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Puetz v. Spectrum Health Hospitals

Court of Appeals of Michigan

April 24, 2018

CATHERINE PUETZ, MD, Plaintiff-Appellant,

          Kent Circuit Court LC No. 15-006618-CB

          Before: Markey, P.J., and M. J. Kelly and Cameron, JJ.

          M. J. Kelly, J.

         Plaintiff, Catherine Puetz, M.D., appeals by right the trial court order dismissing her complaint under MCR 2.116(C)(7) (statute of limitations) and MCR 2.116(C)(10) (no genuine issue of material fact). For the reasons stated in this opinion, we affirm in part and reverse in part.

         I. BASIC FACTS

         In 1999, Puetz took a job with Emergency Care Specialists (ECS), a physicians' group representing about 150 physicians and about 70 physician's assistants. ECS exclusively staffs its physicians at hospitals run by defendant, Spectrum Health Hospitals (Spectrum). Through her relationship with ECS, Puetz had admission privileges in emergency services and observation medicine at Spectrum. In addition, Puetz was appointed to serve as the associate medical director of observation medicine, the associate medical director for ED cardiovascular medicine, and the clinical advisor for pediatrics at Spectrum. In connection with her role at Spectrum, Puetz developed certain observation protocols, which she admitted were created for Spectrum's use and placed on Spectrum's intranet.

         Because the observation program at Spectrum was considered a success, individuals and organizations outside of Spectrum and ECS were interested in it. As a result, in the summer of 2013, ECS and Puetz decided to prepare a pamphlet on observation medicine in an effort to start consulting on the subject. When Spectrum learned about the pamphlet, it instructed ECS that it had to work with Spectrum on any consulting or observation work. Further, a meeting was held on the pamphlet/consulting work in July 2013. At the meeting, Spectrum claimed ownership of the observation materials. A follow-up meeting was scheduled, but did not occur before Puetz was, essentially, prohibited from working at Spectrum in any capacity because of her comments on a Facebook page.

         The record reflects that on August 5, 2013, a Spectrum nurse posted on a public Facebook page a photograph of the backside of an overweight woman and the caption: "Don't judge me. I like what I like." In response to the post, 12 Spectrum employees and 3 ECS employees commented on the photograph on Facebook. Relevant to this appeal, Puetz was the sixth person to comment, and she stated "OMG is that [patient's initials]? You are soo naughty."

         A Spectrum staff member saw the post on Facebook, was uncomfortable with the dialogue, and reported it to Spectrum. Kevin Splaine, Spectrum's president, testified that the decision was made to discipline those involved. Initially, Spectrum decided to remove Puetz from her administrative roles at the hospital. However, Splaine testified that as the investigation into the incident continued, he decided that additional discipline was warranted. According to Splaine, "anyone with whom we could prove was part of this dialogue knew that this was a patient, if they were an employee of Spectrum Health, they would be terminated. If they were contracting with Spectrum Health, the contract would be terminated. And if they were privileged at Spectrum Health, we would not allow them to practice at Spectrum Health Hospitals." The other individuals involved received a written reprimand. By August 19, 2013, Puetz was informed that she was being removed from both her "administrative leadership position and clinical" because of the Facebook incident.

         On August 21, 2013, after making that decision, Splaine spoke at an ECS meeting. Ostensibly, Splaine spoke at the meeting because there was "a lot of angst and concern" about the decision to remove Puetz, and ECS wanted to hear Spectrum's side of it. Splaine apparently did not refer to Puetz by name at the meeting; however, he allegedly told everyone at the meeting that Puetz's comments on Facebook violated HIPAA.[1] In addition, Splaine sent ECS a letter demanding that Puetz and another employee of ECS not be scheduled at any hospital owned by Spectrum. In the letter, Splaine referred to Puetz and the other employee's conduct as reprehensible, unprofessional, and disturbing.

         On March 14, 2014, Puetz filed a complaint in the United Stated District Court for the Western District of Michigan, alleging defamation, false light invasion of privacy, breach of contract, intellectual property ownership, and two counts of tortious interference with a business expectancy. Only count IV, the intellectual property ownership claim, arguably fell within the federal court's original jurisdiction. After discovery closed, the federal district court sua sponte issued a show-cause order regarding subject-matter jurisdiction. Thereafter, the court determined that it lacked subject-matter jurisdiction over the intellectual property claim and dismissed the entire complaint without prejudice.

         Within 30 days of her federal complaint being dismissed, Puetz filed a claim in the Kent County Circuit Court. In response, Spectrum moved for summary disposition under MCR 2.116(C)(7) with regard to the defamation claim and for summary disposition under MCR 2.116(C)(10) for the remaining claims. Puetz also moved for partial summary disposition on the defamation claim, asserting that Splaine's comments were defamation per se, and she asked the court to rule as a matter of law that her comments on Facebook did not constitute a violation of HIPAA. After oral argument, the trial court entered a written opinion and order dismissing the defamation claim under MCR 2.116(C)(7) and dismissing the remaining claims under MCR 2.116(C)(10).

         II. DISMISSAL UNDER MCR 2.116(C)(7)


         Puetz first argues that the trial court erred by dismissing her defamation claim under MCR 2.116(C)(7). Whether a trial court properly granted summary disposition on statute of limitations grounds is reviewed de novo. Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich.App. 362, 369; 775 N.W.2d 618 (2009). "Summary disposition under MCR 2.116(C)(7) is appropriate when the undisputed facts establish that the plaintiff's claim is barred under the applicable statute of limitations." Kincaid v Cardwell, 300 Mich.App. 513, 522; 834 N.W.2d 122 (2013). In addition, issues regarding the proper interpretation and application of statutes are reviewed de novo. Petersen v Magna Corp, 484 Mich. 300, 306; 773 N.W.2d 564 (2009).

         B. ANALYSIS

         In Michigan, the period of limitations for a defamation claim is one year. MCL 600.5805(9). "A defamation claim accrues when 'the wrong upon which the claim is based was done regardless of the time when damage results.' " Mitan v Campbell, 474 Mich. 21, 24; 706 N.W.2d 420 (2005), quoting MCL 600.5827. Here, the allegedly defamatory statements were made on August 21, 2013 and August 22, 2013. Puetz timely filed her complaint in federal court, but her federal complaint was dismissed for lack of subject-matter jurisdiction in June 2015. Puetz declined to appeal the dismissal from federal district court. Subsequently, on July 21, 2015, she filed suit in Michigan, again raising her defamation claim based on Splaine's August 21 and August 22, 2013 statements to ECS. Because her defamation claim was filed more than a year after her claim accrued, it is time-barred unless a tolling provision applies.[2]

         In order to bring a state-law claim in federal court, a plaintiff must assert his or her claim under the supplemental jurisdiction statute, 28 USC 1367. Section 1367(a) provides:

(a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties. [28 USC 1367(a) (emphasis added).]

         Therefore, before a federal court may exercise supplemental jurisdiction over a state-law claim, two requirements must be met. First, there must be a civil action that the federal district court has original jurisdiction over. Second, the state-law claim must be "so related" to the federal claim that it forms "part of the same case or controversy under Article III of the United States Constitution." 28 USC § 1367(a). In this case, the federal district court concluded that Puetz's complaint failed to satisfy the first requirement, i.e., the federal district court lacked original jurisdiction over any of the claims raised in the complaint.[3] Accordingly, because there was no claim over which the federal court had original jurisdiction, the court had no authority under § 1367(a) to exercise supplemental jurisdiction over Puetz's state-law claims.

         The supplemental jurisdiction statute does not contain a provision expressly addressing what happens when a state-law claim is dismissed for lack of subject matter jurisdiction under § 1367(a). Instead, "[s]ubsection (b) places limits on supplemental jurisdiction when the district court's original jurisdiction is based only on diversity of citizenship jurisdiction . . . ." Raygor v Regents of Univ of Minnesota, 534 U.S. 533, 540; 122 S.Ct. 999; 152 L.Ed.2d 27 (2002). "Subsection (c) allows district courts to decline to exercise supplemental jurisdiction in certain situations" that are not applicable under the facts in this case. Id. In addition, subsection (d) appears to toll the limitations period for any claim asserted under subsection (a) regardless of whether the plaintiff was successful in asserting that claim. See Raygor v, 534 U.S. at 542. Section 1367(d) provides:

(d) The period of limitations for any claim asserted under subsection (a), and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.

          It is an issue of first impression in Michigan whether 28 USC 1367(d) tolls a state-law claim filed in federal court that is later dismissed for lack of subject-matter jurisdiction. Further, the United States Supreme Court has not addressed this issue, and, although there are a number of state courts and lower federal courts that have addressed the issue, those decisions are not binding on this Court.[4]

         In the absence of binding authority interpreting 28 USC 1367(d), we first address the United States Supreme Court decision in Raygor. The Raygor Court addressed the narrow issue of whether it was constitutionally permissible to apply the tolling provision in § 1367(d) to state-law claims dismissed on Eleventh Amendment grounds. Raygor, 534 U.S. at 539, 544. In answering this question, the Raygor Court acknowledged that facially § 1367(d) applied to any claim asserted under subsection (a). Id. at 542. However, the Court stated that "reading subsection (d) to apply when state law claims against nonconsenting States are dismissed on Eleventh Amendment grounds raises serious doubts about the constitutionality of the provision given principles of state sovereign immunity." Id. The Court considered it a constitutional question given that a limitations period may be a central condition of a state's decision to waive immunity and given that a state can "prescribe the terms and conditions on which it consents to be sued." Id. at 542-543 (citation omitted). As a result, the Raygor Court relied on the following principle of ...

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