F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS FEB 1 1999 TENTH CIRCUIT PATRICK FISHER Clerk
R. GARY BURKE,
Plaintiff-Counter-Defendant- Appellant,
v. No. 97-2266 (D.C. No. CIV-96-784-BB) BDM TECHNOLOGIES, INC., wholly (D. N.M.) and as a subsidiary of BDM International, Inc.,
Defendant-Counter-Claimant- Appellee.
and
Plaintiff-Counter-Defendant- Appellee,
v. No. 97-2275 (D.C. No. CIV-96-784-BB) BDM TECHNOLOGIES, INC., wholly (D. N.M.) and as a subsidiary of BDM International, Inc.,
Defendant-Counter-Claimant- Appellant.
ORDER AND JUDGMENT *
* This order and judgment is not binding precedent, except under the (continued...) Before SEYMOUR, Chief Judge, ANDERSON, and BRISCOE, Circuit Judges.
Plaintiff Gary Burke brought this action for wrongful termination and
breach of contract, and sought punitive damages in state court. The case was
removed to United States District Court on the basis of diversity jurisdiction, 28
U.S.C. § 1332. Defendant BDM Technologies, Inc., counterclaimed for breach of
fiduciary duty, breach of duty of loyalty, violation of trade secrets, breach of
contract, injunctive relief, and copyright infringement. BDM Technologies
dismissed its counterclaim for copyright infringement with prejudice prior to trial.
Following a trial to the court, the district court ordered that Burke take nothing on
his claims and that BDM Technologies take nothing on its counterclaims. Burke
appeals the district court’s ruling and BDM Technologies cross-appeals. We
affirm.
I.
Burke began his employment at BDM International, Inc., an information
technology corporation, in 1984. In September 1992, he took a medical leave of
absence. During his absence, BDM Technologies was created, which is a wholly-
* (...continued) doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
-2- owned subsidiary of BDM International.
Burke returned to work in June 1993 as vice president of Promotions
Technology International, a unit of BDM Technologies. Burke signed an
agreement which contained an at-will employment provision stating his
“employment may be terminated by either party, at any time, upon such
[reasonable] notice being given.” App. at 155.
As a part of its business objectives, Promotions Technology dealt with
developing “frequency loyalty and database marketing initiative supported by a
software program that [BDM Technologies] marketed and offered to commercial
clients.” Br. of Appellee at 4. In May 1994, Burke began reporting directly to
John Corsiglia, who was then the president of BDM Technologies. In 1993, 1994,
and 1995, Promotions Technology lost approximately $300,000, $900,000, and
$250,000, respectively. To prevent further losses, Corsiglia decided to shut down
the Promotions Technology unit. Corsiglia informed Burke in early July 1995
that he would be subject to a reduction-in-force at the end of the month, and
Burke was discharged at the end of July.
II.
Our review of the district court’s findings of fact is governed by Fed. R.
Civ. P. 52(a). Salve Regina College v. Russell, 499 U.S. 225, 233 (1991). The
rule provides: “Findings of fact, whether based on oral or documentary evidence,
-3- shall not be set aside unless clearly erroneous, and due regard shall be given to
the opportunity of the trial court to judge of the credibility of the witnesses.” A
finding of fact will not be adjudged clearly erroneous “unless it is without factual
support in the record, or if the appellate court, after reviewing all the evidence, is
left with the definite and firm conviction that a mistake has been made.” Las
Vegas Ice & Cold Storage Co. v. Far West Bank , 893 F.2d 1182, 1185 (10th Cir.
1990) (citation omitted).
III.
The general rule in New Mexico is that employment is terminable at will by
either party unless there is a contract stating otherwise. Hartbarger v. Frank
Paxton Co. , 857 P.2d 776, 779 (N.M. 1993). An exception to this rule has been
recognized for implied contracts in which an employer has voluntarily restricted
its power to discharge. Id.
It is undisputed that BDM Technologies has no personnel manual.
However, BDM International, its parent company, does have a personnel manual
which contains progressive discipline procedures. Whether BDM International’s
manual governs the employment policies of BDM Technologies is irrelevant.
Even assuming the manual controls the discharge policies of BDM Technologies,
it is undisputed that the manual provides that reduction-in-force discharges do not
trigger progressive discipline requirements. The record amply supports the
-4- district court’s finding that Burke was discharged due to a reduction-in-force.
Corsiglia testified that he discharged Burke as part of a reduction-in-force after
he determined the poor financial performance of Promotions Technology
necessitated elimination of the entire unit. Burke acknowledged that reduction-
in-force was always a possibility at BDM Technologies. A reasonable trier of
fact could determine Burke was discharged as part of a reduction-in-force. Even
if Burke’s performance was unsatisfactory, the reduction-in-force defense is not
necessarily undermined. The two concepts are not mutually exclusive.
Burke also contends the district court erred in rejecting his claim of breach
of implied covenant of good faith and fair dealing. Generally, every contract,
whether express or implied, imposes upon the parties a duty of good faith and fair
dealing in its performance and enforcement. Watson Truck & Supply Co. v.
Males , 801 P.2d 639, 642 (N.M. 1990); Restatement (Second) of Contracts § 205
(1981). However, New Mexico does not recognize such a cause of action in an
at-will employment contract. See Bourgeous v. Horizon Healthcare Corp. , 872
P.2d 852, 856 (N.M. 1994). Nor will the state embrace such an implied covenant
“to override express provisions addressed by the terms of an integrated written
contract.” Id. The only employment context in which New Mexico has applied
the implied covenant of good faith and fair dealing is non-at-will employment
relationships where the express terms of the employment contract do not foreclose
-5- the doctrine. Id. at 856-57. In articulating its theory, the New Mexico Supreme
Court has stated:
Although an employer may agree to restrict or limit his right to discharge an employee, to imply such a restriction in an employment- at-will relationship, which by its very nature has no restrictions, is inherently unsound. . . . [T]o imply in every employment situation a covenant of good faith prohibiting dismissal except for good cause could be likened to a judicial call for collective bargaining.
Melnick v. State Farm Mut. Auto. Ins. Co. ,
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F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS FEB 1 1999 TENTH CIRCUIT PATRICK FISHER Clerk
R. GARY BURKE,
Plaintiff-Counter-Defendant- Appellant,
v. No. 97-2266 (D.C. No. CIV-96-784-BB) BDM TECHNOLOGIES, INC., wholly (D. N.M.) and as a subsidiary of BDM International, Inc.,
Defendant-Counter-Claimant- Appellee.
and
Plaintiff-Counter-Defendant- Appellee,
v. No. 97-2275 (D.C. No. CIV-96-784-BB) BDM TECHNOLOGIES, INC., wholly (D. N.M.) and as a subsidiary of BDM International, Inc.,
Defendant-Counter-Claimant- Appellant.
ORDER AND JUDGMENT *
* This order and judgment is not binding precedent, except under the (continued...) Before SEYMOUR, Chief Judge, ANDERSON, and BRISCOE, Circuit Judges.
Plaintiff Gary Burke brought this action for wrongful termination and
breach of contract, and sought punitive damages in state court. The case was
removed to United States District Court on the basis of diversity jurisdiction, 28
U.S.C. § 1332. Defendant BDM Technologies, Inc., counterclaimed for breach of
fiduciary duty, breach of duty of loyalty, violation of trade secrets, breach of
contract, injunctive relief, and copyright infringement. BDM Technologies
dismissed its counterclaim for copyright infringement with prejudice prior to trial.
Following a trial to the court, the district court ordered that Burke take nothing on
his claims and that BDM Technologies take nothing on its counterclaims. Burke
appeals the district court’s ruling and BDM Technologies cross-appeals. We
affirm.
I.
Burke began his employment at BDM International, Inc., an information
technology corporation, in 1984. In September 1992, he took a medical leave of
absence. During his absence, BDM Technologies was created, which is a wholly-
* (...continued) doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
-2- owned subsidiary of BDM International.
Burke returned to work in June 1993 as vice president of Promotions
Technology International, a unit of BDM Technologies. Burke signed an
agreement which contained an at-will employment provision stating his
“employment may be terminated by either party, at any time, upon such
[reasonable] notice being given.” App. at 155.
As a part of its business objectives, Promotions Technology dealt with
developing “frequency loyalty and database marketing initiative supported by a
software program that [BDM Technologies] marketed and offered to commercial
clients.” Br. of Appellee at 4. In May 1994, Burke began reporting directly to
John Corsiglia, who was then the president of BDM Technologies. In 1993, 1994,
and 1995, Promotions Technology lost approximately $300,000, $900,000, and
$250,000, respectively. To prevent further losses, Corsiglia decided to shut down
the Promotions Technology unit. Corsiglia informed Burke in early July 1995
that he would be subject to a reduction-in-force at the end of the month, and
Burke was discharged at the end of July.
II.
Our review of the district court’s findings of fact is governed by Fed. R.
Civ. P. 52(a). Salve Regina College v. Russell, 499 U.S. 225, 233 (1991). The
rule provides: “Findings of fact, whether based on oral or documentary evidence,
-3- shall not be set aside unless clearly erroneous, and due regard shall be given to
the opportunity of the trial court to judge of the credibility of the witnesses.” A
finding of fact will not be adjudged clearly erroneous “unless it is without factual
support in the record, or if the appellate court, after reviewing all the evidence, is
left with the definite and firm conviction that a mistake has been made.” Las
Vegas Ice & Cold Storage Co. v. Far West Bank , 893 F.2d 1182, 1185 (10th Cir.
1990) (citation omitted).
III.
The general rule in New Mexico is that employment is terminable at will by
either party unless there is a contract stating otherwise. Hartbarger v. Frank
Paxton Co. , 857 P.2d 776, 779 (N.M. 1993). An exception to this rule has been
recognized for implied contracts in which an employer has voluntarily restricted
its power to discharge. Id.
It is undisputed that BDM Technologies has no personnel manual.
However, BDM International, its parent company, does have a personnel manual
which contains progressive discipline procedures. Whether BDM International’s
manual governs the employment policies of BDM Technologies is irrelevant.
Even assuming the manual controls the discharge policies of BDM Technologies,
it is undisputed that the manual provides that reduction-in-force discharges do not
trigger progressive discipline requirements. The record amply supports the
-4- district court’s finding that Burke was discharged due to a reduction-in-force.
Corsiglia testified that he discharged Burke as part of a reduction-in-force after
he determined the poor financial performance of Promotions Technology
necessitated elimination of the entire unit. Burke acknowledged that reduction-
in-force was always a possibility at BDM Technologies. A reasonable trier of
fact could determine Burke was discharged as part of a reduction-in-force. Even
if Burke’s performance was unsatisfactory, the reduction-in-force defense is not
necessarily undermined. The two concepts are not mutually exclusive.
Burke also contends the district court erred in rejecting his claim of breach
of implied covenant of good faith and fair dealing. Generally, every contract,
whether express or implied, imposes upon the parties a duty of good faith and fair
dealing in its performance and enforcement. Watson Truck & Supply Co. v.
Males , 801 P.2d 639, 642 (N.M. 1990); Restatement (Second) of Contracts § 205
(1981). However, New Mexico does not recognize such a cause of action in an
at-will employment contract. See Bourgeous v. Horizon Healthcare Corp. , 872
P.2d 852, 856 (N.M. 1994). Nor will the state embrace such an implied covenant
“to override express provisions addressed by the terms of an integrated written
contract.” Id. The only employment context in which New Mexico has applied
the implied covenant of good faith and fair dealing is non-at-will employment
relationships where the express terms of the employment contract do not foreclose
-5- the doctrine. Id. at 856-57. In articulating its theory, the New Mexico Supreme
Court has stated:
Although an employer may agree to restrict or limit his right to discharge an employee, to imply such a restriction in an employment- at-will relationship, which by its very nature has no restrictions, is inherently unsound. . . . [T]o imply in every employment situation a covenant of good faith prohibiting dismissal except for good cause could be likened to a judicial call for collective bargaining.
Melnick v. State Farm Mut. Auto. Ins. Co. , 749 P.2d 1105, 1111 (N.M. 1988)
(internal citation omitted).
Burke apparently suggests the “corporate culture and long-standing custom”
of BDM Technologies of attempting to relocate employees whose jobs are
eliminated for economic reasons created an implied contract preventing the
company from discharging an employee without first attempting to relocate that
employee. Because the implied covenant of good faith and fair dealing “requires
that neither party do anything which will deprive the other of the benefits of the
agreement,” Watson , 801 P.2d at 642, Burke reasons the company’s refusal to
transfer him to a vacant position constituted a breach of that implied covenant.
We disagree.
An implied contract cannot be properly fashioned from the company’s
corporate culture/custom for relocating employees subject to a reduction-in-force.
A similar situation was confronted in Hartbarger , where the employer had a
-6- tradition of maintaining long-term employment relationships. After plaintiff was
terminated, he pointed to the history of long-term employment to support his
theory that the employer did not maintain an at-will employment policy. The New
Mexico Supreme Court rejected the argument, noting:
[Defendant’s] retention of other employees for a long time is in itself no indication that [plaintiff] had an implied contract requiring that termination be only for just cause. As a matter of policy, this Court will not consider evidence that a company does not usually fire employees without a good reason as by itself establishing that the company does not maintain an at-will employment policy. To do otherwise would encourage employers to occasionally fire employees for no other reason than to show that they maintain the freedom to do so.
857 P.2d at 785. Here, there is no contention (or evidence) that BDM
Technologies had any policy requiring its officials to attempt to transfer
employees to vacant positions if their jobs were eliminated for economic reasons.
To the contrary, all evidence suggests this practice reflected nothing more than a
benevolent gesture on the part of the company.
Even if an implied covenant of good faith and fair dealing existed, there is
nothing in the record to indicate a breach of such a covenant. Both Corsiglia and
the vice president of human resources undertook good faith efforts to find Burke
alternative employment in the company. Burke, despite his acknowledged
responsibility, made virtually no effort on his own to look for other positions in
the BDM family of companies. The corporate culture at BDM Technologies did
-7- not encompass a guarantee of permanent employment. The company’s practice
was simply to attempt to find vacant positions for individuals in Burke’s position.
IV.
We need not decide whether the district court erred in concluding the
counterclaims had no merit. Even assuming Burke committed the offenses
alleged in the counterclaims, the record contains no evidence that BDM
Technologies suffered damages or has been irreparably harmed in any way that
might justify equitable relief. The district court excluded all evidence regarding
damages to BDM Technologies and Promotions Technology flowing from Burke’s
activities, and BDM Technologies does not appeal that ruling.
As far as BDM Technologies’ requested injunctive relief, the company
alleged Burke’s continued use of proprietary and confidential information in his
business “constitutes an ongoing and continuing harm” for which BDM
Technologies has no adequate remedy at law. App. at 12. See Hines Corp. v.
City of Albuquerque , 621 P.2d 1116, 1118 (N.M. 1980) (injunctions are granted
in New Mexico to prevent irreparable injuries for which there is no adequate
remedy at law). There is no evidence in the record to support this allegation.
BDM Technologies’ only allegation of irreparable harm is that, because of
Burke’s continued misappropriation of proprietary information, the company “has
been unable to sell the TMC software” formerly utilized by Promotions
-8- Technology. Br. of Appellee at 26. The page in the transcript cited in support of
this proposition does not reflect this statement. The transcript page cited is part
of the testimony of Tom Faulders, chief financial officer of BDM International,
and it states the former assets of Promotions Technology are now being held in
BDM International’s strategic operations unit. See Suppl. App. at 87. The record
does not suggest that any BDM entity has attempted to sell the software or
expressed a desire to resume operations in the “frequency loyalty”
marketing/software development industry. The district court’s denial of
injunctive relief is not clearly erroneous.
AFFIRMED.
Entered for the Court
Mary Beck Briscoe Circuit Judge
-9-