Herman v. Coloplast Corp.

          Benjamin E. Ford, Esq. and Paul W. Shaw, Esq., Verrill Dana, LLP; W. Anders Folk, Esq., Stinson Leonard Street LLP, counsel for Plaintiffs.

          Jacqueline A. Mrachek, Esq., and Nicole A. Truso, Esq., Faegre Baker Daniels LLP, counsel for Defendant.

          REPORT AND RECOMMENDATION

          BECKY R. THORSON, United States Magistrate Judge.

         This matter is before the Court on Defendant's motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), or in the alternative, for summary judgment pursuant to Federal Rule of Civil Procedure 56. (Doc. No. 118.)

         Defendant argues that the Amended Complaint should be dismissed pursuant to releases in Plaintiffs' separation agreements. Defendant also argues that Plaintiffs' retaliation claims under the False Claims Act (“FCA”) are time-barred. This Court held a hearing on October 25, 2016. (Doc. No. 146.) For the reasons stated below, this Court recommends that the motion to dismiss be converted to a motion for summary judgment and that the motion be granted.

         This case is an offshoot of a qui tam action brought in the District of Massachusetts on December 2, 2011. United States of America ex rel. Herman, et al. v. Coloplast Corp., et al., Civil Action No. 11-12131-RWZ (D. Mass.); (Doc. No. 1.) The underlying qui tam action remained under seal while the United States investigated the claims until approximately October 2014. (Doc. No. 142, Pls.' Br. 9.) On November 20, 2014, two of the relators in that case, Kimberly Herman and Kevin Roseff, amended the qui tam complaint to bring individual FCA retaliatory discharge claims against one of the defendants, Coloplast Corporation. (Doc. No. 21.) On June 1, 2015, Herman and Roseff amended the complaint again to add claims against Coloplast under the Minnesota Whistleblower Act. (Doc. No. 40.)

         On May 11, 2016, the district court in Massachusetts severed the new claims from the qui tam action and transferred them to the District of Minnesota. (Doc. No. 116.) After the transfer, Defendant moved to dismiss (Doc. No. 118), and the motion was referred to this Court. (Doc. No. 124.)

         I. Background

         A. Employment of Herman and Roseff by Coloplast

         Defendant Coloplast Corporation (“Coloplast”), is a Minnesota-based company that manufactures ostomy and continence care products reimbursed by Federal health care programs. Plaintiffs were former employees of Coloplast who were retained or hired in 2009 and terminated in 2011.

         1. Herman was Hired in 2009 and Terminated in April 2011

         Kimberly Herman was retained by Defendant as a consultant in 2009, hired as Vice President of Marketing in 2010, and promoted to President in April 2010. Herman's employment as President was governed by an Executive Employment Agreement (“Employment Agreement”). (Doc. No. 138, Aff. of Jacqueline Mrachek (“Mrachek Aff.”), Ex. E.) Under this agreement, Herman would be entitled to severance if she was fired without cause and signed a general release of all claims against the Defendant. (Id. § 2.06(f).)

         Herman's employment was terminated on April 15, 2011. On May 5, 2011, Herman signed a Separation Agreement and Release (“Separation Agreement and Release”). Under the Separation Agreement and Release, Herman received payments exceeding $600, 000: (1) $345, 100 (equal to 52 weeks of Herman's base salary); (2) COBRA premiums for up to 52 weeks; (3) $92, 957 representing a pro-rated cash incentive bonus; (4) $54, 774 representing a pro-rated long-term incentive bonus; (5) $102, 000 representing a long-term incentive bonus for prior years; (6) reimbursement of her housing lease for two months; (7) use of her fleet vehicle for approximately two months post-termination; (8) reimbursement of relocation costs for her family to return to Florida; and (9) six months of outplacement services. (Mrachek Aff., Ex. D.) The Separation Agreement and Release included the following release language:

In consideration of the Severance Compensation and other benefits described herein including but not limited to Articles 4 through 8, you, on behalf of yourself and any of your agents, representatives, insurers, heirs, executors, administrators and assigns, absolutely and unconditionally release and agree not to sue, file claims against, or pursue recovery of any alleged damages in any forum from Coloplast and any of Affiliates or its past or current parent corporations, subsidiaries, and divisions, and all respective past and present officers, directors, employees, agents, representatives, attorneys, insurers, indemnitors, successors and assigns of Coloplast, for any and all claims you may have against them up to the date you sign this Agreement, whether you now know of their existence. This includes but is not limited to claims or causes of action directly or indirectly relating to your employment including its termination; claims for breach of contract; any tort claims; claims of discrimination on the basis of age, race, national origin, gender, religion, creed, disability, marital status, or any other protected class. This includes but is not limited to claims arising under the Age Discrimination in Employment Act, the Older Workers Benefits Protection Act, Title VII of the Civil Rights Act, the Minnesota Human Rights Act, the Civil Rights Act of 1991, the Americans with Disabilities Act, the Minnesota Whistleblowing Statute, or any other federal, state or local statute, ordinance, common law or other principle of law.

You are not, however, waiving any claims that may arise after the date on which you sign ...