Summary
concluding that an employer did not alter an employee's at-will employment status by placing him on probation
Summary of this case from Nelson v. Target Corp.Opinion
No. 87-C-0765-S.
September 18, 1989.
Robert S. Campbell, Jr., Cass C. Butler, Watkiss Campbell, Salt Lake City, Utah, for plaintiff.
Charles H. Thronson, David A. Anderson, W. Mark Gavre, Parsons, Behle Latimer, Salt Lake City, Utah, John M. Porter, Knoxville, Tenn., Diane Holmquist, New York City, for defendant.
MEMORANDUM DECISION
This action is before the court after oral argument on the objections of defendant North American Phillips Consumer Electronics Corp. (NAP) to the magistrate's February 23, 1989 report and recommendation (R R) that NAP's motion for summary judgment be granted on plaintiff Ronald G. Maxfield's ERISA claim and denied on his remaining claims.
I. Facts
In 1973 Ronald Maxfield began working for GTE Sylvania as one of thirteen area managers acting as liaisons between GTE and its distributors. For several years he maintained a good work record in that position. NAP purchased GTE in 1981, at which time NAP hired Maxfield on an at-will basis for an indefinite period. In 1985 Gene Ridings became Maxfield's supervisor. Maxfield alleges the relationship between Ridings and him deteriorated when Maxfield started pointing out problems and suggesting how to improve sales. He further alleges Ridings began to discredit, undermine and harass him until it became clear Ridings wanted him fired.
On December 6, 1986, Maxfield signed NAP's 1987 Incentive Compensation Plan (acknowledging his acceptance of the terms) after taking it home and thinking about it. Paragraph nine of the plan provides,
TERMS OF EMPLOYMENT.
This Plan is a sales incentive plan, providing extra compensation in addition to your regular base salary, and does not constitute a contract of employment or brokerage between N.A.P. Consumer Electronics Corp. and you.
I understand that my employment with the company has no specified term or length and that either the Company or I can terminate my employment at will at any time, with or without cause. I also understand that no actual or implied contractual employment obligations whatsoever exist between the Company and me and I agree that I am not relying on any oral statements or writings to the contrary.
NAP says these terms are used company-wide and may not be changed without the written approval of the NAP Vice President of Organization and Manpower Planning. Consequently no supervisor or department head has authority to make individual employment contracts with NAP employees.
During a May 20, 1987 meeting, Ridings placed Maxfield on three months probation for poor job performance. Maxfield alleges the immediate pretext was Ridings' false impression Maxfield had incorrectly explained a volume discount to a customer. Ridings told Maxfield that he must sell 120% of his previous quota and that Ridings was going to make it impossible for him to accomplish. The same day Ridings wrote Maxfield a letter memorializing the reasons for and term of probation. The letter said Maxfield was on probation because he did not urge his customers to make bonus orders at a recent convention and his order write was the poorest of all the area managers. The letter further stated,
Your negative attitude and poor performance leaves me no alternative but to put you officially on notice of probation. I regret the action, but you leave me no choice.
I was shocked when I discovered that you had secretly recorded our conversation at our meeting on May 20th. That sort of behavior lacks good business ethics and judgment. It is this sort of behavior which has effected your overall focus on your job responsibilities.
You must deliver the quota in order to meet the company's objectives. That is the sales department's job. You have not provided this company with satisfactory results for the past 18 months. You agreed that you would not accept these type of results if you were in my position.
Your overall performance and productivity has been discussed several times and as recently as three weeks ago. Poor performances such as yours will no longer be tolerated. You have until August 31, 1987, to significantly improve your results, i.e. improve or exceed quota. Otherwise you will be subject to further disciplinary action.
(Maxfield began in April 1987 to tape his conversations with Ridings.) When Ridings discovered Maxfield was taping their June 16, 1987 meeting, he gave Maxfield an ultimatum either to stop recording their conversations or be fired. At the conclusion of the meeting, Ridings terminated Maxfield for gross insubordination.
Maxfield brings this action on claims of (1) breach of an implied covenant of good faith and fair dealing; (2) violation of ERISA; (3) intentional infliction of emotional distress; and (4) breach of contract.
The magistrate recommends summary judgment be granted on Maxfield's Second Cause of Action (ERISA) and the first two theories supporting his Fourth Cause of Action (contract). He recommends summary judgment be denied on Maxfield's third theory of the contract claim, his First Cause of Action (implied covenant) and his Third Cause of Action (emotional distress). NAP objects to the R R insofar as it recommends denial of NAP's motion for summary judgment; Maxfield does not object to any portion of the R R. Because the court agrees with the recommendations to which there were no objections, it adopts and incorporates them by reference into this opinion.
II. Summary judgment standards
Under Fed.R.Civ.P. 56, summary judgment is proper only when the pleadings, affidavits, depositions or admissions establish there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law. The burden of establishing the nonexistence of a genuine issue of material fact is on the moving party. E.g., Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). This burden has two distinct components: an initial burden of production on the moving party, which burden when satisfied shifts to the nonmoving party, and an ultimate burden of persuasion that always remains on the moving party. See 10A C. Wright, A. Miller M. Kane, Federal Practice and Procedure § 2727 (2d ed. 1983).
Whether a fact is material is determined by looking to relevant substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
When summary judgment is sought, the movant bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the record and affidavits, if any, it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. In a case where a party moves for summary judgment on an issue for which he would not bear the burden of persuasion at trial, his initial burden of production may be satisfied by showing the court there is an absence of evidence in the record to support the nonmovant's case. Id., 477 U.S. at 323, 106 S.Ct. at 2552. "[T]here can be no issue as to any material fact . . . [when] a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id.
Once the moving party has met this initial burden of production, the burden shifts to the nonmoving party to designate "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324, 106 S.Ct. at 2553.
If the defendant in a run-of-the-mill civil case moves for summary judgment . . . based on the lack of proof of a material fact, the judge must ask himself not whether he thinks the evidence unmistakenly favors one side or the other, but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff. The judge's inquiry, therefore, unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict. . . .Liberty Lobby, 477 U.S. at 252, 106 S.Ct. at 2512. "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538. The central inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Liberty Lobby, 477 U.S. at 252, 106 S.Ct. at 2512. If the nonmoving party cannot muster sufficient evidence to make out a triable issue of fact on his claim, a trial would be useless, and the moving party may be entitled to summary judgment as a matter of law. Id.
III. Discussion
For the reasons stated below, the court is persuaded to grant NAP's motion for summary judgment on all claims.
A. Breach of implied covenant of good faith and fair dealing
In Berube v. Fashion Centre, Ltd., 771 P.2d 1033 (Utah 1989), the Utah Supreme Court declined to recognize a claim of breach of implied covenant of good faith and fair dealing in the employment context. See Caldwell v. Ford, Bacon Davis Utah, Inc., 777 P.2d 483, 485 (Utah 1989). Consequently the court must grant, as a matter of law, NAP's motion for summary judgment on Maxfield's claim for breach of implied covenant of good faith and fair dealing.
Regarding exceptions to the at-will rule, Caldwell notes,
A majority of the [ Berube] Court also declined to adopt a broad public policy extension to the employment-at-will doctrine that would routinely make it a violation of public policy to discharge an employee in breach of an employment agreement for other than good cause. . . . [T]he Court concluded that an employer's internally adopted policies and procedures concerning discharge can be sufficient evidence to rebut the presumption of at-will employment and can, in effect, become part of the contractual relationship between the employer and employee. Breach of the terms of this contractual relationship can result in damages determined as in any other breach of contract action.Id. (citations and footnote omitted).
Where there is no evidence NAP had a written or tacit policy that would alter in any respect its at-will employment policy, the presumption of at-will employment is not rebutted.
B. Intentional infliction of emotional distress
Maxfield asserts Ridings' statement that Maxfield must sell 120% of his quota and Ridings would see to it he could not, is sufficient to support a claim of intentional infliction of emotional distress against NAP. NAP responds that assertion fails for three reasons: (1) Ridings' statements do not meet the outrageous conduct standards for claims of intentional infliction of emotion distress; (2) NAP is not liable for Ridings' statement because he did not make it in furtherance of NAP's interest; and (3) Maxfield's claim is controlled by workers' compensation laws. Because the court determines Maxfield's claim fails under the first of NAP's defenses, it need not reach the remaining two.
In Samms v. Eccles, 11 Utah 2d 289, 358 P.2d 344, 346-47 (1961), the Utah Supreme Court recognized the existence of and set out standards for a cause of action for intentional infliction of emotional distress:
Our study of the authorities, and of the arguments advanced, convinces us that, conceding such a cause of action may not be based upon mere negligence, the best considered view recognizes an action for severe emotional distress, though not accompanied by bodily impact or physical injury, where the defendant intentionally engaged in some conduct toward the plaintiff, (a) with the purpose of inflicting emotional distress, or (b) where any reasonable person would have known that such would result; and his actions are of such a nature as to be considered outrageous and intolerable in that they offend against the generally accepted standards of decency and morality.
The Court has not departed from those standards. See Young v. Metropolitan Life Ins. Co., Inc., No. 85-NC-0052S, slip op. at 10-11 (D. Utah 1987). Recent cases applying Samms indicate the plaintiff bears a heavy burden to prove intentional infliction of emotional distress. In Amos v. Corporation of the Presiding Bishop, 594 F. Supp. 791, 831 (D. Utah 1984), rev'd in part on other grounds, 483 U.S. 327, 107 S.Ct. 2862, 97 L.Ed.2d 273 (1987), the court observed the Samms language should be interpreted in light of Restatement (Second) of Torts § 46 comment d (1965), which states,
In Johnson v. Rogers, 763 P.2d 771, 779 (Utah 1988), the Court reexamined Samms for the limited purpose of adding to Utah law a cause of action for negligent infliction of emotional distress; the Court left in place the Samms standards for intentional infliction of emotional distress.
See Samms, 358 P.2d at 347 n. 14.
Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency and to be regarded as atrocious, and utterly intolerable in a civilized community. Generally the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, `Outrageous!'Amos involved a plaintiff who challenged the right of his employer to require him to meet certain moral and religious specifications. The court decided neither the requirements themselves nor the interviews conducted to insure compliance (although allegedly humiliating and stressful) amounted to the outrageous conduct described in Samms and the Restatement. In Young, this court determined an employer did not engage in outrageous conduct by auditing the employee's business records, moving his office, contacting his clients during the course of the audit, diverting his telephone calls, and searching his wastebasket. Young, slip op. at 10-11 (citing Amos, 594 F. Supp. at 830-31); see also, Sperber v. Galigher Ash Co., 747 P.2d 1025, 1028-29 (Utah 1987) (lying to employee about reasons for termination is not outrageous conduct). Considering this recent authority, the court concludes, as a matter of law, Ridings' statements cannot be considered so "outrageous and intolerable" as to offend "generally accepted standards of decency and morality." Samms, 358 P.2d 346-47.
C. Breach of contract
Maxfield asserts the magistrate properly concluded that Ridings' May 20, 1987 letter created a contract for employment through August 31, 1987 which was breached by NAP's termination of Maxfield on June 16, 1987. In other words, by placing Maxfield on probation for a certain period, NAP altered its at-will employment contract to one for a certain term during which Maxfield could be fired only for cause.
The magistrate recognized but rejected without analysis the sole case directly on point with the present action: Aldahir v. Mobile Oil Exploration Producing Southeast, Inc., 420 So.2d 714 (La.App.), cert. denied, 423 So.2d 1147 (La. 1982) (a probationary letter does not constitute a contract of employment for a definite term). There the Louisiana Court of Appeals held (on facts nearly identical to these),
The trial judge concluded that this letter could not fairly be construed as a promise of employment through November 1, 1980, but that it was plainly a warning to plaintiff and not an agreement. We agree with that interpretation. The letter does not purport to do anything but emphasize three objectives to be reached by plaintiff by October 15 and schedules an evaluation of his performance with respect to those objectives by November 1. Obviously it does not constitute an abandonment of its prerogatives as plaintiff's employer with respect to defendant's overall performance and it does not purport to guarantee plaintiff a position. It clearly informs plaintiff that he is not performing satisfactorily and it simply provides some assistance to plaintiff to improve the quality of his work.
Both Maxfield's cited authorities are distinguishable from this case because they relate to termination without cause of at-will employees during the probationary period guaranteed them at the outset of employment. State v. Smith, 99 Nev. 806, 672 P.2d 631, 630 (1983) (at-will employee terminated after two weeks because business slowed was allowed trial on employment contract provisions related to thirty-day probation period); Willis v. Asbury Transportation Co., 386 P.2d 934, 936-37 (Wyo. 1963) (at-will employee hired by written contract for thirty days of probation was entitled to compensation for the entire probationary period); contra Peters v. MCI Telecommunications Corp., 685 F. Supp. 411, 414 (S.D.N.Y. 1988) (a stated probationary period for new employees "does not limit the employer's right to terminate at will. . . . it clarifies the employee's status as conditional — conditioned upon satisfactory reference checks, satisfactory performance, attitude and conduct").
The Smith and Willis plaintiffs had employment contracts that, in their courts' view, granted them work for a specific probationary period. However, the present issue relates to an employee placed on probation for disciplinary reasons. Unlike new untried employees, employees who prove unsatisfactory after a trial period generally have no written guarantee or term of employment promising they will be retained, or terminated only for cause, during the disciplinary probation period. The court considers this an important distinction between probationers who are new employees and those who have proven unsatisfactory employees. Where Maxfield has not shown evidence of "internally adopted [NAP] policies and procedures concerning discharge," that could modify his employment contract as to termination during a disciplinary probation, he fails to rebut the presumption he was an at-will employee. Caldwell, 777 P.2d at 485.
The district court in Aldahir granted summary judgment against the plaintiff, an at-will employee, who asserted a letter placing him on probation for poor work performance specified a period of employment during which he could not be terminated without cause. The letter, dated June 19, 1980, stated the employer's dissatisfaction with Aldahir's work and gave him until November 1, 1980, to improve or seek employment elsewhere by December 1, 1980. Id.
The court considers the Aldahir analysis sound and believes that to hold otherwise would be to grant an unsatisfactory employee more rights than a satisfactory employee and to place an employer at risk of altering the employment agreement merely by placing an employee on probation. In view of case law and public policy, the court concludes, as a matter of law, summary judgment should be granted on Maxfield's claim for breach of contract.
This holding comports with the rule in Rose v. Allied, 719 P.2d 83, 85-86 (Utah 1986), that an at-will employment contract may only be modified when (1) there is an "implied or express stipulation as to the duration" of the employment contract or (2) there is "good consideration in addition to the services contracted to be rendered." Here, there is no evidence whatsoever NAP intended to forfeit its right to terminate Maxfield at will. Maxfield asserts his willingness to meet the 120% sales quota shows he gave consideration for the modification. Even if the court were inclined to accept Maxfield's assertion, it would be forced to find there was no evidence on which a jury could find Maxfield did anything more than agree to the increased quota, see Celotex, 477 U.S. at 323, 106 S.Ct. at 2552; consequently, there is nothing to support Maxfield's argument he gave consideration for a modification of the at-will employment contract.
IV. Conclusion
The court grants NAP's motion for summary judgment on all claims.