Opinion
99 C 6522
November 15, 2000
MEMORANDUM OPINION
INTRODUCTION
This case comes before the Court on Defendant's Motion for Summary Judgment. For the following reasons, we grant the motion in its entirety.
BACKGROUND
In December 1997, Plaintiff Larry Wexler ("Wexler") began working for Defendant Morrison Knudsen Corporation ("MK"). (Def. Statement of Uncontested Facts [hereinafter "Def. SOUF"] ¶ 3.) Wexler assumed the dual positions of material/inventory coordinator and contracts administrator. (P1. Statement of Add'1 Facts thereinafter "P1. SAF"] ¶ 1.) Within sixty days of starting his new job, Wexler received the MK Handbook for Salaried Employees (the "Handbook"). (Def. SOUF ¶ 6.) Wexler reviewed the Handbook upon its receipt. (Id.)
The Handbook and other company literature provide an overview of several company policies. For instance, the company asks employees to report suspected violations of corporation standards by other employees. (Def. Exh. L, Admin Bull. 2.1. 12a-b.) The company urges such reporting as part of its effort to "create a free and open atmosphere" in the workplace. (Id. at 2.1.13.) Furthermore, the Handbook states that it is against company policy to discriminate or retaliate against any individual who has opposed a discriminatory practice, filed a discrimination charge or participated in an investigation. (Def. Exh. F, Employee Handbook, at 5.) In addition, company policy precludes supervisors from engaging in retaliatory acts. (Id. at 6.)
The Handbook moreover warns that "[a]ll employment is at will" and that "nothing in the company's policies or practices or this handbook is sufficient to change your at will status." (Id. at ¶¶ 6-7.)
1. Wexler's Reports To Supervisors
During his tenure, Wexler reported on several occasions what he considered to be inappropriate events occurring in the workplace. Wexler lodged the first of these reports in an email to Project Manager John Vilke on November 18, 1998. (Def. SOUF ¶ 18.) The email reported
a serious problem in the Maintenance area concerning inappropriate language, accusations and the tolerance thereof. There have been past instances of racially offensive terms being used over the radio. No actions were taken in that instance. Today inappropriate remarks were made to Pam which could qualify under sexual harassment. I feel that some sort of action needs to be taken to end this behavior before someone's feelings are hurt beyond repair. I don't think you condone this activity, so I am asking you to take positive action to stop it. (P1. Exh. G.)
A few months later, on March 4, 1999, Wexler sent an email to John Clise in MK's operations and maintenance division. (P1. Exh. H.) This message asked whether it was appropriate for MK employees in both OM and Procurement to party on a regular basis with vendors?" (Id.) Wexler noted that several of his fellow employees had been "wined and dined on a regular basis" by vendors who were subsequently awarded contracts without going though the bid process. (Id.) In addition, in his deposition Plaintiff cited at least two other instances where he "voiced his opposition to conduct that he believed constituted unethical or improper business conduct." (P1. Resp. Def. SOUF ¶ 19.)
Wexler claims to have been subjected to retaliation by MK in light of his willingness to expose these and other breaches of company policy. The basis of his claim includes the following events: (l)poor performance reviews; (2) criticism of job performance; (3) denial of raise; (4) increase of job responsibilities without accompanying increase in pay; (5) change in employment status without accompanying increase in pay; (6) attempts to wrongfully charge him with racial harassment; and (7) repeated threats of termination for reporting unethical business practices. (P1. Resp. Def. SOUP ¶ 20.)
2. The Alleged February 22, 1999 Comment
On or about February 22, 1999, MK employee Mike Bosse ("Bosse") reported to supervisor John Krulock ("Krulock") that Wexler made an inappropriate comment in the workplace. (Def. SOUP ¶ 12.) According to Bosse, Wexler allegedly stated that "James Kemp was a failed experiment from the J building monkey area." (Id.) Kemp, a fellow MK employee, is African American. (Id.) Bosse claimed that he and two fellow employees, Tara Davis ("Davis" and Pam Vesley ("Vesley"), witnessed the comment. (Id.)
Krulock considered the comment potentially discriminatory and reported it to Karen Peavey, the company's EEOC supervisor. (Id. at ¶ 13.) Peavey consulted the company's Director of Human Resources and an in-house attorney, then decided to initiate an investigation. (Id.) Peavey agreed to interview Vesley and asked Krulock to interview Davis. (Id.)
Vesley recalled having been too busy to hear anything. (Id.) Davis claims that Krulock approached her and asked whether Wexler had made any racially derogatory comments about James Kemp. (Davis Aff. ¶ 4.) Although Davis told Krulock that she "did not know what he was talking about," Krulock allegedly continued to question her. (Id. at ¶¶ 5-6.) He described a conversation where Wexler called Kemp a reject from the J building monkey experiment. (Id.) Davis continued to maintain that Wexler never made a racially derogatory comment, although she did recall a comment by Wexler "about James and the J-building." (Id.) Davis claims that "Krulock did not appear satisfied" with her responses and continued pressing her. (Id. at ¶ 7.) She states that because she felt pressured by Krulock, she later left her position at the facility. (Id. at ¶ 10.)
Krulock recalls that Davis appeared "uncomfortable" presumably because she was a new employee. (Krulock Dep. p. 127.) He does not remember Davis exhibiting any reluctance to sign a statement, however. (Id. at 128.)
Krulock then proceeded to interview Wexler. (Def. SOUF ¶ 14.) The interview consisted of Krulock asking Wexler whether he made the statement and Wexler unequivocally denying having done so. (Id.) MK claims that the investigation was resolved in Wexler's favor following this interview. ( Id. at ¶ 15.) Wexler counters that no report exists to this effect, however. (P1. Resp. ¶ 16.) He adds that shortly thereafter, on March 10, 1999, after the investigation he was reprimanded for "creating a divisive environment." (Id.)
By this point, Wexler's time with MK had apparently run its course. On March 12, Wexler submitted a letter of resignation terminating his employment. (Id. at ¶ 25.) Following his resignation, Wexler sent a letter to the EEOC and filled out a standard form questionnaire. (Id. at ¶ 27). On the questionnaire, Wexler did not refer at all to the alleged retaliation for having reported sex and racial discrimination. (Id.) The EEOC referred him to the Illinois Human Rights Commission. (Id.) Wexler failed to follow up with a complaint either to the EEOC or the IHRC. (Id. at ¶ 28.)
3. Wexler's Claims
Wexler has brought two claims against MK. First, he asserts that MK's Handbook and policies endowed him with a legitimate contractual expectation of being free from any form of retaliation for reporting suspected inappropriate conduct. Because MK's agents engaged in retaliatory conduct which effectively forced Wexler's resignation, they breached the implied contract they had struck with Wexler and are liable for damages. In addition, he has raised a defamation claim against MK pertaining to their investigation of his allegedly racially discriminatory comment in March 1999.
MK has responded with this Motion for Summary Judgment of Wexler's two claims. For the following reasons, we grant MK's motion
LEGAL STANDARD
Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). In seeking a grant of summary judgment the moving party must identify "those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). This initial burden may be satisfied by presenting specific evidence on a particular issue or by pointing out "an absence of evidence to support the non-moving party's case," Celotex Corp., 477 U.S. at 325, 106 S.Ct. at 2554. Once the movant has met this burden, the non-moving party cannot simply rest on the allegations in the pleadings, but "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). A "genuine issue" in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); rather, "[a] genuine issue exists when the evidence is such that a reasonable jury could find for the non-movant,"Buscaglia v. United States, 25 F.3d 530, 534 (7th Cir. 1994). When reviewing the record we must draw all reasonable inferences in favor of the non-movant; however, "we are not required to draw every conceivable inference from the record — only those inferences that are reasonable." Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir.1991).
DISCUSSION
(1) Breach of Contract Claim
Wexler claims that MK's Handbook and other policies obligated him to report wrongful conduct to the company. (Compl. at ¶ 24.) In turn, Wexler maintains that these documents expressly prohibited MK from taking any retaliatory or adverse actions against the employee making such reports. (Id.) These terms and conditions became part of an alleged employment agreement between Wexler and MK. (Id. at ¶ 25.) The alleged agreement vested Wexler with a right to remain free from retaliation by MK for reporting any wrongful conduct. (P1. Brief p. 4.) Wexler alleges that after he brought wrongful business conduct to the attention of the MK, MK engaged in a pattern of retaliation in violation of Wexler's contractual rights. (Id. at ¶ 26.)
Under Illinois law, all employment relationships without fixed durations are presumed to be at-will and are terminable by either party with or without cause. See Robinson v. Ada McKinley Comm. Serv., 19 F.3d 359, 360 (7th Cir. 1994). The at-will presumption may be overcome by evidence that the parties contracted otherwise. See id.
In Duldulao v. Saint Mary of Nazareth Hosp. Ctr., the Illinois Supreme Court held that an employee handbook or other policy statement can create enforceable contractual rights if the traditional requirements for contract formation are present. See 505 N.E.2d 314, 318 (Ill. 1987). Those requirements are: (1) that the language of the policy statement must contain a promise clear enough that an employee would reasonably believe that an offer has been made; (2) that the statement was disseminated to the employee in such a manner that the employee is aware of its contents and reasonably believes it to be an offer; and (3) that the employee must accept the offer by commencing or continuing to work after learning of the policy statement. See id. When these conditions are present, the employee's continued work constitutes consideration for the promises contained in the statement and under traditional principles a contract is formed. See id.
In Duldulao, plaintiff Duldulao sued the defendant/hospital alleging that the hospital discharged her in violation of the terms of an employee handbook. See id. at 315. After working for nine years at the hospital as a nurse, Duldulao changed positions and became human resources development coordinator. See id. Less than three months later, Duldulao received both a "probationary evaluation" and a "final notice" that terminated her employment as of the end of that day. See id. at 315-16. Duldulao later brought suit claiming that her termination violated the procedural rights afforded to her by virtue of an implied contract with the hospital. See id. at 316.
The hospital's employee handbook promised employees that after 90 calendar days of employment, they would become permanent employees whose termination required proper notice and investigation. See id. Termination must be preceded by three warning notices within a twelve-month period.See id. Each nurse received a handbook and was expected to become familiar with its contents. See id. These facts led the court to affirm the appellate court's reversal of the circuit court's grant of summary judgment to the hospital, finding that the handbook's language modified the at-will nature of Duldulao's employment and afforded her contractual rights to certain disciplinary procedures. See id. at 320.
Illinois courts have extended Duldulao beyond the at-will context and found that employees may have enforceable contract rights to receive certain other tangible benefits identified in the applicable handbook.See Dow v. Columbus-Cabrini Med. Ctr., 655 N.E.2d 1 (Ill.App. 1995) (holding that employee had under Duldulao an enforceable contractual right to receive payment for unused sick days); DeFosse v. Cherry Elec. Prods. Corp., 510 N.E.2d 141 (111. App. 1987) (holding that employee had under Duldulao an enforceable contractual right to receive disability benefits). Where an intangible working condition is at issue, by contrast, courts have generally refused to extend Duldulao. See Finnane v. Pentel of Am., 43 F. Supp.2d 891, 900 (N.D. Ill. 1999); Svigos v. Perry Television. Inc., No. 95 C 5899, 1996 WL 388416, at *4 (N.D. Ill. 1996).
In Svigos, the plaintiff claimed that her employer violated Title VII and breached its employment contract with her when the employer allegedly ignored her complaints of a co-worker's sexual harassment and, ultimately terminated her. See 1996 WL 388416 at *1. The court dismissed Svigos' contract claim, finding that the company's policy did not contain a clear promise that could be objectively construed as an offer either to investigate complaints of sexual harassment or to discipline documented harassers. See id. at *3 The court concluded that the company's harassment policy merely summarized the existing state of the law without making any promises to investigate complaints and discipline violators.See id.
As a second basis for dismissing Svigos' claim, the court concluded that the claim was "based on an unwarranted extension of Duldulao." See id. at *3 While some courts have extended Duldulao to find that employees may have enforceable contractual rights to receive certain tangible benefits identified in handbooks, courts have not generally recognized contractual rights to intangible benefits. See id. at *4. Svigos was claiming a contractual right to having her charges investigated and acted upon, which amounts to an "intangible working condition that is unrelated to a progressive discipline structure." Id. The court refused to stretchDuldulao to encompass this situation.
In the case at bar, Wexler asks us to recognize his alleged "contractual right" to remain free from retaliation by his employer for reporting wrongful workplace conduct. Following the Svigos rationale, we conclude that Duldulao does not permit us to entertain Wexler's claim. His asserted right does not comprise a "tangible benefit" or a "clearly promised property interest," such as fair discharge procedures or pay for unused sick days. Indeed, Wexler was not discharged; he chose to resign. Instead, his assertion has to do with the intangible condition of working free from retaliation. This claim translates poorly into Duldulao's contract-based analysis of tangible property rights. The fact of this awkward translation indicates that this claim sounds more in tort than in contract. Our legal system boasts an extensive regime under Title VII that would have been better suited to Plaintiffs retaliation claim.
Plaintiff contends that Corluka v. Bridgford Foods of Illinois recognizes a so-called "intangible work condition" as a basis for an employee's assertion of a contractual right. 671 N.E.2d 814, 819 (Ill.App. 1996). We believe that this statement misinterprets the breadth ofCorluka's holding, however. In our view, Corluka represents an outlier case in which one state court very carefully and cautiously reversed the trial court's dismissal of a plaintiffs claim that an employer's "no harassment" policy vested the employee with an enforceable contractual right to remain free from harassment or retaliation. See id. at 819. The court cautioned that its decision was "anchored on the fact that defendant had a very explicit policy statement which rose to the level of contract under Duldulao." Id. That policy promised employees that they could "rest assured that [they] will not be penalized in any way for reporting harassment concerning yourself or any other person." Id. at 816. The strength and clarity of this promise drove the court to resurrect the plaintiffs contract claim. See id. Corluka does not, however, stand for the broader proposition that an "intangible work condition" can formulate a basis for an employee's assertion of a contractual right.
In the case at bar, the employer "promises" alleged by Wexler lack the clarity and convincingness of the example in Corluka. The company statements reflect summaries of existing laws, not promises to employees about their work conditions. Absent express promises, we decline to extend Duldulao as the Corluka court did. We think it more prudent to follow the many courts that have limited Duldulao to encompass "tangible benefits" or "clearly promised property interests." Wexler has failed to provide any issues of fact suggesting that a tangible benefit or clearly promised property interest is involved in this case. Accordingly, his contract claim cannot survive Defendant's Motion for Summary Judgment.
The only colorable promise by MK appears in a letter (the "Letter") awarding Wexler nearly $20,000 in overtime pay. (P1. Exh. 2.) The Letter tells Wexler: "Be advised you will be free from any form of retaliation for accepting this check or having been involved with a Department of Labor investigation relating to overtime pay." (Id.) Even if we construed this language as a promise, the promise pertains to an intangible work condition (working in a retaliation-free environment), not a tangible property interest. The Fair Labor Standards Act, not MK, promised the overtime pay.
Moreover, assuming arguendo that the promise did pertain to a tangible property interest, Wexler has failed to create a genuine issue of material fact suggesting that MK retaliated after Wexler demanded overtime. The Letter was dated March 8, 1999. (Id.) Wexler signed and acknowledged it on March 9, 1999. (Id.) On March 10, Krulock reprimanded Wexler for his refusal to go through the proper chain of command in reporting alleged vendor/employee misconduct on March 4. (P1. Exh. 6, Email from John Krulock.) Wexler composed a letter of resignation on March 11 and submitted it on March 12. (P1. Resp. ¶ 25.) Krulock expressly based his reprimands on an entirely unrelated occurrence, and Wexler has failed to establish any connection between his request for overtime and Krulock's reprimands. Wexler resigned on March 11 before any further allegedly retaliatory conduct could take place. (P1. Resp. ¶ 25.)
(2) Defamation Claim
Plaintiff has also brought a defamation claim against MK. Plaintiff alleges that MK made the defamatory statement that Wexler had engaged in racial harassment of a fellow employee and published the statement to other MK employees. (Compl. ¶¶ 24-26.) The statement purportedly damaged Wexler's reputation by causing him to lose promotions, pay increases and the opportunity to advance within the company. (Id. at ¶ 27.) The statement also allegedly caused Wexler to suffer emotional distress, humiliation and loss of reputation and self-esteem. (Id.)
In order to prove defamation under Illinois law, the plaintiff must show that the defendant made a false statement about him, that an unprivileged publication occurred to a third party with fault by the defendant, and that the publication damaged plaintiff. See Cianci v. Pettibone Corp., 698 N.E.2d 674, 679 (Ill.App. 1998). Some defamatory statements may be protected by qualified privilege, however. See Kuwik v. Starmark Star Mktg. Admin., Inc., 619 N.E.2d 129, 132 (Ill. 1993). Qualified privilege effectuates the policy of facilitating the free flow of information in order ultimately to unearth the correct information.See id. at 133. Whether qualified privilege exists depends on the circumstances. See id. In general, qualified privilege protects three classes of communications: (1) those involving some interest of the person who published the defamatory matter; (2) those involving some interest of the person to whom the matter is published or a third party; and (3) those involving a recognized public interest. See Vickers v. Abbott Labs., 719 N.E.2d 1101, 1108 (Ill.App. 1999) (citing S. Harper, F. James O. Gray, Torts § 5.25, at 216 (2d ed. 1986)).
The defendant has the burden of establishing a qualified privilege See id. at 1110. Once the qualified privilege is established, the communication at issue is only actionable if the plaintiff can show that the defendant abused the privilege. See id. In order to satisfy this burden, the plaintiff must present evidence of a "reckless act which shows a disregard for the defamed party's rights, including the failure to properly investigate the truth of the matter, limit, the scope of the material, or send the material to only the proper parties." Id. (quotingKuwik, 619 N.E.2d at 136). For purposes of summary judgment, this means that the plaintiff must come forward with actual evidence of abuse of the qualified privilege that creates an issue of fact. See id.
In Vickers, an employee accused department manager Vickers of sexual harassment. See 719 N.E.2d at 1105. Several employees later corroborated the charges. See id. Company representatives interviewed the accusers, the corroboratory and finally Vickers. See id. at 1105-06. Upon completion of the investigation, the company concluded that there was ample evidence supporting the allegations. See id. Consequently, the company offered Vickers a senior planning position which required no supervision of other employees and involved a modest pay decrease. See id. Vickers later sued, alleging defamation and other charges.
The appellate court agreed with the trial court's conclusion that the company's communications were covered by a qualified privilege. See id. at 1110. A qualified privilege existed because of the many interests involved. The female accusers and corroborators "had an interest in stopping harassment and abuse by the plaintiff," the company "had an interest in investigating Abbott employees' concerns and taking action to prevent further harassment," and the public has an interest "in eradicating sexual harassment in the workplace." Id. at 1109. Plaintiff failed to defeat the privilege by showing that the employer abused it.See id. at 1111. He provided no concrete evidence to support the notion that the employees fabricated stories about him, nor did he create any factual issues suggesting that the employer failed to conduct a proper investigation. See id. at 1111-12.
In the case at bar, we find that MK has carried its burden of establishing a qualified privilege. Its representatives sought to conduct a thorough investigation of alleged racial harassment. Just as inVickers, the instant defendants had an interest in investigating its employees and in taking action to prevent further harassment. So too does the public have an interest in eradicating racial harassment in the workplace.
Because we have found a qualified privilege, Wexler' s claim is only actionable if he can show that MK abused the privilege. See Vickers, 719 N.E.2d at 1110. We conclude that Wexler has failed to come forward with actual evidence of abuse of the qualified privilege that creates an issue of fact. See id. Wexler has attempted to generate a factual issue by proffering the affidavit of employee Tara Davis who recounts how Krulock conducted her interview. The facts before us, however, indicate that MK and Krulock responded properly to the allegations. See Kuwik, 619 N.E.2d at 136 (citing as abuses of privilege company's failure to properly investigate the truth of the matter, limit the scope of the material, or send the material only to the proper parties). MK undertook an investigation. It limited the scope of the investigation by interviewing only the accuser, the two named witnesses, and the accused. MK's agents did not share the alleged material with anyone other than those who were already familiar with it. Krulock may have pressed Davis, but the case law and public policy embrace such thorough investigations by employers.
That Davis felt uncomfortable during the interview is apparent from her affidavit, and Krulock says as much in his deposition. But these kinds of encounters can by their very nature be uncomfortable. Awkwardness is often the price of vigorous investigations. In her affidavit, Davis appears to express surprise or even outrage that Krulock asked to videotape her statement. Yet such requests are appropriate, even commonplace, in investigations. Davis goes on to say that she felt intimidated by Krulock. While this is unfortunate, it is not enough to create a triable issue of fact, particularly when the alleged intimidation did not motivate Davis to make an incriminating statement about Wexler. Taken together, the facts simply do not create a triable issue as to any abuse by MK and Krulock of this privilege. Accordingly, we grant summary judgment to MK on Wexler's defamation claim.
CONCLUSION
For the foregoing reasons, we grant Defendant MK's motion for summary judgment in its entirety.