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Judge tosses bulk of former CFO's defamation suit vs Walgreens; Miquelon seeks to add new allegations arising from recent investor documents

By Jonathan Bilyk | Jul 20, 2015


A Cook County judge has refused to allow Wade D. Miquelon, former chief financial officer at Walgreens, to proceed with much of his defamation and breach of contract lawsuit against his former employer, in which he alleged Walgreens executives lied to investors and the press about why he had departed the company in 2014.

Now, Miquelon has asked the judge for permission to amend his complaint again, this time to bolster his claims the company misled him into signing a separation agreement used by Walgreens to defend itself against his lawsuit, and to add a new allegation of defamation against the company and its executives.

In late June, Cook County Circuit Judge Franklin Valderrama granted motions by Deerfield-based Walgreen Co. to dismiss seven of nine counts alleged in Miquelon’s litigation against the country’s largest pharmacy retailer.

Walgreens had brought the motions this spring, in response to the complaints brought by Miquelon last fall.

At that time, Miquelon had alleged Walgreens executives had tried to falsely pin the full blame on him for alleged financial missteps. The complaint followed articles published in the Wall Street Journal in the summer and early fall of 2014, which amplified disparaging remarks Miquelon said had been made by then-Walgreens CEO Gregory Wasson and Stefano Pessina, a billionaire investor, who has since been named the CEO of Walgreens, following its merger with international drugstore chain, Alliance Boots.

The lawsuit itself came against the backdrop of that merger. As Walgreens began the process of acquiring Boots and reorganizing the company, Miquelon signed a separation agreement in May 2014, agreeing to remain with the company for 18 more months to help oversee the merger and acquisition.

However, in June 2014, investors allegedly grew angry with adjusted earnings numbers from Walgreens, which dropped its earnings forecast from $8.5 billion to about $7 billion by 2016.

In his complaint, Miquelon had asserted the company had maintained inflated earnings forecasts over his objections for months.

However, Miquelon said Wasson never defended him and, in conversations with investors during a subsequent “road show” with Pessina to discuss the pending merger, later allegedly blamed Walgreens’ recent moves on him, saying he was “too conservative” and had mismanaged the company’s finances.

Miquelon’s complaint specifically alleged defamation, breach of contract, tortious interference with Miquelon’s ability to land new jobs, violations of the separation agreement, conversion for refusing to pay Miquelon money he believed he was owed under the separation agreement, and fraudulent inducement.

He asked the court to declare the statements allegedly made against him to be false, to order Walgreens and its executives to stop making the allegedly defaming and disparaging statements about him and his performance and to award him damages.

In its motion to dismiss, however, Walgreens said a release included in the separation agreement Miquelon had signed in May 2014, and a release he signed in August 2014 when he formally left the company, precluded him from bringing virtually all of his complaint.

Valderrama agreed, saying the language of the releases, “which the court finds unambiguous,” agrees with Walgreens’ interpretation.

“Any other interpretation of the (releases) would be contrary to the plain terms of those documents,” the judge wrote, dismissing with prejudice six of the nine counts, including those for defamation and breach of contract and those demanding injunctions and a “declaration of falsity” concerning the statements regarding Miquelon in the Wall Street Journal articles.

Additionally, Valderrama dismissed without prejudice Miquelon’s fraudulent inducement claim, stating he did not believe the evidence reflected “any false statement” made by Walgreens leadership to Miquelon about the nature of the separation agreement, or what they intended to communicate to investors following Miquelon’s departure.

The judge, however, declined to dismiss Miquelon’s complaints regarding Walgreens’ alleged breach of contract and conversion in refusing to pay him severance to which he believes he is entitled under the separation agreement.

Walgreens had argued the court should determine it has no obligation to pay Miquelon anything more because the former CFO had violated confidentiality agreements when he filed his lawsuit and discussed internal company matters in the public record.

Judge Valderrama, however, disagreed, saying a protective order he had issued earlier in the proceedings regarding maintaining secrecy around internal Walgreens company documents cannot be used by Walgreens to defeat Miquelon’s contentions in his complaint.

“At no time has this court been asked to find or found that Miquelon breached his duty of confidentiality when he filed his complaint,” the judge wrote. “Rather the court found that Walgreens ‘satisfied its burden of establishing a compelling interest in maintaining the confidentiality of nonpublic documents.’

“Therefore, Walgreens’ affirmative matter does not defeat Miquelon’s claims.”

Following Valderrama’s June 29 ruling, Miquelon asked the court on July 13 for the chance to again amend his complaint.

While the judge had dismissed the “fraudulent inducement” count, Miquelon, through his attorney, Nathan E. Hoffman of the firm of Dechert LLP, of Chicago, said he wished to introduce “additional context” to the allegation, to demonstrate the company and its executives intentionally misled him into signing the releases “by both misrepresentation and concealment.”

Further, Miquelon’s motion indicated he wishes to introduce another defamation count against Walgreens, this time stemming from allegedly disparaging statements made against Miquelon in documents issued to investors and filed with federal regulators in April 2015, well beyond the period of time covered by the releases.

A passage within the document in a section discussing Walgreens’ executive compensation states: “Based on Mr. Miquelon’s breaches of certain obligations to the company and other bases, it is not obligated to provide to Mr. Miquelon any of the compensation and benefits listed above.”

Miquelon said this statement was “disparaging on its face,” as well as “false and misleading,” and he alleges the statement has “had a devastating impact on Miquelon’s professional reputation.”

“Miquelon has not breached any of his obligations to Walgreens, and certainly no judicial determination has been made to that effect,” Miquelon’s attorneys argue in his motion to amend. “Walgreens’ statement regarding Miquelon’s alleged ‘breaches’ was not required by any measure … the proxy statement clearly violates the non-disparagement provision of the separation agreement.”

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