Medical Device Co. Ethicon Sued After Construction Contract Breached

On Wednesday, Ethicon Inc. removed a case brought against it to federal court. Optum Construction Group originally filed a lawsuit against Ethicon Inc. in the Superior Court of Gwinnett County, Georgia last month. They accused the defendant of fraud, breach of contract, unjust enrichment, negligent misrepresentation, and violation of the Georgia Prompt Pay Act. 

The lawsuit stems from an issue involving some of the construction work that Ethicon had contracted Optum to complete. Ethicon had used them as their contractors for many projects in the past and had an established business relationship, according to the complaint. The plaintiff would be paid in past jobs based on the invoices they had received at the beginning of every project. In July 2018, the defendant again reached out to the plaintiff for their contracting services, sending them a $1.4 million invoice for installation of an Air Handling Unit.

However, after Optum and Ethicon’s internal managers conducted a further assessment of the project, they found that there were material structural issues and deficiencies in the plan/design based on the weight of the unit and inadequacy of the foundation to accommodate the unit. Optum was directed by Ethicon to consult another engineering firm and come up with a new proposal.

After doing further planning and making revised drawings of the project, they concluded that the revised plan would be two and a half times the square footage of the original, and would require $900,000 in additional funds. This was made clear at a meeting between the plaintiff and Ethicon’s Onsite Facilities Engineer Raymond Harris, who assured them that the additional fees could be covered and instructed them to proceed with the project.

The defendant assured Optum that they would send along the purchase order for the additional costs. Given their successful business history, Optum took them at their word and trusted that the order would be sent. As the work progressed, and neared completion, representatives of Ethicon became increasingly evasive and difficult to reach when the plaintiff attempted to discuss the status of the amended purchase order. Optum believes that Ethicon’s construction managers/supervisors at the plant failed to properly budget for the modified project plan.

As the project drew closer to completion, the defendant reached out to Optum and presented them with two choices. The first option was to forgive any further debt on the part of Ethicon and complete the project in return for future business. The other option presented was that Optum could pursue a claim for what it was owed for the added labor, but would be banned from the site, and would never receive further work from Ethicon. 

Optum elected to go with the second option and demanded payment from the defendant. In response, Ethicon hired their own counsel and claimed that the expense should be offset by faulty work that the plaintiff had performed in the past. When the plaintiff requested to bring in their own company to inspect the alleged shortcomings of their work, the defendant refused to give them access. 

The plaintiff believes that Ethicon personnel “engaged in a conspiracy and pattern of ongoing fraudulent conduct to misrepresent Ethicon’s present intent to deliver an amended purchase order that would incorporate the significant additional work.” To remedy this issue, the plaintiff requests $951,634.00, the amount expended to complete the additional work.

The plaintiff is represented by Fox Rothschild.