United States District Court, S.D. Indiana, Indianapolis Division
Jane Magnus-Stinson, Chief Judge
Cindy Costello filed a Complaint against her employer, Board
of Trustees of the Flavius J. Witham Memorial Hospital d/b/a
Witham Health Services (“Witham”) and
several of its employees, alleging that she was denied
employment benefits that were owed to her, including overtime
compensation, bonuses, paid time off, and reimbursement of
expenses. [Filing No. 1.] Defendants filed a Motion
for Partial Judgment on the Pleadings, pursuant to Federal
Rule of Civil Procedure 12(c), seeking judgment on some of
Ms. Costello's state law claims, which was fully briefed
by the parties. [Filing No. 14; Filing No.
15; Filing No. 20; Filing No. 24.] Ms.
Costello then filed a Motion for Leave to File an Amended
Complaint, seeking to add additional claims without changing
the claims raised in her initial Complaint. [Filing No.
36.] Pursuant to the Court's order, [Filing No.
38], Defendants filed a Notice, declining to oppose the
Motion to Amend and indicating their desire to stand on the
arguments made in their Motion for Partial Judgment on the
Pleadings and apply those arguments to the Amended Complaint,
if amendment was permitted, [Filing No. 39].
Court now GRANTS Ms. Costello's Motion
for Leave to Amend, [Filing No. 36], and
DIRECTS the Clerk to docket the proposed
Amended Complaint, [Filing No. 36-1], as the
operative complaint in this action, with the proposed
exhibits, [Filing No. 36-2; Filing No.
36-3], docketed as exhibits thereto. The remainder of
this Order will address Defendant's Motion for Partial
Judgment on the Pleadings is it relates to the Amended
Complaint. For the reasons stated herein, the Court grants
the motion in part and denies the motion in part.
motion for judgment on the pleadings under Rule 12(c) is
governed by the same standards as a motion to dismiss for
failure to state a claim under Rule 12(b)(6). Adams v.
City of Indianapolis, 742 F.3d 720, 727-28 (7th Cir.
2014). To survive a motion to dismiss under Rule 12(b)(6),
the complaint must contain allegations that collectively
“state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
(2007)). “Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do
not suffice.” Iqbal, 556 U.S. at 678 (citing
Twombly, 550 U.S. at 555). In deciding a Rule 12(c)
motion, the Court must accept all well-pled facts as true and
draw all permissible inferences in favor of the non-movant.
Archer v. Chisholm, 870 F.3d 603, 612 (7th Cir.
to allege fraud, the plaintiff “must state with
particularity the circumstances constituting fraud.”
Fed.R.Civ.P. 9(b). This means that the plaintiff ordinarily
must describe the “who, what, when, where, and
how” of the fraud. United States ex rel. Berkowitz
v. Automation Aids, Inc., 896 F.3d 834, 839 (7th Cir.
2018) (internal quotations and citation omitted). Although
what constitutes “particularity” may depend on
the facts of each case, plaintiffs must “use some means
of injecting precision and some measure of substantiation
into their allegations of fraud.” Id.
(internal quotations, alteration, and citation omitted). This
heightened standard does not only apply to causes of action
for fraud specifically, but applies to any claim that
“sounds in fraud, ” meaning any claim that is
premised upon a course of fraudulent conduct. Borsellino
v. Goldman Sachs Grp., Inc., 477 F.3d 502, 507 (7th Cir.
2007). Whether a claim “sounds in fraud” will
depend upon the plaintiff's specific factual allegations.
with the standard of review described above, the following
allegations from the Amended Complaint are accepted as true
for purposes of deciding this Motion.
2014, Witham offered Ms. Costello a position in sales and
marketing in its Toxicology Laboratory, to begin in January
2015. [Filing No. 36-1 at 2.] Prior to receiving
this offer, Ms. Costello had worked in forensic and clinical
laboratory services for 35 years and had developed a strong
professional reputation within the industry and a large book
of clients. [Filing No. 36-1 at 2.] Ms. Costello
moved over 100 miles in order to take the position at Witham,
which forced her husband to retire from his employment.
[Filing No. 36-1 at 2.]
description provided by Witham indicated that the job was
“Non-Exempt, ” meaning that she would be entitled
to overtime pay. [Filing No. 36-1 at 2.] Pursuant to
the offer, Witham was to pay Ms. Costello a base salary, plus
an additional bonus in the amount of 5% of annual revenues
above $1, 380, 000. [Filing No. 36-1 at 2.] However,
Ms. Costello alleges that Witham misrepresented its annual
revenue and failed to incorporate into its representation
various clients and accounts that it had lost. [Filing
No. 36-1 at 3.]
negotiations, Witham represented that it would reimburse meal
costs incurred during required travel and provide Ms.
Costello with three weeks of paid time off per year.
[Filing No. 36-1 at 3.] After Ms. Costello began
working, Witham failed to reimburse her meal costs, required
her to work during her paid time off, forced her to use her
paid time off for any day on which she was unable to travel,
only paid her for 40 hours per week even though she worked
more hours, and refused to pay her overtime. [Filing No.
36-1 at 3.] In addition, Ms. Costello personally
established a $100, 000 line of credit with a distributor,
and several credit accounts with partnering laboratories,
which Witham knowingly and intentionally defaulted on.
[Filing No. 36-1 at 4.]
Costello brought the lack of overtime pay to the attention of
Jeff Retz, the toxicology lab manager, and informed all of
the individual Defendants. [Filing No. 36-1 at 3.]
Mr. Retz threatened Ms. Costello that if she did not stop
pursuing overtime pay or commission that was owed to her, she
would either be fired, or the toxicology lab would be shut
down. [Filing No. 36-1 at 3.] Defendant Dr. Michael
Wagner also told Ms. Costello that, if she pursued her
requests for overtime pay or unpaid commission, she would be
“axed.” [Filing No. 36-1 at 3.] Ms.
Costello complained to human resources about the threats, but
nothing was done. [Filing No. 36-1 at 4.]
on these allegations, Ms. Costello asserted various claims
under the federal Fair Labor Standards Act
(“FLSA”), the Indiana Wage Payment
Statute, the federal Family and Medical Leave Act
(“FMLA”), Title VII, the federal Equal
Pay Act, and Indiana common law. [Filing No. 36-1 at
4-14.] Relevant here, Ms. Costello asserted state law
claims for breach of contract, unjust enrichment, promissory
estoppel, constructive fraud, and breach of fiduciary duty.
[Filing No. 36-1 at 5-10.]
the breach of contract claim, Ms. Costello asserts that she
entered into negotiations with Witham based upon a job
description for a non-exempt position. [Filing No. 36-1
at 6.] She then entered into a contract with Witham,
under which Witham agreed to pay her a 5% bonus every six
months, no later than January 15th and July 15th of each
consecutive year. [Filing No. 36-1 at 6.] Witham
also agreed to reimburse her for the cost of meals during any
necessary travel and for office expenses. [Filing No.
36-1 at 6.] According to Ms. Costello, Witham breached
the contract by “failing to provide [her] with the
agreed upon terms of employment, ” and by failing to
pay her bonuses and reimburse her for meals and office
expenses, resulting in substantial monetary damage.
[Filing No. 36-1 at 6.]
Costello attached to her Amended Complaint a copy of the job
posting for the Sales and Marketing Representative position
at Witham, which contains a notation that the job is
“Nonexempt.” [Filing No. 36-2 at 2.] The
posting also states that it “is not a contract of
employment, nor does it establish an employment relationship
that requires the hospital or employee to have a reason to
terminate the employment relationship.” [Filing No.
36-2 at 3.] In addition, the posting states that Witham
“may unilaterally modify the content of this document
at any time, ” with or without notice to or approval
from the employee, and that if the employee “continues
to remain employed after notification of any changes, it
shall be considered an acceptance of the same.”
[Filing No. 36-2 at 3.] The posting was unsigned.
[Filing No. 36-2 at 2-3.]
Costello also attached a series of emails which culminated in
the following terms of the offer of employment: (1) a yearly
salary of $55, 000 plus a 5% bonus for revenues in excess of
$1, 380, 000, to be paid semi-annually; (2) reimbursement for
mileage at the rate established by the Internal Revenue
Service; (3) reimbursement for office supplies and meals at a
rate of one meal per day unless overnight travel is required;
and (4) furnishing of a laptop and cell phone. [Filing
No. 36-3 at 2.]
unjust enrichment, Ms. Costello asserts that Witham is a
large, wealthy business organization that was in a superior
position in terms of knowledge and business sophistication
and it owed her a fiduciary duty to be honest and tell her
the truth. [Filing No. 36-1 at 7.] She states that
Witham took advantage of this superior position and
“implemented a scheme to defraud” her by lying
about and failing to inform her of material facts.
[Filing No. 36-1 at 7.] Specifically, she alleges
that she was under a contract to receive a bonus based on
revenue, but Witham refused to inform her of its actual
revenue and intentionally lied to her about the amount of
revenue generated to avoid paying the bonus. [Filing No.
36-1 at 8.] Ms. Costello also alleges that Witham
allotted her three weeks of paid time off, but then required
her to maintain availability and answer phone calls and
emails while she used the time. [Filing No. 36-1 at
the claim for promissory estoppel, Ms. Costello alleges that
Witham made “numerous promises” in order to
induce her to accept its offer of employment, including but
not limited to the promise that it would accept the clients
she presented. [Filing No. 36-1 at 8.] Despite this
promise, Witham repeatedly refused to provide services to
numerous large clients that Ms. Costello presented.
[Filing No. 36-1 at 8.] Ms. Costello also alleges
that she personally established a $100, 000 line of credit
with a distributor and two credit accounts with partnering
laboratories, “under the implied assurance that
[Witham] would make timely payments” on the accounts,
and that Witham used her name and reputation to negotiate the
terms of the line of credit in order to obtain products vital
for its daily operations. [Filing No. 36-1 at 9.]
She alleges that Witham then knowingly and intentionally
defaulted on these accounts, which caused the distributor and
laboratories to contact Ms. Costello personally for payment,
irreparably harming her professional reputation. [Filing
No. 36-1 at 9.]
her claim for breach of fiduciary duty, Ms. Costello alleges
that Defendants owed fiduciary duties to her, and Defendants
have breached those duties, resulting in substantial damages.
[Filing No. 36-1 at 10.]
have filed a Rule 12(c) Motion for Partial Judgment on the
Pleadings as to Ms. Costello's claims for breach of
contract, unjust enrichment, promissory estoppel,
constructive fraud, and breach of fiduciary duty. [Filing
No. 14.] The Court now considers the Motion and the
related briefing by both parties as it relates to the Amended
outset, the Court notes that Ms. Costello, in her Response to
Defendants' Motion, conceded that her claim for
constructive fraud did not satisfy the particularity
requirements of Rule 9(b) and voluntarily withdrew it.
[Filing No. 20 at 5-6.] Although Ms. Costello later
reasserted her constructive fraud claim in her Amended
Complaint, [Filing No. 36-1 at 9], this appears to
have been an oversight, as the allegations were not altered
to account for her concession that the claim was
insufficiently pled. Accordingly, the Court will treat the
constructive fraud claim as WITHDRAWN, and
Defendants' Motion is DENIED AS MOOT
with respect to that claim. The Court will address the
remaining claims in turn.