MEMORANDUM
This case arises out of the termination of Plaintiffs employment with the Defendant. Pending before the Court is the Magistrate Judge’s Report and Recommendation (“R & R”) (Docket Entry No. 50), Defendant’s objections thereto (Docket Entry Nos. 51, 57, and 59), and Plaintiffs reply to Defendant’s objections (Docket Entry Nos. 56 and 58). Having reviewed the entire record de novo pursuant to 28 U.S.C. § 636(b)(1)(B) and (C) and Rule 72(b), Fed.R.Civ.P., the Court REJECTS in part and ADOPTS in part the Magistrate Judge’s recommendations and GRANTS Defendant’s Motion for Summary Judgment on all of Plaintiffs claims.
I. PROCEDURAL BACKGROUND
Plaintiff, Dennis K. Shelby, has brought suit against Defendant, Delta Air Lines, Inc. (“Delta”). Shelby has made four claims against Delta: (1) breach of employment contract; (2) breach of an implied covenant of good faith and fair dealing; (3) fraud and deceit; and (4) negligent misrepresentation. Pursuant to this Court’s Order and the provisions of 28 U.S.C. § 636(b)(1)(A) and (B) and Rules 302 and 303, L.R.M.P., the ease was referred to the Magistrate Judge for consideration of any pretrial matters. Subsequent thereto, Delta filed a Motion for Summary Judgment seeking dismissal of all of Shelby’s claims against it. The Magistrate Judge has recommended that Shelby’s fraud claim be dismissed, but that the remainder of Delta’s motion be denied. Delta has filed objections to the Magistrate Judge’s conclusions with this Court, each of which will be addressed herein.
For the reasons more fully outlined in this Memorandum, the Magistrate Judge’s R & R is hereby adopted in part and rejected in part, and this ease is hereby dismissed.
II. FACTS
On May 21, 1974, Shelby was hired by Delta as a customer service agent (“CSA”) in Paducah, Kentucky. During his employment with Delta, Shelby worked in various Delta stations. From 1983 until March of 1990
As part of the hiring process, Shelby signed an application which provided in pertinent part as follows:
If employed, in consideration thereof, and/or in consideration of the continuance thereof, and without further consideration, I do hereby agree:
That should I be given employment either in the position applied for or any other, now or hereafter, such employment may be terminated at any time without notice or liability for wages or salary, except such earned at date of such termination, and without any other liability whatsoever ...; That all terms and conditions of my employment, except as inconsistent with this contract or any other valid contract between Company and me (or someone legally acting on my behalf) shall be determined and governed by Company’s Standard Practice Manual, as same may be amended from time to time hereafter (a copy of which, together with all amendments shall at all times be available to me);
That this Agreement, including the foregoing application shall apply to all positions I may hereafter hold with Company; that upon my initial employment, and any subsequent change of my position by Company, I promptly will familiarize myself with all governmental and Company rules and regulations (including all parts of aforementioned Standard Practice Manual) applying to any positions to which I may be assigned; and it shall be sufficient cause for my discharge if I shall fail to familiarize myself with and to faithfully abide by all such rules and regulations, or by the decisions of Company or such instructions as may be given to me at any time;
Give careful attention to all provisions of this application which, including all terms and conditions set forth herein, if accepted, constitutes a contract of employment between you and Company, all terms and conditions of employment, and all other questions arising relative to your employment, will be determined in accordance with its provisions.
Delta’s Standard Practice Manual, which is incorporated into and is a part of the Delta employment contract, provides in pertinent part as follows:
1000.1 Policy
Just as all personnel have the right to resign their employment with Delta at any time and for any reason they choose, Delta may terminate the employment relationship with any individual at any time and for any reason if Delta concludes in its sole judgment that such termination is appropriate. This right exists notwithstanding any examples of conduct or other statements contained in Standard Practice, any personnel handbooks or any other statements of Delta’s general policies. No Delta supervisory or management personnel other than the Chairman of the Board and Chief Executive Officer and the President and Chief Operating Officer are authorized to amend or modify these terms of employment.
The guidelines set forth in this standard practice are intended to provide examples of some of Delta’s expectations as to conduct and appearance of Delta employees. Any list of this nature obviously cannot be all inclusive, and personnel must use their good judgment at all times. Personnel should also seek the advice of supervisors if they have any questions about particular conduct.
NOTE: For purposes of employment at Delta Air Lines, Inc., the term “permanent employee” means that the employee is filling a position deemed by Delta to be permanent. The term “permanent employee” does not mean that the individual is bound to a permanent position for his/her entire Delta career or that the employee and Delta have agreed to be parties to an employment relationship until the employee’s retirement. As stated earlier, and individual may resign his/her employment with Delta at any time and for any reason he/she may deem appropriate, and Delta may terminate the employment relationship at any time if Delta concludes in itssole judgment that an individual is not meeting Delta standards.
1000.6 Use of Drugs
Possession or use of cocaine, heroine, marijuana, or any hallucinogenic or illegal drug, whether or not on duty, will result in disciplinary action, including possible termination.
In 1989, pursuant to regulations promulgated under the Drug Free Workplace Act, 41 U.S.C. §§ 701-707 (1988), Delta instituted a new Anti-Drug Program. As a part of its Anti-Drug Program, Delta decided to review its longstanding policy to terminate employees involved in any way with illegal drugs. Delta’s evaluation of this policy began in early 1989 and culminated with the issuance, on September 15, 1989, by Delta’s Senior Vice-President of Personnel, R.H. Heil, of a two-page written memorandum to all Delta personnel concerning Delta’s “Anti-Drug Program.” The memorandum was posted on the employee bulletin board where Shelby worked and a copy was distributed to all Delta employees, including Shelby. The memorandum provided in pertinent part as follows:
On March 17, 1989, we advised you that the FAA had recently set forth regulations requiring all certificated air carriers, such as Delta, to develop and implement programs to eliminate the effects of illegal drug use in the workplace. A major component of the FAA regulations involves the testing, by urinalysis, of certain groups of our personnel in the United States for the presence of illegal drugs. The FAA required drug testing must be started by all carriers no later than December 18, 1989. The purpose of this memo is to inform you about the details of Delta’s substance-abuse policy, provide you with general information about the FAA requirements, and explain the steps we have taken to insure the integrity of the anti-drug program.
Delta’s Policy
Historically, Delta has maintained an unwavering commitment to maintaining the very highest standards of safety in the airline industry. We have never tolerated the use of illegal drugs by our personnel, and given that drug abuse presents a discernible threat to safety, we must be committed to the prevention of illegal drug use at Delta Air Lines.
Realistically, it is recognized that there may be some current personnel who have developed drug dependency or patterns of casual drug use which may not be easy to change. Therefore, as a prelude to implementation of the FAA mandated drug testing program, those individuals will be given a fair opportunity to correct their problems.
Commencing September 18,1989, and concluding on December 17, 1989, we will observe a 90-day amnesty period during which time any employee with a drug problem can voluntarily come forward and receive rehabilitation, counseling, or other professional assistance with the understanding that he will be returned to his present job upon successful completion of the program (and upon recertification where necessary). Individuals who come forward under this Amnesty Program will be permitted to use sick leave in order to undergo treatment and will not be subject to disciplinary action for drug usage. Individuals who choose to come forward may either contact their supervisor or our newly created Personal Assistance Programs Office____ Please note that the Amnesty Program does not alter in any way Delta’s long-standing, absolute prohibition against the use of illegal drugs. The Amnesty Program applies only to those who voluntarily come forward to seek help during the 90-day period.
The Amnesty Program will conclude on December 17,1989. It is expected that no later than that date, any Delta employee who is an illegal drug user will have taken the necessary steps to receive medical help or other assistance and will have ceased all use of illegal drugs. Commencing with our drug testing on December 18, 1989, there can be absolutely no tolerance for the use of unlawful substances by Delta personnel. Thus, at the conclusion of the Amnesty Program, any employee who is found to be using illegal drugs will be terminated.
After he got home from work, Shelby testified that Hackett called and stated that he had talked with Sheehan, they both agreed that Shelby would get help through the Amnesty Program, and he would not be terminated. According to Hackett, however, Shelby never asked, nor did Hackett give him any opinion or any advice concerning Delta’s Anti-Drug Program during either of their two phone conversations. Hackett also testified that Shelby had called in sick that Sunday and therefore did not work. Shelby and Hackett both testified that Shelby asked Hackett what he should do, and Hackett told him that he should report the situation to the Stations Manager, Jim Britton.
On the day after Shelby was bailed out of jail, October 2, 1989, he went to see his Stations Manager, Jim Britton. During that meeting, Shelby testified in his deposition that he informed Britton about his drug problem and his arrest. Shelby further testified he told Britton he desired to enter the Amnesty Program. Shelby testified that Britton then told him to go back to work, and Britton would call Atlanta to find out what he needed to do. Before walking out, Shelby testified that he once again stated his understanding that an Amnesty Program was in effect and of his desire to enter the program. Britton testified that he then spoke with the System Manager in Atlanta, A1 Olmstead, and told him that Shelby had advised him that he had been arrested for the possession and sale of cocaine. Britton further testified that Olmstead told him to immediately suspend Shelby pending further review. In his deposition testimony, Britton denied that Shelby made any amnesty requests during either of their conversations on that day. Britton testified that Shelby also told him he had sold drugs twice, his arrest stemmed from these sales, he now had his life together after his marriage, and he was no longer using drugs. Shelby testified that about an hour after their initial conversation, Britton asked him to come into his office. Shelby testified Britton then told him that Delta
On that same day, Britton sent a memo to his boss in Atlanta, E.R. Andersen, Regional Manager-Stations, advising him that Shelby had informed him that he had been indicted for possession and sale of cocaine. The memo stated further that Shelby was placed on indefinite suspension with the concurrence of System Manager, A1 Olmstead. Britton concluded his memo by noting that he had notified the Corporate Security Representative, Griffin Roberts, and the Director of Equal Opportunity, Richard Ealey, of the situation, and would make him aware of further details as they became known.
On November 7,1989, Britton sent another memo to'Andersen advising him that Shelby had told him he had been indicted for possession and sale of a controlled substance and of Shelby’s subsequent suspension. In the letter, Britton stated that Shelby admitted to him that he had purchased cocaine and delivered it to an acquaintance on two occasions as a favor and not for profit. Britton also stated Shelby had told him his lawyer was trying to work out a pretrial diversion program. Britton stated further that Shelby had been with Delta for over fifteen years, and he was an above-standard employee. Britton ended this letter by noting the seriousness of the situation and requesting guidance in the matter.
Following the suspension, the case was then reviewed by management in the Corporate Stations Department and by Delta’s Equal Opportunity Office. On November 14, 1989, Ealey decided to terminate Shelby immediately. However, the decision to terminate Shelby apparently was not properly communicated to the Regional Manager in Stations, E.R. Andersen. As a result, instead of advising the Nashville Station Manager to terminate Shelby, Andersen proceeded on the assumption that Delta would wait until the disposition of the Tennessee criminal proceedings before making a final employment decision on Shelby. Consequently, Shelby was left on suspension.
On December 19, 1989, while he was on suspension, Shelby sent a letter to Delta requesting reinstatement. The letter, however, made no reference to Delta’s Anti-Drug Program. On March 16, 1990, Shelby sent Britton a copy of the memorandum of understanding which he had entered into with the prosecuting authorities in Montgomery County, Tennessee. Britton forwarded the document to Mark Baxter of Delta’s Equal Employment Opportunity office. The memorandum provided that Shelby would be subjected to a pretrial diversion program. Specifically, the memorandum provided that the charges against Shelby would be dismissed upon his compliance with the conditions of the agreement. At this point, the earlier communications breakdown was discovered. On March 21, 1990, Britton was expressly advised by Andersen to terminate Shelby. Britton then called Shelby and asked him to come in, but Shelby requested that Britton inform him of the decision by phone. Britton testified that he first requested that Shelby resign, but Shelby refused. Shelby refused to resign his position. At that point, Britton terminated Shelby.
On March 27, 1990, Shelby wrote to R.H. Heil, author of the Anti-Drug Memo. Shelby specifically stated in this letter that the Amnesty Program was the deciding factor in his decision to advise Delta of his drug problem, and his suspension was contrary to the Amnesty Program as described in the memorandum.
3
In response to Shelby’s letter, Heil advised Shelby that the reason for his termination was due to the fact that he had been convicted and fined for the possession of a controlled substance. Heil advised Shelby that Delta’s policy was to immediately terminate any Delta employee arrested or convicted of possessing a controlled substance. Heil further advised Shelby that these employees were not eligible for the Amnesty Program. Shelby responded by letter stating that he had not been convicted or fined of possessing a controlled substance,
III. DISCUSSION
Federal Rules of Civil Procedure 56(c) provides that summary judgment “shall be rendered ... if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” The party seeking summary judgment bears the initial burden of showing the absence of a genuine issue of material fact.
Celotex Corp. v. Catrett,
A dispute about a material fact is “genuine” within the meaning of Rule 56(c) only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.
Anderson v. Liberty Lobby, Inc.,
A. Breach of Contract Claim
1. Contentions of the Parties
Shelby contends Delta’s termination of him despite the existence of the Anti-Drug Program constituted a breach of the parties’ contract for which he is entitled to damages. The parties do not dispute that, when originally hired by Delta, Shelby was an at-will employee, who could be discharged for any reason or no reason at all. Shelby contends, however, that his employment-at-will status was abrogated by Delta’s issuance of its Anti-Drug Memorandum. Specifically, Shelby contends that Delta’s Anti-Drug Memorandum created a contractual obligation on its part which prevented it from suspending or terminating him for drug use if he chose to participate in the Anti-Drug Program.
Delta has moved for summary judgment dismissal of Shelby’s breach of contract claim. First, Delta contends that Shelby entered into a 'written employment contract for an indefinite term. As a result, Shelby’s employment relationship with Delta was at-will, and, therefore, Delta could terminate for any reason or for no reason at all. Delta asserts that Shelby’s “at-will” status was specifically confirmed as well by language found in his employee handbook, the express terms of which could not be amended or modified except by the Chairman of the Board, the Chief Executive Officer, the President, or the Chief Operating Officer. Thus, Delta asserts that as a matter of both common law and express contractual agreement, it was legally entitled to sever its employment relationship with Shelby at any time for any or no reason.
Next, Delta argues that, even if this Court should find that the Anti-Drug Memorandum became a part of the employment contract, under Tennessee state law, Delta’s right to terminate Shelby under the at-will doctrine would not be affected by the Memorandum’s inclusion into the parties’ contract. This assertion is based upon Delta’s contention that, under Tennessee law, the employer’s rights to terminate an at-will employee are
only
affected by amendments to the parties’ contract which deal specifically with the term or duration of the employee’s employment. In this case, Delta asserts that any purported amendments to the contract made by the
Alternatively, Delta contends that, even if this Court should find that the Anti-Drug Memorandum became a part of the employment contract, and additionally finds that Tennessee’s employment-at-will rule does not bar Shelby’s breach of contract claim, nevertheless, Shelby’s termination was proper because he was not eligible for participation in the program. First, Delta argues that the Amnesty Program was available only to those employees who used drugs personally, and not to those who were also dealers or to those who had been arrested and convicted of any crimes involving drugs. Since Shelby was not a mere drug user but also a drug dealer, he was not eligible to participate in the Anti-Drug Program and could, therefore, be terminated. Second, Delta asserts Shelby was not eligible for the Anti-Drug Program because he did not “voluntarily” come forward as required by the provisions of the Anti-Drug Memo. Since Shelby was not eligible to participate in the Anti-Drug Program, Delta’s termination of him, despite the existence of the Anti-Drug Program, did not constitute a breach of the parties’ contract.
In response, Shelby argues that Tennessee courts have recognized that, even though the term of an employment contract is indefinite, that fact alone does not preclude its modification. Under Tennessee law, what would otherwise be an at-will contract may be modified by specific language which evidences an intent to modify the existent employment contract. Shelby alleges that the language of the Anti-Drug Memo could be interpreted by a reasonable person as showing contractual intent to modify the parties’ employment contract. Further, Shelby asserts that a material issue of fact exists regarding whether he was eligible for the Amnesty Program since the memo did not expressly and specifically exclude those who made casual sales of drugs incident to their own personal use, or those who had been arrested for possession. Shelby contends that a reasonable person could construe the memo in such a way as to apply to his situation. As such, a reasonable person could conclude that Delta breached their contract by terminating him in violation of the provisions of the memo.
2. Analysis
The parties do not dispute that initially Shelby was an employee at will under both the common law, since he was not hired for any definite time period, and under the express provisions of the employment application which by its own terms became a part of the employment contract. Further, the parties do not dispute that the longstanding rule in Tennessee is that an employee at will may be discharged without breach of contract for good cause, bad cause, or no cause at all, without being liable for any legal wrong.
Harney v. Meadowbrook Nursing Center,
Shelby contends, however, the Anti-Drug Memo modified his employment contract. Delta denies this. Therefore, the Court must first decide whether the Memo became a part of Shelby’s employment contract. If it did not, then Shelby cannot sue under a breach of contract theory.
Tennessee courts have recognized that an employee handbook may, under certain circumstances, become a part of the contract of employment between the employee and the employer.
Davis v. Conn. Gen. Life Ins. Co.,
The Court also finds that a genuine issue of material fact exists as to whether or not Shelby was eligible for the Amnesty Program. Ordinarily, the ascertainment of the intention of the parties to a written contract is a question of law for the court to decide when the language of the contract is plain, simple, clear, and unambiguous.
Hamblen County v. City of Morristown,
In this case, the Court finds the Memo to be ambiguous as to what conduct was covered and not covered by the Amnesty Program. It appears to the Court that the Memo was directed solely to users and not dealers. The Memo makes reference at least eight times to drug “usage” or drug “use.” On whole, the tenor of the Memo appears to address only those employees who have a “drug use” problem. However, there is a reference in the Memo to “drug problem,” although the Memo does not contain a definition of “drug problem.” Further, the Memo does not contain any listing of specific conduct excluded from the Amnesty Program. The Court finds that the Memo could be construed by a reasonable person as including limited, casual exchanges or sales of drugs among friends incident to their use of the drugs. Therefore, the Court believes that, viewing the language of the Memo in a light most favorable to Shelby, a reasonable person could interpret the Memo to cover those who admittedly made casual exchanges or sales of drugs in addition to their using drugs.
It should also be noted that there is a genuine issue of material fact as to the exact nature of Shelby’s sales, i.e., whether he sold drugs for profit or whether they were just casual exchanges, and how often he sold drugs. Furthermore, a reasonable person could interpret the Memo as covering those who have been arrested or even convicted for the simple possession and/or sale of drugs since the Memo did not specifically exclude employees who have been arrested or convicted for such criminal violations. Delta has argued that it could not have possibly listed all of the activities, or conduct, or crimes which would have excluded employees from the Amnesty Program. The Court finds, however, that in order to have avoided the present situation, Delta would not have been required to issue an exhaustive laundry list of conduct not covered by the Amnesty Program. Any such listing would have only had to include those specific activities which a reasonable person might consider as covered under the Amnesty Program. Other drug related “problems” would unquestionably not be covered by the Amnesty Program. For example, a reasonable person could not interpret the Memo as covering an assault, robbery, or murder committed during a sale or the use of drugs or in pursuit of funds to purchase drugs.
The Court also finds that there is a genuine issue of material fact as to whether Shelby “voluntarily” came forward. Shelby testified that when he called Hackett and when he went to see Britton, he affirmatively stated his desire to enter the Amnesty Program. Both Hackett and Britton deny this and Delta contends that Shelby’s actions can hardly be said to have been voluntary given his arrest.
Having found that the Anti-Drug Memo became a part of the contract and that Shelby has made out a factual issue with regard to his eligibility for the Amnesty Program, it remains for the Court to determine
In
Graves,
On appeal, the Tennessee Court of Appeals addressed the issue of “[wjhether the employee handbook ... created an implied contract of employment thereby altering [plaintiffs] status as an employee at will.”
Graves,
[Assuming arguendo that the handbook furnished to Graves created an implied contract of employment, we agree with Graves’ statement in her brief that it created an “implied contract of employment for an indefinite term.”
The law is well established in this state that a contract for employment for an indefinite term is a contract at will and can be terminated by either party at any time without cause.... There has never been any contention on the part of Graves that she was hired for any definite term and there is no dispute as to any material fact in regard to the term of employment. In view of the facts of this case, we can only assume that Graves is seeking for this Court to change the well-established law in the state concerning contracts of employment terminable at will. To respond to this assertion, we adopt the statement of Judge Conner in Whittaker v. Care-More, Inc. [621 S.W.2d 395 (Tenn.Ct.App.1981) ]:
It is not the province of this court to change the law as plaintiffs assert. That prerogative lies with the supreme court or the legislature. However, based upon our review of this area of the law we are compelled to note that any substantial change in the “employee-at-will” rule should first be microscopically analyzed regarding its effect on the commerce of this state. There must be protection from substantial impairment of the very legitimate interests of any employer in hiring and retaining the most qualified personnel available or the very foundation of the free enterprise system could be jeopardized.
Graves,
In
Bringle,
It is clear that the employee handbooks did not create any employment contract for a definite term. Even if it was conceded that the handbooks established an employment contract, the contract would be for an indefinite term. Plaintiff has never contended that she was hired for any definite term and there is no dispute as to any material fact in regard to the term of employment. The law is well established in this state that a contract for employment for an indefinite term is a contract at will and can be terminated by either party at any time without cause.
Bringle,
In
Crigger,
Shelby has cited to
Wilmer v. Tenn. Eastman Co.,
In
Hamby,
a number of employees filed suit against their employer, alleging that they were entitled to compensation because their employer had not complied with certain procedures concerning job certification, seniority, “roll-down rights,” and the payment of guaranteed employment hours as set forth in an employees’ handbook which they allege was part of their employment contract.
Hamby,
It is noteworthy that Hamby only dealt with the issue of whether a handbook can be deemed a part of an employment contract. Without discussion, the Tennessee Court of Appeals concluded that the Chancellor had correctly determined that the handbook was a part of the contract. Id. at 376. Subsequent courts have relied upon Hamby to support their finding that an employment contract may be amended by an employee handbook in certain circumstances. As the Court has already noted above, that proposition appears to have now become firmly established in Tennessee. However, the issue presently before this Court was not precisely addressed in the Hamby decision. Nowhere did Hamby discuss or even mention Tennessee’s employment-at-will doctrine and its effect on a purported amendment to an employment at-will contract by an employee handbook. Further, the disgruntled employees in that case were laid off, not discharged.
Shelby has also cited to and relied most heavily on
Williams v. Maremont Corp.,
As a general rule “[t]he law is well established in this state that a contract for employment for an indefinite term is a contract at will and can be terminated by either partfy] at any time without cause____” The mere lack of definite durational term, however, does not prohibit the existence of other terms to the contract. For instance, parties typically agree on other terms of employment, such as wages and hours, without regard to the lack of a specific durational term.
Williams,
The terms of the employee handbook here are clear. It states that “employees mil be recalled in the order of seniority.” (emphasis added). Maremont asserts that because it is free under the doctrine of employment at will to terminate any of its employees at any time, its promise in the employee handbook is mere nudum pac tum—a naked agreement unenforceable at law. We do not agree.
Maremont contractually bound itself to lay off and rehire Plaintiffs in order of seniority. Maremont’s promise of seniority-based job recall, together with increased benefits after ten years of employment, was clothed in the consideration of improved stability of the work force and better cooperation between management and the employees. Maremont was not obligated to create its seniority policy, but having done so to the detriment of those relying on the policy, it may not now treat its promise as an empty one.
Maremont argues that its promise is unenforceable “because there is no way to fashion a remedy for the breach.” It asserts that the remedies of damages and specific performance are inappropriate because there is no basis for assessing damages or ordering reemployment because theoretically the employer could terminate at will immediately upon rehiring Plaintiffs.
The remedy of specific performance may not be available but damages may be recovered for breach of contract. This contract, as all contracts, impliedly provides for good faith and fair dealing between the parties. Gibson’s Suits in Chancery, 6th Edition, § 34. All parties are bound by law “to act in word and deed, in a responsible manner” and the trier of fact in assessing damages would hold the parties to this standard.
We think that under the record before us, the affidavit of Maremont to the motion and the affidavits of Plaintiffs to the response raise a genuine issue of material fact—the issue of whether the Plaintiffs were permanently terminated or temporarily laid off. This genuine issue of material fact renders summary judgment inappropriate in this case.
Williams, 776 S.W.2d at 80-81.
Shelby contends that Williams stands for the proposition that a policy statement that does not affect the durational terms of an at-will employment contract may nevertheless prevent an employer from exercising its at-will rights. The Court believes Shelby’s reliance on Williams is misplaced.
Williams
expressly distinguishes between an employer’s right to terminate an at-will employee and
other
terms of employment.
Williams
does not hold that handbook statements may limit the right of an employer to terminate an employee at will, but rather that an employer is contractually bound by statements which amount to unequivocal guarantees of conditions of employment “other” than those which relate to the right of either party to terminate their relationship— in that case, an employee’s right to be re
In essence, the Court reads Williams as holding that a genuine issue of material fact existed as to whether the employees had in fact been permanently terminated or temporarily laid off. If found to have been terminated, judgment for the employer would have been appropriate. If found to have been merely laid off, the employer would be required to abide by the handbook provisions which contractually bound the employer as to “other” terms of employment which did not speak to an employer’s right to terminate an employee at will.
The Court additionally finds that Shelby’s reliance upon the Court’s decision in
Davis v. Conn. Gen. Life Ins. Co.,
Finally, Shelby has cited to
Wilmer v. Tenn. Eastman Co.,
Based on the analysis of the cases above, the-Court finds that under Tennessee law, where the duration of the employment contract is not put at issue by a purported amendment, and in the absence of any public policy exception, then the right of the employer to terminate an at-will employee for any or no reason will override any inconsistent term of the purported amendment. This determination does not end the Court’s inquiry in this case, however, because the Court must now determine whether the Anti-Drug Memo could be construed by a reasonable person as creating a fixed term of employment. If not, then no genuine issue of fact exists as to the meaning of the Memo on this issue, and therefore summary judgment for Delta would be appropriate.
The Court finds no language in the Memo which a reasonable person could construe as creating any fixed term of employment. The Memo simply does not address that issue in any way. In
Whittaker v. Care-More, Inc.,
An employee may reasonably expect uninterrupted employment year in and yearout. Any employee doing his work in a satisfactory manner and working for the good of the organization has little to fear about job security.
Id. at 397. The Tennessee Court of Appeals held that such language did not entitle the plaintiff to a specific term of employment because there were no guarantees or binding commitments contained therein. Id. The same may be said of the present case. Further, the Memo must be read in conjunction with the express language of the employment application and the Standard Practice Manual incorporated into the employment contract, which provided that, regardless of any conduct or statements of Delta, it had the right to terminate the employment relationship with Shelby at any time and for any reason.
Since there are no genuine issues of material fact as to whether Shelby was an employee at will and since the Memo did not provide a definite term of employment, the Court GRANTS Delta’s Motion for Summary Judgment on Shelby’s breach of contract claim.
B. Breach of Implied Covenant of Good Faith and Fair Dealing Claim
1. Contentions of the Parties
Shelby has alleged a claim for breach of an implied covenant of good faith and fair dealing. Shelby alleges that Delta’s conduct in terminating him was not fair, and that Delta acted in bad faith by violating Delta’s alleged promise that, if employees who had developed drug dependencies or patterns of casual drug use and who voluntarily admitted such to Delta during the amnesty period, they would not be disciplined.
Delta asserts that Tennessee law does not recognize a claim for breach of an implied covenant of good faith and fair dealing in the employment context. Further, Delta asserts that, even if Tennessee does recognize such an action, in this case there is no factual basis to support Shelby’s claim. Also, Delta contends that the express terms of the employment agreement between Shelby and Delta allowed Delta to terminate Shelby with or without cause. Therefore, Delta asserts this claim attempts to create an implied covenant that is inconsistent with the express terms of Shelby’s employment which is not allowed under the law.
In response, Shelby asserts that the concept of a covenant of good faith and fair dealing in an employer/employee relationship has been expressly recognized by the Tennessee courts. Shelby contends that whether it was reasonable for Delta to have terminated him under the circumstances is a factual question which precludes summary judgment dismissal of his claims.
2. Analysis
The parties have primarily relied on two cases: one from the Middle Section of the Court of Appeals of Tennessee, and the other from the Eastern Section of the Court of Appeals of Tennessee. Neither party has suggested nor furnished the Court with any Tennessee Supreme Court authorities on this issue and the Court has found none on its own.
Delta relies upon
Whittaker v. Care-More, Inc.,
The theory of bad faith is that in any contract of employment there is an implied covenant of good faith and fair dealing and that termination not made in good faith constitutes a breach of contract, (citation omitted) Few courts have accepted this concept.
It is not the province of this court to change the law as plaintiffs assert. That prerogative lies with the supreme court or the legislature. However, based upon our review of this area of the law we are compelled to note that any substantial change in the “employee-at-will” rule should first be microscopically analyzed regarding its effect on the commerce of this state. There must be protection from substantial impairment of a very legitimate interest of an employer in hiring and retaining the most qualified personnel available or the very foundation of the free enterprise system could be jeopardized. Professor Blades clearly recognized the danger for abuse resulting from a weakening of the “employee-at-will” rule when he wrote:
[Tjhere is the danger that the average jury will identify with, and therefore believe, the employee. This possibility could give rise to vexatious lawsuits by disgruntled employees fabricating plausible tales of employer coercion. If the potential for vexatious suits by discharged employees is too great, employers will be inhibited in exercising their best judgment as to which employee should or should not be retained.... [T]he employer’s prerogative to make independent, good-faith judgments about employees is important in our free enterprise system. 67 Colum.L.Rev. 1404, 1428 (1967).
Tennessee has made enormous strides in recent years in its attraction of new industry of high quality designed to increase the average per capita income of its citizens and thus, better the quality of their lives. The impact on the continuation of such influx of new businesses should be carefully considered before any substantial modification is made in the employee-at-will rule.
Whittaker,
Shelby relies upon
Williams v. Maremont Corp.,
In a diversity case, where there is no definitive state decision on the issue at hand, the Court must predict how the court of last resort will act if presented with the issue.
Filley v. Kickoff Publishing Co.,
In the present case, the Court believes that when presented with the issue, the Tennessee Supreme Court will conclude that at-will employment contracts will not be encumbered with an implied covenant of good faith and fair dealing.
The Court believes the Plaintiffs reliance on Williams is misplaced. In the Court’s opinion, the language in Williams referring to good faith and fair dealing was only meant to apply to the provisions of the contract dealing with recall rights. If it were determined that the plaintiffs in that case were merely laid off rather than permanently discharged, then Maremont Corporation was under an obligation to exercise good faith and fair dealing in relation to its laid off employees regarding the handbook provisions dealing with recall rights. But if the plaintiffs were discharged, there was no implied obligation of good faith and fair dealing.
Even if the Maremont case is read to hold that a duty of “good faith and fair dealing” is implied in all at-will employment contracts, the Whittaker case has specifically rejected this concept. The only authority cited by the Maremont court is Gibson’s Suits in Chancery. Although this noted treatise is well respected, it is a very slim reed on which to rest a major restructuring of the employment relationship.
Further, the Williams Court’s statement noted above was not necessary to the determination of that case. All the court needed to do there was to note that the policy stated in the handbook with respect to recall of laid-off employees was an implied contract and that there was a factual dispute as to whether these plaintiffs were terminated or were laid off. If they were terminated, they had no lawsuit; if they were laid off, they had a right under the employment contract to be recalled. Also, it does not appear that the parties in Williams fully briefed and argued this issue to the court. Otherwise, it seems reasonable to assume that the opinion in Williams would have discussed Whittaker to some extent. Whittaker was cited in the court’s opinion in Williams, but only in support of the general proposition that employment contracts without a stated term of employment are at-will contracts.
Finally, if Tennessee courts were to follow a reading of Maremont such that an implied covenant of good faith and fair dealing applies to an otherwise terminable-at-will contract, the at-will doctrine could be completely destroyed. Determining whether an employer exercised good faith and fair dealing when it discharged an at-will employee will almost always be subject to the discretion of the courts or a jury.
Therefore, the Court GRANTS Delta’s Motion for Summary Judgment on Shelby’s breach of an implied covenant of good faith and fair dealing.
C. Fraud and Deceit Claim
Shelby has also alleged a cause of action for fraud and deceit. As already noted, the Magistrate Judge concluded that Shelby’s fraud claim is subsumed in his contract claim. As the Magistrate Judge stated, under Tennessee law, mere allegations that a contract was breached tortiously, negligently and/or willfully do not give rise to an action in tort.
See Becker v. Celebration, Inc., 541
F.2d
156,
157 (6th Cir.1976);
Midr-South Milling Co. v. Loret Farmes, Inc.,
Moreover, Shelby’s counsel has not objected to the Magistrate Judge’s recommendation dismissing this claim. Also, Shelby’s counsel agreed at oral argument that this claim should be dismissed. Accordingly, the Court ADOPTS the Magistrate Judge’s recommendation and GRANTS Delta’s Motion
D. Negligent Misrepresentation
1. Contentions of the Parties
Shelby has also asserted a claim under a theory of negligent misrepresentation. Delta contends that Tennessee does not recognize a cause of action for negligent misrepresentation in the employer/employee context, but only with regard to commercial transactions. Alternatively, Delta argues that even if Tennessee does recognize such an action in this situation, Shelby has not presented evidence to establish the elements for such an action.
2. Analysis
Tennessee has adopted the definition of negligent misrepresentation found in the Restatement of Torts (Second) § 552 (1977).
See Tartera v. Palumbo,
§ 552. Information Negligently Supplied for the Guidance of Others
(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
Restatement of Torts (Second) § 552(1) (1977).
The parties admit that apparently no Tennessee court has previously addressed the issue of the applicability of a cause of action for negligent misrepresentation in an employer/employee discharge context, and the Court has found none on its own. The Tennessee cases involving negligent misrepresentation all involve commercial transactions.
See, e.g., Houghland v. Security Alarms & Services, Inc.,
In commercial transactions the law has recognized a less stringent standard of liability for fraudulent misrepresentations than the common law action for deceit. One who, in the course of his business, profession, or employment, or during a transaction in which he had a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused by them by their justifiable reliance upon such information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. (citations omitted). This standard of liability substitutes a reasonable care standard for the common law scienter requirement. In other words, in business transactions, a defendant can be held liable for negligent misrepresentations.
Id. at 232 (emphasis added).
It is clear to the Court that Section 552 only applies to commercial or business transactions. First, the Court notes that none of the examples in the comments to Section 552 involve an employer/employee situation. Further, the language of Section 552 expressly refers to the negligent supplying of false information “for the guidance of others in their
business transactions.”
Restatement (Second) of Torts § 552(1) (1977) (emphasis added). Delta did not issue the Anti-Drug Memo to Shelby for his guidance in some business transaction. Also, the Court finds that allowing a claim for negligent misrepresentation in this particular context would be inconsistent with Tennessee’s employment-at-will rule since it would allow a discharged at-will employee to attack through an action sounding in tort, what he/she is unable to challenge by an action for breach of contract. The Court believes that any such inroad on Tennessee’s employment-at-will rule should be decided by the Tennessee Supreme Court or the Tennessee General
For the foregoing reason, Delta’s Motion for Summary Judgment is GRANTED, and Shelby’s claims are hereby DISMISSED in their entirety.
Notes
. Lead agents report directly to supervisors and act as working foremen. They ensure that all positions are manned and generally address routine operational matters. However, they do not have authority to establish or define Delta policy or to make any personnel decisions such as suspensions, terminations, or hiring.
. There is a dispute as to what time Shelby called. Shelby testified in his deposition that he was supposed to be at work by 10:00 a.m. and that he called Hackett before going in to work. Hackett maintains that Shelby did not call until around 12:00 noon.
. On that same date, Shelby was arrested in Kentucky for the possession and sale of illegal drugs. Shelby eventually pled guilty to this charge and was sentenced to five years which was reduced to probation.