Mason v. Telefunken Semiconductors America, LLC, 797 F.3d 33

Background

Mason was employed by Tejas Silicon under a written one-year renewable employment agreement (effective April 1, 2009) that provided severance/benefits for certain terminations and enhanced severance if termination resulted from an acquisition/merger.
In Dec. 2011 Tejas underwent a corporate reorganization; Mason signed four documents: an Amendment (substituting TSA for Tejas effective Jan. 1, 2012), an Offer Letter (stating at-will employment with TSA), a New Agreement reiterating at-will status, and a Release (broadly releasing claims as of Dec. 31, 2011) with Mason handwriting “EXCEPT AS AMENDED IN ‘AMENDMENT TO EMPLOYMENT AGREEMENT.’”
TSA informed Mason in Feb. 2012 it would not renew the original Agreement (effective Apr. 1, 2012) and that post-April 1 employment would be governed by the December documents; Mason remained employed until furlough/layoff May 17, 2012.
Mason sued in California state court alleging breach of contract (severance), breach of implied covenant, and Cal. Lab. Code § 203 violation; case was removed and transferred to D.N.H.; district court granted summary judgment for TSA in full.
On appeal, the First Circuit examined three events for triggering severance: (1) the Dec. 2011 reorganization/transfer, (2) the Feb. 2012 non-renewal, and (3) the May 2012 layoff; the court reversed summary judgment as to the reorganization claim, affirmed as to non-renewal and layoff, and remanded.

Issues

Issue	Mason's Argument	TSA's Argument	Held
Whether the Dec. 2011 reorganization/transfer constituted a "termination" under the Agreement triggering severance	"Termination" can mean end of employment with Tejas even if immediately reemployed by TSA; agreement ambiguous; Release carve-out preserves claim	There was no termination — employment simply transferred to TSA; dictionary meaning precludes severance	Ambiguous — extrinsic evidence creates genuine factual disputes; summary judgment improper as to this claim; Release not dispositive due to Mason's handwritten coda
Whether TSA's Feb. 2012 notice of non-renewal constituted a "termination" triggering severance	Non-renewal of the Agreement ends the employment relationship and thus triggers severance	Non-renewal is distinct from termination; Agreement shows different meanings and separate notice periods	Non-renewal is not termination under the Agreement; summary judgment for TSA affirmed on this claim
Whether the May 17, 2012 layoff (RIF) triggered severance under the Agreement	The layoff was a termination without cause under the Agreement (continued protections)	By then the Agreement had expired and post-April employment was at-will per December documents; thus no severance	Mason waived argument on appeal; alternatively, even on merits employment was at-will after non-renewal so layoff did not trigger severance; summary judgment affirmed on this claim
Effect of the Release signed Dec. 2011 on severance claim from Tejas termination	Mason’s handwritten exception preserved severance claims arising under the Amendment/Agreement	Release bars any claim for separation effective Dec. 31, 2011	Release ambiguous given the handwritten coda and extrinsic evidence; cannot be resolved as a matter of law on summary judgment

Key Cases Cited

Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard)
Torres Vargas v. Santiago Cummings, 149 F.3d 29 (1st Cir. 1998) (summary-judgment review and construing contracts)
Dore v. Arnold Worldwide, Inc., 139 P.3d 56 (Cal. 2006) (contract ambiguity when terms reasonably susceptible to multiple meanings)
Chapin v. Fairchild Camera & Instrument Corp., 107 Cal. Rptr. 111 (Cal. Ct. App. 1973) (severance rights may exist despite continuous employment)
Guz v. Bechtel National, Inc., 8 P.3d 1089 (Cal. 2000) (presumption that employment without fixed term is at-will)