Client Network Services, Inc. v. Smith

Cross MOTION for Summary Judgment and Opposition to Plaintiff's Motion for Partial Summary Judgment

D. Md.June 7, 2017

1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND Southern Division ____________________________________ | CLIENT NETWORK SERVICES, INC. | | Plaintiff | Case No. 8:15-cv-2207-PWG | Hon. Paul W. Grimm v. | | STEPHEN ALAN SMITH | | Defendant | ____________________________________| DEFENDANT STEPHEN ALAN SMITH’S MEMORANDUM IN OPPOSITION TO PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT AND IN SUPPORT OF DEFENDANT’S CROSS-MOTION FOR SUMMARY JUDGMENT Defendant, Stephen Alan Smith (“Defendant” or “Smith”), in the above-entitled matter, by and through his undersigned counsel, submits the within Memorandum of Law in opposition to Plaintiff’s, Client Network Services, Inc. (“Plaintiff” or “CNSI”), Motion for Partial Summary Judgment and in support of his Cross-Motion for Summary Judgment, filed pursuant to Federal Rule of Civil Procedure 56, and respectfully requests that this Honorable Court deny Plaintiff’s Motion for Partial Summary Judgment and grant Defendant’s Cross-Motion for Summary Judgment in its entirety. As grounds therefore, Defendant states as follows: Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 1 of 33 2 TABLE OF CONTENTS I. FACTUAL BACKGROUND . . . . . . 3 A. Statement of Undisputed Facts . . . . . . 3 B. Facts Asserted by Plaintiff to Which There is a Genuine Dispute . 10 II. STANDARD OF REVIEW . . . . . . . 13 III. ARGUMENT . . . . . . . . . 14 A. CNSI’s Entire Claim Is Barred by the Parties’ Agreed-Upon Modification of the Statute of Limitations . . . . 14 B. Public Policy-Based Whistleblower Protections Require That Summary Judgment be Entered in Defendant’s Favor . . . 17 C. Smith is Entitled to Summary Judgment on Plaintiff’s Tortious Interference With Contract Claim Because Plaintiff Fails to Make Out a Prima Facie Case . . . . . 27 D. Smith is Entitled to Summary Judgment on Plaintiff’s Civil Conspiracy Claim Because Plaintiff Fails to Make Out a Prima Facie Case . . . . . . . . 30 IV. CONCLUSION . . . . . . . . 31 Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 2 of 33 3 I. FACTUAL BACKGROUND A. Statement of Undisputed Facts 1. Plaintiff, CNSI, is a Maryland corporation with its principal place of business in Rockville, Maryland. Joint Statement of Undisputed Facts (“JSUF”) ¶ 1; Exhibit 1, at JR00002. 2. CNSI delivers a broad range of health information technology (IT) enterprise solutions and customizable products to a diverse base of federal and state agencies. JSUF ¶ 1; Exhibit 1, at JR00002. 3. Defendant, Smith, is a former employee of CNSI. JSUF ¶ 2; Exhibit 1, at JR00002. 4. During 2010, the Department of Health and Hospitals (“DHH”) for the State of Louisiana released a Solicitation for Proposals in connection with its replacement of its then- existing Medicaid Management and Information System (the “LMMIS Solicitation”). JSUF ¶ 6; Exhibit 1, at JR00003. 5. CNSI intended to bid on the LMMIS Solicitation. JSUF ¶ 7; Exhibit 1, at JR00003. 6. On December 15, 2010, CNSI recruited and selected Smith to serve as the new President of CNSI’s health care business unit (“HHS Business Unit”) and sent Smith an offer letter. JSUF ¶ 3; Exhibit 1, at JR00002. 7. Shortly thereafter, CNSI rescinded the December 15, 2010 offer letter and offered Smith the position of Senior Vice President (“SVP”) of MMIS business development. JSUF ¶ 4; Exhibit 1, at JR00003. 8. As a result of the change of position, Smith was to receive a decrease in compensation, JSUF ¶ 14; Exhibit 1, at JR00004, which he “accepted,” “agreed to,” and Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 3 of 33 4 “underst[ood][;]” it did not anger him (as mischaracterized by the Plaintiff). Deposition of Stephen A. Smith, 22:13-24:16, Exhibit 8, at JR00039. 9. The parties then entered into an At Will Employee Agreement (“the Agreement”), effective as of January 3, 2011. JSUF ¶ 5; Exhibit 1, at JR00002; Exhibit 2, at JR00008- JR00012. 10. The Agreement states, in pertinent part, that: Employee understands and agrees that the business ethics of CNSI and personal standards and ethics of its employees must, at all times, be above reproach, and the Employee agrees to conduct himself/herself in a manner that reflects positively upon CNSI. Exhibit 2, at JR00008, ¶ 7. 11. The Agreement further states that: EMPLOYEE HEREBY AGREES THAT ANY CLAIM OR LAWSUIT ARISING OUT OF EMPLOYEE’S EMPLOYMENT WITH CNSI AND/OR THE TERMINATION THEREOF, REGARDLESS OF WHETHER OR NOT SUCH DISPUTE SPECIFICALLY ARISES UNDER THIS AGREEMENT, MUST BE FILED WITHIN ONE YEAR AFTER THE DATE OF THE EMPLOYMENT ACTION THAT IS THE SUBJECT OF SUCH CLAIM OR LAWSUIT AND EMPLOYEE HEREBY WAIVES ANY STATUTE OF LIMITATIONS TO THE CONTRARY. Exhibit 2, at JR00011, ¶ 14. 12. CNSI filed its bid in response to the LLMIS Solicitation on February 15, 2011. JSUF ¶ 9; Exhibit 1, at JR00003. 13. This was in spite of the fact that CNSI had never been the fiscal agent on a contract before. Deposition of Bishwajeet Chatterjee, 51:24-52:15, Exhibit 16, at JR00833- JR00834.1 1 Defendant acknowledges the Court’s instruction, made in its Case Management Order dated July 29, 2016, that “[a]ll deposition transcripts shall be provided in their entirety in ‘minuscript’ Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 4 of 33 5 14. On February 17, 2011, the submission deadline, three other companies also submitted bids, including Molina Medicaid Solutions (“Molina”), the incumbent contractor. JSUF ¶ 10; Exhibit 1, at JR00003. 15. At the end of the evaluation period for the LMMIS Solicitation, Louisiana issued a notice of intent to award the LMMIS contract to CNSI on June 9, 2011. JSUF ¶ 11; Exhibit 1, at JR00004. 16. As part of its bid, CNSI declared Bank of America as its only banking institution and that CNSI had: . . . increase[d] its revenue at a very rapid pace since incorporation in April 1994, from $1.2 million in 1995 to more than $104 million just ten years later. More recent years have continued to reflect this steady growth, with FY2009 revenues totaling $167 million. Exhibit 14, at JR00302-JR00303. 17. In its bid, CNSI also declared that it was “. . . in compliance with all debt covenants . . . .” Exhibit 14, at JR0302-JR00303. 18. In reality, however, at the time CNSI submitted its bid, financially “things were tough” for CNSI. Deposition of Adnan Ahmed, 130:18-22, Exhibit 15, at JR00434. 19. For instance, in 2010, the year immediately prior to the bid submission, CNSI’s revenues declined by “about $44 million.” Deposition of Bishwajeet Chatterjee, 157:13-25, Exhibit 16, at JR00939. This resulted in CNSI suffering a net loss of $10.3 million that year. Deposition of Adnan Ahmed, 94:13-15, Exhibit 15, at JR00398. (four transcript pages per printed page) format . . . .” Defendant is unable to comply with that instruction in some regards, as some of the deposition transcripts in CNSI’s litigation against the State of Louisiana were only produced in full-size form during the course of discovery. Defendant was not a party to the CNSI/Louisiana litigation, therefore original transcripts are not in his possession. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 5 of 33 6 20. In fact, discussions occurred among CNSI executives that “if CNSI did not obtain the Louisiana bid or the Maryland bid, that CNSI was going to need to look at a distress sale to sell the Company.” Deposition of Adnan Ahmed, 36:2-11, Exhibit 15, at JR00340. 21. Additionally, despite representing that it was in compliance with all debt covenants, CNSI was actually in default of its Bank of America obligation at the time of the submission, having received a notice of default letter only three days before submission. Deposition of Bishwajeet Chatterjee, 86:8-24, Exhibit 16, at JR00868. 22. Due to CNSI’s poor financial condition, Bank of America had amended CNSI’s credit agreement with the bank three times within the year prior to the bid submission. Deposition of Adnan Ahmed, 129:11-130:24, Exhibit 15, at JR00433-JR00434. 23. This catalyzed Bank of America to put CNSI’s financial account into the “special assets group” which, CNSI admits, “is not a good thing to happen.” Deposition of Adnan Ahmed, 116:21-120:3, Exhibit 15, at JR00420-JR00424. 24. Despite submitting a bid in response to the LMMIS Solicitation, CNSI leadership was concerned about its ability to post the $6 million performance bond required for the LMMIS project, and there were internal discussions prior to the bid submission that if CNSI was the successful bidder, it would have “a lot of difficulty” securing the bond and that it was going to be a problem. Deposition of Adnan Ahmed, 241:14-24, Exhibit 15, at JR00545. 25. To further compound the issue, CNSI was to post the $6 million bond “within ten business days from request.” Email from Martha Abraham to Jaytee Kanwal dated February 4, 2011; Exhibit 17, at JR01136-JR01138. 26. Throughout the fall of 2011, DHH and CNSI negotiated the terms of the contract. JSUF ¶ 16; Exhibit 1, at JR00004. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 6 of 33 7 27. The proposed LMMIS Agreement was then sent to the Federal Centers for Medicaid and Medicare Services (“CMS”) on October 5, 2011. JSUF ¶ 16; Exhibit 1, at JR00004. 28. Smith participated in CNSI’s communications with CMS’s regional representative, Jeoffrey Branch (“Branch”), during the period of CMS’s review of the LMMIS Agreement after October 5, 2011. JSUF ¶ 17; Exhibit 1, at JR00005. 29. Smith first learned of CNSI’s problems posting the performance bond when a representative of Xerox/ACS, John Hammack (“Hammack”), called Smith and informed him: of CNSI’s difficulties in procuring the bond; and that Xerox/ACS was very interested in the bonding process. Deposition of Stephen A. Smith, 85:2-11, Exhibit 8, at JR00054. Hammack further indicated that future legal action could be forthcoming. Deposition of Stephen A. Smith, 88:2-89:17, Exhibit 8, at JR00055. 30. Smith then confirmed this information about the performance bond with a CNSI employee. Deposition of Stephen A. Smith, 91:14-20, Exhibit 8, at JR00056. 31. Meanwhile, CNSI asked Smith to help find a solution to CNSI’s bond problems. Deposition of Stephen A. Smith, 193:13-194:1, Exhibit 8, at JR00081-JR00082. Accordingly, Smith called a friend of his at Bank of America, Charles Malm (“Malm”). Deposition of Stephen A. Smith, 190:21-193:12, Exhibit 8, at JR00081. 32. During Smith’s conversation with Malm, Malm informed Smith that CNSI’s account was with the special assets group. Deposition of Stephen A. Smith, 192:9-193:1, Exhibit 8, at JR00081. 33. In November 2011, Smith announced his intent to cease his employment with CNSI. JSUF ¶ 18; Exhibit 1, at JR00004. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 7 of 33 8 34. Around that time, Smith was contact by Mike Connolly, a headhunter from Maxis, an organization that had an ongoing agreement with Molina, in regard to a possible employment opportunity for Smith with Molina on a New Jersey contract. Deposition of Stephen A. Smith, 94:17-95:12, Exhibit 8, at JR00057. 35. A meeting was scheduled whereby Norm Nichols (“Nichols”), Molina’s President, and Smith were to discuss the potential career opportunity. Deposition of Stephen A. Smith, 93:4-96:18, Exhibit 8, at JR00056-JR00057. 36. At this meeting, in addition to discussing the New Jersey position, Nichols informed Smith that the “Louisiana situation may not be over yet” and referenced Bruce Greenstein (“Greenstein”), Secretary of Health and Hospitals for the State of Louisiana. Deposition of Stephen A. Smith, 36:10-20, 96:3-98:5, 102:19-107:6, Exhibit 8, at JR00042, JR00057, JR00059-JR00060. 37. On or about December 8, 2011, prior to Smith’s departure from CNSI, he drafted and sent an email to Branch using the alias John Kunego (the “Kunego Email”) whereby Smith informed Branch of certain misinformation and/or misrepresentations in CNSI’s bid of the LMMIS Solicitation, as well as various other improprieties. JSUF ¶ 21, Exhibit 1, at JR00005; Exhibit 4, JR00017. 38. Following the award of the LMMIS Agreement to CNSI, Smith voluntarily, and by mutual agreement, terminated his employment from CNSI on February 29, 2012. JSUF ¶ 23. 39. Thereafter, CNSI reached out to Greenstein, who also happened to be a former CNSI employee, to request that Louisiana rescind the requirement for CNSI to post the $6 Million performance bond in an effort “[n]ot to hit the panic button yet,” given CNSI’s problems posting the bond. Deposition of Adnan Ahmed, 252:20-255:2, Exhibit 15, at JR00556-JR00559. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 8 of 33 9 40. CNSI was forced to “think outside the box” in order to procure the funds to post the $6 million dollar bond. Exhibit 18, at JR01140. 41. In order to post the bond, CNSI needed to utilize its subcontractors to post $4 million of the bond. Deposition of Adnan Ahmed, 296:15-298:24, Exhibit 15, at JR00600- JR00602. 42. A portion of the bid involved pricing Electronic Visit Verification, which was to be mandatory. Deposition of Bishwajeet Chatterjee, 294:16-295:15, Exhibit 16, at JR01076- JR01077. 43. Instead, CNSI included a portion of the EVV as mandatory and a portion of the EVV as voluntary. Deposition of Thomas Creighton Carroll, 239:19-240:23, Exhibit 19, at JR01380-JR01381. 44. CNSI’s miscalculation left CNSI with “huge exposure” and the cost was to be a $40 million revenue impact. Deposition of Bishwajeet Chatterjee, 263:18-265:6, 294:16-295:15, Exhibit 16, at JR01045-JR01047, JR01076-JR01077. 45. Despite being awarded the LMMIS contract on June 9, 2011, it took CNSI until February 2012 to post the bond. Deposition of Bishwajeet Chatterjee, 287:13-288:13, exhibit 16, at JR01069-JR01070. 46. This communication was in violation of 1.7.4 of the SFP which states “Without exception, all inquiries shall be submitted in electronic Excel Format. . . .” Deposition of Adnan Ahmed, 190:1-192:17, Exhibit 15, at JR00493-JR00495. 47. After leaving CNSI’s employment, Smith was contacted by Scott Bailey (“Bailey”), an investigator with the Louisiana Attorney General’s Office; Bailey informed Smith Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 9 of 33 10 that he could either cooperate with the Attorney General’s investigation or become a target of it. Deposition of Stephen A. Smith, 241:1-242:9, Exhibit 8, at JR00093-JR00094. 48. Smith decided to cooperate rather than become a target and declared that he wrote the Kunego email. Deposition of Stephen A. Smith, 246:2-247:14, Exhibit 8, at JR00095. 49. Through his cooperation, Smith surmised that Greenstein, not CNSI, was the subject of the investigation. Deposition of Stephen A. Smith, 251:16-252:7, Exhibit 8, at JR00096. 50. On March 21, 2013, Louisiana sent a letter whereby it terminated the LMMIS Agreement with CNSI. Exhibit 5, at JR00020. Louisiana further outlined the bases for the termination in a letter dated April 26, 2013. Exhibit 6, at JR00022-JR00026. 51. On April 9, 2014, CNSI learned that Smith had sent the Kunego email. (Compl., ¶ 59.) B. Facts Asserted by Plaintiff to Which There is a Genuine Dispute2 5. Smith’s performance at a meeting with CNSI leadership was not less than adequate for the position of President. CNSI rescinded its offer for Smith to serve as President because, as it was explained to Smith, “this move was being made so [CNSI] could win [the] Louisiana [bid].” Deposition of Stephen A. Smith, 22:13-23:8, Exhibit 8, at JR00039. 19. Smith was not angered by the reduction in his bonus; he was disappointed. Deposition of Stephen A. Smith, 60:3-5, Exhibit 8, at JR00048. The cited portion of his 2 The following statements of fact are provided in dispute of the Statement of Facts provided by Plaintiff in its Motion for Partial Summary Judgment. They are numbered to correspond with Plaintiff’s Statement of Facts. As explained in the Argument section of this Cross-Motion, Defendant is entitled to summary judgment despite these disputes of fact, as they have no relevance to the arguments advanced in Defendant’s Cross-Motion. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 10 of 33 11 testimony is clear, and Plaintiff’s attempt to characterize his testimony otherwise is a misrepresentation of fact. 20. Smith was not angered by the reduction in his salary and the change in staff to whom he reported; he felt marginalized. Deposition of Stephen A. Smith, 61:17-22, Exhibit 8, at JR00048. The cited portion of his testimony is clear, and Plaintiff’s attempt to characterize his testimony otherwise is a misrepresentation of fact. 31. CNSI authorized Smith to discuss CNSI’s financial condition, ability to procure a performance bond, and available credit lines with Charles Malm and/or others outside the company. In addition, Smith did not share any information with Charles Malm about CNSI. Deposition of Stephen A. Smith, 193:13-194:17, Exhibit 8, at JR00081-JR00082. 36. Whether CNSI authorized Smith to discuss any information regarding the LMMIS Solicitation or CNSI’s ability to obtain a performance bond with John Hammack or any other representative of Xerox/ACS is irrelevant. Smith did not reveal any information confidential or proprietary to CNSI (as the information was in the public domain), and no damaging or disparaging information was revealed to Xerox/ACS. In addition, CNSI has not suffered any damages by any potential communication Smith had with Hammack. Deposition of Stephen A. Smith, 90:15-91:8, Exhibit 8, at JR00056. 39. Paragraph 39 raises a credibility question that cannot be resolved on summary judgment. Girard v. Gill, 261 F.2d 695, 697 (4th Cir. 1958) (“Conflicts and ambiguities are not to be resolved on motions for summary judgment.”). 40. Paragraph 40 raises a credibility question that cannot be resolved on summary judgment. Girard v. Gill, 261 F.2d 695, 697 (4th Cir. 1958) (“Conflicts and ambiguities are not to be resolved on motions for summary judgment.”). Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 11 of 33 12 44. None of the statements made by Smith in the Kunego Email are false; in fact they are demonstrably true. See infra Responses to Paragraphs 46, 48, 52, 55, 57, and 58. In addition, the citations to the record are extensive. See pages 23 through 26 for specific citations to the record which place this alleged fact in serious dispute; all such disputes are discussed at length in those pages. 46. Smith’s statement that CNSI can’t obtain a performance bond was true. See pages 23 through 26 for specific citations to the record which place this alleged fact in serious dispute; all such disputes are discussed at length in those pages. 48. Smith’s statement that CNSI has a single major creditor – Bank of America – is true. Bank of America was the only financial institution listed on CNSI’s bid for the LMMIS Solicitation. See pages 23 through 26 for specific citations to the record which place this alleged fact in serious dispute; all such disputes are discussed at length in those pages. 52. Smith’s statements about CNSI’s pricing in its bid were true. See pages 23 through 26 for specific citations to the record which place this alleged fact in serious dispute; all such disputes are discussed at length in those pages. 55. Smith’s statement about the removal of Thomson Reuters is true. See pages 23 through 26 for specific citations to the record which place this alleged fact in serious dispute; all such disputes are discussed at length in those pages. 57. Smith’s statements about the relationship between CNSI and its former employee, Greenstein, were true. See pages 23 through 26 for specific citations to the record which place this alleged fact in serious dispute; all such disputes are discussed at length in those pages. 58. Statements made by Plaintiff that “Smith did nothing to confirm the veracity of the factual allegations and accusations he made in the Kunego email”; and “Nor did he discuss Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 12 of 33 13 any of the issues alleged in the Kunego Email with his colleagues at CNSI” are unsupported by the record and lack citations, as required by Federal Rule 56. 64. The State of Louisiana terminated CNSI “for cause” and/or “for convenience.” Exhibit 6, at JR00022-JR00026. 65. The State of Louisiana did not improperly terminate CNSI’s contract. It was a termination for convenience, which is not improper and not a breach of the agreement. Exhibit 6, at JR00022-JR00026. 66. Paragraph 66 is unsupported by the record and lacks a citation required by Federal Rule 56. II. STANDARD OF REVIEW Courts should grant summary judgment when the moving party has demonstrated that no genuine dispute of material fact exists and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a) (2010); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); It’s My Party, Inc. v. Live Nat., Inc., 88 F.Supp.3d 475, 483 (D. Md. 2015). The moving party bears the “initial burden of demonstrating the absence of a genuine dispute of material fact.” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (citing Celotex Corp., 477 U.S. at 323). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “[T]he mere existence of some factual dispute is insufficient to defeat a motion for summary judgment; there must be a genuine issue of material fact.” Leakas v. Columbia Country Club, 831 F.Supp. 1231, 1235 (D. Md. 1993) (citing Liberty Lobby, 477 U.S. at 248). The non-moving party’s evidence must show more than mere “metaphysical doubt as to Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 13 of 33 14 the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). In considering a motion for summary judgment, the court draws all “justifiable inferences” in favor of the non-moving party. Liberty Lobby, 477 U.S. at 255. However, to prevail against a motion for summary judgment, the non-moving party must come forward with “specific facts showing that there is a genuine issue for trial.” Matsushita Elec., 475 U.S. at 587 (citing FED. R. CIV. P. 56(e)). Conclusory assertions which are offered without any factual basis in the record cannot create a genuine dispute so as to survive summary judgment. See Boone v. Everett, 671 Fed. App’x 864, 866 (4th Cir. 2016). With this in mind, “courts should not be reluctant to grant summary judgment in appropriate cases since ‘[o]ne of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims,’ . . . thereby permitting courts to avoid ‘. . . protracted, expensive and harassing trials.’” Witter v. Abell-Howe Co., 765 F.Supp. 1144, 1147 (W.D.N.Y. 1991) (quoting Celotex Corp., 477 U.S. at 323-24; Meiri v. Dacon, 759 F.2d 989, 998 (2nd Cir. 1985), cert. denied, 474 U.S. 829 (1985)). III. ARGUMENT A. CNSI’s Entire Claim Is Barred by the Parties’ Agreed-Upon Modification of the Statute of Limitations Defendant is entitled to summary judgment on Plaintiff’s Complaint, in its entirety, because each cause of action pled therein is time-barred. In Smith’s At Will Employment Agreement, the parties agreed to shorten the statute of limitations to one year for any claim arising out of Smith’s employment. Exhibit 2, at JR00011, ¶ 14. Specifically, the parties agreed as follows: EMPLOYEE HEREBY AGREES THAT ANY CLAIM OR LAWSUIT ARISING OUT OF EMPLOYEE’S EMPLOYMENT WITH CNSI AND/OR THE TERMINATION THEREOF, Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 14 of 33 15 REGARDLESS OF WHETHER OR NOT SUCH DISPUTE SPECIFICALLY ARISES UNDER THIS AGREEMENT, MUST BE FILED WITHIN ONE YEAR AFTER THE DATE OF THE EMPLOYMENT ACTION THAT IS THE SUBJECT OF SUCH CLAIM OR LAWSUIT AND EMPLOYEE HEREBY WAIVES ANY STATUTE OF LIMITATIONS TO THE CONTRARY. Exhibit 2, at JR00011, ¶ 14. Maryland law permits the parties to a contract to shorten the statute of limitations by mutual agreement. See College of Notre Dame of Md., Inc. v. Morabito Consultants, Inc., 132 Md. App. 158, 172, 752 A.2d 265, 273 (2000) (there is no statute which prohibits the modification of the statute of limitations by contract). Indeed, Maryland state appellate courts have upheld the imposition of a one-year contractual statute of limitations, holding that “there is no public policy prohibition against judicial enforcement of a one-year limitations period.” Harvey v. N. Ins. Co. of N.Y., 153 Md. App. 436, 445, 837 A.2d 223, 228 (2003). And, “[c]ourts have frequently found contractual limitations periods of one year (or less) to be reasonable.” In re Cotton Yarn Antitrust Litig., 505 F.3d 274, 287 (4th Cir. 2007) (citations omitted). With that in mind, in order to determine the appropriate scope of the provision, this Court must conduct a standard contract interpretation analysis. Maryland courts have “long adhered to the law of objective interpretation of contracts.” Auction & Estate Representatives, Inc. v. Ashton, 354 Md. 333, 340, 731 A.2d 441, 444 (1999); see also Bank of Commerce v. Md. Fin. Bank, 639 Fed. App’x. 929, 932 (4th Cir. 2016) (quoting Dumbarton Improvement Ass’n, Inc. v. Druid Ridge Cemetary Co., 434 Md. 37, 51, 73 A.3d 224, 232 (2013) (same). “Thus, when interpreting a contract, courts need not discern the actual mindset of the parties at the time of the agreement, but instead must ‘determine from the language of the agreement itself what a reasonable person in the positions of the parties would have meant at the time it was effectuated.’” Bank of Commerce, 639 Fed. App’x at 933 (quoting Druid Ridge, 434 Md. at 52, 73 A.3d at 232 (quoting GMAC v. Daniels, 303 Md. 254, 261, 492 Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 15 of 33 16 A.2d 1306, 1310 (1985))). “[W]hen the language of the contract is plain and unambiguous there is no room for construction, and a court must presume that the parties meant what they expressed.” Calomiris v. Woods, 353 Md. 425, 436, 727 A.2d 358, 363 (1999) (quoting GMAC, 303 Md. at 261, 492 A.2d at 1310). The contractual language agreed to by the parties in this case is clear and unambiguous, and it must be applied so as to time-bar all of Plaintiff’s claims. The provision shortening the statute of limitations applies to “any claim or lawsuit arising out of employee’s employment with CNSI . . . .” Exhibit 2, at JR00011, ¶ 14 (emphasis added). The plain meaning of the terms “any claim or lawsuit” is just that: any claim, and it must apply regardless of the party asserting such claim.3 See Norville v. Anne Arundel Cnty. Bd. of Educ., 160 Md. App. 12, 70, 862 A.2d 477, 511-12 (2004) (“the words ‘any claim’ cannot reasonably be read to exclude certain categories of claims”), vacated on other grounds sub nom., Anne Arundel Cnty. Bd. of Educ. v. Norville, 390 Md. 93, 115, 887 A.2d 1029, 1042 (2005). The Agreement is clear and unambiguous for what is says as well as for what it does not say. For instance, the provision does not include a carve-out for the employer’s claims, nor does it limit the scope of the provision to “any claim or lawsuit employee may have arising out of employee’s employment with CNSI” or use other similar language. Exhibit 2, at JR00011, ¶ 14. The terms “any claim or lawsuit” must be applied using their plain meaning, and that plain meaning bans any claim or suit, filed by any party, related to Smith’s employment. 3 If this Court were to find the subject provision ambiguous, i.e., capable of more than one reasonable meaning, despite its clear application to “any claim,” summary judgment for Defendant is still appropriate here. Under Maryland law, an ambiguous contract provision “is to be construed against” the drafter. See Hebb v. Stump, Harvey & Cook, Inc., 25 Md. App. 478, 482, 334 A.2d 563, 567 (1975) (“It is well established that language in a contract prepared and included by one party is to be construed against that party if there is an ambiguity.”) (citations omitted). Construing the provision against CNSI leads to the same result: summary judgment must be entered in Defendant’s favor. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 16 of 33 17 In this case, all of Plaintiff’s claims arise out of Smith’s employment with CNSI. If not for Smith’s employment with CNSI, he would not have been in a position to allegedly: breach his employment contract (Count I); breach a duty of loyalty (Count II); or tortuously interfere with a contract in which he was involved solely due to his employment at CNSI (Counts III and IV). Therefore, the statute of limitations applicable to Plaintiff’s claims began to run, at the very latest, on April 9, 2014, which is the date on which CNSI admits it knew that Smith sent the Kunego Email. (Compl., ¶ 59.) CNSI did not file its suit until July 28, 2015, well more than one year following the latest possible accrual of the statute of limitations. Accordingly, under the Agreement, and the modification of the statute of limitations contained therein, Exhibit 2, at JR00011, ¶ 14, the statute of limitations has expired on all of Plaintiff’s claims and Defendant is entitled to summary judgment. B. Public Policy-Based Whistleblower Protections Require That Summary Judgment be Entered in Defendant’s Favor It is well-settled in this jurisdiction, through what the Supreme Court of the United States has described as a “traditional common-law principle[ ],” that “a promise is unenforceable if the interest in its enforcement is outweighed in the circumstances by a public policy harmed by enforcement of the agreement.” Town of Newton v. Rumery, 480 U.S. 386, 392 (1987) (citing, by c.f., RESTATEMENT (SECOND) OF CONTRACTS § 178(1) (1981) (“A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms.”); United States v. Purdue Pharma L.P., 600 F.3d 319, 327 (4th Cir. 2010); Pee Dee Healthcare, P.A. v. Sanford, 509 F.3d 204, 212 (4th Cir. 2007); see also State Farm Mut. Auto Ins. Co. v. Nationwide Mut. Ins. Co., 307 Md. 631, 643, 516 A.2d 586, 592 (1986) (“A contractual provision that violates public policy is invalid, Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 17 of 33 18 but only to the extent of the conflict between the stated public policy and the contractual provision.”) (citing Ins. Comm’r v. Metropolitan Life Ins. Co., 296 Md. 334, 340 n.6, 463 A.2d 793, 796 n.6 (1983); Reese v. State Farm Mut. Auto. Ins. Co., 285 Md. 548, 552 n.1, 403 A.2d 1229, 1231 n.1 (1979))). Put another way, contract provisions are unenforceable if they violate clear mandates of public policy. Here, Plaintiff seeks to enforce a contract provision that would, if applied, violate clear public policy supporting whistleblower activity. The contract provision is, therefore, unenforceable as to the alleged conduct of which Plaintiff complains. “‘Public policy has its place in the law of contracts, yet that will-o’-wisp of the law varies and changes with the interests, habits, need, sentiments, and fashions of the day.’” Bondcote Corp. v. Ayers, No. 7:05CV00705, 2006 WL 938734, *4 (S.D. W.Va. Apr. 11, 2006) (quoting Wallihan v. Hughes, 196 Va. 117, 125, 82 S.E.2d 553, 558 (1954)). While it may be true that “[t]he meaning of the phrase ‘public policy’ is vague and variable[,] . . . whatever ‘tends to injustice or oppression . . . or to the violation of a statute’ is against public policy.” Id. (quoting Wallihan, 196 Va. at 124, 82 S.E.2d at 558). Public policy is, plainly, “the principle ‘which declares that no one can lawfully do that which has a tendency to be injurious to the public welfare.’” Id. (quoting Wallihan, 196 Va. at 124, 82 S.E.2d at 558). As the Bondcote court noted, it is a complicated question whether a contract provision is considered unenforceable as against public policy. Id. Nevertheless, federal courts have declared, on several occasions, that a contract provision preventing disclosure of wrongdoing to governmental authorities violates public policy. Of note, the United States District Court for the Southern District of West Virginia has ruled: “[A] citizen may not be denied the right to inform on violation of federal laws.” United States v. Bailes, 120 F.Supp. 614, 626 (S.D. W.Va. 1954) (citing In re Quarles, 158 U.S. 532, 537-38 (1895) (additional citations omitted)). Similarly, the Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 18 of 33 19 United States District Court for the District of Columbia has noted that “[t]here is a constitutional right to inform the government of violations of federal laws—a right which under Article VI [of the Constitution] supersedes local tort or contract rights.” Maddox v. Williams, 855 F.Supp. 406, 415 (D.D.C. 1994) (citing In re Quarles, 158 U.S. at 536-38). On the same line of reasoning, the United States Court of Appeals for the Ninth Circuit has stated that “however high the duty an agent may owe its principal, society’s interest in preventing the commission of criminal acts overrides that duty, as exemplified by the wealth of state and federal criminal conspiracy statutes in this country.” Caesar Elecs., Inc. v. Andrews, 905 F.2d 287, 289 (9th Cir. 1990), cert. denied sub nom., Caesar Elecs., Inc. v. Fairchild Semiconductor Corp., 498 U.S. 984 (1991). Maryland’s state appellate courts agree that an employee’s right to “blow the whistle” on possible criminal conduct is protected by a clear mandate of public policy; Wholey v. Sears Roebuck, 370 Md. 38, 803 A.2d 482 (2002) (“Wholey II”),4 is instructive. In Wholey II, the plaintiff was employed as a security manager for a large department store. Id. at 44-45, 803 A.2d at 484-85. In the course of his employment, the plaintiff observed a store manager engaging in suspicious behavior, which the plaintiff believed to be indicative of theft of store merchandise. Id. at 44, 803 A.2d at 485. The plaintiff reported the manager’s behavior to his supervisor; with his supervisor’s permission, he installed a security camera in the manager’s office; and he informed the District Store Manager of the camera installation. Id. at 44-45, 803 A.2d at 484-85. Shortly thereafter, the District Store Manager terminated the plaintiff due to the manner in which the plaintiff handled the alleged theft investigation. Id. at 45, 803 A.2d at 485. The plaintiff then filed suit against the store and the District Store Manager alleging 4 Wholey II affirmed, on other grounds, a decision of the Court of Specials, Sears, Roebuck and Co. v. Wholey, 139 Md. App. 642, 779 A.2d 408 (2001). For ease of review, Defendant refers to these cases as Wholey I (Court of Special Appeals) and Wholey II (Court of Appeals). Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 19 of 33 20 abusive discharge/wrongful termination. Id. at 43, 803 A.2d at 484. After a jury verdict in favor of the plaintiff, the Court of Special Appeals reversed, holding that “no clear mandate of public policy was implicated in [the defendants’] termination of [the plaintiff’s] employment, as a matter of law,” and, therefore, the plaintiff could not sustain a cause of action for abusive discharge/wrongful termination. Id. at 46-47, 803 A.2d at 486-87; see also Sears, Roebuck and Co. v. Wholey, 139 Md. App. 642, 660, 779 A.2d 408, 419 (2001) (“Wholey I”). On subsequent appeal, the Court of Appeals specifically considered “whether a clear mandate of public policy favor[s] the investigation and reporting of suspected criminal activity . . . in Maryland such that the termination of an at-will employee who acted congruent with this public policy is wrongful.” Wholey II, 370 Md. at 48, 803 A.2d at 487. The Court began its analysis by discussing the prima facie elements of an abusive discharge/wrongful termination claim: “[T]o establish wrongful discharge, the employee must be discharged, the basis for the employee’s discharge must violate some clear mandate of public policy, and there must be a nexus between the employee’s conduct and the employer’s decision to fire the employee.” Id. at 50-51, 803 A.2d at 489 (citing Wholey I, 139 Md. App. at 649, 779 A.2d at 412 (quoting Shapiro v. Massengill, 105 Md. App. 743, 764, 661 A.2d 202, 213 (1995))). The Court then noted that “we must strive to confine the scope of public policy mandates to clear and articulable principles of law and to be precise about the contours of actionable public policy mandates.” Id. at 52, 803 A.2d at 490. In concluding that whistleblower protections represent a clear mandate of public policy, the Court of Appeals turned first to Maryland’s statutes which may be relevant to whistleblower activities. Id. at 57, 803 A.2d at 492-93. The Court noted that, while Maryland’s General Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 20 of 33 21 Assembly created whistleblower protections for public employees of the executive branch,5 the statutory protections afforded private employee-whistleblowers were extremely limited. Id. at 57 and n.11, 803 A.2d at 492-93 and n.11. Indeed, the Court recognized that the General Assembly had “declined to provide a statutory remedy for private employee-whistleblowers” with regard to whistleblowing of criminal activity. Id. at 57, 803 A.2d at 492. Nevertheless, the Court noted that “an express statutory mandate provides a discernible foundation for the public policy exception sought by the [plaintiff]; namely, the Legislature has created a misdemeanor offense for a person who harms or injures another’s person or property in retaliation for reporting a crime.” Id. at 57- 58, 803 A.3d at 493 (citations omitted). The specific statute on which the Court relied stated, at the time, as follows: (a) Prohibited acts.—A person may not intentionally harm or injure any person or damage or destroy any property with the intent of retaliating against a victim or witness for giving testimony in an official proceeding or for reporting a crime or delinquent act. (b) Penalty.—A person who violates this section is guilty of a misdemeanor and upon conviction shall be sentenced to imprisonment for not more than 5 years.6 5 See MD. CODE ANN., STATE PERS. & PENS. §§ 5-301 – 313 (1996). 6 Section 762 was re-codified in 2002 as Section 9-303 of the Criminal Law Article of the Maryland Code. The statutory text was then amended in 2005, but the scope and intent remains the same: Prohibited--In general (a) A person may not intentionally harm another, threaten to harm another, or damage or destroy property with the intent of retaliating against a victim or witness for: (1) giving testimony in an official proceeding; or (2) reporting a crime or delinquent act. . . . Penalty (c)(1) Except as provided in paragraph (2) of this subsection, a person who violates this section is guilty of a misdemeanor and on conviction is subject to imprisonment not exceeding 5 years or a fine not exceeding $5,000 or both . . . . MD. CODE ANN., CRIM. LAW § 9-303 (2005). Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 21 of 33 22 Id. at 58, 803 A.2d at 493 (quoting Md. Code, Art. 27, § 762 (1957, 1996 Repl. Vol., 2001 Supp.) (emphasis in original)). For the purposes of statutory analysis, the term “witness” was defined, in relevant part, as: “[A] person who: . . . [h]as knowledge of the existence of facts relating to a crime or delinquent act . . . .”7 Id. (quoting Md. Code, Art. 27, § 760(e) (1957, 1996 Repl. Vol., 2001 Supp.)). “From these statutory provisions,” the Maryland Court of Appeals recognized “a clearly definable public policy[,]” applicable to the private sector, that “the Legislature sought to protect those witnesses who report suspected criminal activity to the appropriate law enforcement or judicial authority from being harmed for performing this important public task.” Id. at 59, 803 A.2d at 494 (emphasis in original). In this Court’s Order denying Defendant’s Motion to Dismiss filed earlier in this case, this Court stated that the law on which Defendant relies for his whistleblower argument “is sound, but narrow.” (Order, Def. M. to Dismiss, Document 23, at 2.) The Court continued: “At this juncture, it is not clear that Smith suspected CNSI of criminal activity and engaged in whistleblowing activities.” (Id.) The Court also noted that Plaintiff’s claims were based on the allegation that Smith’s whistleblowing statements were intentionally false, which would prevent Defendant from obtaining protection under Maryland’s whistleblower laws. (Id. at 3.) Following discovery, it has become clear that Smith is entitled to whistleblower protections, and Defendant’s Motion for Summary Judgment must be granted. Smith, in the Kunego email, informed Branch, an employee of the Federal Centers for Medicaid and Medicare Services (“CMS”), of certain misinformation and misrepresentations made in CNSI’s bid in response to the LMMIS solicitation, as well as various other 7 Section 760(e) was re-codified in 2002 as Section 9-301 of the Criminal Law Article. The statutory text was then amended in 2003, 2005, and 2014, but the definition of “witness” remained unchanged. See MD. CODE ANN., CRIM LAW § 9-301(d) (2014) (“‘Witness’ means a person who: . . . has knowledge of the existence of facts relating to a crime or delinquent act[.]”). Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 22 of 33 23 improprieties. See Exhibit 4, at JR00017. Specifically, Smith, writing as Kunego, stated that: (a) CNSI could not obtain a performance bond and knew this at the time of the proposal’s submission; (b) the sole bank which CNSI listed on its bid had assigned CNSI’s account to a “special assets group”; (c) if CNSI produced a bond, it could only do so by including funds from its subcontractors; (d) CNSI had made a significant error in pricing its bid by including VVS (visit verification system) pricing differently than the other bidders; (e) DHH was asking CNSI to remove one subcontractor in favor of another; (f) some personnel named in the CNSI proposal would not be a part of the final project team; and (g) there had been consistent, frequent communication between CNSI’s executives and Secretary Greenstein since the procurement process began. Exhibit 4, at JR00017. Despite these statements being inconvenient for the Plaintiff, they are all, in fact, accurate. CNSI’s claim that the statements are intentionally false holds no water in light of the summary judgment record. As Smith disclosed in the Kunego Email, CNSI was in some financial trouble at the time of the bid. In fact, CNSI was in default of its loan with Bank of America as of the date of submission. Deposition of Bishwajeet Chatterjee, 86:8-24, Exhibit 16, at JR000868. Among CNSI’s leadership, there were internal discussions prior to the bid submission that if it was the successful bidder it would have “a lot of difficulty” posting the bond and that it was going to be a problem. Deposition of Adnan Ahmed, 241:14-24, Exhibit 15, at JR000545. Despite CNSI’s rosy outlook, which it displayed when it submitted its proposal, Exhibit 14, at JR000302-304, in reality, Bank of America amended the credit agreement it had extended to CNSI three times within the year prior to the submission due to repeated defaults and failures to cure. Deposition of Adnan Ahmed, 130:2-22, Exhibit 15, at JR000434. When Jaytee Kanwal learned, on August 24, 2011, that two carriers with whom CNSI had strong relationships required 100% collateral in Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 23 of 33 24 order to approve the bond he said, tellingly: “Uh. Oh. [sic]” Deposition of Inderpal “Jaytee” Kanwal, 245:13-252:13, Exhibit 22, at JR002162-JR002169; see also E-mail String dated August 24, 2011, Exhibit 20, at JR001783-JR001784. Just as Smith disclosed in the Kunego Email, CNSI was having trouble with the LMMIS Solicitation bonding requirement. After learning that the State of Louisiana would not grant CNSI’s request to waive the bond requirement, Adnan Ahmed, a co-founder and officer, stated in regards to obtaining the $6 million bond the CNSI should “not hit the panic button yet” but would need to “think outside the box” about how to find a way to post the bond. Deposition of Adnan Ahmed, 252:14-255:9, Exhibit 15, at JR000556-JR000559. Meanwhile, CNSI’s financial account was in Bank of America’s “special assets group,” because “[t]here [were] some concerns that the bank had” with CNSI’s financial strength, which “is not a good thing to happen.” Deposition of Adnan Ahmed, 116:21-120:3, Exhibit 15, at JR000420-JR000424. As of September 27, 2011, CNSI was still attempting to procure bond funding and was looking to various subcontractors to help post the funds. Deposition of Adnan Ahmed, 279:25-282:10, Exhibit 15, at JR000583-JR000584. In order to procure the bond, Plaintiff received $4 million of the bond from subcontractors; Noridian and Magellan each submitted $2 in order for CNSI to satisfy its bond requirement. Deposition of Inderpal “Jaytee” Kanwal, 278:23-279:13, Exhibit 22, at JR002195-JR002196. As Smith informed CMS in the Kunego Email, and CNSI readily admits, CNSI priced VVS services optionally in its bid, while Louisiana required that the VVS pricing be listed as mandatory. Deposition of Bishwajeet Chatterjee, 294:11-298:17, Exhibit 16, at JR00`076- JR001077. In fact, CNSI self-reported the pricing difference, acknowledging its mistake. Deposition of Thomas Creighton Carroll, 239:7-241:3, Exhibit 19, at JR001021-JR001023. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 24 of 33 25 As Smith disclosed in the Kunego Email, DHH wanted “CNSI to remove Thompson [sic] Reuters” as a subcontractor on the project. Deposition of Adnan Ahmed, 365:2-5, Exhibit 15, at JR000669; see also Deposition of Thomas Creighton Carroll, 469:2-8, Exhibit 19, at JR001610. Also, SAS was subcontracted to work on the LMMIS contract. Deposition of Thomas Creighton Carroll, 536:24-537:15, Exhibit 19, at JR001677-JR001678. As Smith stated in the Kunego Email, certain key personnel would not be a part of the final LMMIS team. Shailesh Patel, who was listed as the Deputy Project Manager in the bid submitted by CNSI, did not want to relocate to Baton Rouge. Deposition of Bishwajeet Chatterjee, 313:24-315:14, Exhibit 16, at JR001095-JR001097. This was an issue for CNSI. Deposition of Bishwajeet Chatterjee, 315:1-6, Exhibit 16, at JR001097. CNSI would need to hire a “different Deputy [Project Manager] that would [have to] meet the SFP criteria and have them interview with DHH and hire them.” Deposition of Bishwajeet Chatterjee, 315:15-19, Exhibit 16, at JR001097-JR001101. And, in an effort to “avert a crisis,” Shailesh Patel was named in the documentation. Deposition of Bishwajeet Chatterjee, 315:20-316:1, Exhibit 16, at JR001097- JR001098. Smith was also correct about CNSI’s interactions with Greenstein; in fact, the interactions between CNSI and Greenstein is well documented. Upon moving to Louisiana in regard to the LMMIS project, Creighton Carroll (“Carroll”), his wife, and his family stayed with Greenstein for about a week. Deposition of Thomas Creighton Carroll, 256:16-257:16, Exhibit 19, at JR001397-JR001398. Importantly, between November 1, 2010 and June 2011, Carroll had over 1,100 communications with Greenstein. Deposition of Thomas Creighton Carroll, 129:3- 132:15, Exhibit 19, at JR001269-JR001272. One of those communications was a phone call where Carroll and Greenstein discussed the experience requirement of the LMMMIS Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 25 of 33 26 Solicitation. Deposition of Bishwajeet Chatterjee, 237:2-238:12, Exhibit 16, at JR001010- JR001011. On February 16, 2011, one day before the LMMIS submission deadline, Alton Ashy, a CNSI consultant, hosted a dinner where Greenstein was invited and attended along with CNSI officer(s). Deposition of Bishwajeet Chatterjee, 234:5-237:19, Exhibit 16, at JR001016- JR001019. Contrary to Plaintiff’s bald assertion that Smith’s statements made in the Kunego Email were intentionally false, the statements were, in fact, true, as shown through Chatterjee’s, Ahmed’s, Kanwal’s, and Carroll’s deposition testimony in the CNSI v. Louisiana litigation, ibid., all of which took place prior to CNSI initiating its Complaint in this action.8 CNSI’s misrepresentation of facts in their bid in response to the LMMIS solicitation constitutes a criminal offense. See 18 U.S.C. § 287 (1986) (“Whoever makes or presents to any person or officer in the civil, military, or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be imprisoned not more than five years and shall be subject to a fine . . . .”). And, Smith testified at his deposition that he suspected CNSI was engaging in Medicaid fraud when he sent the Kunego Email. Deposition of Stephen A. Smith, 164:7-166:4, Exhibit 8, at JR00074-JR00075. He testified that he used the alias, John Kunego, to report CNSI’s conduct to CMS because “[t]here is a well-established history of Medicaid fraud being -- of individuals having the right and ability to interact anonymously with the Medicaid program. And I took that opportunity.” Deposition of Stephen A. Smith, 164:7-166:4, Exhibit 8, at JR00074-JR00075. Smith also testified that he viewed 8 Chatterjee’s Deposition took place on October 8, 2014, Exhibit 16, at JR000783-JR001136; Carroll’s deposition took place on April 15 and 16, 2015, Exhibit 19, at JR001142-JR001782; Kanwal’s deposition took place on September 25, 2014, Exhibit 22, at JR001918-JR002199; and Ahmed’s deposition took place on June 17 and 18, 2014, Exhibit 15, at JR000305-JR000782. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 26 of 33 27 himself as a whistleblower and had “information that [he] believe[d] would have -- that would be -- that would indicate a fraudulent situation or a -- some sort of malfeasance with a federal program . . . .” Deposition of Stephen A. Smith, 168:18-169:4, Exhibit 8, at JR00075. With these undisputed facts, all drawn from direct deposition testimony by CNSI executives, in mind, this Court should rule that Defendant is entitled to whistleblower protections under Maryland law. Smith reported suspected Medicaid fraud to the Federal Centers for Medicaid and Medicare Services. His disclosures were accurate, and, now, CNSI has filed suit against him asserting facts that are contradicted by its own officers’ prior deposition testimony. Smith is entitled to summary judgment on Plaintiff’s claims under Wholey II, 370 Md. 38, 803 A.2d 482 (2002); Town of Newton, 480 U.S. 386 (1987); and State Farm, 307 Md. 631, 516 A.2d 586 (1986). C. Smith is Entitled to Summary Judgment on Plaintiff’s Tortious Interference With Contract Claim Because Plaintiff Fails to Make Out a Prima Facie Case In Maryland, tortious interference is generally described as “a third party’s intentional interference with another in his or her business or occupation [whereby he] induces a breach of an existing contract or, absent an existing contract, maliciously or wrongfully infringes upon an economic relationship.” Macklin v. Robert Logan Assocs., 334 Md. 287, 297, 639 A.2d 112, 117 (1994) (citing Sharrow v. State Farm Mut. Auto. Ins. Co., 306 Md. 754, 763, 511 A.2d 492, 497 (1986)). The cause of action of tortious interference with contract requires proof of five (5) elements: 1) existence of a contract between plaintiff and a third-party; 2) defendant’s knowledge of that contract; 3) defendant’s intentional interference with that contract; 4) breach of that contract by the third party; [and] 5) resulting damages to the plaintiff. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 27 of 33 28 Fraidin v. Weitzman, 93 Md. App. 168, 189, 611 A.2d 1046, 1057 (1992) (citing Fowler v. Printers II, Inc., 89 Md. App. 448, 466, 598 A.2d 794, 802 (1991)). Importantly, only non-parties to a contract can be held liable for interference with a contract. Kaser v. Fin. Prot. Mktg., Inc., 376 Md. 621, 630, 831 A.2d 49, 54 (2003) (citing Alexander v. Evander, 336 Md. 635, 646 n.8, 650 A.2d 260, 265 n.8 (1994)). As an agent and employee of CNSI, Smith cannot be held liable for allegedly tortiously interfering with his principal’s contract. See, e.g., Mid-Atlantic Soaring Ass’n, Inc. v. FAA, No. RDB 05-2110, 2006 WL 1892412, *9 (D. Md. June 29, 2006) (agent/employees of party to economic relationship could not be held liable for tortious interference of principal’s contract). Although CNSI attempted to plead around this flaw in its case by claiming that Smith was acting outside the scope of his employment, (Compl., ¶ 82), Smith was actually complying with his contractual obligation to maintain “personal standards and ethics [that are] . . . at all times, . . . above reproach . . . .” See Exhibit 2, at JR00008, ¶ 7. Smith whistleblew on CNSI because it was the right thing to do ethically; he had “information that [he] believe[d] would . . . indicate a fraudulent situation or a – some sort of malfeasance with a federal program . . . .” Deposition of Stephen A. Smith, 168:1-169:4, Exhibit 8, at JR00075. CNSI may be disappointed that its misrepresentations to the government were revealed by its employee, but by requiring Smith to maintain “personal standards and ethics [that are] . . . at all times, . . . above reproach[,]” see Exhibit 2, at JR00008, ¶ 7, CNSI made Smith’s whistleblowing activity part of the scope of his employment. Under Maryland law, therefore, Plaintiff cannot maintain a tortious interference claim against Defendant. In addition, CNSI cannot satisfy the third or fourth elements of tortious interference with contract. With regard to the third element, the Court need look no further than the Kunego Email Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 28 of 33 29 itself to determine that Smith’s actions were not calculated to interfere with the CNSI-Louisiana contract. Smith clearly states in the Kunego Email that he believes “that it is in the best interest of the State of Louisiana and the federal government to vacate the award.” Exhibit 4, at JR00017-JR00018 (emphasis added). The desired effect of this letter was for the original award to be withdrawn and for Louisiana to reissue it; CNSI could have won the award again with truthful representations in its bid. Deposition of Stephen Smith, 182:3-183:9, Exhibit 8, at JR00079. This type of action occurs in many Medicaid procurements; it would not have reflected poorly on CNSI; and, thus, would not have caused CNSI any harm. Deposition of Stephen Smith, 187:1-188:3, Exhibit 8, at JR00080. With regard to the fourth element, Plaintiff has the burden of proving that the State of Louisiana breached its contract with CNSI as a result of Smith’s actions. Fraidin v. Weitzman, 93 Md. App. 168, 189, 611 A.2d 1046, 1057 (1992) (citing Fowler v. Printers II, Inc., 89 Md. App. 448, 466, 598 A.2d 794, 802 (1991)). As evidenced by its letter dated April 26, 2013, Louisiana terminated the contract for “cause” and/or for “convenience.” Exhibit 6, at JR00022-JR00026. Under Maryland law, a termination for convenience is not a breach of contract unless the party terminating the contract acted in bad faith. See Questar Builders, Inc. v. CB Flooring, LLC, 410 Md. 241, 275, 978 A.2d 651, 671 (2009) (termination for convenience provisions granting one party “broad discretion to determine whether and to what extent it will perform under the contract” are subject to implied contractual requirements of good faith and fair dealing); see also Securiforce Int’l Am., LLC v. United States, 125 Fed. Cl. 749, 782, 785 (2016) (“[A] proper termination for convenience does not constitute a breach of contract . . .” absent bad faith) (quoting TigerSwan, Inc. v. United States, 110 Fed. Cl. 336, 344 (2013)). The standard for bad faith is extremely high and requires proof tantamount to specific intent to injure the other Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 29 of 33 30 contracting party, malice, or “designedly oppressive conduct.” Kalvar Corp., Inc. v. United States, 543 F.2d 1298, 1302 (Ct. Cl. 1976). Notably, Plaintiff does not allege that the State of Louisiana acted in bad faith. Because the State of Louisiana terminated the contract, at the very least, “for convenience,” pursuant to Article III.C. of the CNSI-Louisiana Agreement, the termination of the contract was not a “breach,” and Plaintiff cannot satisfy the prima facie elements of tortious interference. Summary judgment in Defendant’s favor is therefore required here. D. Smith is Entitled to Summary Judgment on Plaintiff’s Civil Conspiracy Claim Because Plaintiff Fails to Make Out a Prima Facie Case Under Maryland law, a civil conspiracy is an agreement or understanding by two or more persons in an effort “to accomplish an unlawful act or to use unlawful means to accomplish an act not in itself illegal, with a further requirement that the act or the means employed must result in damages to the plaintiff.” Hoffman v. Stamper, 385 Md. 1, 24, 867 A.2d 276, 290 (2005) (quoting Green v. WSSC, 259 Md. 206, 221, 269 A.2d 815, 824 (1970)). Civil conspiracy is not, however, a “separate tort capable of independently sustaining an award of damages in the absence of other tortious injury to the plaintiff.” Alleco Inc. v. Harry & Jeannette Weinberg Found., Inc., 340 Md. 176, 189, 665 A.2d 1038, 1045 (1995) (quoting Alexander v. Evander, 336 Md. 635, 645 n.8, 650 A.2d 260, 265 n.8 (1994)). It is merely a vehicle to extend liability to a co-conspirator once a plaintiff has established the wrongdoing of one defendant. See Hovatter v. Widdowson, No. Civ.CCB-03-2904, 2004 WL 2075467, *10 (D. Md. Sept. 15, 2004) (citing Hoffman v. Stamper, 155 Md. App. 247, 289-90, 843 A.2d 153, 178-79 (2004); Hejirika v. Md. Div. of Corrs., 264 F.Supp.2d 341, 346-47 (D. Md. 2003)). In this case, Plaintiff incorrectly asserted its civil conspiracy cause of action as a stand- alone tort. Plaintiff did not identify any other potential defendant to which Plaintiff wished to Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 30 of 33 31 extend liability, and the statute of limitations has long passed as to any other third-party to which CNSI could claim liability should extend. In addition, Plaintiff’s civil conspiracy claim fails on its merits. To advance the claim, Plaintiff speculates that Smith acted as an agent of Molina and/or Norm Nichols in sending the Kunego Email. (Compl., ¶¶ 88-91.) Plaintiff has been unable to produce even a scintilla of evidence that Plaintiff and Molina and/or Mr. Nichols reached any agreement to harm CNSI. Indeed, both Smith and Mr. Nichols have testified that the purpose of the meeting was to discuss a potential employment opportunity for Smith with Molina in New Jersey. Deposition of Stephen Smith, 93:1-96:18, Exhibit 8, at JR00056-JR00057; Deposition of Norm Nichols, 42:10-43:22, 177:25-179:5, Exhibit 21, at JR001831. The fact that Defendant met on one occasion with Mr. Nichols is insufficient to somehow support a civil conspiracy claim, even if Plaintiff had pled it correctly. Accordingly, Defendant is entitled to summary judgment on Plaintiff’s civil conspiracy claim, i.e., Count IV of Plaintiff’s Complaint. IV. CONCLUSION For all of the reasons stated herein, Defendant, Stephen Alan Smith, respectfully requests that the Court deny Plaintiff’s Motion for Partial Summary Judgment and grant Defendant’s Cross-Motion for Summary Judgment. Respectfully submitted, /s/ Nathan I. Finkelstein Nathan I. Finkelstein, Esq. (Bar # 09668) Nat@fglawfirm.com THE FINKELSTEIN GROUP, P.C. 4600 N. Park Ave., Suite 101 Chevy Chase, Maryland 20815 Ph: (301) 951-8400 Fx: (301) 951-8401 Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 31 of 33 32 /s/ David E. Cahn David E. Cahn, Esq. (Bar # 18279) cahnd@cahnlawoffice.com The Law Office of David Cahn, LLC 13842A Outlet Drive, Suite 175 Silver Spring, Maryland 20904 Ph: (301) 799-8072 /s/ Matthew E. Feinberg Matthew E. Feinberg, Esq. (Bar # 17745) mfeinberg@pilieromazza.com PILIEROMAZZA, PLLC 888 17th Street, N.W., 11th Floor Washington, D.C. 20006 Ph: (202) 857-1000 Fx: (202) 857-0200 Attorneys for Defendant, Stephen A. Smith Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 32 of 33 33 CERTIFICATE OF SERVICE I, Matthew E. Feinberg, hereby certify that on this 6th day of June 2017, a true copy of the within document was served on each party appearing pro se and on the attorney of record for each other party separately appearing by delivering a copy of the same, first-class mail, postage prepaid, and by electronic mail, to: Harry A. Platt, Esq. Matthew J. Antonelli, Esq. Saul Ewing, LLP 1919 Pennsylvania Ave., N.W., Suite 550 Washington, D.C. 20006 /s/ Matthew E. Feinberg Matthew E. Feinberg, Esq. Case 8:15-cv-02207-PWG Document 46 Filed 06/07/17 Page 33 of 33