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MCCONCHIE v. WAL-MART STORES

November 14, 1997

LEIGH McCONCHIE, Plaintiff, against WAL-MART STORES, INC., Defendant.


The opinion of the court was delivered by: MCAVOY

 This diversity action presents the narrow issue of whether, under New York law, an employer's termination of a licensed pharmacist for disobeying a directive that the pharmacist believed to be unethical and illegal is actionable as a breach of contract based upon an implied-in-law obligation.

 I. BACKGROUND

 A. Facts

 The facts in this case, for the most part, are undisputed, and

 because plaintiff failed to file a Rule 7.1(f) Statement, he is deemed to have admitted the material facts set forth in defendant's statement. See Local Rule 7.1(f).

 Plaintiff Leigh McConchie, a New York resident, was hired by defendant Wal-Mart Stores, Inc., a Delaware corporation with a principal place of business in Arkansas, *fn1" on June 11, 1993 as a pharmacist in defendant's Greenbush, New York store. He was later transferred to the Wilton/Saratoga Springs store, where he worked until he was terminated. Pl. Dep. at 37, 61, 66-67. At all relevant times, plaintiff was licensed to practice as a pharmacist in New York State. Plaintiff had no employment contract with defendant at any time, and concedes that he could be terminated at will. Id. at 70, 105-06; Pl. Aff. P 3.

 During the relevant period of plaintiff's employment, he reported to District Manager Susan Stafford. Pl. Dep. at 115. Stafford also is a pharmacist licensed to practice in New York. Stafford in turn reported to Randy Sims, defendant's Regional Manager, who is a licensed pharmacist, but is not licensed to practice in New York. Sims reported to Vice-President Robert Cummings. Id. at 115-16.

 Defendant has set prices for its prescriptions, which are listed on its computer system. Plaintiff, like all of defendant's pharmacists, had discretion to override these set prices. Pl. Dep. at 122-24. Such discretion might be exercised when, for example, a customer informs the pharmacist that a competitor carries the same product at a lower price. Id. at 123-24. Moreover, for bulk or high volume purchases, the computer system automatically provides a discount, so that the more a customer purchases, the lower the per unit cost. Id. at 123.

 At issue in the present case are prescriptions plaintiff filled for a veterinarian, Dr. James Prendergast, for various types of horse medication. Pl. Dep. at 117-22. Whenever Prendergast bought medication in bulk, which he apparently did very often, he received the volume discount. In February of 1996, when reviewing financial reports with Sims, Stafford noted a decrease in the "gross profit percent" for the Wilton/Saratoga Springs store. Stafford Dep. at 7-9; Sims Dep. at 18-19. *fn2" In speaking with plaintiff about the decrease in the gross profit percent for his store, plaintiff told Stafford that he was filling a number of large volume prescriptions for Prendergast. Pl. Dep. at 133-35; Stafford Aff. P 8.

 Stafford discussed the matter with Sims and told him that she felt it was illegal for defendant to sell large quantities of drugs to one individual, as opposed to filling prescriptions for the amount of medication that only one patient (or animal) would take. Stafford Aff. P 12; Sims Aff. P 6. After checking with Cummings, Sims told Stafford that defendant was not a wholesaler or distributor and plaintiff could no longer fill prescriptions for larger quantities of drugs to one individual at discount prices. Stafford Aff. P 13; Sims Aff. P 7.

 Shortly thereafter, Stafford expressed her concerns to plaintiff about filling prescriptions for large quantities of drugs. First, she noted that such prescriptions lowered the gross profit percent. Pl. Dep. at 133-38. Second, she told plaintiff that defendant was not registered as a wholesaler, and yet was filling prescriptions for large quantities made out to Prendergast rather than the ultimate user of the drug. Id. at 139-43; Stafford Dep. at 16-17. Plaintiff told Stafford that he believed that Prendergast was using the medication for several animals in his practice, but that he was not reselling the drugs for profit. Id. at 169.

 On March 2, 1996, Sims himself contacted plaintiff. As plaintiff describes it, Sims told plaintiff that he was "'no longer to fill prescriptions that have been or are to be written by Dr. Prendergast.'" Pl. Dep. at 143. Sims gave plaintiff two reasons for this imperative: (1) he felt that filling large dollar volume prescriptions was affecting the profit margin of the pharmacy; and (2) because plaintiff was filling large volume prescriptions in one person's name, it made it appear as if defendant was wholesaling medication. Id. at 143-44. Though plaintiff protested that he could simply speak to Prendergast and get the individual patient names for each prescription, Sims persisted, telling plaintiff that the prescriptions were being filled at a low profit margin, and that plaintiff was to stop filling them. Id. at 146. Plaintiff understood Sims' order to mean that he could not fill any prescriptions for Prendergast. Plaintiff also alleges telling Sims that he believed it was against the law and pharmaceutical ethics to refuse to fill or refill a prescription based on profit margin, though he could not specify what legal or ethical rule he had in mind. Id. at 152.

 After his talk with Sims, plaintiff called Stafford and told her about the conversation. Pl. Dep. at 109-10. Stafford agreed with Sims, and told plaintiff that he would be "in trouble" if he failed to follow Sims' instructions. Id. at 111-14, 161.

 Nonetheless, on March 8, plaintiff filled three prescriptions for Prendergrast. The prescriptions were for a horse named "Cigar" and were written by Prendergrast. On March 11 plaintiff filled two more prescriptions for "Cigar" written by Prendergast. The amount of medication in the March 8 and 11 prescriptions were for large volumes, for which ...


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