New Jersey Superior Court Says Doctor Is Entitled To His Share Of GSK Global Settlement

New Jersey Superior Court Says Doctor Is Entitled To His Share Of GSK Global Settlement

January 2, 2019

On October 29, 2018, a three-judge panel in New Jersey’s Superior Court held the lower court improperly expanded a confidentiality provision in a deal among four relators. The court held that the plaintiff, Joseph Piacentile, had not breached the confidentiality provision in the agreement, entitling him to his share of a global settlement between the United States government and GlaxoSmithKline (GSK), as negotiated in the deal. The confidentiality provision prohibited Piacentile and/or his counsel from making certain comments regarding the other relators, however it did not include a general ban on making statements regarding the global settlement. The Superior Court held that by re-writing the contract to include such broad protection, the lower court improperly expanded the clear and unambiguous contract.   

Background

Joseph Piacentile, a former practicing physician, filed a qui tam complaint in the U.S. District Court for the Eastern District of Pennsylvania against numerous pharmaceutical companies, including GSK. Following this suit, in January 2003 two former pharmaceutical company employees, Gregory Thorpe and Blair Hamrick, filed another qui tam complaint against GSK in the U.S. District Court for the District of Colorado. A third former pharmaceutical company employee, Thomas Gerahty, filed yet another qui tam complaint against GSK in April 2003 in the U.S. District Court for the District of Massachusetts. Gerahty later amended his complaint and added an additional former employee, Matthew Burke, as a co-relator. 

The relators in the Colorado case, Thorpe and Hamrick, entered into an agreement with the relators in the Massachusetts case, Gerahty and Burke, whereby all relators agreed to share any proceeds from their lawsuits, should they prove successful. Following this agreement, the relators began negotiating an additional agreement with Joseph Piacentile. On August 13, 2007, the relators and Piacentile entered into a settlement agreement and release. Under the terms of the deal,  the relators agreed to pay Piacentile 2.25% of any relator’s share awarded collectively to the relators. In exchange for this reward, Piacentile agreed to dismiss his matter in Pennsylvania with prejudice. Upholding his end of the deal, Piacentile dismissed his matter on August 27, 2007. 

The August 2007 agreement included a confidentiality provision, which in relevant part stated the following: “No publicity or public comment shall be made by Piacentile or Piacentile’s counsel regarding the Massachusetts or Colorado matters at any time. Piacentile and counsel shall not issue a press release or discuss this matter with any member of the press if and when the Colorado and Massachusetts matters settle or are otherwise resolved.” This provision was at the center of the dispute that ensued among the relators and Piacentile.

Piacentile initially retained former Boies, Schiller & Flexner, LLP attorney David Stone to represent him in his qui tam suit. A few years later, in 2009, David Stone left Boies, Schiller & Flexner LLP and started a new firm, Stone & Magnanini LLP. Piacentile retained Stone & Magnanini LLP, and Stone continued to represent him. Later that year, another former GSK employee, LaFauci, retained Stone, and Stone filed a qui tam complaint on LaFauci’s behalf, making similar allegations of kickback schemes.

In July 2012, the U.S. government announced a global settlement with GSK. Pursuant to the settlement, by paying a sum of money GSK resolved all outstanding liabilities, settled  the civil qui tam allegations brought by the relators, and settled allegations brought by LaFauci and a GSK sales manager. Following the global settlement, Stone & Magnanini LLP issued a press release titled “[Stone & Magnanini LLP] Represent Key Whistleblower in DOJ’s Landmark $3 Billion Settlement.” 

In October 2012, Piacentile sought payment from the relators of his 2.25% share of the award pursuant to the agreement. However, the relators refused to pay him on the grounds that Stone’s press release constituted a violation of the confidentiality provision. In response, Piacentile filed a complaint against the relators. Three of the relators settled with Piacentile, however Thorpe refused to settle and filed a motion for summary judgment.

The lower court granted Thorpe’s motion for summary judgment, finding that Piacentile breached the confidentiality provision of the settlement agreement. Piacentile’s appeal followed.

Superior Court of New Jersey Appellate Division Decision

The Superior Court of New Jersey Appellate Division reversed. The court concluded that Piacentile did not breach the confidentiality agreement, and therefore was entitled to summary judgment as a matter of law on his breach of contract claim against Thorpe. 

The court was unpersuaded by Piacentile’s first assertion that Stone’s departure from his previous firm, Boises, Schiller & Flexner LLP, absolved him from compliance with the confidentiality agreement. Piacentile argued that the confidentiality agreement Stone executed as a Boies, Schiller & Flexner attorney was not binding on him in his personal capacity, and therefore, Stone did not violate the agreement when he issued the press release as a Stone & Magnanni LLP attorney. The court disagreed. While the confidentiality agreement did not identify Stone personally, it specified “Piacentile’s counsel” and although Stone changed law firms, he continued to represent Piacentile. Therefore, because Stone signed the agreement as “Piacentile’s counsel” and maintained that position throughout the lawsuit, the agreement remained binding on him despite his change in law firms.

The court did however agree with Piacentile’s second assertion that the court below misconstrued the plain meaning of the confidentiality agreement. The court held that the agreement between the relators and Piacentile was clear and unambiguous. Under the well-established rules of contract construction, the New Jersey Superior Court explained, a court “may not re-write a contract or grant a better deal than that for which the parties expressly bargained.” Piacentile v. Thorpe, No. A-5218-15T3, slip. op. at 7 (N.J. Super. Ct. App. Div. Oct. 29, 2018) (citing Globe Motor Co. v. Igdalev, 436 N.J. Super. 594, 602 (App. Div. 2014), rev’d on other grounds, 225 N.J. 469 (2016)). When the contract is plain and clear, the language itself must determine the agreement’s force and effect. The confidentiality provision in the Piacentile agreement expressly prohibited comments regarding the Massachusetts or Colorado matters, however it did not make a blanket ban on press releases or discussions with the press about the global settlement generally or the settlement of other relators. 

Stone’s press release made no specific references to the Massachusetts or Colorado matters. It merely included general comments about the settlement and specific comments about the matter of another relator, LaFauci. Therefore, it did not violate the agreement. By expanding the terms of the confidentiality provision in the unambiguous agreement among the relators and Piacentile, the lower court misconstrued the contract. Accordingly, the three-judge panel in the Superior Court of New Jersey reversed the order below.

Conclusion

Piacentile v. Thorpe reaffirms the well accepted proposition that courts are bound by the plain and unambiguous language of contractual terms. As in Piacentile, the relators and Piacentile freely entered into the agreement, and they are bound by the language they drafted. It is not a court’s place to “grant a better deal” than the one the parties agree to. While the agreement at issue expressly prohibited public comments “regarding the Massachusetts and Colorado matters at any time” and “not to use a press release or discuss this matter with any members of the press,” it did not prohibit making general statements or statements about matters with other relators. By reading such a broad prohibition into the confidentiality agreement, the appellate court held that the judge below “rewrote the Agreement” and erroneously ruled against Piacentile. If the relators wished for such broad protection, they should have written it into the confidentiality agreement.

<< Back to Whistleblower Wire home