Eileen O'donnell v. Gale Simon, an Assistant Commissioner of the New Jersey Department of Banking

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 09-1241
EILEEN O'DONNELL,
Appellant
v.
GALE SIMON, an Assistant Commissioner of the New Jersey
Department of Banking and Insurance; LEE BARRY,
an Assistant Commissioner of the New Jersey
Department of Banking and Insurance; HEALTH NET, INC.;
HEALTH NET OF THE NORTHEAST, INC.;
HEALTH NET OF NEW JERSEY, INC.; JAY GELLERT;
CURT WESTEN
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civil No. 06-cv-05351)
District Judge: Honorable Faith S. Hochberg
Submitted Under Third Circuit LAR 34.1(a)
January 12, 2010
Before: SCIRICA, Chief Judge, BARRY and SMITH, Circuit Judges
(Opinion Filed: January 28, 2010)
OPINION

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Because the distinctions are of no moment here, we do not distinguish between1
Health Net and its subsidiaries.
In addition to Simon and Barry, O’Donnell named Health Net, its subsidiaries, and2
two Health Net executives as defendants. However, following the District Court’s
judgment with respect to Simon and Barry, O’Donnell’s claims against the other
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BARRY, Circuit Judge
Eileen O’Donnell appeals from the District Court’s July 25, 2007 order granting
Gale Simon and Lee Barry’s motion to dismiss her complaint pursuant to Federal Rule of
Civil Procedure 12(b)(6). We have jurisdiction pursuant to 28 U.S.C. § 1291, and will
affirm.
I. Background
Because we write solely for the parties’ benefit, we set forth only those facts
necessary to our analysis. In deciding a motion to dismiss under Rule 12(b)(6), all factual
allegations must be accepted as true and all reasonable inferences drawn in plaintiff’s
favor. Phillips v. County of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008). Our review of
the grant of a motion to dismiss is plenary. Id. at 230.
In 1995, O’Donnell began working as an attorney for First Option Health Plan of
New Jersey, a company purchased by Health Net, Inc. (“Health Net”) in 1997. While1
working for Health Net, O’Donnell, among other duties, regularly interacted with the
New Jersey Department of Banking and Insurance (“DOBI”), a state agency charged with
the oversight of health care companies, and Simon and Barry, both DOBI Assistant
Commissioners.2

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defendants were dismissed with prejudice and are not at issue here.
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In 2002, O’Donnell learned that, beginning in July 2001, Health Net used an
improper database for calculating claim reimbursements in violation of New Jersey
regulations. The incorrect calculations that resulted led to Health Net making restitution,
paying a fine, and being named as a defendant in a class action lawsuit. During the
course of the class action, it was revealed that Health Net also used an improper database
in 1999, but failed to inform DOBI of the error or, if it had, failed to make restitution.
Simon and Barry blamed O’Donnell for the 1999 failure, characterizing her actions as
“hiding” the violation. (App. 21.) In the class action litigation, Health Net blamed
O’Donnell for the 1999 violation, an allegation she denies.
In the summer of 2005, DOBI met with Health Net officials. At that meeting,
Simon and/or Barry informed Health Net that O’Donnell impeded relations between
DOBI and Health Net and that O’Donnell was “untrustworthy, uncooperative and too
adversarial.” (App. 22.) Simon and Barry advised Health Net that DOBI did not wish to
interact with O’Donnell. Thereafter, O’Donnell learned that Simon directed DOBI
employees not to communicate with O’Donnell, and O’Donnell’s supervisor at Health
Net directed her not to interact with DOBI. O’Donnell informed Health Net that she was
considering filing a lawsuit against DOBI and its agents for “blackballing” her. She was
terminated by Health Net in January 2006. (App. 24.)

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O’Donnell contends that she was denied both substantive and procedural due3
process. Violation of both forms of due process require the deprivation of a
constitutionally protected property or liberty interest. See Piecknick v. Pennsylvania, 36
F.3d 1250, 1256 (3d Cir. 1994).
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In November 2006, O’Donnell filed suit against Simon and Barry in the U. S.
District Court for the District of New Jersey alleging violations of both 42 U.S.C. § 1983
and the New Jersey Civil Rights Act, N.J. Stat. Ann. § 10:6-1 et seq., as well as common
law claims of negligence, intentional or negligent infliction of emotional distress, tortious
interference with contractual relationships, tortious interference with prospective
economic advantage, and defamation. The District Court granted Simon and Barry’s
Rule 12(b)(6) motion to dismiss.
II. Discussion
A.
O’Donnell contends that Simon and Barry’s conduct led to her being barred from
dealing with DOBI and, thus, wrongfully deprived her of property and liberty interests
under the Fourteenth Amendment, in violation of 42 U.S.C. § 1983. Specifically,3
O’Donnell contends that she was deprived of: (1) her interests in her law license and
continuing her chosen profession; and (2) her interest in avoiding debarment which would
preclude her interaction with DOBI. Simon and Barry contend that they are shielded by
qualified immunity.
“[Q]ualified immunity protects government officials from liability for civil
damages insofar as their conduct does not violate clearly established . . . constitutional

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rights of which a reasonable person would have known.” Pearson v. Callahan, – U.S. –,
129 S.Ct. 808, 815 (2009) (quotation omitted). It reflects the “need to hold public
officials accountable when they exercise power irresponsibly and the need to shield
officials from harassment, distraction, and liability when they perform their duties
reasonably.” Id. In Saucier v. Katz, the Supreme Court mandated a two-step qualified
immunity analysis – first, whether “the facts alleged show that the [official’s] conduct
violated a constitutional right,” and, second, whether the right, if violated, “was clearly
established.” 533 U.S. 194, 201 (2001). In Pearson, the Court backed away from that
sequence, stating, “while the sequence set forth [in Saucier] is often appropriate, it should
no longer be regarded as mandatory.” 129 S.Ct. at 818. We nonetheless begin by
determining whether O’Donnell can establish a constitutional violation. Because she
cannot, we need not proceed further.
A plaintiff alleging a property interest in employment “must have more than a
unilateral expectation of continued employment; rather, [he or] she must have a legitimate
entitlement to such continued employment.” Hill v. Kutztown, 455 F.3d 225, 234 (3d Cir.
2006). A “plaintiff must demonstrate entitlement to a property interest created expressly
by state statute or regulation or arising from government policy or a mutually explicit
understanding between a government employer and an employee.” Carter v.
Philadelphia, 989 F.2d 117, 120 (3d Cir. 1993). Here, O’Donnell fails to cite any statute,
regulation, policy, or mutually explicit understanding establishing that she has a property

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interest in interacting with DOBI or to continued employment with Health Net.
Accordingly, her “unilateral expectation of continued employment” does not rise to the
level of a constitutionally protected property interest.
“The right to hold specific private employment and to follow a chosen profession
free from unreasonable governmental interference” are liberty and property interests
protected by the Constitution. Piecknick, 36 F.3d at 1259. However, “[s]tate actions that
exclude a person from one particular job are not actionable in suits . . . brought directly
under the due process clause. It is the liberty to pursue a calling or occupation, and not
the right to a specific job, that is secured by the Fourteenth Amendment.” Id. (alteration
in original; quotations and citations omitted).
Here, O’Donnell contends that Simon and Barry’s conduct “effected a loss of
existing employment, a loss of employability in the field of her chosen profession, and a
contraction of her law license.” (Appellant Brief at 21.) However, O’Donnell’s
contention that Simon and Barry’s conduct amounted to a de facto revocation or
limitation of her law license goes too far. Indeed, her complaint concedes that her
employment with Health Net involved tasks much broader than merely interacting with
DOBI and included the provision of legal advice to Health Net and negotiation with
physicians, hospitals, and specialty providers in New York, New Jersey, and
Connecticut. Accordingly, because O’Donnell’s termination by Health Net and any
actions taken by Simon and Barry affected only her specific job with Health Net – not her

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broader right to practice law – she has not asserted a constitutionally protected liberty
interest.
O’Donnell also argues that she has a right to do business with the state, relying on,
among other authorities, Berlanti v. Bodman, 780 F.2d 296 (3d Cir. 1985), and
Department of Labor v. Titan Construction Co., 504 A.2d 7 (N.J. 1985), two cases
involving the New Jersey Department of Labor’s ability to debar contractors from
government projects for failing to comply with the New Jersey Prevailing Wage Act.
Those cases, however, are distinguishable. Unlike the plaintiffs in Berlanti and Titan
Construction, O’Donnell was not foreclosed from contracting with DOBI nor prevented
from obtaining government contracts. Accordingly, this argument too fails.
O’Donnell contends, finally, that Simon and Barry may not avail themselves of
qualified immunity because they lacked the authority to “demand that Health Net fire her,
[to] refus[e] to allow her to interact with [DOBI], and [to] direct[ DOBI] staff to have no
dealing with her on any matter.” (Appellant Brief at 21). Putting aside O’Donnell’s
failure to cite any authority establishing that Simon and Barry lacked the discretion to
determine with whom they (or, for that matter, DOBI personnel) interact, O’Donnell did
not establish that she was denied a constitutionally protected property or liberty interest
in the first instance. Hill, 455 F.3d at 233-34; Nicholas v. Penn. State Univ., 227 F.3d
133, 139-40 (3d Cir. 2000). Accordingly, we reject this argument.
B.

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O’Donnell alleges that Simon and Barry defamed her in the summer of 2005.
O’Donnell’s complaint, however, was not filed until November 2006, after the one-year
statute of limitations on defamation actions expired. N.J. Stat. Ann. § 2A:14-3.
In New Jersey, the “discovery rule” cannot extend the limitations period for
defamation claims. Lawrence v. Bauer Publ’g & Printing Ltd., 396 A.2d 569, 570 (N.J.
1979) (adopting reasoning of dissenting appellate judge, 381 A.2d 358 (N.J. Super. Ct.
App. Div. 1977)). Nevertheless, O’Donnell argues that Lawrence was wrongly decided
and, in the alternative, that we should find a limited exception to its rule. Because Erie
Railroad Co. v. Tompkins, 304 U.S. 64 (1938), requires us “to follow state law as
announced by the highest state court,” we reject O’Donnell’s argument without further
discussion. Edwards v. HOVENSA, LLC, 497 F.3d 355, 361 (3d Cir. 2007).
C.
O’Donnell mentions, but does not discuss, the dismissal of her New Jersey Civil
Rights Act claim (as well as the dismissal of her state common law claims other than
defamation) only by way of footnotes in her opening brief. Accordingly, any appeal
regarding those claims has been waived. Odd v. Malone, 538 F.3d 202, 207 n.2 (3d Cir.
2008).
D.
Finally, O’Donnell contends that the District Court erred by failing to permit her to
amend her complaint. When a complaint is dismissed for failure to state a claim upon

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which relief may be granted, a plaintiff should be granted the opportunity to amend the
complaint unless amendment would be inequitable or futile. Grayson v. Mayview State
Hosp., 293 F.3d 103, 106 (3d Cir. 2002). Because O’Donnell has failed even now to
identify any constitutionally protected property or liberty interest and untimely filed her
defamation claim, we conclude that it would have been futile for the Court to provide her
with leave to amend.
III.
For the reasons stated above, we will affirm the District Court’s order.

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