Lapchak v. Paradigm Biopharmaceuticals (USA), Inc.

Summary

The United States District Court for the Southern District of California granted Defendants’ Rule 12(b)(6) motion to dismiss claims in Paul A. Lapchak’s Second Amended Complaint. The court dismissed the breach-of-contract claim against Donna Skerrett without prejudice and with leave to amend, and dismissed the California Labor Code section 1102.5 whistleblower claims against Skerrett with prejudice. The section 1102.5(b) and (c) claims against Paradigm Biopharmaceuticals (USA), Inc. were dismissed without prejudice and with leave to amend.

Holdings

1. A breach-of-contract claim cannot proceed against Skerrett where the pleaded Employment Agreement was between Lapchak and Paradigm and Skerrett was not alleged to be a party to the agreement.
2. The plaintiff's section 1102.5 whistleblower claim against Skerrett was dismissed because the complaint did not allege an employment relationship between Lapchak and Skerrett, and the court rejected the theory that the statutory phrase 'any person acting on behalf of the employer' permits individual liability under the circumstances presented.
3. The complaint failed to state a section 1102.5(b) retaliation claim against Paradigm because the alleged drug-toxicity report did not identify a specific legal violation and the compensation-related allegations did not identify to whom plaintiff complained or otherwise adequately plead Paradigm's awareness of protected activity.
4. A section 1102.5(c) claim requires allegations that the employee refused to participate in conduct that would violate a statute, rule, or regulation; complaints about allegedly unlawful activity, without allegations identifying the requested conduct and the employee's refusal, are insufficient.

Questions Presented

1. Whether Lapchak adequately pleaded a breach-of-contract claim against Skerrett when he alleged that the Employment Agreement was between himself and Paradigm, not Skerrett.
2. Whether Lapchak could assert California Labor Code section 1102.5 claims against Skerrett without alleging an employment relationship between himself and Skerrett.
3. Whether Lapchak adequately pleaded a section 1102.5(b) retaliation claim against Paradigm based on alleged reports of drug toxicity and compensation-related complaints.
4. Whether Lapchak adequately pleaded a section 1102.5(c) retaliation claim against Paradigm by alleging complaints about unsafe drug activity without identifying a refusal to participate in unlawful conduct.

Disposition

dismissed