# NEW V. THERMO FISHER SCIENTIFIC, INC.

> District Court, M.D. North Carolina · August 7, 2020

URL: https://www.frixlaw.com/law-library/cases/10253557

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** August 7, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10253557

## How later opinions describe it (automated extraction)

- finding that an employer’s failure to pay wages for future vacation days was a violation of the NCWHA when the employees had complied with the requisite terms of the employment agreement

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

REBECCA HOLLAND NEW, )
)
Plaintiff, )
)
v. ) 1:19cv807
)
THERMO FISHER SCIENTIFIC, )
INC., a corporation, )
)
Defendant. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.
Plaintiff Rebecca Holland New brings this action against
Defendant Thermo Fisher Scientific, Inc. (“Thermo”) alleging sex
discrimination and breach of contract, as well as failure to pay
wages due, fraud, and conversion. Before the court is Defendant’s
motion to dismiss, pursuant to Federal Rule of Civil Procedure
12(b)(6). (Doc. 8.) The motion is fully briefed (Docs. 9, 11,
12) and is ready for decision. For the reasons set forth below,
the motion to dismiss will be granted in part and denied in part.
I. BACKGROUND
A. Facts
The allegations of the complaint, along with the contents of
documents of which the court takes judicial notice,1 viewed in the

1 The court may consider documents outside the pleadings without
converting a motion to dismiss into one for summary judgment if those
documents are “integral to and explicitly relied on in the complaint”
and their authenticity is unchallenged. Copeland v. Bieber, 789 F.3d
484, 490 (4th Cir. 2015) (quoting Phillips v. LCI Int’l, Inc., 190 F.3d
light most favorable to New, show the following:
On approximately August 15, 2011, New, a Wake County, North
Carolina resident, was employed with Patheon Pharmaceuticals
Services, Inc. (“Patheon”) as a Senior Vice president, Human
Resources. (Doc. 1 ¶¶ 6, 10-11.) Around August 29, 2017,
Defendant Thermo acquired Patheon N.V., Patheon’s parent company,

and New became employed by Thermo. (Id. ¶ 12.) By that time,
New’s job title and responsibilities within Patheon had been
elevated to Executive Vice President, Enterprise Operations. (Id.
¶ 11.) Rather than exercise her options under a Change in Control
provision in her contract with Patheon, which would have entitled
her to substantial severance, bonuses, and other benefits, New
accepted Thermo’s offer to stay on as a Group Vice President,
Enterprise-Wide Operations. (Id. at 4-5; Doc. 1-1 at 23.) In her
new role with Thermo, she reported to Michel Lagarde, the Senior
Vice President and President, Contract Development and
Manufacturing, and had a base salary of $405,000 annually. (Doc.

1-1 at 23.) Upon starting with Thermo, New’s responsibilities
included business management, project management, and client
experience management, as well as the management of the vendor
relationship with Cognizant, a client, and the integrated business

609, 618 (4th Cir. 1999)). New relies on thirteen exhibits attached to
her complaint to support her claim (Doc. 1-1) and the exhibits’
authenticity is unchallenged.
sales and program support of small clients. (Doc. 1 ¶ 23.)
The terms of New’s employment were set out in three different
documents which, taken together, establish the contractual
relationship between her and Thermo. (Id. ¶ 14.) In an August 17,
2017 letter agreement, signed by New on August 28, 2017 (Doc. 1-1
at 23-25), the parties agreed that New’s initial employment

agreement with Patheon (Doc. 1-1 at 1-22) would “remain largely in
effect.” (Doc. 1-1 at 23.) Her employment agreement was further
modified through a memorandum entitled “Outstanding Patheon Long-
Term Incentive Awards for Rebecca Holland New.” (Id. at 26.) The
facts, viewed in the light most favorable to New, show that her
contractual relationship with Thermo was defined by (1) her initial
employment agreement with Patheon (Doc. 1-1 at 1-22), (2) the
signed August 2017 letter agreement (Doc. 1-1 at 23-25), and (3)
the long-term incentive awards memorandum (Doc. 1-1 at 26),
(collectively, New’s “Employment Agreement”). (Doc. 1 ¶ 14.)
Subject to her Employment Agreement, New’s unvested Patheon

Stock Options and Restricted Stock Units (“RSUs”) that were to
vest upon the Change in Control “were converted to unvested Thermo
Fisher Stock Options and RSUs ‘subject to substantially the same
terms and conditions (including vesting schedule)’ as her unvested
Patheon Stock Options and RSUs.” (Id. ¶ 16.) Additionally, New’s
unvested Thermo Fisher Stock Options and RSUs were to vest
immediately if she were terminated by Thermo “without Cause” or if
New resigned her employment “with Good Reason.” (Id. ¶ 17.)
Moreover, if New was terminated for a reason other than for Cause
or if she terminated her employment for “good reason,” Thermo had
to pay her an amount equal to twelve months of base salary,
performance bonuses, plus any other amounts or benefits she was
eligible to receive. (Id. ¶ 18.) However, to recover these

severance benefits, New was required to submit a form releasing
Thermo from all current and future claims, both known and unknown.
(Doc. 1-1 at 12.) New’s Employment Agreement also provided that
she would “continue to be eligible for severance in accordance
with the terms of [her] Employment Agreement for two years from
Closing” and that her “other current benefit and executive
perquisite offerings, excluding [her] severance benefits, will be
unchanged for at least one year from Closing.” (Doc. 1 ¶ 19.)
The terms “Cause” and “Good Reason” are defined in New’s
employment agreement as follows:
“Cause” means the determination, in good faith, by the
Company, after notice to the Executive that one or more
of the following events has occurred: (i) the Executive
has failed to perform her material duties and, if
curable, such failure has not been cured after a period
of thirty (30) days’ notice from the Company; (ii) any
reckless or grossly negligent act by the Executive
having the effect of injuring the interests, business,
or reputation of any member of the Patheon Group in any
material respect; (iii) the Executive’s commission of
any felony (including entry of a nolo contendere plea);
(iv) any misappropriation or embezzlement of the
property of any member of the Patheon Group; or (v) a
breach of any material provision of this agreement by
the Executive, which breach, if curable, remains uncured
for a period of thirty (30) days after receipt by
Executive of notice from the Company of such breach.
* * *
“Good Reason” means the occurrence of any of the
following events without the consent of the Executive:
(i) a material reduction of the Executive’s duties or
responsibilities that is inconsistent with the
Executive’s position as described in this Agreement
(i.e. that would result in a de facto reduction in rank)
or a change in Executive’s reporting relationship such
that Executive no longer reports directly to the Chief
Executive Officer; (ii) a material breach by the Company
of this Agreement, or (iii) a requirement by the Company
that the Executive work more than fifty (50) miles from
Executive’s principle office. A termination of the
Executive’s employment by Executive shall not be deemed
to be for Good Reason unless (i) the Executive gives
notice to the Company of the existence of the event or
condition constituting Good Reason within thirty (30)
days after such event or condition initially occurs or
exists, (ii) the Company fails to cure such event or
condition within thirty (30) days after receiving such
notice, and (iii) the Executive’s “separation from
service” within the meaning of Section 409A of the Code
occurs not later than ninety (90) days after such event
or condition initially occurs or exists.
(Doc. 1-1 at 4-5.) Notices and other communications between New
and Thermo were to be in writing and either hand delivered or
delivered by registered or certified mail with postage prepaid and
a return receipt requested. (Id. at 15.) The agreement further
provided that “[n]otice and communications shall be effective when
actually received by the addressee.” (Id.)
New met with Michel Lagarde on July 16, 2018, to express her
concern that Thermo, and Lagarde himself, were diminishing her
role within the company.2 (Doc. 1 ¶ 72.) At this meeting, Lagarde
admitted that he was diminishing New’s role, that he had no role
for her in his organization, and that he would try to find another
position for her elsewhere. (Id. ¶¶ 72, 73.) The following day,
New met with Mike Jewett, the head of Human Resources for Pharma
Services Group.3 (Id. ¶ 76.) At this meeting, Jewett told New

“they were looking to find other roles for her” and he recognized
that Lagarde “stated that there was not a role for New in the PSG
organization.” (Id.) On July 20, 2018, New was advised that
Lagarde had removed her from further involvement in a major merger
and acquisition project that she had previously led. (Id. ¶ 77.)
On July 23, 2018, New’s legal counsel sent a letter to Thermo
via email and U.S. First Class Mail “in accordance with the ‘Good
Reason’ provision in her Employment Agreement.” (Id. ¶ 78; Doc.
11 at 7.) The letter identified an alleged significant change in
New’s reporting relationship in that she no longer reported to
Lagarde. Further, material reductions in her duties and

responsibilities had taken place, including “the recent
elimination of her role and involvement in leading mergers and

2 The complaint also contains allegations that New was discriminated
against by a male employee based on her sex as well as subjected to a
hostile work environment. Because the claims based on those facts are
not the subject of a pending motion, the court refrains from discussing
them.

3 Pharma Services Group (“PSG”) is a division of, or affiliate operation
owned and operated by, Thermo. (Doc. 1 ¶ 7.)
acquisitions, shifting of responsibilities of carve-outs to peers,
the removal of the integration lead as a direct report and
elimination of the function and role, [and] elimination of project
management office responsibilities including management of
Cognizant and outsourced operations.” (Doc. 1-1 at 136.) The
letter also stated that New and her legal counsel “would like to

open a constructive dialogue to discuss [New’s] transition period
and transfer of information and responsibilities, and her
severance benefits.” (Id.)
New was told that there was a job for her, and on August 22,
2018, New’s supervisor “provided [her] with an August 16, 2018
letter signed by Jewett advising that her current position with
the Company was being limited to ‘Business Management’ only and
lowered to a Vice President level.” (Docs. 1 ¶ 83; 1-1 at 138.)
The 30-day “cure period” that was triggered by the July 23, 2018
letter from New’s counsel expired in late August, and on August 27,
2018, New’s counsel emailed Thermo’s counsel suggesting they

discuss a separation arrangement. (Doc. 1 ¶¶ 85, 87.) On
September 5, 2018, New was offered a future position outside of
the PSG group with Biologics, but this position would require her
to relocate and would result in reductions in title, band level,
responsibility, and compensation. (Id. ¶ 89.) New rejected this
offer the following day, and her counsel sent correspondence to
Thermo’s counsel indicating that the offer was rejected and that
New would be leaving the company effective November 2, 2018. (Id.
¶ 92.) Thermo’s counsel responded the same day, informing New’s
counsel that New had no “Good Reason” to leave Thermo. (Id.)
On September 17, 2018, New spoke with Jewett, who
acknowledged that New expected the Employment Agreement to be
honored and told her he would be back in touch with a separation

agreement. (Id. ¶ 94.) Jewett followed up with New a few days
later, giving her until September 24, 2018, to accept a limited
severance offer of $200,000 with no bonus payments. (Id. ¶¶ 95,
96.) In his correspondence, Jewett informed New that “the Company
had made a mistake changing (lowering) her title, band level,
compensation opportunities and responsibility in his August 16,
2018 letter.” (Id. ¶ 96.) New’s counsel sent a letter to Thermo’s
counsel outlining some of the issues New had encountered at the
company and advising that New would be terminating her employment
effective October 5, 2018. (Id. ¶ 102.) On October 5, 2018, New
left Thermo. (Id. ¶ 103.) New never received the severance

benefits outlined in her Employment Agreement, and her stock
options and RSUs that were to vest immediately upon her termination
by Thermo without Cause, or by New with Good Reason, were removed
from her investment account. (Id. ¶¶ 106, 107.)
B. Procedural History
New filed an eight-count complaint on August 7, 2019,
alleging the following: Unlawful Sex Discrimination and
Harassment, in violation of Title VII, 42 U.S.C. § 2000e-2(a)
(Count I); Hostile and Abusive Working Environment, in violation
of Title VII (Count II); Unlawful Retaliation, in violation of 42
U.S.C. § 2000e-3(a) (Count III); Breach of Contract regarding
Severance and Other Benefits (Count IV); Breach of Contract
regarding Stock Options and RSU’s (Count V); Conversion (Count

VI); Fraud (Count VII); and Failure to Pay Wages and Benefits when
Due, in violation of the North Carolina Wage and Hour Act, N.C.
Gen. Stat. §§ 95-25.1 et seq. (Count VIII). On September 30, 2019,
along with its answer to New’s complaint (Doc. 10), Thermo filed
the present motion to dismiss for failure to state a claim,
pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 8).
The motion was briefed (Docs. 9, 11, 12) and is now ready for
decision.
II. ANALYSIS
Jurisdiction and venue are not contested issues and are
proper. New correctly argues that this court has diversity

jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). (Doc. 1 ¶ 2.)
New further asserts jurisdiction stemming from 28 U.S.C. § 1331
and 42 U.S.C. § 2000e-5(f)(3). (Id. ¶ 3.) Venue is proper in
this district pursuant to 28 U.S.C. § 1391(b). Further, the
parties consented to jurisdiction and venue in this court in their
Employment Agreement. (Doc. 1-1 at 3.)
A. Motion to Dismiss Standard
Thermo moves to dismiss five of the eight counts in New’s
complaint pursuant to Rule 12(b)(6), arguing that she has failed
to state a claim upon which relief can be granted. (Doc. 8.) A
motion to dismiss under Rule 12(b)(6) is meant to “test[] the
sufficiency of a complaint” and not to “resolve contests

surrounding the facts, the merits of a claim, or the applicability
of defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943,
952 (4th Cir. 1992). To survive such a motion, “a complaint must
contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). In considering the motion, a
court “must accept as true all of the factual allegations contained
in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per
curiam), and all reasonable inferences must be drawn in the
plaintiff’s favor, Ibarra v. United States, 120 F.3d 472, 474 (4th

Cir. 1997). “Rule 12(b)(6) protects against meritless litigation
by requiring sufficient factual allegations ‘to raise a right to
relief above the speculative level’ so as to ‘nudge[] the[] claims
across the line from conceivable to plausible.’” Sauers v.
Winston-Salem/Forsyth Cty. Bd. of Educ., 179 F. Supp. 3d 544, 550
(M.D.N.C. 2016) (alterations in original) (quoting Twombly, 550
U.S. at 555). Mere legal conclusions are not accepted as true,
and “[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Iqbal,
556 U.S. at 678.
B. Breach of Contract
New raises two breach of contract claims in her complaint:
first, as it relates to severance and other benefits; and second,

as it relates to her stock options and RSUs. (Doc. 1 at 34-37.)
Thermo moves to dismiss, arguing that New failed to comply with
the contractual prerequisites to claiming “Good Reason.” Thermo
contends that New failed to timely and properly provide notice of
an alleged “Good Reason” for termination, that the July 23, 2018
letter from New’s counsel was deficient, and that New failed to
produce a signed release of claims form as required by the
Employment Agreement. (Doc. 9 at 10-13.) Thermo further argues
that even if New provided proper notice, she failed to plausibly
allege a “material reduction” in her position, duties, or
responsibilities. (Id. at 14.) Finally, Thermo contends that

there is no legal basis for New alleging constructive discharge
and that she cannot seek contractual damages without abiding by
the terms of the contract herself. (Id. at 17.)
New opposes Thermo’s motion to dismiss, arguing that her “Good
Reason” and “Termination” notices were both timely and sufficient.
(Doc. 11 at 13-14.) She argues that her notice provided Thermo
with an opportunity to cure the problems it had created and that
Thermo’s claim that she failed to offer a signed release is
disingenuous. (Id. at 15-17.) Finally, New contends that Thermo
materially reduced her duties and responsibilities to the point of
eliminating her position altogether and that she was
constructively terminated within the meaning of her Employment
Agreement. (Id. at 18-20.) In response, Thermo reiterates that

New failed to provide timely notice, failed to serve notice in
compliance with her Employment Agreement, and failed to give Thermo
an opportunity to cure any alleged reductions in responsibilities.
(Doc. 12 at 3-5.) Further, it argues, Thermo’s denial of New’s
demand for severance benefits was not a repudiation entitling her
to ignore the Employment Agreement, she never identified any
material reductions in her duties, and there was no constructive
discharge. (Id. at 6-8.)
To succeed in a breach of contract claim, a plaintiff must
show “(1) existence of a valid contract, and (2) breach of the
terms of that contract.” Sanders v. State Personnel Comm’n, 677

S.E.2d 182, 187 (N.C. Ct. App. 2009) (quoting Toomer v. Garrett,
574 S.E.2d 76, 91 (2002)) (internal quotation marks omitted). In
interpreting contracts, North Carolina courts employ the following
rules of construction:
[T]he goal of construction is to arrive at the intent of
the parties when the [contract] was issued. Where a
[contract] defines a term, that definition is to be used.
If no definition is given, non-technical words are to be
given their meaning in ordinary speech, unless the
context clearly indicates another meaning was intended.
The various terms of the [contract] are to be
harmoniously construed, and if possible, every word and
every provision is to be given effect.
Singleton v. Haywood Elec. Membership Corp., 588 S.E.2d 871, 875
(N.C. 2003) (quoting Gaston County Dyeing Machine Co. v. Northfield
Ins. Co., 524 S.E.2d 558, 563 (N.C. 2000)). “Whether a failure to
perform a contractual obligation is so material as to discharge
other parties to the contract from further performance of their
obligations thereunder is a question of fact which must be
determined by the jury or . . . by the trial court without a jury.”
Combined Ins. Co. of Am. v. McDonald, 243 S.E.2d 817, 820 (N.C.
Ct. App. 1978). Further, “if one party to the contract renounces
it, the other may treat renunciation as a breach and sue for . . .
damages at once, provided the renunciation covers the entire
performance to which the contract binds the promisor.” Cook v.
Lawson, 164 S.E.2d 29, 32 (N.C. Ct. App. 1968) (citing Pappas v.
Crist, 25 S.E.2d 850, 852 (N.C. 1943)). This, too, is a question
to be determined by the jury. Id.
The terms of New’s Employment Agreement establish that she is
entitled to contractual benefits if she terminates her employment
for “Good Reason” or if Thermo terminates her employment without
“Cause.” (Doc. 1-1 at 4-5.) In either situation, notice must be
provided in accordance with the agreement (id. at 15), and to
recover severance benefits, New must submit a signed release of
claims form (id. at 11-12). Finally, New is “eligible for
severance in accordance with the terms of [her] Employment
Agreement for two years from Closing,” and her other benefits under
the agreement will remain unchanged for one year following the
closing date. (Doc. 1 ¶ 19.) Before New could terminate her
employment for “Good Reason,” she was required to notify Thermo of

a material reduction in her duties or responsibilities and give it
thirty days to cure. Further, she was required to leave the
company within ninety days after the issue or condition initially
occurred. New’s employment was terminated on October 5, 2018, and
she alleges that her July 23, 2018 communication with Thermo was
her notice of a material reduction in her work, triggering the
thirty-day cure period. Given the requirement that New notify
Thermo within thirty days of an issue constituting “Good Reason”
and terminate her employment within ninety days of making Thermo
aware, she must plausibly allege that a material reduction occurred
between July 7, 2018 (ninety days prior to her termination) and

July 23, 2018 (the date of her notice to Thermo), and New must
have had until August 22, 2018 to cure.
New points to her July 16, 2018 meeting with Jewett as
evidence of a material reduction in her role. But as alleged in
her complaint, this meeting was to discuss previous reductions in
her role that had taken place prior to July 7, 2018. These alleged
reductions included the change in her reporting structure (Doc. 1-
1 at 152), the reduction in her responsibilities over mergers and
acquisitions (Doc. 1 ¶¶ 52-54), the taking away of her headcount
(id. ¶¶ 59, 61), and the removal of New’s work on Shared Services
(id. ¶ 62.) And while New was allegedly told she had no role in
the organization, she was also told that other roles were being
contemplated for her. (Id. ¶ 76.) Whether or not these qualify

as grounds, on July 20, 2018, New was removed from a major
merger/acquisition project. (Id. ¶ 77.) In the “Good Reason”
letter from New’s counsel, one of the alleged material reductions
was “the recent elimination of [New’s] role and involvement in
leading mergers and acquisitions.” (Doc. 1-1 at 136.) Thermo
argues that New had not worked on this particular merger since
2017, citing New’s complaint. (Doc. 9 at 16.) Viewing the facts
in the light most favorable to New, she has properly alleged a
material reduction in her role occurring within the timeframe
mandated by the Employment Agreement. Given this notice of
material reduction, Thermo was required to cure the issue by

August 22, 2018. But rather than cure, Thermo informed New on
August 22 that her role within the company was “being limited to
‘Business Management’ only and lowered to a Vice President level.”
(Doc. 1 ¶ 83.)
Thermo contends that it had no opportunity to cure, pointing
to the request in the “Good Reason” letter to “resolve the issues
related to [New’s] end of employment” (Doc. 9 at 6), but the
letter, entitled “Good Reason Termination of Employment Agreement
of Rebecca Holland New,” calls for a dialogue (Doc. 1-1 at 136).
Viewing this communication in the light most favorable to New, and
taking into account the document itself, the court finds that this
plausibly alleges a “Good Reason” notice providing Thermo with an
opportunity to cure.

As to notice, the Employment Agreement requires that
communications be hand delivered or delivered by registered or
certified mail with postage prepaid and a return receipt requested
but provides further that “[n]otice and communications shall be
effective when actually received by the addressee.” (Doc. 1-1 at
15.) New focuses on the latter language to argue that her notice
was effective because it was actually received and acted on by
Thermo. (Doc. 11 at 4.) Thermo contends that the notice was
defective under the express terms of the agreement. To be sure,
nothing in the Employment Agreement indicates that actual receipt
excuses a failure to observe the mandated delivery requirements.

However, whether one party’s failure to abide by the terms of a
contract excuses the other party from performing its obligations
is a question of materiality and is left to the finder of fact.
At minimum, viewing the facts in the light most favorable to New,
she has stated a claim upon which relief can be granted. If a
factfinder determines that the notice provisions were not
material, then Thermo’s alleged subsequent failure to perform its
contractual obligations would give rise to a breach of contract
claim. Thermo’s motion to dismiss as to New’s stock options and
RSUs (Count V) will therefore be denied.
As to the contractual prerequisites to receive severance
benefits, New does not allege that she turned over an executed
release to Thermo as required under the Employment Agreement. She

does allege that Thermo repudiated the Employment Agreement by
telling her and her counsel on multiple occasions that she would
not receive her contract benefits. (Doc. 1 ¶¶ 73, 92, 95-96; Doc.
1-1 at 147, 149-150; Doc. 11 at 17.) New claims that once Thermo
repudiated the Employment Agreement, she was “free to sue for all
of her contract benefits immediately.” (Doc. 11 at 17.) In
response, Thermo argues that “[j]ust because [it] informed [New]
that it disagreed with her position that there was ‘Good Reason’
and would not roll over and pay [her] an additional $1.2 Million
upon demand . . . does not mean [it] repudiated the Agreement.”
(Doc. 12 at 6.) Whether Thermo’s statements that New was not going

to receive her contractual benefits constituted a repudiation
allowing New to sue for breach of contract is a question for the
factfinder and is not a finding to be made at this stage. See
Cook, 164 S.E.2d at 32 (“We hold that plaintiff was entitled to
have the jury pass upon his allegations [of repudiation] and
evidence of breach of contract.”) Viewing the facts in the light
most favorable to New, then, she has stated a claim upon which
relief can be granted, and Thermo’s motion to dismiss her claim as
to her severance benefits (Count IV) will be denied.4
C. Conversion
In her complaint, New alleges that Thermo “wrongfully
converted [her] vested Stock Options and RSUs by removing them, or
causing their removal, from [her] Fidelity account” and

“effectively prevent[ed] [her] from exercising her vested Stock
Options and RSUs in accordance with the terms and conditions of
the Employment Agreement.” (Doc. 1 ¶¶ 153, 154.) Thermo moves to
dismiss, arguing that New “did not voluntarily terminate her
employment for ‘Good Reason’ and therefore cannot show the
Severance Benefits are ‘property belonging to another’ (i.e.,
Plaintiff),” citing Lockerman v. S. River Elec. Membership Corp.,
794 S.E.2d 346, 354 (N.C. Ct. App. 2016). (Doc. 9 at 19.)
Ultimately, it argues, because New “cannot show that the Severance
Benefits were hers, or that Thermo Fisher wrongfully deprived her
of them, her Conversion claim fails and should be dismissed with

prejudice.” (Id.) In opposing Thermo’s motion, New argues that
its “entire argument regarding conversion is that New’s contract
benefits were not ‘property belonging’ to her because she was not
owed those amounts under her Employment Agreement,” a contention

4 Because New has sufficiently alleged that she had “Good Reason” under
the Employment Agreement, the court need not address Thermo’s argument
as to constructive discharge.
that she asserts is false. (Doc. 11 at 20.)
In North Carolina, a claim for conversion requires “(1) an
unauthorized assumption and exercise of right of ownership over
property belonging to another and (2) a wrongful deprivation of it
by the owner, regardless of the subsequent application of the
converted property.” Lockerman, 794 S.E.2d at 354 (quoting N.C.

State Bare v. Gilbert, 663 S.E.2d 1, 4 (N.C. Ct. App. 2008)).
Generally, there is no conversion until an act is done in violation
of the plaintiff’s dominion over or rights in the property.
Gallimore v. Sink, 218 S.E.2d 181, 183 (N.C. Ct. App. 1975)
(citation omitted). “After an act of conversion has become
complete, an offer to return or restore the property by the
wrongdoer will not bar the cause of action for conversion.” Wall
v. Colvard, Inc., 149 S.E.2d 559, 564 (N.C. 1966) (citation
omitted).
Thermo’s argument primarily rests on its belief that New
cannot show that she was entitled to her Stock Options and RSUs

under the Employment Agreement. But the court has found that New
alleged sufficient facts to state a claim for breach of contract.
She has alleged that the Stock Options and RSUs in the Employment
Agreement belonged to her and were removed from her investment
account by, or at the direction of, Thermo. If New successfully
shows that Thermo breached the Employment Agreement and that she
was entitled to the Stock Options and RSUs that were to vest upon
her termination, then a conversion claim may be maintained.
Consequently, New has alleged sufficient facts to state a claim
for conversion, and Thermo’s motion to dismiss the conversion claim
(Count VI) will be denied.
D. Fraud
In Count VII of her complaint, New alleges that Thermo made

fraudulent and false misrepresentations “[i]n an effort to induce
[her] to accept employment” with Thermo and forego the “immediate
vesting of her unvested Patheon Stock Options and RSUs,” her
severance benefits, and her other employment opportunities. (Doc.
1 ¶¶ 157-59.) New alleges that she relied on these
misrepresentations and, as a result, suffered emotional distress,
mental anguish, and economic damages. (Id. ¶¶ 160, 161.) Thermo
moves to dismiss, arguing that New has “failed to sufficiently
plead the elements of her claim with particularity.” (Doc. 9 at
21.) Thermo argues that New failed to plausibly allege that Thermo
made a false representation or concealed a material fact, or that

the “non-existent false representation was ‘reasonably calculated
to deceive’ or ‘made with intent to deceive,’” citing Anderson v.
Sara Lee Corp., 508 F.3d 181, 189 (4th Cir. 2007). (Id. at 22.)
It argues New cannot show that she suffered any damages from the
alleged fraudulent or false misrepresentations. (Id.) New opposes
the motion, contending that she adequately pleaded a fraud claim,
that the allegations in her complaint are detailed, and that she
did in fact suffer damages. (Doc. 11 at 22-23.) In response,
Thermo argues that New “bases her Fraud claim upon the sole
allegation that, ‘[Thermo] represented to New that her services
were very much needed by [Thermo], that her position would not
change and that her position would not be eliminated,’” and argues
that she has failed to allege who made these statements and failed

to acknowledge that the Employment Agreement only protected her
role from material reductions for a term of twelve months. (Doc.
12 at 9.)
In cases alleging fraud, a plaintiff “must state with
particularity the circumstances constituting fraud.” Fed. R. Civ.
P. 9(b). Procedurally, a failure to comply with Rule 9(b) is
treated as a failure to state a claim under Rule 12(b)(6).
Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 n.5
(4th Cir. 1999). To meet the requirements of Rule 9(b), the
plaintiff must sufficiently describe “the time, place, and
contents of the false representations, as well as the identity of

the person making the misrepresentation and what he obtained
thereby.” U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., 525
F.3d 370, 379 (4th Cir. 2008) (quoting Harrison, 176 F.3d at 784).
This minimum factual description is “often referred to as the who,
what, when, where, and how of the alleged fraud.” Id. (citation
and internal quotation marks omitted). In cases where a fraud
claim incorporates by reference the prior allegations in the
complaint, the entire complaint is examined to determine whether
the pleading requirements of Rule 9(b) are satisfied. Adkins v.
Crown Auto, Inc., 488 F.3d 225, 232 (4th Cir. 2007). “A court
should hesitate to dismiss a complaint under Rule 9(b) if the court
is satisfied (1) that the defendant has been made aware of the
particular circumstances for which she will have to prepare a

defense at trial, and (2) that plaintiff has substantial
prediscovery evidence of those facts.” Harrison, 176 F.3d at 784.
While the particularity requirement is governed by Federal
Rule of Civil Procedure 9(b), substantive State law governs the
elements necessary to meet the standard. See Nakell v. Liner
Yankelevitz Sunshine & Regenstreif, LLP, 394 F. Supp. 2d 762, 772
(M.D.N.C. 2005) (citation omitted) (“[T]he law of the state in
which the Court sits will control the content of the elements of
the fraud claim. The specificity of the allegations as required
by state law affects the pleading requirements under Rule 9(b).”).
In North Carolina, to state a claim for actual fraud, a plaintiff

must allege: “(1) [f]alse representation or concealment of a
material fact, (2) reasonably calculated to deceive, (3) made with
intent to deceive, (4) which does in fact deceive, (5) resulting
in damage to the injured party.” Forbis v. Neal, 649 S.E.2d 382,
387 (N.C. 2007) (quoting Ragsdale v. Kennedy, 209 S.E.2d 494, 500
(N.C. 1974)). Reliance on the allegedly false representations
must be reasonable, and that reasonableness is a question for the
jury, “unless the facts are so clear that they support only one
conclusion.” Id. (citations omitted).
In stating her fraud claim, New has incorporated by reference
all prior allegations in her complaint. (Doc. 1 ¶ 156.)
Therefore, the court must examine all the preceding allegations to
determine if she has met her pleading requirement. The alleged

false statements, which New claims were made by Thermo, are that
New’s “services were needed by the Company, her position would not
change and her position would not be eliminated.” (Id. ¶ 157.)
She does sufficiently allege falsity at the time and intent – to
induce her to forego contract benefits to which she was then
entitled. Her allegations detailing the alleged continuous
reduction of her responsibilities within the company and the
indication that she had no role with the company moving forward
support her intent allegations. And she has alleged that as a
result of Thermo’s intentional misrepresentations she lost the
contract benefits under her employment agreement with Patheon and

other employment opportunities, all in excess of $1,000,000. To
this extent, the alleged fraud is described with sufficient
particularity to assist Thermo in preparing a defense.
However, New fails to allege who made these representations,
where, and when. She argues that identifying Thermo generally as
the person making the material misrepresentation in the contract
satisfies Rule 9(b)’s “who” requirement. But the cases upon which
she relies are distinguishable, allowing that it can be the case
if the facts support the reasonable inference that the source of
the corporate statement can readily be found. See McCauley v.
Home Loan Inv. Bank, F.S.B., 710 F.3d 551, 559 (4th Cir. 2013)
(attributing an allegedly false statement to appraisal by Home
Loan Investment Bank, F.S.B.); Anderson, 508 F.3d at 189 (in class

action, attributing to corporate defendant allegedly false
statements, at the time of hiring, to pay all employees all
compensable time under the Fair Labor Standards Act). New’s
complaint does not allege who made the statement, when (other than
presumably before her employment with Thermo (Doc. 1 ¶ 13 (“[i]n
an effort to induce New to accept employment”)), or where it was
made. These facts are critical, as she alleges fraud in the
inducement. Therefore, Thermo’s motion to dismiss New’s fraud
claim (Count VII) will be granted. But because this defect can be
cured by amendment, the motion will be granted without prejudice.
See Armstrong v. City of Greensboro, No. 1:15CV282, 2016 WL

1312037, at *3 (M.D.N.C. Mar. 31, 2016) (dismissing a claim without
prejudice when further evidence “could warrant Plaintiff seeking
leave to file an amended complaint”).
E. North Carolina Wage and Hour Act Claim
New alleges that given the circumstances of her termination,
she was entitled to severance pay, bonuses, and other benefits
under the Employment Agreement and that Thermo failed to deliver
those benefits. (Doc. 1 ¶ 164, 165.) New alleges that her
“severance pay, bonuses and other benefits and [her] vested
[Thermo] Stock Options and RSUs constitute wages due, and [Thermo]
failed to pay [her] all wages due upon the termination of her
employment in violation of the North Carolina Wage and Hour Act
(“NCWHA”), N.C. Gen. Stat. §§ 95-25.1 et seq.” (Id. ¶ 166.) She

further alleges that she is “entitled to recover all amounts owed
to her for her vested [Thermo] Stock Options and RSUs and her
severance pay, bonuses and other benefits . . . plus liquidated
damages, interest at the legal rate from the date or dates those
amounts were required to be paid, and reasonable attorney’s fees.”
(Id. ¶ 168.)
Thermo moves to dismiss, arguing that New “cannot bring a
claim under the NCWHA for contract benefits she had not ‘earned.’”
(Doc. 9 at 20.) Thermo argues that New earned neither the
severance benefits which include payment of a year’s salary to
cover the year following her termination, as well as bonuses and

benefits, nor the value of the stock options and RSUs because they
would not have vested until years in the future if Plaintiff had
remained employed. (Id. at 20-21.) Finally, Thermo argues that
even if New could proceed under a theory that these future amounts
were earned and constitute wages, her claim would still fail
because “a) she cannot show that she complied with the contractual
prerequisites of the Amended Patheon Agreement; b) she cannot show
that she voluntarily resigned her employment for Good Reason; and
c) she cannot show that she is entitled to the Severance Benefits
she seeks.” (Id. at 21.) New opposes the motion to dismiss,
arguing that her contract benefits “are clearly wages due upon
termination” and that she has “performed all services necessary to
earn them.” (Doc. 11 at 21.)

The NCWHA defines “wage” as “compensation for labor or
services rendered by an employee whether determined on a time,
task, piece, job, day, commission, or other basis of calculation”
and provides that “[f]or the purposes of G.S. 95–25.6 through G.S.
95–25.13 ‘wage’ includes sick pay, vacation pay, severance pay,
commissions, bonuses, and other amounts promised when the employer
has a policy or a practice of making such payments.” N.C. Gen.
Stat. § 95–25.2(16). Further, “[e]very employer shall pay every
employee all wages . . . accruing to the employee on the regular
payday” and “[w]ages based upon bonuses, commissions, or other
forms of calculation may be paid as infrequently as annually if

prescribed in advance.” Id. § 95-25.6. While the statutory
definition of wages is “broad enough to include things like ‘sick
pay’ ‘bonuses’ or ‘other amounts promised,’ such items are
compensable only if the employee has actually worked the hours to
earn the wages.” Whitley v. Horton, 608 S.E.2d 416 (N.C. Ct. App.
2005) (table).
The court has found that New has alleged sufficient facts to
state a claim for breach of contract. Therefore, any argument
against her NCWHA claim predicated on her failure to comply with
the Employment Agreement or her failure to demonstrate that she
was entitled to contractual benefits fails. The only remaining
question is whether the contractual benefits New is seeking to
recover are earned wages. Given the NCWHA’s definition of wages

and the terms of the Employment Agreement, New has alleged facts
sufficient to maintain an action under the NCWHA. The Employment
Agreement provided that New would receive the contractual benefits
if she terminated her employment for “Good Reason” and complied
with the other terms of the contract, including the notice and
timeliness provisions. To earn these benefits, New simply had to
comply with the terms of her agreement with Thermo. And viewing
the facts in the light most favorable to New, as the court must do
at this stage, she has alleged sufficient facts demonstrating that
she complied with the contractual terms and has thus “earned” the
benefits. See Hamilton v. Memorex Telex Corp., 454 S.E.2d 278,

282-83 (N.C. Ct. App. 1995) (finding that an employer’s failure to
pay wages for future vacation days was a violation of the NCWHA
when the employees had complied with the requisite terms of the
employment agreement). While New cannot pursue unearned
contractual damages under the NCWHA, Whitley, 608 S.E.2d 416, she
can state a claim under the act as it relates to any earned wages.
See, e.g., Myers v. Roush Fenway Racing, LLC, No. 1:09CV508, 2009
WL 5215375, at *5 (M.D.N.C. Dec. 28, 2009), report and
recommendation adopted in part, rejected in part, No. 1:09CV508,
2010 WL 2765378 (M.D.N.C. July 12, 2010) (“Finally, to the extent
that Plaintiff contends that the Wage and Hour Act can be
‘reasonably interpreted’ to allow him to recover unearned,
contractual damages, this court is bound to apply the Act as it

has been interpreted by the North Carolina courts. The North
Carolina courts have consistently interpreted the Act to exclude
recovery of future, unearned wages.”). Because New has pleaded
sufficient facts to state a claim under the NCWHA, Thermo’s motion
to dismiss Count VIII will be denied.
III. CONCLUSION
For the reasons stated above,
IT IS THEREFORE ORDERED that Defendant’s motion to dismiss
(Doc. 8) is GRANTED as to Count VII of New’s Complaint (Doc. 1),
which is DISMISSED WITHOUT PREJUDICE, but is otherwise DENIED.

/s/ Thomas D. Schroeder
United States District Judge

August 7, 2020

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10253557. Public record. Not legal advice.