NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
PER CURIAM.
Plaintiff Ronn Sorr appeals from the Law Division's dismissal with prejudice of his complaint against defendant Novartis Pharmaceuticals Corporation, Inc. (Novartis) pursuant to Rule 4:6-2(e). Plaintiff's complaint seeks to hold Novartis liable for the actions of its former employee, Thomas Nanna (Nanna), and requests reimbursement for the fines, costs, and other sanctions imposed upon plaintiff by the Board of Pharmacy (Board) following an administrative license revocation proceeding. For the following reasons, we affirm the dismissal of plaintiff's complaint.
By way of background, in 2005, the New Jersey Attorney General filed a four-count complaint seeking the suspension or revocation of the license of plaintiff, a registered pharmacist who operated the Trenton Avenue Pharmacy in Atlantic City. The administrative complaint charged plaintiff with various statutory and regulatory violations stemming from his failure to verify the validity of prescriptions, notify patients who receive contraindicated prescriptions, maintain complete patient records, and counsel patients on their prescriptions. These allegations arose from plaintiff's participation in a voucher program in which individuals could obtain free samples of drugs manufactured by Novartis as a way of being introduced to the company's line of pharmaceutical products.
According to the record before the Administrative Law Judge (ALJ), the voucher program required that a physician diagnose a patient and prescribe medication on a form called the New Jersey Prescription Blank (NJPB). A voucher for payment was attached to the back of the NJPB for each drug that was prescribed. After filling and dispensing the medication, the pharmacist would submit the voucher to the company for reimbursement and dispensing fees. From June 2002 to September 2002, Nanna, Novartis's sales representative who serviced the Atlantic City area, delivered to plaintiff bundles of NJPBs bearing Novartis vouchers. Plaintiff filled 965 prescriptions for the voucher program, including the 104 NJPBs that formed the basis for the Attorney General's complaint. The 104 NJPBs were for certain prescription drugs; however, the patients identified in these 104 NJPBs neither delivered their prescriptions to plaintiff nor picked up the drug samples at plaintiff's pharmacy. Instead, plaintiff either provided the drugs to Nanna or mailed them to a physician whose name did not appear as the prescribing licensee. By doing so, plaintiff collected $90,000 in reimbursement from Novartis.
Plaintiff denied the allegations in the complaint and claimed that he was "duped" into filling fraudulent prescriptions by Nanna's misrepresentations:
The medications that I dispensed were in very small amounts designed to be starter samples. None of the medications were controlled substances. I believed that Nanna was simply trying to encourage the various doctors to utilize the medications as part of his job as a sales representative for Novartis. I knew Novartis to be a highly reputable pharmaceutical company and I trusted that [its] representatives were not engaged in any improper behavior.
At the close of hearings, the ALJ found that there was no genuine issue of fact and granted the Attorney General's motion for summary decision in part,1 concluding that plaintiff had engaged in dishonesty, fraud, deception, or misrepresentation "by accepting bundled prescriptions delivered by a sales representative, filling those prescriptions without question, dispensing medications in bulk to an unknown end user, and then collecting $90,000 in reimbursement." The ALJ also found that plaintiff's actions constituted gross negligence and evidenced a lack of professional judgment. The ALJ also granted summary judgment on certain other charges, finding that plaintiff failed to record complete patient information in the patient profile system and failed to counsel the patients for whom the medication was prescribed.
The Board adopted the ALJ's initial decision, expressly rejecting plaintiff's claim that he had been "duped" by Nanna into filling fraudulent prescriptions. The Board concluded that plaintiff "knew or should have known" that the NJPBs were fake based on their clearly questionable nature and surrounding circumstances, yet willfully "turn[ed] a blind eye" to conduct plaintiff knew was wrong and in violation of his professional and ethical responsibilities.
By doing so, [plaintiff] put drugs into the stream of commerce that he knew or should have known were not going to a valid patient and that unaccounted for, may be used by unauthorized individuals for consumption or sold through unlawful channels to an unsuspecting member of the public. [Plaintiff's] continued failure to comply with the standard of care has put patients and the general public at real and potential risk.
Consequently, the Board suspended plaintiff's license to practice pharmacy in New Jersey for five years,2 imposed a civil penalty in the amount of $10,000, and required that he pay attorney's fees and investigative costs in the amount of $99,639.75.
On appeal, we affirmed the Board's final decision, reasoning:
The material facts concerning the circumstances under which [plaintiff] filled the 104 prescriptions were not disputed. The undisputed facts provided ample support for the ALJ's and the Board's finding that [plaintiff] filled the prescriptions under circumstances that should have alerted him to the fact that the prescriptions were not valid. . . . [Moreover, plaintiff] gave the medications to Nanna or mailed them to Dr. Vasoya. [Plaintiff] never counseled any of the purported patients. He had no idea who was receiving the medications.
[In the Matter of the Suspension or Revocation of License of Ronald Sorr, License No. RI 14509, to Practice Pharmacy in the State of New Jersey, No. A-5807-06T5 (App. Div. Jan. 28, 2008) (slip op. at 11-12).]
As to plaintiff's claim of being induced by Nanna's fraudulent conduct, we specifically upheld the Board's finding that plaintiff:
should have taken note of the remarkable similarity of the handwriting on the face of the prescriptions supposedly written by different practitioners; the unusual distance between the practitioners' office and the patients' homes from [plaintiff's pharmacy]; the bundled presentation of prescriptions; the oddity that so many patients were concurrently suffering from identical conditions, all covered by the specific Novartis products.
[Id. at 11.]
On December 18, 2009, plaintiff instituted the instant action against Novartis, its parent company, Novartis Corporation, Inc., Sandoz, Inc., and Nanna, alleging that as a result of his reliance upon Nanna's misrepresentations and fraudulent inducements, plaintiff "has sustained pecuniary damages in the form of fines, penalties, lost earnings, and lost income exceeding $200,000," as well as emotional distress and loss of reputation due to the suspension of his pharmacy license.3 Novartis then moved to dismiss the complaint pursuant to Rule 4:6-2(e). Following argument, the trial court granted Novartis's motion, concluding that plaintiff's complaint failed to state a claim upon which relief could be granted, as such a claim was barred for public policy reasons. The motion judge concluded:
This Court's ruling is based on this Court's review of Plaintiff's Complaint. A review of paragraph 51-61, clearly indicates that Plaintiff is seeking compensation for damages resulting from Plaintiff's alleged good faith reliance on Defendant Sales Rep's misrepresentation, and Defendant Company's negligence in hiring, retaining and failing to properly monitor and control the voucher program. In other words, Plaintiff is seeking indemnification from Defendants for the losses he incurred as a result of misrepresentations made by Defendant Sales Rep and negligent hiring of Defendant Sales Rep by Defendant Company. However, the Board of Pharmacy has already found that Plaintiff's sanctions, which Plaintiff now calls damages, were imposed because Plaintiff willfully turned a blind eye to conduct that he knew or should have known was wrong and in violation of his professional and ethical responsibilities.. . . Thus, Plaintiff's Complaint is essentially arguing that Plaintiff was induced to commit a crime for which he received sanctions. Due to public policy, this Court cannot allow such a Complaint to go forth since it would open the door to many lawsuits between coconspirators for indemnification.
We agree.
On a Rule 4:6-2(e) motion to dismiss a complaint for failure to state a claim, the court applies an indulgent standard. "`[T]he plaintiff is entitled to a liberal interpretation of [the] contents [of the complaint] and to the benefits of all its allegations and the most favorable inferences which may be reasonably drawn'" therefrom. Burg v. State, 147 N.J.Super. 316, 319 (App. Div.) (quoting Rappaport v. Nichols, 31 N.J. 188, 193 (1959)), certif. denied, 75 N.J. 11 (1977). Every reasonable inference of fact is accorded the plaintiff, Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 746 (1989), and the motion is "granted only in rare instances and ordinarily without prejudice." Pressler, Current N.J. Court Rules, comment 4.1.1 on R. 4:6-2(e) (2010). While the "inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint," Printing Mart-Morristown, supra, 116 N.J. at 746, the reviewing court must "view the allegations with great liberality and without concern for the plaintiff's ability to prove the facts alleged in the complaint." Sickles v. Cabot Corp., 379 N.J.Super. 100, 106 (App. Div.), certif. denied, 185 N.J. 297 (2005). Accordingly, "the test for determining the adequacy of a pleading [is] whether a cause of action is `suggested' by the facts." Printing Mart-Morristown, supra, 116 N.J. at 746 (quoting Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192 (1988)). In applying this test, a court treats the plaintiff's version of the facts as set forth in his complaint as uncontradicted and accords it all legitimate inferences. Banco Popular N. Am. v. Gandi, 184 N.J. 161, 166 (2005).
On appeal, the standard of review is the same as that of the trial court. Donato v. Moldow, 374 N.J.Super. 475, 483 (App. Div. 2005). A trial court's dismissal of a plaintiff's complaint must be upheld when "even a generous reading of the allegations does not reveal a legal basis for recovery." Edwards v. Prudential Prop. & Cas. Co., 357 N.J.Super. 196, 202 (App. Div.), certif. denied, 176 N.J. 278 (2003); Camden Cnty. Energy Recovery Assocs. v. N.J. Dep't of Envtl. Prot., 320 N.J.Super. 59, 64-65 (App. Div. 1999), aff'd o.b., 170 N.J. 246 (2001) (holding that courts must dismiss a pleading when a generous reading of the allegations therein fails to reveal a legal basis for recovery). "The motion may not be denied based on the possibility that discovery may establish the requisite claim; rather, the legal requisites for plaintiffs' claim must be apparent from the complaint itself." Edwards, supra, 357 N.J. Super. at 202.
Under New Jersey law, generally a person cannot be indemnified for loss or damage arising out of his own wrongful acts or violation of the law. See, e.g., Allstate Ins. Co. v. Malec, 104 N.J. 1, 11-12 (1986). Indeed, "as a matter of moral principle[,] no person should be permitted to allege his own moral turpitude as a ground for recovery." Ambassador Ins. Co. v. Montes, 76 N.J. 477, 483 (1978). Moreover, "[w]ere a person able to insure himself against the economic consequences of his intentional wrongdoing, the deterrence attributable to financial responsibility would be missing." Ibid. As the motion judge properly stated, such suits "would open the door to many lawsuits between coconspirators for indemnification."
Here, plaintiff seeks indemnification for the sanctions4 that were imposed upon him by the Board for engaging in conduct that he knew or should have known was wrong and in violation of his statutory, professional, and ethical responsibilities. Allowing indemnification in such a situation would undermine the "important interests" upon which the Board relied when imposing sanctions on plaintiff, most significantly
the paramount interest in protecting the public from practitioners such as [plaintiff], who would fill bulk prescriptions, including a number of medications which involve potentially hazardous combinations of drugs, without verification of any prescriptions, and by delivery to a sales representative [in violation of applicable statutes and regulations].
In short, the Board acted to "protect the public from a practitioner who must have known he dispensed multiple prescriptions which were not issued for a legitimate purpose and posed dangers to the public." Permitting plaintiff to seek reimbursement from Novartis for the Board's penalties would, in our view, conflict with the fundamental public policy principle that a person cannot be indemnified for loss or damage arising out of his own wrongful acts or violation of the law.
Because public policy precludes indemnification for one's own unlawful conduct, and the plain language of plaintiff's complaint clearly reveals that the "damages" he now seeks to recoup are the very penalties imposed by the Board for his wrongful conduct, "even a generous reading of the allegations [in plaintiff's complaint] does not reveal a legal basis for recovery." Edwards, supra, 357 N.J. Super. at 202. Accordingly, the dismissal of plaintiff's complaint was proper.
We are of the further view that plaintiff's complaint is also barred by the doctrine of collateral estoppel, since the identical issue of whether plaintiff reasonably relied upon, and was induced to act by, Nanna's misrepresentations was fairly litigated and determined adverse to plaintiff in an administrative proceeding in which plaintiff fully participated. See First Union Nat'l Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 352 (2007); Hennessey v. Winslow Twp., 183 N.J. 593, 599 (2005).
Nor is plaintiff's claim against Novartis of negligent hiring, retention and supervision of its employee Nanna sustainable as a matter of law. The tort of negligent hiring or failure to fire addresses the risk created by exposing members of the public to a potentially dangerous individual. As one court has stated:
"One dealing with the public is bound to use reasonable care to select employees competent and fit for the work assigned to them and to refrain from retaining the services of an unfit employee. When an employer neglects this duty and as a result injury is occasioned to a third person, the employer may be liable even though the injury was brought about by the willful act of the employee beyond the scope of this employment."
[Di Cosala v. Kay, 91 N.J. 159, 173-74 (1982) (quoting Fleming v. Bronfin, 80 A.2d 915, 917 (D.C. Mun. App. 1951)).]
In New Jersey, the tort of negligent hiring involves two fundamental requirements:
The first involves the knowledge of the employer and foreseeability of harm to third persons. An employer will only be held responsible for the torts of its employees beyond the scope of the employment where it knew or had reason to know of the particular unfitness, incompetence or dangerous attributes of the employee and could reasonably have foreseen that such qualities created a risk of harm to other persons. The second required showing is that, through the negligence of the employer in hiring the employee, the latter's incompetence, unfitness or dangerous characteristics proximately caused the injury.
[Di Cosala, supra, 91 N.J. at 173-74 (internal citations omitted).]
Here, plaintiff has not demonstrated any proximate causal connection between any act or omission by Novartis and his alleged harm. As noted, it has already been determined that plaintiff knew or should have known that the 104 prescriptions at issue were not valid based on the obviously suspicious circumstances under which he filled them. In re Suspension or Revocation of License of Sorr, supra, slip op. at 12. Thus, the penalties imposed upon plaintiff in the administrative proceeding, to which he seeks damages in the instant action, arose out of his own wrongdoing, independent of any inducement by Nanna. Consequently, plaintiff's own, knowing violation of his professional, regulatory and ethical duties constitutes an intervening act that breaks any link between Novartis's action or inaction and plaintiff's alleged harm. Simply put, plaintiff cannot demonstrate that Nanna's unfitness or incompetence proximately caused the damages plaintiff now seeks.
Lastly, plaintiff's effort to hold Novartis vicariously liable for Nanna's conduct under the doctrine of respondeat superior also fails as a matter of law. Under this doctrine, which is based on the theory that the employee is the agent or acting for the employer, Di Cosala, supra, 91 N.J. at 172, an employer is vicariously liable for the torts of an employee if the employee was acting within the scope of his or her employment at the time the tort was committed. Id. at 168-69; O'Toole v. Carr, 345 N.J.Super. 559, 566 (App. Div. 2001), aff'd o.b., 175 N.J. 421 (2003). An employee is acting within the scope of employment if the action is "`of the kind [the employee] is employed to perform; it occurs substantially within the authorized time and space limits; [and] it is actuated, at least in part, by a purpose to serve the master.'" Di Cosala, supra, 91 N.J. at 169 (quoting Restatement (Second) of Agency § 228 (1957)).
Here, according to the allegations in plaintiff's complaint, Nanna submitted forged prescriptions on blank prescription pads that were stolen from doctors' offices throughout New Jersey. Plaintiff alleges that Nanna defrauded him by tricking him into accepting the forged prescriptions, and defrauded Novartis by submitting payment vouchers to Novartis, compelling the company to pay for medications for fictional patients. However, absent from plaintiff's complaint is any allegation that Nanna's so-called fraudulent conduct, which resulted in Novartis paying for forged prescriptions, was within the scope of his employment with Novartis, otherwise authorized by Novartis, or actuated in any way by a purpose to serve Novartis. Thus, on its face, the complaint fails to state a claim under the doctrine of respondeat superior.
Affirmed.
