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Patricia Ann Earl v. H.D. Smith Wholesale Drug

September 8, 2011


The opinion of the court was delivered by: Sue E. Myerscough, U.S. District Judge:

E-FILED 3:08-cv-03224-SEM-BGC # 89 Page 1 of 27

Friday, 09 September, 2011 09:44:42 AM

Clerk, U.S. District Court, ILCD


On October 10, 2008, Plaintiff Patricia Ann Earl filed a Complaint alleging gender discrimination in violation of the Equal Employment Opportunity Act (42 U.S.C. § 2000(e), et seq.) (Title VII) and several state law claims. The matter is now before the Court on Defendant H.D. Smith Wholesale Drug Company's (H.D. Smith) Motion for Summary Judgment (d/e 74) and Defendant John D'Amaro's Motion for Summary Judgment (d/e 79). For the reasons that follow, H.D. Smith's Motion for Summary Judgment is granted with respect to Counts I and II. Because the Court declines to exercise supplemental jurisdiction over Earl's state law claims, Counts III, IV, VI, and VII are dismissed without prejudice and D'Amaro's Motion for Summary Judgment is denied as moot.


Earl began working for H.D. Smith in 2005 as Vice President of Drug Divisions. In 2006, Earl became H.D. Smith's Vice President of Insitutional Marketing, at which time she entered into an Executive Employment Agreement with H.D. Smith.

At all relevant times, Defendant D'Amaro was employed by H.D. Smith as the Chief Financial Officer (CFO). D'Amaro's primary responsibility was the financial representation of the company. He was also responsible for reviewing contracts to ensure that the right business issues were addressed in them. Dale Smith is the Chairman of the Board and Chief Executive Officer (CEO). Smith was D'Amaro's direct superior.

In 2007, H.D. Smith began negotiating a contract*fn1 with a Pennsylvania-based hospital system for drugs and other pharmaceutical products. The hospital system included Lehigh Valley Hospital and Health Network (Lehigh Valley) and Health Spectrum Pharmacy Services. Earl was involved in these negotiations. The Lehigh Valley Contract was expected to generate sales of six-to-seven million dollars a month.

By late 2007, H.D. Smith and Lehigh Valley had been negotiating the Lehigh Valley Contract for several months. Earl was charged with managing the final revisions. It was Earl's responsibility to work through the final revision process and get the necessary signatures. Earl's counterpart during this process was Ann Faust, Lehigh Valley's Contract and Product Manager.

On November 27, 2007, Earl sent what she characterized as "executable contracts" requesting Faust to have each of the contracts signed and returned. On January 23, 2008 at 3:11 p.m., Dale Bergman -- H.D. Smith's Finance Director in the division in which Lehigh Valley is located -- sent an e-mail to D'Amaro, Earl, and others in which he stated that Lehigh Valley was preparing to sign the contract. Earl read that e-mail. In the same e-mail, Bergman also stated that he believed the Lehigh Valley Contract would have to be signed by Smith due to H.D. Smith's "Signing Authority policy." Under the signing authority policy, Smith was the only one authorized to sign the Lehigh Valley Contract for H.D. Smith because of the dollar amount of the contract.

On January 26, 2008, at 12:40 p.m., D'Amaro sent an e-mail to Bergman, Smith, and Earl regarding changes to be made in the Lehigh Valley Contract. D'Amaro attached a revised copy of the Lehigh Valley Contract to his email. The revised contract sent by D'Amaro included several modifications to the contract, including the following: (a) moved language contained in paragraph 17 of the revised contract from an attachment into the actual document; (b) changed the notice provisions in the document, contained in paragraph 22 at page 7, to indicate that any notice under the contract should be sent to Smith as CEO rather than D'Amaro as CFO; (c) changed the signature page to provide that Smith -- rather than D'Amaro -- would sign on behalf of H.D. Smith; and (d) added paragraph 29 to permit AR financing. D'Amaro was not involved in the day-to-day changes made to the Lehigh Valley Contract prior to January 26.

On January 29, 2008, Earl was working in H.D. Smith's facility in Kearny, New Jersey. At 12:39 p.m. that day, Earl sent an email to Faust in which she stated "tell me what is on your signed page." At 2:29 p.m., Earl emailed Faust a copy of the contract with "the changes we discussed" and inserted paragraphs 17 and 29 added by D'Amaro. The email indicated that Earl was "able to keep all pages in the same order as before." The e-mail stated the contract was the final documents for both sides and requested that Faust print the document and give H.D. Smith a signed contract the next day. Earl indicated she would get the contract signed by H.D. Smith's CFO.

On the morning of January 30, 2008, Earl traveled from H.D. Smith's New Jersey facility to Lehigh Valley for a business meeting. Prior to the meeting, Earl and Faust called D'Amaro. During the call, D'Amaro was told that Faust "had gotten" the Lehigh Valley Contract signed and they would be given to Earl. Later that same day, Faust faxed a signed copy of the contract to D'Amaro. After D'Amaro received Faust's fax, he asked his assistant, Leslie Collins ("Collins"), to review the contract to ensure that the changes that he had requested on January 26 were included in it. On January 31, 2008, Collins informed D'Amaro that the signed copy of the Lehigh Valley Contract that Faust had faxed to him contained some -- but not all -- of the changes that D'Amaro had requested in his January 26 email to Earl. Paragraph 17, for example, did not include the weekly pay terms which were to have been in the final contract. As far as Paragraph 22 is concerned, the name of the person to whom notice was to be sent had not been changed from D'Amaro to Smith. Similarly, the name of the person who was to sign the Lehigh Valley Contract for H.D. Smith had not been changed from D'Amaro to Smith. Additionally, the faxed contract had two paragraphs which were numbered "34." Finally, the signature page of the faxed contract indicated that it had been signed by Lehigh's Terry Capuano ("Capuano") on January 23, and there was no indication that Capuano had authorized or initialed the changes.

After Collins reported to him, D'Amaro called Earl. D'Amaro pointed out that the contract had not been signed on January 30, 2008, as it should have been. He also observed that, while the contract had a signature page that appeared to have been signed and dated by Capuano on January 23, the contract included changes that D'Amaro had not requested until January 26. Earl told D'Amaro that she would call Faust to address the situation. D'Amaro told Earl not to "involve the customer" at that point and he would take care of it.

Shortly after her telephone conversation with D'Amaro, Earl sent an email to D'Amaro in which she explained that the changes that had been made to the contract were "approved" by Faust.*fn2 In the same email, Earl forwarded a previous email (originally sent to Faust but not D'Amaro) in which she stated: "I was able to keep all the pages in the same order as before." In his response to Earl's email, D'Amaro explained to Earl that the two of them needed to meet to discuss the various versions of the contract which were "out there." He stated that H.D. Smith and Lehigh Valley did not have a signed contract with which he was comfortable. He also stated that he had left a voicemail message for Faust letting her know that there was a problem with the contract.

After he spoke with Earl, D'Amaro revised the contract so that it would include all of the changes that he had requested on January 26, 2008 and a new signature page. On February 1, 2008, D'Amaro sent the corrected final contract to Faust by email so that Capuano could sign the final version.

Earl asked to meet with D'Amaro on February 6, 2008. During the meeting, Earl told D'Amaro that what he had said to her over the phone on January 31, 2008, was accusatory. Earl told D'Amaro that she was disappointed with him for speaking to her in that way in light of all of the work that she had put in on the Lehigh Valley Contract. Earl told D'Amaro that she had expected to be congratulated for finally getting the contract signed. Earl indicated that she told D'Amaro she felt he was demeaning in the way he talked to her and indicated that the communication may have been just as bad on her part and that they needed to communicate better. Earl does not recall talking about any other specifics regarding the January 31, 2008 telephone conversation during her February 6, 2008 meeting with D'Amaro. Rather, she recalls discussing the tone in which D'Amaro had talked to her on January 31. Additionally, Earl suggested that she thought there were some "pricing discrepancies that were occurring at Lehigh Valley" related to "credit and rebilling." Earl told D'Amaro he had called her "integrity into question." She also stated that she thought D'Amaro's "integrity" was "in question" because he had not taken responsibility for and resolved the "credit and ebilling" situation.

On February 7, 2008, D'Amaro met with Smith for their weekly meeting. That meeting was the first meeting during which Smith recalls having communications from D'Amaro regarding Earl and the Lehigh Valley issues. D'Amaro indicated he had been involved in a process to analyze and determine which version of the contract was correct. The primary issue raised regarding Earl during the meeting related to the fact that a proposed contract with a very large hospital system in Pennsylvania had been executed by an authorized individual there and subsequently had been altered. D'Amaro indicated he had reviewed the document and was making Smith aware of that.

D'Amaro informed Smith that the Lehigh Valley Contract "process was compromised in that we [H.D. Smith] received a contract that was signed and that had insertions in it after the date of the signature on the particular contract." D'Amaro also informed Smith that he had reviewed the contract and compared it with the drafts that he had sent to Earl on January 26. D'Amaro and Smith discussed how "it appeared that portions of the [contract] had been altered to mask changes that were subsequent to the signat[ure]." Smith was speaking about changes in the sections of the contract that had to be changed in such a way that they fit into the existing pagination and changes that had occurred at times that were inconsistent with the time the document had been signed. D'Amaro informed Smith that he had sent a revised copy of the contract to Lehigh Valley to be signed.

Later that same day, Smith called D'Amaro back into his office. Smith told D'Amaro that he wanted to have Earl come meet with them so that they could discuss "what occurred with Lehigh Valley to understand from her perspective." Smith then called Earl and asked her to join them. Earl joined Smith and D'Amaro, and Smith asked Earl if she was aware of "the fact that there had been alterations to the contract after it had been signed." Smith told Earl that was "unacceptable" because it put H.D. Smith in a situation where if "the customer compared the agreement they'd signed with the agreement [that was faxed by Faust to D'Amaro on January 30, 2008,] that [Smith] would have signed without [D'Amaro's] intervention, then there wouldn't be any consistency between th[em]." Smith believed that what had occurred could "invalidate . . . a significant contract for the company." He also was concerned that "it would damage our credibility and character in terms of an analysis that might occur internally at Lehigh and their feeling that H.D. Smith had done something underhanded or unethical." When asked if she recalled telling Dale Smith that the person who signed the contract was ...

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