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Coleman v. Mallinckrodt Enterprises LLC

United States District Court, E.D. Missouri, Eastern Division

August 13, 2019




         This matter is before the Court on defendant Mallinckrodt Enterprises LLC's (“MNK”) Motion to Compel Arbitration and Stay Proceedings. Plaintiff Jeffrey Coleman opposes the motion and it is fully briefed. For the following reasons, the motion to compel arbitration and stay proceedings will be granted.

         I. Background

         Plaintiff filed this action on September 15, 2017 in the Superior Court of the State of California, County of Alameda, against defendants, his former employers. The complaint asserts claims for non-payment of wages; adverse employment action (termination and retaliation) in violation of public policy; negligent hiring, supervision and retention; violation of California Labor Code § 1102.5 (retaliation); violation of Federal False Claims Act (retaliation); concealment; breach of employment contract; breach of implied covenant of good faith and fair dealing; unjust enrichment; and failure to provide employee file.

         On November 13, 2017, MNK removed this case to the United States District Court for the Northern District of California, pursuant to federal question jurisdiction, 28 U.S.C. § 1331, and diversity of citizenship, 28 U.S.C. § 1332. (Doc. 1). On May 3, 2018, MNK filed a motion to transfer venue pursuant to 28 U.S.C. § 1404(a) on the grounds that litigating this action in the Eastern District of Missouri would be in the interests of justice and more convenient for the parties and witnesses. (Doc. 39). On April 25, 2019, the motion was granted and the case was transferred to this Court. (Docs. 46, 47).

         Plaintiff and MNK assert that California law applies to this contract dispute. The Court agrees. See Wisland v. Admiral Beverage Corp., 119 F.3d 733, 736 (8th Cir. 1997) (if transfer is based on convenience of parties and witnesses, pursuant to § 1404(a), the law of the transferor court applies) (citing Ferens v. John Deere Co., 494 U.S. 516, 531 (1990) (applying the state law of the transferor court)).

         In the complaint, plaintiff alleges he began employment with Questcor Pharmaceuticals, Inc. (“Questcor”) in July 2011 as a Regional Sales Manager. Plaintiff alleges he was hired to train and deploy representatives to sell the drug, H.P. Acthar Gel (“Acthar”), an injectable anti-inflammatory. Plaintiff states his income consisted of a base salary, stock options, and the potential to earn additional pay via a sales and performance incentive compensation program called, in part, the Incentive Bonus Plan. In accepting and continuing his employment with defendants, plaintiff states he relied on the Incentive Bonus Plan to increase his base salary.

         In 2014, Mallinckrodt Enterprises LLC, Mallinckrodt LLC, and Enterprises Holdings, Inc. (collectively “Mallinckrodt”) purchased and merged with Questcor. During plaintiff's employment with Questcor and subsequently Mallinckrodt, plaintiff alleges defendants encouraged him to illegally promote and sell Acthar for uses which had not been approved by the Food and Drug Administration (“FDA”). As a result of plaintiff's refusal to engage in improper sales practices, he alleges he was unfairly penalized by his inability to meet unrealistic and fraudulently based Incentive Bonus Plan goals. Plaintiff further alleges he could not meet his regional sales goals because defendants retaliated against him by relocating some of his key sales representatives, which left him with a less than full staff.

         Plaintiff alleges he was constructively terminated on September 18, 2015 due to a disadvantaged work environment and unfair treatment as a direct result of refusing to promote the off-label use of Acthar and voicing complaints about such sales practices to his superiors.

         II. MNK's Motion to Compel Arbitration and the Parties' Positions

         MNK moves to compel arbitration and stay the proceedings pursuant to 9 U.S.C. §§ 3 and 4. MNK argues that plaintiff received an Employee Handbook at the start of his employment with Questcor, which contained a binding and enforceable Dispute Resolution Process/Arbitration Clause (“Arbitration Clause”). MNK attached to its motion to compel plaintiff's “ACKNOWLEDGMENT OF RECEIPT” of the Employee Handbook, signed and dated by plaintiff on July 22, 2011. Doc. 64-3. MNK argues that the Arbitration Clause covers all of plaintiff's claims. The Arbitration Clause states in part:

The Company's Dispute Resolution Process through mutual binding arbitration applies to the Company and to all employees of Questcor, regardless of the length of service or status, and covers all disputes or claims between an employee and Questcor, including, but not limited to those relating to an employee's employment, compensation or the termination of employment.
You and Questcor agree that arbitration will be conducted before a neutral experienced arbitrator chosen jointly by you and the Company, and will be conducted under the Employment Arbitration Rules of the American Arbitration Association (“AAA”). ...

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