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COLODNEY v. CONTINUUM HEALTH PARTNERS

April 15, 2004.

J. COLODNEY, Plaintiff,
v.
CONTINUUM HEALTH PARTNERS, INC., MS. GAIL DONOVAN, COO, MR. PETER KELLEY, CEO & President, MR. MORTON HYMAN, Chairman, MR. JAMES HARDEN, Trustee, BETH ISRAEL MEDICAL CENTER, ST. LUKE'S-ROOSEVELT HOSPITAL, LONG ISLAND COLLEGE HOSPITAL, Defendants



The opinion of the court was delivered by: DENISE COTE, District Judge

OPINION AND ORDER

Pro se plaintiff Nathan J. Colodney ("Colodney") worked for approximately one year and two months as a Chief Information Officer ("CIO") at Continuum Health Partners ("Continuum"). Colodney brought this diversity*fn1 action on September 17, 2003, against Continuum and seven other defendants alleging, inter alia, defamation, breach of good faith, breach of implied contract, and constitutional and statutory violations, arising from his loss of employment. On November 5, Colodney amended his complaint to add additional claims against the same defendants.*fn2 All eight defendants have moved to dismiss the amended complaint. For the reasons that follow, the motion is granted in part.

  Background

  All the facts in this Opinion are taken from the complaint and documents upon which the complaint relies.*fn3 The events at issue principally span the period between March 2001 and August 2002.

  The Hiring Process

  On March 15, 2001, Colodney was interviewed by Continuum*fn4 for a position as its CIO. At the interview, Joseph Szmadzinski ("Szmadzinski"), a consultant to Continuum's technology department, explained that Continuum's technology operations had been outsourced to Cap Gemini Ernst & Young ("CGEY") for a seven-year period starting in December 2000. The CIO would be responsible for managing Continuum's contract with CGEY, and for overseeing the technology department's strategic planning. Szmadzinski informed Colodney that the CIO position would be "steady employment throughout the term of the outsourcing agreement."

  On March 16, Colodney received a tentative job offer from Continuum. On March 23, Colodney returned to Continuum for a follow-up interview with Gail Donovan ("Donovan"), the Interim Chief Operating Officer of St. Luke's-Roosevelt Hospital Center and the Chief Operating Officer of Beth Israel Medical Center (the "Medical Center"). At the meeting, Colodney asked Donovan if Continuum engaged in strategic planning, and whether it had a business plan. Donovan answered yes to both questions. That day, Colodney also met with Pamela Abner ("Abner"), a Human Resources executive at Continuum. Abner explained that Colodney would be required to complete a six-month probationary period, during which his employment could be terminated at any time.

  In a letter from Abner dated March 26 (the "Offer Letter"), Continuum extended to Colodney a formal offer of employment. The Offer Letter described Colodney's salary, job title, and the company's retirement savings plan. Nothing in the Offer Letter referred to a fixed term of employment or to the six-month probationary period. Colodney accepted the job offer, rented out his Virginia home, resigned from his job at the United States Air Force, and relocated to the New York City area.

  Employee Handbook

  Colodney began his employment at Continuum on June 4. On that day, he received a copy of an employee handbook (the "Handbook"). The front page of the Handbook bears the logos of both the Medical Center and Continuum. The Handbook's first page contains a disclaimer that is boxed off and shaded a different color. It states:

  Neither this handbook nor any other Medical Center document, give you right [sic], either express or implied, to remain employed by the Medical Center. Nor does it guarantee any fixed terms and conditions of your employment. Your employment is not for any specific time and may be terminated at will with or without cause and without prior notice, by Medical Center.

  (Emphasis supplied.) The second page of the Handbook describes Continuum as the parent corporation of several hospitals, including the Medical Center.*fn5

  The Handbook provides that its list of "serious violations," which subject an employee to disciplinary actions "up to and including suspension and discharge," is not intended to be "comprehensive." The list includes, inter alia, the misuse of property belonging to the employer; the unauthorized possession, use, and copying of records or "disclosure of information contained in such records to unauthorized persons;" and the "failure or refusal to perform satisfactorily the duties and responsibilities of one's job or related duties as assigned."

  According to Colodney, "the Handbook does not state a single basis for firing for cause." Moreover, Colodney asserts, none of the reasons for his firing are listed.

  2001 Meeting with Internal Audit

  Shortly after commencing his employment at Continuum, Colodney discovered that there was no supporting documentation for the pricing of the CGEY-Continuum outsourcing agreement. Colodney noted this discrepancy to Edward Shapoff ("Shapoff"), Continuum's Chief Financial Officer, who suggested that Colodney contact Continuum's Internal Audit Team from Ernst & Young Accounting ("Internal Audit"). Colodney met with two Ernst & Young auditors, and turned over to them documents associated with Continuum's prior technology budgets. Shapoff left Continuum within sixty days of Colodney's meeting with Internal Audit, and was replaced by Brendan Loughlin ("Loughlin").

  Sometime after Shapoff's departure, Loughlin and Sharon Joy ("Joy"), Continuum's Vice President of Finance, spoke with Colodney regarding his meeting with Internal Audit. Loughlin, in Joy's presence, "scolded" Colodney for turning over Continuum's technology budgets to Internal Audit, and directed Colodney to seek Loughlin's permission before holding any future meetings with Internal Audit. Loughlin explained that reports from Internal Audit were sent directly to the Board of Directors.

  Summer 2002; Szmadzinski Makes Bid to Become CIO

  In early June 2002, Szmadzinski informed Colodney that there was "no future" for Colodney at Continuum and that he should "consider looking elsewhere." On June 22, Szmadzinski, in his role as a consultant to Continuum, completed a study of the outsourcing agreement. He concluded that a new retained organization led by a new CIO was needed to monitor the agreement. Szmadzinski had himself in mind for the new CIO position.

  On July 11, Donovan met with Colodney in the presence of Loughlin, Szmadzinski, and Mark McDougle ("McDougle"), the Chief Operating Officer of Long Island College Hospital. Donovan informed Colodney that, based on Szmadzinski's study of the outsourcing agreement, Szmadzinski would be joining Continuum as the Chief Information Resources Officer (CIRO), effective immediately. Colodney would now report to Szmadzinski. Donovan directed Colodney to turn over his CGEY files to Szmadzinski for copying.

  The following day, Donovan and Colodney met with the Feld Group, a consulting company. Donovan asked the company to bid on the same work she had just awarded to Szmadzinski. At the meeting, Donovan indicated to the Feld Group that, although she was inclined to use Szmadzinski because of his familiarity with Continuum, no decision had been reached regarding who would receive the contract. She stated that she wanted to make a decision as soon as possible, and asked the Feld Group to submit a proposal within three days. Donovan noted that the price of the proposal would be "the key factor" in determining who was awarded the contract. The Feld Group gave their price and stated that there was no room for compromise. Donovan did not disclose to the Feld Group the conversation she had had with Szmadzinski the day before.

  July 2002: Colodnev's Meeting with the Feld Group

  After the meeting and unbeknownst to Donovan, Colodney met privately with the Feld Group representatives. He described to them "what was happening" at Continuum so that the Feld Group could make a "competitive" proposal. Colodney discussed with the Feld Group the "mess" at the technology department caused by Donovan's lack of management skills, described "the roles that each executive played" in the outsourcing agreement, and gave specific examples of Donovan and Loughlin's managerial shortcomings. According to Colodney, since all of this information was already known to Szmadzinski, "nothing was a secret, but it put the two competitors on the same level."

  The Feld Group told Colodney that they were aware that Donovan was being dishonest with them regarding the status of the contract award, and expressed doubt about submitting a bid in light of Donovan's preference for Szmadzinski. Colodney told them that it would be worth it to submit a proposal that "beat all aspects of Szmadzinski's proposal." To that end, Colodney supplied the Feld Group with copies of Szmadzinski's study of the outsourcing agreement in order to "give them a better idea of what they were bidding on." According to Colodney, none of the documents prepared by Szmadzinski was marked proprietary by either Continuum or Szmadzinski. Colodney also informed the Feld Group that their price was "a little high" and that they would "need to do something about it if they were going to beat Szmadzinski."

  Shortly after the Feld Group submitted its proposal, Donovan sent an email to Colodney, Loughlin, and McDougle stating that the Feld Group no longer wanted the job. Colodney expressed his concerns to McDougle regarding Donovan's selection of Szmadzinski, noting that Szmadzinski was the person ...


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