at-will employment.” Id. at 822. Although the Court did not explicitly discuss the fact that the employment relationship had not actually begun (or that the at-issue promise was an employment offer rather than the promise of continued employment), it held that Mr. Woods could not state a claim for promissory estoppel in any at-will context. Id.

         Dr. Chand's case is an even more appropriate candidate for application of the rule precluding promissory estoppel claims in the context of at-will employment relationships. Unlike in Woods, there is no question here whether the proposed term of employment was at-will. The at-issue offer letter explicitly said the offer was for at-will employment. See original Compl., Ex. 1; Amended Compl., Ex. 1 (“Your employment with Merck is ‘at will[.]'”). Allowing a cause of action for promissory estoppel for reliance on employment offers but not for reliance on continued employment itself would lead to untenable consequences. At bottom, it would mean that Merck could have terminated Dr. Chand's employment the second she became an employee, but could not rescind its offer of employment up until that point. Such a rule would make no sense and plainly demonstrates why promissory estoppel is not available to Dr. Chand here, just as it would not have been available to Dr. Chand if she had started working for Merck as an at-will employee.

         Dr. Chand does not address the long line of cases excluding at-will employment from the reach of promissory estoppel claims. See supra n.4. Instead, Dr. Chand appears to argue that the at-issue contract was not terminable at-will pursuant to the Restatement of Employment Law. Section 2.02 of the Restatement says: “The employment relationship is not terminable at will by an employer if . . . (b) a promise by the employer to limit termination of employment reasonably induces detrimental reliance by the employee.” Comment A clarifies that the Section “lists the principal contractual variations from at-will employment” and Comment C adds that “Section 2.02(b) makes clear that promises by employers ...


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