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CASE NO. 2:12-CV-00160-NT

DEFENDANTS REPLY MEMORANDUM I. INTRODUCTION AND OVERVIEW On May 5, 2012, the Plaintiff James Murtagh M.D. filed his first Complaint. The Defendants filed a comprehensive Motion to Dismiss. In recognition of the merits of the motion, Dr. Murtagh filed a First Amended Complaint. The Defendants filed a second Motion to Dismiss. Dr. Murtagh filed a response that did not comply with the Local Rules. The Court ordered Dr. Murtagh to file a pleading that complied with the Local Rules. He did so on January 7, 2013, but substantially revised his response and exceeded the twenty-page limit. In support of his Amended Response, Dr. Murtagh has filed four new documents: An unexecuted form "Professional Services Placement Agreement" prepared by Vista, (Dkt. No. 381); An email from Nick Daskalas to Jim Murtagh, (Dkt. No. 38-2); An unauthenticated article allegedly published in the Atlanta-Journal Constitution regarding Dr. Murtagh's conflict with Emory, (Dkt. No. 38-3); and an Affidavit executed by Dr. Murtagh. (Dkt. No. 38-4). These documents are not properly before the Court and should not be considered. Rodi v. S. New England Sch. of Law, 398 F.3d 5, 12 (1st Cir. 2004) (new facts in five affidavits, two additional

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letters, and an array of other documents tendered in response to a Motion to Dismiss could not be considered). II. ARGUMENT Dr. Murtagh argues in his Amended Response that the Defendants' Motion to Dismiss should be deemed to be a Rule 56 Motion for Summary Judgment because the Defendants have raised "legal defenses" to his claims. This is patently incorrect. The bedrock rule in the First Circuit is that "a properly raised affirmative defense can be adjudicated on a motion to dismiss[.]" Rodi, 398 F.3d at 12. A. Count One: Action for Breach of Tri-Party Contract

Defendants asserted that Dr. Murtagh cannot directly enforce the Vista Contract because he is not a party to the agreement. Dr. Murtagh concedes he is not a party but contends that he can directly enforce it under an exception for integrated contracts and that an integrated contract consisting of the Vista Contract and a Placement Agreement he separately executed with Vista exists. (Response at 10-11). Dr. Murtaghs alleged Placement Agreement with Vista is not attached to his Complaint and, therefore, cannot be used to support an integrated agreement argument. However, even if such an agreement had been properly submitted, it offers no safe harbor under Maine law. In order for a contract to incorporate another contract, it must expressly refer to it. Canadian Nat. Ry. Co. v. Montreal, Maine & Atlantic Ry., Inc., 786 F. Supp. 2d 398, 415 (D. Me. 2011). The unexecuted Placement Agreement does not refer to the Vista Contract and, thus, does not incorporate it. (See Placement Agreement, Dkt. No. 38-3). Next, Dr. Murtagh is also apparently arguing that the alleged Placement Agreement and the Vista Contract are multiple writings that make up one contract. Multiple writings can make up a single contract, but only if they are contemporaneous writings. Carr v. Bd. of Regents of the 2

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Univ. Sys. of Ga., 249 F. Appx 146, 150 (11th Cir. 2007). Any agreement Dr. Murtagh executed with Vista was entered into years after Vista and St. Mary's entered into the Vista Contact. For these reasons, the Placement Agreement does not incorporate the Vista Contract and Dr. Murtagh cannot directly enforce a tri-party contract.1 B. Count Four: Enforcement of Rights of Third Party Beneficiaries

Defendants assert that Dr. Murtagh is merely an incidental beneficiary of the Vista Contract and, therefore, has no third party beneficiary rights. Dr. Murtagh contends that he is an intended beneficiary of this contract. Dr. Murtagh bases his alleged third party beneficiary rights entirely on paragraph nine of the Vista Contract, which states that: If Client [St. Marys] reasonably finds the performance of any Professional providing Locum Tenens coverage under this Agreement to be unacceptable for reasons of professional competence or personal conduct it shall give notice to Vista and may then remove the physician from the placement. (Vista Contract at 9). And, he specifically contends that he is entitled to enforce the reasonable findings and notice provisions of this paragraph in order to effectuate the intent of the parties. (Am. Compl. 52-55).2 This argument has no validity. In order to terminate a placement pursuant to paragraph nine, St. Mary's is merely required to reasonably find that the performance of any Professional

Dr. Murtagh also argues that Vista is the Agent for both Murtagh . . . and the Hospital, that Vista [was] acting for Murtagh, and that the agency relationship of Vista to [the Hospital and Dr. Murtagh] grants direct contract rights to him. (Response at 10-11). He seems to suggest in this argument that because Vista was his agent any obligations owed by the Hospital to Vista were also owed to him. (See id.). This is without merit because the Placement Agreement explicitly disclaims any ongoing agency relationship. (See Placement Agreement at 19 (This Agreement does not create a partnership or any agency relationship . . . .)). He further alleges that under this paragraph the Hospital was required to give him notice in writing of the reasons for the termination of the placement, and the opportunity to be heard, confront witnesses, present evidence, and advocate his position before the termination. (Am. Compl. 55). This paragraph does not extend rights of this nature.

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providing locum tenens coverage is unacceptable for reasons of professional competence or personal conduct and to then give notice to Vista.3 None of these provisions is directed in any manner to Dr. Murtagh or any other locum tenens physician. And, absent such direction, Dr. Murtagh has not demonstrated that recognition of his right to enforce the reasonable findings and notice provisions in paragraph nine is necessary to effectuate the intention of parties. He is, therefore, not an intended beneficiary of paragraph nine. See DiMillo v. Travelers Prop. Cas. Co. of Am., 789 F. Supp. 2d 194, 207 (D. Me.2011). Finally, although paragraph nine could be construed to give Vista the right to challenge a placement termination and seek additional payments, it does not evidence an intent to confer that right on any locum tenens physician. In an effort to overcome these deficiencies, Dr. Murtagh argues that the reference to a "Professional" in paragraph nine and in other places in the Vista Contract demonstrates that the parties intended to confer third party beneficiary status to him under paragraph nine. (Response at 12). An incidental reference of this nature to a party who may receive some benefit from a contract is not sufficient under Maine law to create third party beneficiary rights. Fleet Bank of Me. v. Harriman, 721 A.2d 658 (Me. 1998) is instructive on this issue. There, the plaintiffs had a mortgage contract with Fleet Bank. Id. at 659. Fleet Bank also had a guaranty contract with a federal agency in which the agency guaranteed the loan. Id. Much like the Vista Contracts references to a professional, the guaranty generically referenced a borrower. Id. In the guaranty, Fleet Bank promised to consider the borrower (the plaintiffs) for an interest rate reduction before foreclosing. Id. Fleet Bank ignored this promise and foreclosed. Id. The Court determined that even though the guaranty benefitted the plaintiffs by enabling them to get

Paragraph nine does not require St. Marys to provide written findings to Vista and certainly not to a locum tenens physician.

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a loan and by providing pre-foreclosure protection, they were not third-party beneficiaries because there was no indication that the parties to the guaranty had a clear and definite intent to give [the plaintiffs] an enforceable benefit. Id. at 661 (citation omitted). Simply put, Fleet Bank's breach gave only the federal agency not the plaintiffs recourse. Id. The circumstances here are strikingly similar. Although Dr. Murtagh benefitted by being placed at St. Mary's by Vista, the mere non-specific reference in the Vista Contract to a Professional providing Locum Tenens coverage does not establish a clear intent by Vista and St. Mary's to give Dr. Murtagh the right to enforce the reasonable findings and notice provisions of paragraph nine. Also, even though as in Fleet Bank, paragraph nine may give Vista an enforceable right to sue for breach of paragraph nine, it does not extend this right to Dr. Murtagh.4 Finally, even though Dr. Murtagh could be impacted by a breach of the provisions of paragraph nine, this is not issue determinative since the controlling inquiry is whether the contract creates enforceable rights for a third party and not whether the third party may arguably suffer consequences due to a breach. See Devine v. Roche Biomed. Labs., 658 A.2d 868, 870 (Me. 1985) (the controlling inquiry is whether the contract at issue creates enforceable rights for a third party). C. Count Six: Retaliation against Whistleblower & Wrongful Discharge

Under Maine law, a failure to exhaust administrative remedies by first bringing an administrative action with the Maine Human Rights Commission (MHRC) before filing a

Dr. Murtagh claims the Hospital does not contest that the reasonable findings provision, if applicable, entitled him to a hearing. (Response at 8). The Hospital did not make such a concession because it is not true. The Vista Contract does not mention due process rights and the Bylaws specifically exclude a physician with temporary privileges from the due process rights Dr. Murtagh seeks. (See Motion at 8-9). In short, the Hospital has consistently argued that Dr. Murtagh has not been granted any due process rights under the Vista Contract or the Hospital's Bylaws.

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court action precludes recovery of civil penal damages or compensatory damages, punitive damages, and attorneys fees under the Whistleblower Protection Act. Thayer Corp. v. Reed, No. 2:10-cv-423 JAW, 2011 WL 268723 at *18 (D. Me. July 11, 2011); (See also Motion. at 1314). In their Motion to Dismiss, Defendants asserted that Dr. Murtagh did not plead that he had initiated the requisite administrative action necessary to recover civil penal damages, compensatory damages, punitive damages, and attorneys fees under the WPA. Murtagh now concedes as he must that he did not file a complaint with the MHRC. (See Response at 15-17; Aff. at 4). Therefore, the Court must dismiss all claims for civil penal damages, compensatory damages, punitive damages, and attorneys fees under the WPA. In addition to the dismissal of these damages, the remainder of the WPA claims should also be dismissed. Dr. Murtagh now concedes that he also did not make a report to a public body. (See Response at 15-17; Aff. at 4). He does allege that he reported activity to the Hospital, but this is not sufficient to preclude dismissal of his WPA claim because this is not the basis for his claim. Instead, he alleges that St. Mary's retaliated against him by terminat[ing] him proactively to prevent reporting, presumably to outside agencies. (Response at 16). To that end, Dr. Murtagh devotes a large portion of his Brief to asking this Court to create a new right under the WPA protection from termination due to the employer's anticipation or fear of reporting. By its plain language, the pertinent part of the WPA provides protection for an employee who reports activity. See M.R.S.A. 833(1)(a),(b),(e). And, the Maine Law Court interprets the WPA to require proof that the employee engaged in protected activity and limits protection to employees who report. Costain v. Sunbury Primary Care, P.A., 2008 ME 142, 6-8, 954 A.2d 1051, 1053-54. Dr. Murtagh seeks to expand this protection to employees who may make

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reports. (Response at 16-17). In support of this expansion, he cites King v. Dept. of Army, 2011 MSPB 83 (2011), an opinion of the Merit Systems Protection Board, which, according to its website, is an independent, quasi-judicial agency in the Executive branch, and a factually distinguishable Massachusetts qui tam suit in which the plaintiff actually made reports to his supervisors, United States v. Forest Industries, 729 F. Supp. 2d 446 (D. Mass. 2010). Unsurprisingly, Dr. Murtagh ignores multiple decisions in which courts have rejected whistleblower protection for perceived whistleblowers who have not engaged in reporting activities. See, e.g., Allen v. Charter Cty. of Wayne, 192 F. Appx 347, 351-52 (6th Cir. 2006); Stiehm v. City of Dundas, No. A07-1471, 2008 WL 2574974 at *4-5 (Minn. Ct. App. July 1, 2008); Chandler v. Dowell Schlumberger Inc., 572 N.W.2d 210, 212-14 (Mich. 1998). Lastly, Dr. Murtaghs whistleblower claim remains deficiently pled. In particular, he concedes that the causation element of his claim is speculative in nature and is nothing more than a fishing expedition. (See Response at 15 (stating that until discovery is begun he can only speculate on the [Hospitals] true motives.)) Such fishing expeditions are not permitted by the Federal Rules. See, e.g., DM Research, Inc. v. Coll. of Am. Pathologists, 170 F.3d 53, 55 (1st Cir. 1999). Dr. Murtaghs whistleblower claim should be dismissed as a matter of law or, if his claim survives, the Court must dismiss his right to seek recovery of civil penal damages, compensatory damages, punitive damages, and attorneys fees under the WPA. D. Count Two: Tortious Interference With Contracts Or Prospective Economic Advantage

To state a viable tortious interference claim, Dr. Murtagh must allege facts sufficient to make plausible "the existence of a valid contract or prospective economic advantage, interference with that contract or advantage through fraud or intimidation, and damages 7

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proximately caused by the interference." Sherbert v. Remmell, 2006 ME 116, 4 n.3, 908 A.2d 622, 623 n.3. Defendants asserted that Dr. Murtagh failed to satisfy this standard because he was relying solely on a fraud theory and had not provided the detail required to satisfy Rule 9(b). Dr. Murtagh now contends that he need not plead fraud with specificity, and his claim can survive under an alternative intimidation theory. The word "intimidation" does not appear in Dr. Murtagh's Amended Complaint. Nor has Dr. Murtagh pled in his Amended Complaint any facts to adequately plead intimidation under Maine law, which would require plausible facts that the Defendants procured a breach of contract by making it clear to Vista that the only manner in which Vista could avail itself of a particular benefit of working with defendant would be to breach its contract with plaintiff. Madigan v. Webber Hosp. Assoc., No. 2:11cv00094JAW, 2012 WL 4510958 at *18 (D. Me. Sept. 20, 2012) (stating standard for interference by intimidation). Dr. Murtagh did not plead facts of this nature and instead alleged only that the Defendants told Vista that the Hospital was terminating Dr. Murtagh's placement for unsatisfactory performance. (See Am. Compl. at 22-23, 42). In addition, it is irrelevant that he now apparently argues that the Defendants told Vista to terminate him or lose their business, (see Response at 18), because the allegation is not in his Amended Complaint. Dr. Murtagh's tortious interference claim, therefore, is based solely on fraud, and must satisfy Rule 9(b). See Goodman v. President & Trs. of Bowdoin Coll., 135 F. Supp. 2d 40, 59 (D. Me. 2001). It does not. Dr. Murtagh concedes that his Vista contract is the only existing contract at issue. (See Response at 18). He, however, has not pled sufficient facts to meet the fraud standard even with respect to that lone contract, as that standard requires (1) a false representation (2) of a material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false, (4) for

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the purpose of inducing another to act or refrain from acting in reliance on it, and (5) the other person justifiably relies on the representation as true and acts upon it to the damage of the plaintiff." Rutland v. Mullen, 798 A.2d 1104, 1111 (Me. 2002). Dr. Murtagh does not address this failure and argues that he does not have to meet this standard. He is mistaken, and his claim is, therefore, deficient because it does not contain sufficient factual matter to state a claim to relief that is plausible on its face. See Goodman, 135 F. Supp. 2d at 59. Finally, Dr. Murtagh's pleading as to unnamed potential contracts and relationships is even more deficient precisely because they are not identified in the Amended Complaint. See , LLC v. Alpine Investors, 739 F. Supp. 2d 8, 34 (D. Me. 2010) (dismissing tortious interference claim for failure to specifically identify current or prospective relationships). And, the Court should reject Dr. Murtagh's attempt to end run this deficiency by alleging new facts in his Amended Response and its accompanying exhibits. Rodi, 398 F.3d at 11-12. E. Count Three: Defamation

In their Motion to Dismiss, the Defendants argued that the statements Dr. Murtagh has identified are non-defamatory as a matter of law. Dr. Murtagh's counter is somewhat

nonresponsive, in that he has argued only that opinions are sometimes defamatory. While Cook Heyward acknowledges that opinions are sometimes actionable, it holds that the exception does not apply to a statement that someone or something was terminated for "unsatisfactory job performance". See Cook, Heyward, Lee, Hopper & Feehan, P.C. v. Trump Va. Acquisitions LLC, No. 3:12CV131HEH, 2012 WL 1898616 at *5 (E.D. Va. May 20, 2012). Dr. Murtagh's arguments do not change this result. F. Count Three: False Light

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In the Motion to Dismiss, the Defendants argued that Dr. Murtagh had not pled sufficient facts to establish the "publicity" element necessary to plausibly plead a False Light claim. Dr. Murtagh did not address this dispositive argument in his Amended Response. He, therefore, concedes the insufficiency of his pleadings with regard to this claim. G. Count Five: Failure to Explain Termination in Writing.

In their Motion to Dismiss, the Defendants argued that Dr. Murtagh was not entitled to written findings under Section 630 because (1) he admits he is as an independent contractor and (2) the relevant contracts support his admission. Dr. Murtagh's responds only to the second argument, claiming that the contractual language is outweighed by an eight-factor test for determining whether an individual is an employee or an independent contractor. This argument is insufficient to avoid dismissal. First, it does not address Dr. Murtagh's admission that he is an independent contractor. (See Am. Compl. at 31, 39, 53, 57). Second, he has not pled any facts in his Amended Complaint that address any of the eight factors. And, although he attempts to address some of these factors in his new response, (see Response at 22), the Court cannot consider these news allegations. See Rodi, 398 F.3d at 11-12. Respectfully submitted this 22nd day of January, 2013. /s/ Ronald W. Schneider, Jr. Ronald W. Schneider, Jr., Bar No. 8402 David A. Soley, Bar No. 6799 Travis M. Brennan, Bar No. 4525 BERNSTEIN SHUR 100 Middle Street, P.O. Box 9729 Portland, ME 04104-5029 Telephone: (207) 774-1200 Email: /s/ James L. Jones James L. Jones, Bar No. 3214 (pro hac vice) Sterling Kidd, Bar No. 103670 (pro hac vice) Michael Bernier, Bar No. 103960 (pro hac vice) BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC Meadowbrook Office Park, 4268 I-55 North Jackson, Mississippi 39211 Telephone: (601) 351-2400 Email: Attorneys for Defendants St. Marys Regional Medical Center, a/k/a St. Marys Hospital; St. Marys Health System; and Ira Shapiro, M.D. 10

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CERTIFICATE OF SERVICE This is to certify that on this 22nd day of January, 2013, I have on this day served all parties in this case in accordance with the directives from the Electronic Court Filing (ECF) which was generated as a result of electronic filing to all counsel listed below: Brian Mahaney Joseph Bird Bethany Kroe Mahaney & Ertl, LLC 1442 N. Farwell Avenue, Suite 604 Milwaukee, WI 53202 /s/ Ronald W. Schneider, Jr.