Labor/Employment – Doctor’s race discrimination claim dismissed

Where an Indian doctor alleged that she was denied privileges because of her race, but her complaint contained only vague and conclusory allegations that the hospital denied other physicians of Indian descent clinical privileges before or had a different peer review process for white physicians, the claim was dismissed.

Background

After WakeMed Cary Hospital denied her physician privileges, Haritha Nadendla sued the hospital alleging a federal claim under 42 U.S.C. § 1981 and state-law claims of breach of contract, breach of the implied covenant of good faith and fair dealing, negligence and arbitrary and capricious conduct. WakeMed moved to dismiss those claims.

The district court initially ruled that Nadendla pled sufficient facts to plausibly state a § 1981 claim and state-law claims for breach of contract and for arbitrary and capricious conduct. But it granted WakeMed’s motion as to Nadendla’s state-law claims for negligence and breach of the implied covenant of good faith and fair dealing.

However, the court reversed course in a subsequent order, concluding that, had it applied the correct law, it would have dismissed Nadendla’s § 1981 claim. The district court then dismissed the § 1981 claim and declined to exercise supplemental jurisdiction over Nadendla’s remaining state-law claims for breach of contract and for arbitrary and capricious conduct.

Revisit

The court begins with the district court’s decision to revisit its prior ruling on Nadendla’s § 1981 claim. After the district court issued its first order, WakeMed moved the court to reconsider the order in light of the Supreme Court’s recent decision in Comcast Corp. v. National Ass’n of African American-Owned Media, 140 S. Ct. 1009 (2020). WakeMed argued that under Comcast, a plaintiff asserting a § 1981 claim must plausibly plead but-for causation to survive dismissal.

In its revised order, the district court stated that it had not considered Comcast, “which was decided after the motion to dismiss was fully briefed, but prior to this court’s first order on the motion.” After acknowledging that it “[could not] simply ignore precedent because it was unaware of such precedent,” the district court held that Nadendla had failed to plead but-for causation in alleging her § 1981 claim.

The court finds no abuse of discretion in the district court’s decision to revisit its prior order. The district court realized that it had not applied the right legal standard in deciding whether Nadendla had pled a § 1981 claim and corrected itself. The law affords a court discretion to do just that.

Section 1981

To succeed on a § 1981 claim, “a plaintiff must ultimately establish both that the defendant intended to discriminate on the basis of race, and that the discrimination interfered with a contractual interest.” A plaintiff must also show that the interference with a contractual interest would not have happened but for the plaintiff’s race. Nadendla’s complaint fails to do this. It contains extensive and specific allegations regarding WakeMed’s failure to abide by the bylaws during the hearing process. But factual details regarding race are conspicuously absent.

Nadendla premises her § 1981 claim on only vague and conclusory allegations that WakeMed denied other physicians of Indian descent clinical privileges before or had a different peer review process for white physicians. Without factual detail, the court is unable to infer that WakeMed intended to interfere with a contractual interest of Nadendla on the basis of race.

State-law claims

The district court did not err in dismissing Nadendla’s negligence claim because she failed to allege facts suggesting that WakeMed owed her any duty except contractual duties arising out of the bylaws. The district court dismissed the cause of action for a breach of the implied covenant of good faith and fair dealing, reasoning that North Carolina law does not allow claims for breach of contract and breach of the implied covenant of good faith and fair dealing based on the same facts.

While North Carolina law is not crystal clear on the question before this court, considering the law cited by both parties, the court finds that Nadendla’s breach of the implied covenant of good faith and fair dealing claim does not fail as a matter of law. Breach of the implied covenant of good faith and fair dealing is a separate claim from breach of contract, and it is not subsumed into the latter when the express terms of the contract do not preclude the implied terms which the plaintiff claims were breached.

Affirmed in part and reversed in part.

Nadendla v. WakeMed (Lawyers Weekly No. 001-010-22, 16 pp.) (A. Marvin Quattlebaum Jr., J.) Case No. 21-1300. Jan. 21, 2022. From E.D.N.C. at Raleigh (Malcolm J. Howard, S.J.) John Richard Taylor for Appellant. Elizabeth Sims Hedrick for Appellee. 4th Cir.