Opinion
No. CIV 04-341 TUC JMR.
March 17, 2006
ORDER
Pending before this Court are the parties' various motions for summary judgment. For the reasons discussed below, Plaintiff's motion is denied and Defendants' motions are granted.
I. FACTUAL HISTORY
Wilkes was hired by Electronic Data Systems ("EDS") as a customer service representative in December 2002. She was a full-time, hourly employee. Wilkes received a U.S. Benefits Handbook, which outlined, inter alia, EDS's policy on short-term disability benefits. Under the policy, a full-time, active EDS employee is eligible for the benefit if, due to illness or injury, she is unable to earn more than 80 percent of her pre-disability employment. Employees seeking to collect the benefit were instructed to contact their leader who would coordinate with Synchrony, EDS's third-party administrator through defendant Metropolitan Life Insurance ("MetLife").
It is undisputed that EDS's short-term disability program is a payroll practice and is not subject to the provisions of the Employee Retirement Income Security Act of 1974.
Immediately following the introductory paragraph under the disability benefits section of the handbook, was a disclaimer set off by a bold heading and in the same size font as the rest of the handbook. The disclaimer read:
The EDS benefits overview is used by EDS leaders to provide employees and leaders information about EDS' disability benefits process. This is only intended as an overview. None of the information contained herein is intended to give special rights or privileges to specific individuals or to entitle any person to remain employed by EDS. Unless contrary to applicable law or the terms of a written contract executed by an officer of EDS, employment at EDS is not guaranteed for any definite period and may be terminated at any time by the company or by an employee with or without cause or previous notice (unless specifically provided otherwise in a written contract executed by an officer of EDS). Although some of the guidelines set forth herein may suggest, even strongly, that certain procedures or steps be followed, these procedures should not be interpreted as altering the at-will employment relationship and do not constitute an employment contract.
(emphasis added). Another disclaimer followed the introductory paragraph to the short-term disabilities section and added, "EDS retains the right to change, modify, suspend, interpret, or eliminate any provision in this publication, at any time, with or without notice."
The policy also provides that accumulated paid time off ("PTO") can be used to replace an hourly employee's income for the five-day elimination period (the minimum length of time an employee must be disabled to qualify for short-term disability benefits) on approved applications, during which short-term disability benefits are unavailable. Wilkes' final paycheck showed 120 hours of outstanding PTO.
During her employment with EDS, Wilkes suffered from migraine headaches and laryngitis, and underwent two separate surgeries — one for her sinuses and one on her gall bladder. She applied for short-term disability benefits four times. On the first occasion in March 2003, Wilkes thought she was ineligible for benefits because she had not "been working long enough." Deposition, Marla Wilkes at 98. However, Wilkes consulted with her supervisor who told her that he would submit the claim for her and that "she did not need to read the policy or anything else." Disability benefits were approved from March 10 to March 31, 2003, for disabilities due to migraines and sinuses based on the information provided by her physician, Dr. Griffin. Dr. Griffin released her to return to work on April 1, 2003. Nonetheless, Wilkes requested that her disability benefits be extended past March 31, 2003, because of her continued sinus problems (she ultimately had surgery for sinusitis in late May). However, Synchrony denied that request because Wilkes had not provided any supporting documentation regarding her medical condition. Synchrony notified Wilkes by letter and informed her that she had 15 days from the date of the letter to appeal. Wilkes appealed. That appeal was denied on May 12, 2003, as Synchrony had not received any supporting documentation as of that date. Wilkes provided the necessary documentation in July, well past the appeal period. She did not receive disability benefits for the period running from April 1, 2003, to June 23, 2003.
In the fall of 2003, Wilkes filed another claim for disability due to migraine headaches and gallstones beginning August 17, 2003. Synchrony denied that claim on September 3, 2003, stating that although the information received from Dr. Griffin indicated that Wilkes was able to work zero hours, it also indicated that she was able to perform all the tasks of her job. Synchrony, therefore, found that Wilkes was not disabled. Wilkes was, again, given 15 days to appeal the denial, which she did. Synchrony denied the appeal on October 6, 2003, for the reason that Wilkes's subjective complaints were not sufficient to uphold an award of benefits and the medical documentation provided did not support a finding of a disability.
Wilkes filed a third request for short-term disability benefits due to gall bladder surgery performed on October 4, 2003. On October 20, 2003, Synchrony informed Wilkes that because she had not worked since August 18, 2003, and because that absence had not been covered by short-term disability benefits, she did not meet the requirements of an active employee and was, therefore, ineligible for short-term disability benefits for her surgery. Wilkes was informed that this was the final decision on the claim and that she had exhausted all available appeal rights.
Wilkes' final application was made in January 2004 for disability due to migraines beginning December 9, 2003, and extending through January 31, 2004. Synchrony provided benefits for those dates, but advised Wilkes that if her absence extended beyond January 31, she would need to provide further medical documentation. Synchrony denied an extension of benefits beyond January 31, based on the information provided. Wilkes appealed. The denial was upheld on March 24, 2004.
Wilkes was paid neither short-term disability benefits nor PTO for any period of time denied under her applications.
II. PROCEDURAL HISTORY
Wilkes filed her complaint in the Arizona Superior Court on March 30, 2004. Defendants removed on June 30, 2004. Wilkes raised five counts: (1) breach of contract, (2) breach of fiduciary duty, (3) fraud/misrepresentation, (4) a request for declaratory judgment as to her rights under EDS's benefits plan, and (5) insurance bad faith. Count 3 was dismissed from the suit. Wilkes, EDS, and MetLife have all filed motions for summary judgment.
III. DISCUSSION
A. Summary Judgment Standard
Summary judgment is appropriate where no genuine issue as to a material fact exists and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The initial burden rests on the moving party to demonstrate the absence of any genuine issue of material fact. Fed.R.Civ.P. 56(a); Celotex, 477 U.S. at 323. Once satisfied, the burden shifts to the party resisting summary judgment to demonstrate through production of probative evidence that an issue of fact remains to be tried. 477 U.S. at 323-24. The Court must accept the non-movant's evidence as true and view all inferences in the light most favorable to the non-movant. Eisenberg v. Insurance Co. of North America, 815 F.2d 1285, 1289 (9th Cir. 1987).
B. The U.S. Benefits Handbook along with the statements by EDS did not form a contract.
In an action for breach of contract, "the plaintiff has the burden of proving the existence of a contract, breach of the contract, and resulting damages." Chartone, Inc. v. Bernini, 207 Ariz. 162, 170, 83 P.3d 1103, 1111 (Ariz.Ct.App. 2004). "It is elementary that before there can be a binding contract there must be mutual consent of the parties to the terms thereof. . . . There must be a distinct intention common to both and without difference and until all understand alike there can be no assent." Heywood v. Ziol, 91 Ariz. 309, 314, 372 P.2d 200, 203 (1962) (internal citations omitted).
Wilkes argues that the U.S. Benefits Handbook provided by EDS constituted a contract between her and EDS. She further argues that her supervisor's comment that he would file a claim for her and "she did not need to do anything or to read the handbook" constitutes a promise of benefits pursuant to the handbook. "Employers are certainly free to issue no personnel manual at all or to issue a personnel manual that clearly and conspicuously tells their employees that the manual is not part of the employment contract. . . ." Leikvold v. Valley View Cmty Hosp., 141 Ariz. 544, 548, 688 P.2d 170, 174 (1984). However, if it contains contractual statements, an employee handbook may alter the at-will nature of an employment relationship. See Wagenseller v. Scottsdale Mem'l Hosp., 147 Ariz. 370, 381 710 P.2d 1025, 1036 (1985). "A statement is contractual only if it discloses `a promissory intent or [is] one that the employee could reasonably conclude constituted a commitment by the employer.'" Demasse v. ITT Corp., 194 Ariz 500, 505, 984 P.2d 1138, 1143 (1999) (quoting Soderlun v. Pub. Serv. Co. of Colo., 944 P.2d 616, 620 (Colo.Ct.App. 1997) (emphasis added). While this is a question of fact, "[d]isclaimers in personnel manuals that clearly and conspicuously tell employees that the manual in not part of the employment contract . . . `instill no reasonable expectations of job security and do not give employees any reason to rely on representations in the manual.'" Roberson v. Wal-Mart Stores, Inc., 202 Ariz. 286, 291, 44 P.3d 164, 169 (Ariz.Ct.App. 2002) (quoting Leikvold, 141 Ariz. at 548, 688 P.2d at 174 (Ariz. 1984)).
In the present case, the U.S. Benefits Handbook contained a clear, unambiguous disclaimer that could have given Wilkes no reasonable expectation that it constituted a commitment on the part of EDS. Wilkes argues that she was told she did not have to read the policy and that her supervisor would file the claim for her. If she did not read the policy, she could not have developed any expectations based on the policy. If she did read the policy, she would have known that EDS did not intend to make a commitment by it. At most, her supervisor's comment could only have given her a reasonable expectation that he would file a claim for benefits, which he did. Because Wilkes could have had no reasonable expectation that the terms of the U.S. Benefits Handbook constituted a promise, her breach of contract claim fails.
C. Defendants had no fiduciary relationship with Plaintiff. 1. EDS did not have a fiduciary relationship with Wilkes based on an employer-employee relationship.
Wilkes has cited no binding authority for her proposition that under Arizona law EDS had a fiduciary relationship with her by virtue of her employment there. In Arizona, the employer-employee relationship, absent special circumstances, does not constitute a confidential relationship. See Rhoads v. Harvey Publ'ns, Inc. 145 Ariz. 142, 149-50, 700 P.2d 840, 847-8 (Ariz.Ct.App. 1984) (distinguishing the normal employer-employee relationship from the confidential relationship in Roberts v. Sears, Roebuck Co., 573 F.2d 976 (7th Cir. 1978) in which the plaintiff was of a relatively young age and low level of education and had exchanged confidential information regarding his invention of a wrench with his employer). Wilkes has offered no evidence that any special circumstances existed that would raise her relationship with EDS to a confidential relationship. Therefore, EDS did not owe her a fiduciary duty as her employer.
2. Wilkes did not have a fiduciary relationship with either EDS or MetLife as insurers.
Under Arizona law, "`insurance' is a contract by which one undertakes to indemnify another or to pay a specific amount upon determinable contingencies." A.R.S. § 20-103. An insurer is a person or business entity "engaged in the business of making contracts of insurance." A.R.S. § 20-104. As discussed above, no contract existed between Wilkes and either defendant for short term disability benefits. Therefore, neither EDS nor MetLife had a fiduciary duty to Wilkes as insurers.
D. In the absence of a contract or a fiduciary relationship, Plaintiff's bad faith claim cannot stand.
Because there is no contract between Wilkes and the defendants, Wilkes' claim for the breach of good faith and fair dealing in contracts fails. Likewise, her claim for insurance bad faith fails.
IV. CONCLUSION
Because Wilkes cannot show that the employee benefits handbook was a contract, and because neither EDS nor MetLife are fiduciaries to Wilkes, her motion for summary judgment is denied. Defendants are entitled to judgment as a matter of law.
Accordingly,
IT IS ORDERED that Plaintiff's motion for summary judgment (Doc. No. 58) is DENIED. IT IS FURTHER ORDERED that Defendants' motions for summary judgment (Doc. Nos. 57, 61, and 62) are GRANTED. IT IS FURTHER ORDERED that this case is DISMISSED WITH PREJUDICE.