`
`
`
`Charles J. Messia, Esq.
`Lauren W. Gershuny, Esq.
`GENOVA BURNS LLC
`494 Broad Street
`Newark, New Jersey 07102
`Tel: (973) 533-0777
`Fax: (973) 533-1112
`cmessina@genovaburns.com
`lgershuny@genovaburns.com
`Attorneys for Plaintiff,
`FMLASource, Inc.
`
`
`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEW JERSEY
`
`
`
`FMLASOURCE, INC.,
`
`Plaintiff,
`
`v.
`
`RWJBARNABAS HEALTH INC.,
`
` Defendant.
`
`
`
`
`
` Civil Action No.:
`
`
`
`COMPLAINT AND
`DEMAND FOR JURY TRIAL
`
`
`
`Plaintiff, FMLASource, Inc. (“Plaintiff” or “FMLASource”), by way of Complaint
`
`against defendant RWJBarnabas, Inc. (“RWJB” or “Defendant”), alleges as follows:
`
`INTRODUCTION
`
`1.
`
`This action stems from RWJB’s unjustified breach of an agreement between it
`
`and FMLASource, pursuant to which FMLASource provided RWJB with FMLA and ADA
`
`leave administration services (the “Agreement”).
`
`2.
`
`The Agreement, which commenced on October 20, 2019, stipulated an initial
`
`three-year term that was not to expire until October 19, 2022. Yet, despite this required term
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`
`
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`of the contract, RWJB wrongfully, and without justification, terminated the Agreement as of
`
`December 15, 2020.
`
`3.
`
`After the decision makers at RWJB made up their mind that they wanted to end
`
`the Agreement with FMLASource, but without justification to do so, they proceeded to engage
`
`in a plan to conjure up criticisms about FMLASource’s services. This was done in an attempt
`
`to prematurely exit the Agreement under the auspices of a material breach without having to
`
`pay FMLASource for the remainder of the contract term, through October 19, 2022.
`
`4.
`
`RWJB’s conduct of engaging in a pattern of drumming up manufactured and
`
`pretextual complaints about FMLASource’s services over the last several months, in order to
`
`make it appear that RWJB could terminate the contract without being responsible to pay
`
`FMLASource for the remaining term, demonstrates RWJB’s bad faith in its performance of the
`
`Agreement.
`
`5.
`
`As a direct result of RWJB’s breaches of the Agreement and the implied
`
`covenant of good faith and fair dealing, Plaintiff has and will continue to suffer damages in
`
`excess of $1 million that it would have otherwise received as a benefit from the contract.
`
`PARTIES
`
`6.
`
`FMLASource, Inc. is a corporation incorporated in Illinois, with its principal
`
`place of business located in Chicago, Illinois.
`
`7.
`
`Upon information and belief, RWJB is a corporation incorporated in New
`
`Jersey, with its principal place of business located at 94 Old Short Hills Road, Livingston,
`
`New Jersey.
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`2
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`JURISDICTION AND VENUE
`
`8.
`
`This Court has diversity jurisdiction over the subject matter of this action
`
`pursuant to 28 U.S.C. § 1332(a). Federal subject matter jurisdiction is conferred over
`
`Plaintiff’s state law claims based on diversity of citizenship and because the amount in
`
`controversy exceeds the sum of Seventy-Five Thousand ($75,000.00) dollars, exclusive of
`
`interest and costs.
`
`9.
`
`Venue is proper in this Court under 28 U.S.C. § 1391(b) because a substantial
`
`part of the events or omissions giving rise to these claims occurred in the District of New
`
`Jersey. Namely, RWJB has all of its locations – which FMLASource services – in New
`
`Jersey.
`
`FACTS
`
`A. FMLASource’s History with Barnabas and Agreement with RWJB
`
`10.
`
`FMLASource, an industry-leading leave administrator that services thousands of
`
`customers throughout the country, are experts in processing and monitoring its clients’
`
`employees’ leaves of absence to which they are entitled under various federal and state laws,
`
`including, most notably, the Family and Medical Leave Act (“FMLA”).
`
`11.
`
` On or about July 1, 2016, FMLASource and RWJB’s predecessor, Barnabas
`
`Health, Inc. (“Barnabas”), entered into a contract for leave administration services.
`
`12.
`
`That same year, Barnabas announced that it had finalized a merger with Robert
`
`Wood Johnson Health System, the resulting entity of which was RWJB.
`
`13.
`
`In recognition of the stellar job FMLASource did on behalf of the Barnabas
`
`account, RWJB entered into a new contract – the Agreement – with FMLASource on or about
`
`October 19, 2019, pursuant to which FMLASource would administer the leaves of all
`
`3
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`Case 2:21-cv-02214-MCA-MAH Document 1 Filed 02/10/21 Page 4 of 14 PageID: 4
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`
`
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`employees -- approximately 33,000 -- of the merged entity, RWJB. Attached as Exhibit A is a
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`true and correct copy of the Agreement.
`
`14.
`
`Pursuant to the terms of the Agreement, the services which FMLASource was
`
`required to perform for RWJB (the “Services”) are encapsulated in Schedule I of the
`
`Agreement. Schedule I describes the Services which are comprised of the standard package of
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`services offered to FMLASource’s customers, including a designated account management
`
`contact; access to FMLASource’s call center and online tools; leave administration; and
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`reporting on program utilization, frequency of leaves, and absence history on a rolling 12-
`
`month basis.
`
`15.
`
`The parties also agreed that fees were to be structured based on the number of
`
`employees covered under the Agreement. Specifically, RWJB agreed to pay a fee of $1.43 per
`
`employee per month for FMLASource’s services outlined in Section I of the Agreement.
`
`16. Upon information and belief, as of the date of this Complaint RWJB has at least
`
`32,999 employees covered under the Agreement, resulting in an annual revenue to
`
`FMLASource of at least $566,262.84.
`
`17. Upon information and belief, it is likely that the number of employees covered
`
`under the Agreement will grow over the next two years, as RWJB has acquired or is in the
`
`process of acquiring and integrating at least two additional facilities. If this expansion occurs
`
`prior to October 2022, it will significantly increase RWBJ’s employee count, and
`
`consequently, the fees due under the Agreement.
`
`18.
`
`Pursuant to the Agreement, RWJB and FMLASource agreed to a guaranteed
`
`three-year initial term of the Agreement.
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`4
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`
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`19. Under the terms of the Agreement, RWJB is only permitted to terminate the
`
`Agreement if FMLASource “fails to perform any material service required to be performed” and
`
`if such failure is not cured within 30 days.
`
`FMLASource Onboards RWJB and Meets or Exceeds its Contractual Obligations
`
`B.
`
`
`20. After RWJB expressed its intention to move forward with FMLASource for its
`
`entire employee population, FMLASource began the re-implementation process with RWJB in
`
`May of 2019.
`
`21. During this process, which took several months and for which FMLASource did
`
`not charge RWJB, the relevant teams within RWJB and FMLASource met on a weekly basis to
`
`discuss the Services and address any specific issues or concerns with leave administration.
`
`22.
`
`This process ran smoothly and, after several months, on October 20, 2019, the
`
`Agreement “went live.”
`
`23. During the initial months of the Agreement, RWJB and FMLASource held
`
`weekly teleconferences to monitor the Services and address any specific concerns.
`
`24. During this time, RWJB made a variety of customization requests—that is,
`
`requests to modify the Services to fit RWJB’s specific needs, which were not requirements
`
`under the Agreement. For instance, RWJB requested a specific format for a leave report that it
`
`could use to process its payroll.
`
`25.
`
`Though not included within the scheduled Services, and therefore, normally
`
`subject to an additional fee, FMLASource created a custom report that met RWJB’s needs
`
`beginning January 1, 2020, without charging any additional fee.
`
`26. Another example, amongst others, of FMLASource customizing services for
`
`RWJB at no cost in reliance on RWJB acting in good faith with respect to the Agreement – and
`
`5
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`
`
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`in spite of having no contractual obligation to do so– was in March of 2020 when RWJB
`
`requested that FMLASource integrate with RWJB’s long-term disability carrier, Cigna.
`
`27. Again, while not required under the Agreement and believing RWJB would
`
`respect the Agreement and act in good faith, FMLASource developed an export file that would
`
`facilitate information-sharing with Cigna to make claims administration simpler for RWJB
`
`employees, without any additional fee.
`
`28.
`
`In addition to making these customization efforts and many more, which
`
`FMLASource had no obligation under the Agreement to do, FMLASource’s performance under
`
`the Agreement speaks for itself. Since the commencement of FMLASource’s relationship with
`
`RWJB (and its predecessor, Barnabas), FMLASource has administered tens of thousands of
`
`leaves with an accuracy rate of over 99%.
`
`29.
`
`Further, in a highly regulated space in which employee litigation and regulatory
`
`scrutiny are common, there have been zero reported investigations or lawsuits in connection
`
`with FMLASource’s services.
`
`C. Once RWJB’s New Business Personnel Takes Over, RWJB Manufactures Nitpick
`Complaints to Try To Justify Its Termination of the Agreement
`
`
`
`30. At or near the time of the Agreement’s commencement, FMLASource’s business
`
`contacts at RWJB changed and, upon information and belief, they were thrust into an existing
`
`vendor relationship that they did not necessarily want.
`
`31.
`
`These new business contacts at RWJB must have realized that FMLASource’s
`
`track record was stellar and that they would not be able to get out of the Agreement unless they
`
`began to manufacture dissatisfaction. So that is what they did.
`
`32. At around this same time, RWJB’s leadership stopped attending the parties’
`
`weekly teleconferences. Despite multiple follow-ups from FMLASource to continue these
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`6
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`
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`weekly discussions to ensure there were no issues with the Services and/or to quickly and
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`efficiently address any issues should they occur, RWJB failed to respond. Notably, at that time,
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`FMLASource was not sure why RWJB stopped attending the parties’ weekly calls. But it soon
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`became clear that RWJB had one foot out the door and was focused on figuring out how to exit
`
`the three-year-term Agreement – rather than complying with and, in good faith, working on its
`
`relationship with FMLASource.
`
`33.
`
`In or about May 2020, RWJB’s team started complaining about FMLASource;
`
`but, importantly, their complaints did not relate to the Services which FMLASource was required
`
`to provide. Instead, RWJB’s complaints primarily related to preferences and requests for
`
`customizations, which departed from the services for which RWJB and FMLASource had
`
`contracted.
`
`34.
`
`These nitpick complaints did not relate to contractual breaches on the part of
`
`FMLASource, much less “material” breaches; as a result, they did not permit RWJB to
`
`terminate the Agreement.
`
`35.
`
`RWJB, committed
`
`to
`
`its plan
`
`to somehow end
`
`the Agreement with
`
`FMLASource, continued in its pattern of manufacturing nitpick complaints, many of which did
`
`not reflect reality. Specifically, RWJB sent a letter dated June 6, 2020, which contained
`
`meritless complaints. Indeed, none of them rose to the level of a material breach of the
`
`contract, yet the correspondence concluded with a request to terminate the Agreement. This
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`was despite the fact that FMLASource was not given a chance to cure any alleged issues. Such
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`failure to provide FMLASource the opportunity to cure any deficiencies – baseless or not --
`
`was of course intentional, as RWJB did not want to see FMLASource succeed; rather, they
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`wanted FMLASource out.
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`7
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`Case 2:21-cv-02214-MCA-MAH Document 1 Filed 02/10/21 Page 8 of 14 PageID: 8
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`36.
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`FMLASource took the issues raised in RWJB’s June 6, 2020 letter seriously,
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`however, and immediately investigated the claims with a designated team organized
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`specifically to service the RWJB account. After a thorough review, FMLASource determined
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`that most of RWJB’s complaints were without merit and did not accurately reflect the history
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`of events.
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`37. More so, RWJB’s alleged errors or mistakes largely consisted of stated
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`preferences for the Services – not material failures to provide the Services as listed in Schedule
`
`I of the Agreement.
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`38. As a result, the June 6 letter reads as merely a “wish list” that FMLASource did
`
`not 100% fulfill. Nowhere in the June 6 letter did RWJB provide a specific example of a
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`material Service that FMLASource failed to provide.
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`39. Despite the fact that RWJB’s complaints related to preferences outside the four
`
`corners of the Agreement, FMLASource remained committed to working with RWJB to
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`improve the relationship.
`
`40.
`
`In furtherance of those efforts, FMLASource submitted a point-by-point
`
`response to each specific concern RWJB had, and described an action plan to address each.
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`41.
`
` On August 20, 2020, however, RWJB continued in its pattern of manufacturing
`
`service failures in order to get out of the three-year-term of the contract, and sent
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`FMLASource another letter, which likewise made minor complaints related to RWJB’s
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`preferences, but once again failed to identify any material service failures.
`
`42.
`
`The fact that no material service failures were identified in the August 20 letter
`
`is not surprising given that, as of the date of the letter, 96% of 277 surveyed RWJB employees
`
`rated FMLASource’s customer experience as positive.
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`8
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`
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`43. Despite the fact that RWJB employees almost universally felt that FMLASource
`
`was doing a good job, it was unfortunately becoming obvious that RWJB had made up its mind
`
`to terminate the Agreement and that it would not cooperate with FMLASource to improve the
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`relationship.
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`44. Nonetheless, FMLASource once again took the concerns identified in the August
`
`20 letter seriously and conducted numerous internal meetings to investigate whether RWJB’s
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`claims had merit.
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`45.
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`The investigation, however, revealed that they did not.
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`46.
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`In light of this finding, it became abundantly clear to FMLASource that RWJB’s
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`alleged concerns were not a genuine contractual grievance, but a pretext to terminate the
`
`Agreement prematurely.
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`47. As such, and in response to the August 20 Letter, FMLASource sent a detailed
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`response to RWJB on September 4, 2020, in which FMLASource re-asserted its commitment
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`to the relationship and the expectation that RWJB would honor the Agreement.
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`48. Despite all of FMLASource’s efforts, on October 19, 2020, RWJB sent a letter
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`purporting to terminate the Agreement effective December 15, 2020.
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`In Its Haste to Get FMLASource Out, RWJB Creates Confusion Among Its
`Employees
`
`D.
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`
`
`49. Although RWJB informed FMLASource that it would be terminating the
`
`Agreement on December 15, 2020, prior to that date RWJB started telling its employees that as
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`of December 1, 2020, RWJB was transitioning their leave of absence vendor from
`
`FMLASource to Reed Group (“Reed”), a competitor of FMLASource. This contradiction
`
`between what RWJB told FMLASource and what it told its employees has caused much
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`confusion for RWJB’s employees and FMLASource.
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`
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`9
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`FIRST CLAIM FOR RELIEF
`(BREACH OF CONTRACT)
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`50.
`
`Plaintiff hereby incorporates by reference each of the preceding allegations as
`
`though each were specifically set forth at length herein.
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`51.
`
`FMLASource and RWJB entered into the Agreement whereby Plaintiff was to
`
`be paid per employee per month for the period of three years for FMLA and ADA leave
`
`administration services.
`
`52.
`
` Pursuant to the Agreement, RWJB was to pay FMLASource a fee of $1.43 per
`
`employee per month in exchange for all of the Services as set forth in Schedule I to the
`
`Agreement.
`
`53.
`
`RWJB materially breached the Agreement by, among other actions and inactions
`
`described above, terminating the Agreement prior to the end of the contract term without
`
`justification for doing so under the terms of the Agreement.
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`54.
`
`FMLASource has suffered damages as a direct and foreseeable result of RWJB’s
`
`breaches because, among other damages, FMLASource has not received the benefit of its
`
`bargain in the Agreement – its fee, through October 19, 2022.
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`55.
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`FMLASource has complied with all conditions precedent to the bringing of this
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`action or, in the alternative, RWJB has waived and/or is estopped from raising conditions
`
`precedent as a defense.
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`WHEREFORE, Plaintiff demands judgment against RWJB for compensatory damages,
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`consequential damages, punitive damages, attorneys’ fees and costs of suit, prejudgment and
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`post-judgment interest, and such other and further relief as the Court may deem just and
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`equitable.
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`10
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`SECOND CLAIM FOR RELIEF
`(BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING)
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`56.
`
`Plaintiff hereby incorporates by reference each of the preceding allegations as
`
`though each were specifically set forth at length herein.
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`57.
`
`Every contract made under New Jersey law incorporates an implied covenant of
`
`good faith and fair dealing.
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`58.
`
`FMLASource and RWBJ entered into the Agreement which is a valid and
`
`enforceable contract between the parties.
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`59.
`
`RWBJ acted with bad motive and engaged in bad faith conduct, by, among other
`
`things, terminating the Agreement prior to the contract term, without justification, with the
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`express purpose of depriving FMLASource of benefits under the Agreement.
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`60.
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`Further, RWJB breached the implied covenant of good faith and fair dealing by
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`ceasing to productively communicate with FMLASource and otherwise failing to cooperate
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`with FMLASource, while at the same time shifting its focus to manufacturing alleged service
`
`defects so that it could prematurely and unlawfully exit the Agreement.
`
`61.
`
`RWJB further breached the implied covenant of good faith and fair dealing by
`
`confusing both its own employees as well as FMLASource by informing FMLASource that it
`
`would be terminated on December 15, 2020, but telling its own employees that Reed would be
`
`taking over leave administration as of December 1, 2020.
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`62.
`
`FMLASource has suffered damages as a direct and foreseeable result of RWBJ’s
`
`breaches of the implied covenant of good faith and fair dealing.
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`WHEREFORE, Plaintiff demands judgment against RWJB for compensatory damages,
`
`consequential damages, punitive damages, attorneys’ fees and costs of suit, prejudgment and
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`11
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`post-judgment interest, contribution, indemnification, and such other and further relief as the
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`Court may deem just and equitable.
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`THIRD CLAIM FOR RELIEF
`(UNJUST ENRICHMENT)
`
`
`
`63.
`
`Plaintiff hereby incorporates by reference each of the preceding allegations as
`
`though each were specifically set forth at length herein.
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`64.
`
`RWJB has been unjustly enriched by accepting the services of FMLASource –
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`services that will, among other things, benefit RWJB through the end of the term of the
`
`Agreement, while refusing to pay FMLASource for those services.
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`65.
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`The retention of this benefit without remuneration to Plaintiff would be unjust.
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`WHEREFORE, Plaintiff demands judgment against RWJB for compensatory damages,
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`consequential damages, punitive damages, attorneys’ fees and costs of suit, prejudgment and
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`post-judgment interest, and such other and further relief as the Court may deem just and
`
`equitable.
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`FOURTH CLAIM FOR RELIEF
`(DECLARATORY JUDGMENT)
`
`Plaintiff hereby incorporates by reference each of the preceding allegations as
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`66.
`
`though each were specifically set forth at length herein.
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`67.
`
`Plaintiff seeks relief under the New Jersey Declaratory Judgment Act, N.J.S.A.
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`2A:16-50 et seq., which allows parties to sue for a judicial declaration in order to declare and
`
`settle the rights and obligations of the parties.
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`68.
`
`FMLASource seeks a declaration that it is not in breach of the Agreement and
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`therefore, there is no justification for a termination of the Agreement.
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`12
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`
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`WHEREFORE, Plaintiff respectfully requests that this Court enter an Order declaring
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`that FMLASource is not in breach of the Agreement, and therefore there is no justification for a
`
`termination of the Agreement, together with such other and further relief as the Court deems just
`
`and equitable.
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`Dated: February 9, 2021
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`Respectfully submitted,
`
`
`By:
`
`
`
`
`
`
`
`
`s/ Charles J. Messina
`Charles J. Messina, Esq.
`GENOVA BURNS LLC
`494 Broad Street
`Newark, New Jersey 07102
`Tel: (973) 533-0777
`Fax: (973) 533-1112
`cmessina@genovaburns.com
`Attorneys for Plaintiff,
`FMLASource, Inc.
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`JURY DEMAND
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`Plaintiff demands a trial by jury as to all issues so triable.
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`LOCAL CIVIL RULE 11.2 CERTIFICATION
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`Pursuant to L. CIV. R. 11.2, the undersigned counsel for Plaintiff hereby certifies that
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`this matter in controversy is not the subject of any action pending in any court, or of any
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`pending arbitration or administrative proceeding.
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`13
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`Case 2:21-cv-02214-MCA-MAH Document 1 Filed 02/10/21 Page 14 of 14 PageID: 14
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`LOCAL CIVIL RULE 201.1(d)(3) CERTIFICATION
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`Pursuant to L. CIV. R. 201(d)(3), the undersigned counsel for Plaintiff hereby certifies
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`that the amount in controversy exceeds $150,000.00.
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`By:
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`
`
`
`s/ Charles J. Messina
`Charles J. Messina, Esq.
`GENOVA BURNS LLC
`494 Broad Street
`Newark, New Jersey 07102
`Tel: (973) 533-0777
`Fax: (973) 533-1112
`cmessina@genovaburns.com
`Attorneys for Plaintiff,
`FMLASource, Inc.
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`Dated: February 9, 2021
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`15797081v1 (24536.001)
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`14
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