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_____________ CY NT HI A S ANDS v. S H E R R Y K . W A G N E R ; D O N A L D W . K L IN E II; S T A T N U R S E , IN C .; S T A T H E A L T H S E R V IC E S , IN C .; G U A R D IA N H E A L T H S E R V IC E S , IN C .; T R IA G E S T A F F IN G IN C .; G H S H E A L T H C A R E IN C . ; NOR DI C I NVE S T M E NT S ; T I R P AR T NE RS ; GAUR DI AN

NUR S I NG S E RV I CE S , I NC DONAL D W L I N E , I I ; ST A T H E A L T H SE R V I C E S, I N C ; n/ k/ a GU AR DI AN HEA LTH SERV I CES, I NC a n d GH S HEA LTHC AR E, I NC n / k / a GUA RDI AN N URS I NG SE RVI CES , I NC,

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_____________ C Y N T H IA S A N D S , A ppel l ant v. S H E R R Y K . W A G N E R ; D O N A L D W . K L IN E ; S T A T N U R S E IN C ; S T A T H E A L T H S E R V IC E S , IN C ; G U A R D IA N H E A L T H S E R V IC E S , IN C .;The Honorable Ala n D. L ourie, Judge of

the United States Court of Appe als for the * Fe deral Circuit, sitting by designation. 2 GUA RDI AN H EAL TH S ERVI CES , I NC. ; TRI AGE S TAF F I NG I NC; GHS HEAL THCARE I NC, n / k / a GUA RDI AN N URS I NG SE RVI CES I NC; G U A R D IA N N U R S IN G S E R V IC E S IN C ; N O R D IC IN V E S T M E N T S IN C ; T IR P ARTNER S A p p e a ls f

ro m th e U n ited S tate s D istric t C o u rt f o r th e M id d le D istric t o f P e n n sy lv a n ia ( N o. 01- cv- 1475) D istric t Ju d g e : H o n o ra b le M a lco lm M u ir Subm i t t ed pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

February5, 2009 B e f o re : M c K E E , J O R D A N a n d L O U R IE , C ir c u it J u d g e s , * ( Fi l ed: February24, 2009)

___________________ OPI NI ON O F THE COURT

____________________ M C K E E , C i r cui tJ udge: T h is c o n so lid a ted a p p e a l ar ise s f ro m th e e x e c u tio n o f

a S to c k P u rc h a se A g re e m e n t and i nvol ves t w o di ffe r ents et s of def endant s w ho ar e appe al i ng the or derof the di s t r i ct c o u r tg r a n t i n g j u d g me n ti n f a v o ro f P l a i n t i f f Cyn t h i a S a n d s . F o rth e r e a s o n s th a tf o l l o w,3

we wi l l a f

f i r m. I. T he di s t r i ctcour thad di ver s i t yj ur i s di ct i on pur s uantt o 28 U . S. C . § 1332. W e have j ur i s di ct i on pur s uantt o 28 U . S. C . § 1291. T he fi nal or derof the di s t r i ctcour tw as ent er ed on J anuary11, 2008. T he not i ce of appea l fordefe ndant s Sher r yW agnerand ST A T N ur s e, I nc. w as notfi l ed unt i l February14, 2008. H ow ever , s i nce D onal d K l i ne and the r emai ni ng defe ndant s t i m el yfi l ed an a ppeal on February8, the t i m e forfi l i ng an ap p ea l fo r th e re m ainin g p arti es w as e n large d b yo p era ti o n o f F ed . R . A p p . P . 4 (a)(3) (“If o n e p a rtytim e lyf

iles a n o tice o f

a p p e a l, an yo th e r p a rtym a yf ile a n o tice o f

a p p e a l w ith in 14 day s aft er the d at e w hen t he fir stno t i ce w as fi l ed, or w i t hin the ti m e otherw i se pr es cr i bed byt hi s R ul e 4( a) , w hi cheve rper i od ends l at er . ”) . W agner ’ s appea l w as t h e r e f o r e t i m e l y. I. I nas m uch as w e w r i t e pr i m ar i l yforthe part i es , w e nee d notdi s cus s the fa ctual or p ro c e d u ra l b a c k g ro u n d e x c e p t in s o f a r a s it m a yb e u s e f

u l to o u r b ri e f

d is c u s s io n . B eca us e of the thor oughnes s of the di s t r i ctcour t ’ s cons i der at i on of the i s s ues thathave been r ai s ed, w e ca n pr i m ar i l yr el yon t he di s t r i ctcour t ’ s expl anat i on of w hythe d e f e n d a n ts a rg u m e n ts a re n o t m e ri to ri o u s . A l l defe ndant s ar gue thatPenns y l vani a’ s “gi s tof the ac t i on” doctr i ne pr ecl udes S a n d s ’ c la im s a g a in s t th e m . See e Tol l , I nc. v. E l i as/

Savi on A dver t is i ng, I

nc. , 811 A . 2d4

1 0 , 1 4 (P a . S u p e r. 2 0 0 2 ) (e x p lain in g th a t th e g ist o f th e a c tio n d o c trin e o p e ra tes to

“ p re c lu d e [ ] p la in tif

f s f ro m re -c a s tin g o rd in a ry b re a c h o f c o n tr a c t c la im s [ a s ] t o rt c la im s ” ). In re jec tin g th e d e f

e n d a n ts’ a ttem p t to re lyo n th a t d o c trin e in th e D e f e n d a n ts’ M o tio n to D ism iss , the d istric t co u rt e x p lain e d : T he dut i es al l egedl ybr eac hed i n t hi s cas e expe nd w el l bey ond t he t erm s of th e S to c k P u rc h a s e A g re e m e n t e n te re d in to b e tw e e n S a n d s a n d W a g n e r. N one of the K l i ne D efe ndant s w er e a pa r t yt o t hatagr eement . T he unl aw ful a c tiv itie s a lle g e d ly u n d e rt a k e n b yW a g n e r a n d th e K lin e D e f e n d a n ts (i .e ., th e c o n sp ira c yto d e f

ra u d S a n d s) c o m p rise a n e ss e n tial, if n o t th e d o m in a n t, fa ce t of this case . T h e b rea ch o f c o n tr ac t cl aim relates to W ag n er’s fa il u re t o paySands pur s uantt o t he t erm s of the St ock Pur chas e A gr eement . T he cl ai m s w hi ch the D efe ndant s now s eek t o have di s m i s s ed r el at e t o other c o n d u c t co n c e rn in g a n u n law f u l ag re e m e n t b e tw e e n W a g n e r a n d K lin e to sta rt a b u sin e ss e ss e n tiallyid e n tica l to S tat N u rse , In c . [a n d tra n sf e rrin g a ll of St atN ur s e’ s as s et s and cus t om er s t o t he new corpor at i on] , ther eby defr audi ng Sands fr om t he bene fi tof hercontr actw i t h W agner . T he dut i es i m pl i cat ed byt hatconductar e i m pos ed bys oci al pol i ci es , and notbythe S to c k P u rc h a se A g re e m e n t. ( A pp. 234. ) W e ca n add l i t t l e t o t he court ’ s expl anat i on and w e w i l l ther efor e af fi r m t he di s t r i ctcour t ’ s r ej ect i on of the “gi s tof the ac t i on” doctr i ne s ubs t ant i al l yforthe r eas ons s e t f o rt h b yth e d is tr ic t c o u rt . A l l defe ndant s al s o ar gue thatSands w as i n m at er i al br eac h of the St ock Pur chas e A g re e m e n t as a m a tter o f law . T h e d istric t co u rt e x p lain e d w h yd e f e n d a n ts’ a ttem p t to r el yon t he doctr i ne of “ s ubs t ant i al per form ance ” t o es t abl i s h a mat er i al br eac h of the s t ock pur chas e w as m er t i l es s . O nce a gai n, w e ca n r el yon t he di s t r i ctcour t ’ s expl anat i on t o r es ol ve thatar gum enton appea l . I n i t s or derof J ul y24, 2007, the courtexpl ai ned: A s s t at ed above , onl ya s i ngl e s peci al ver di ctques t i on w as pos ed t o t he5

j ur y . T he i s s ue of w hetherSands s ubs t ant i al l yper form ed the obl i gat i ons im p o se d u p o n h e r b yth e S to c k P u rc h a se A g re e m e n t w a s n o t p re se n ted to t he j ur yand no part yobj ect ed t o t he fa i l ur e t o pr es enti tt o t he j ury . H ad t hi s i s s ue bee n r ai s ed att he appr opr i at e t i m e ( i . e. , upon r evi ew of the sp ec ial v erd ictq u esti o n o r af ter he aring the ju ryinstruction s an d b ef o re co u n sels’ closing arg u m en ts) , w e w o u ld h av e c o n side red tai lori n g the ju ry i nst ruct i on s and ad ding anynecessaryspeci al verdi ctqu est i on s. I n eff ect , t he D efe ndant s ar e now at t empt i ng t o s ubs t i tut e a s i gni fi cant l ydi ffe r entl egal s t andar d i nt o t he ca s e. W e ar e of the vi ew that th e ira tte m p t is u n tim e ly, in a p p ro p ri a te , a n d u n f a ir ly p re ju d ic ia l to S a n d s . T h e D ef en d an ts w aive d their op p o rtu n ityto li ti g ate the q u esti o n o f S an d s’s s ubs t ant i al per form ance w hen theyfai l ed t o obj ectt o t he j uryi ns t ruct i ons a n d a s k th a t th e m a tte r b e p re s e n te d to th e ju ry in a s p e c ia l v e rd ic t q u e s tio n . H a d th e m a tte r b e e n ra is e d a t th a t p o in t, S a n d s c o u ld h a v e re s p o n d e d . B eca us e the j ur yhas been di s m i s s ed, i ti s now i nappr opr i at e and w oul d be pr ej udi ci al t o Sands t o at t empt t o change the governi ng l egal s t andar d. (A p p . 2 1 8 -1 9 .) M o re o v e r, as th e d istric t co u rt a lso e x p lain e d , the e v id e n c e f a iled to su p p o rtd ef

en d an ts’ theo ryin an yev en t. (A p p . 2 1 9 -23 . ) A l l defe ndant s nextar gue thatthe di s t r i ctcour terr ed i n al l ow i ng the ques t i on of f ra u d to g o to th e ju rye v e n th o u g h th e e v id e n c e d id n o t su p p o rt a f in d in g o f f ra u d . In its J anuary11, 2008, O r derdeny i ng defe ndant s ’ pos t - t r i al m ot i ons , the di s t r i ctcour trul ed t hatt hi s pos i t i on w as unt enabl e bec aus e i t“fa i l s t o cons i dera s ubs t ant i al amount of evi dence . ” ( A pp. 14) . W e agr ee. Kl i n e , S t a tHe a l t h S e r v i c e s , I n c . , n / k / a Gu a r d i a n He a l t h S e r v i c e s , I n c . , a n d GHS H eal t hcar e, I nc. , n/ k/ a G uar di an N ur s i ng Ser vi ces , I nc. ( t he “K l i ne D efe ndant s ”) r ai s e an obj ect i on t o t he j ur ychar ge i n t he fi r s ttr i al . T heycl ai m the di s t r i ctcour tcomm i t t ed re v e rsib le e rro r w h e n it ch a rg e d th e ju ryth a t S a n d s’ b u rd e n o f p ro o f o n th e c o n sp ira c yto defr aud w as a “pr eponder ance of the evi dence ” r atherthan “c l earand convi nci ng6

e v i d e n c e . ” T h e ya r e c o r r e c ti n p o i n t i n g o u tth a tth e c h a r g e wa s e r r o n e o u s . No defe ndant s obj ect ed t o t he cha r ge. H ow ever , i n B e a rd sh a ll v. Min u tem a n P re ss In t’l, I nc. , 664 F. 2d 23, 27 ( 3d C i r . 1981) , w e hel d t hatan err ori n t he i ns t ruct i ons r egar di ng t he bur den of pr oof i s fundament al , and ca n ent i t l e a de fenda ntt o a new tr i al even i n t he ab sen ce o f c o n tem p o ran eo u s o b jecti o n . N ev erthe less, that d o es n o t end o u r i n q u iry beca us e def

endant s di d s ubm i tpr opos ed j uryi ns t ruct i ons . T he pr opos ed i ns t ruct i ons t hat w er e off er ed di d noti ncl ude an i ns truct i on thatcons pi r acyt o defr aud mustbe es t abl i s hed bycl earand convi nci ng evi dence . W e have hel d t hatthi s i s “t ant amount t o i nvi t ed e rr o r,” a n d d o e s n o t r e q u ir e re v e rs a l. 2260 W oodl ey Road Joi ntV

entur e v. ITT Sheraton C or p. , 3 6 9 F .3 d 7 3 2 , 7 4 4 (3 d C ir. 2 0 0 6 ). A c c o rd in g ly , alth o u g h th e ir c h a llen g e to th is por t i on of the j ur ychar ge i s t echni cal l ycorr ect , gi ven the “i nvi t ed err or , ” i tdoes not w arr antr el i ef. F inally , the K li n e D ef

en d an ts argu e tha t i t w as re v ersible e rror fo r th e d istri ct co u rt t o r efus e K l i ne’ s r eques tfora cha r ge on mal i ce a nd l ack of j us t i fi cat i on i n connec t i on w i t h t he fr aud cha r ge. T he di s t r i ctcour tcons i der ed thatar gum enti n rul i ng on pos t - t r i al m ot i ons . K l i ne di d m ake thi s obj ect i on attr i al , s o w e r evi ew forabus e of di s cr et i on, u n le s s th e in s tru c tio n a c tu a lly m is s ta te s th e la w , in w h ic h c a s e o u r r e v ie w is p le n a ry. C ooperD is tr i but i ng C o. , I nc. v. A m ana R ef

r iger at i on, I

nc. , 1 8 0 F . 3 d 5 4 2 , 5 4 9 (3d C ir . 1999) . W e do notbel i eve thi s por t i on of the cha r ge mi s s t at ed the l aw , nordo w e fi nd t hat t he di s t r i ctcour tabus ed i t s di s cr et i on i n r efus i ng K l i ne’ s r eques t s foraddi t i onal7

i nst ruct i on s. In h er pro se bri ef, W agn er r ai ses the ad dit i on al argum ent that the S t ock P urchase A gr eements houl d be cons i der ed voi d a b in iti o beca us e “STA T N ur s e upon s al e pr ovi ded s ervi ces t hatw er e no l ongerl egal t o pr ovi de. ” She bas es thi s ar gum enton heral l egat i on t hati tw as i m pr operundervar i ous t ax l aw s t o t r eatcert ai n ki nds of nur s es as “i ndepende ntcontr act or s ” r athert han “e m pl oy ees , ” and thatSands al l egedl ys ol d hert he b u sin e ss w ith o u t re v e a lin g th a t th e a g e n c yw a s v io latin g th e se tax law s. W e re jec t th is ar gum ents ubs t ant i al l yfort he r eas ons ar t i cul at ed bythe di s t r i ctcour ti n i t s J anuary11, 2 0 0 8 O rd e r. ( See A p p . 9 -1 1 .) II. Fort he r eas ons s etfor t h above, the j udgm entof the di s t r i ctcour tw i l l be af fi r m ed.