Byrd v. Quantum Health Resources CV-95-432-SD 07/16/97 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
M. Adele Byrd
v. Civil No. 95-432-SD
Quantum Health Resources Corp., d/b/a Quantum Health Resources
O R D E R
Plaintiff Adele Byrd brings this civil action against
defendant Quantum Health Resources Corporation, d/b/a Quantum
Health Resources, claiming that (1) Quantum treated her
unfavorably in the conditions of her employment and later
terminated such employment on account of her gender in violation
of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e,
et seg.; (2) Quantum breached certain express and implied terms
of the employment contract between the parties; and (3) Quantum
defamed her by publishing an unfavorable assessment of her job
performance.
Background
Quantum is a national provider of home therapies and support
services to long-term, chronically ill patients. In 1992,
Quantum hired plaintiff Byrd as a North East Area Marketing
Representative. Byrd's job was to solicit patient referrals from health care providers in her assigned territory. Byrd's
supervisor was Virginia Kraus. In December 1993 Kraus completed
a "Performance Appraisal" of Byrd's work. The evaluation was
favorable, lauding Byrd for "[c]learly understand[ing] purpose,
objectives, practices and procedures of Quantum" and for
" [r]ecogniz[ing] the importance of guality in providing a
competitive edge."
In August 1993 David Hayes took over as Byrd's supervisor.
In November 1993 Hayes informed Byrd that some of her assigned
territory was being reassigned to Jayne Poirier, a newly hired
marketing representative. The decision to reassign some of
Byrd's territory to Poirier appears to have generated some ill
will between Byrd and Hayes. To compensate her for the lost
territory, Hayes promised to pay Byrd commissions on patient
referrals from her old territory for a three-month period.
In January 1994 Hayes sent Byrd a memo informing her that
she would be reguired to meet certain performance expectations or
risk losing her position at Quantum. In March 1994 Hayes
prepared a report for his supervisor concerning the marketing
representatives for the northeast area. In discussing Byrd, the
memo stated, "Adele Byrd: Behind in paperwork; attitude needs
improvement; will make decision on continued employment with QHR
by 3/21/94." Through administrative error, the memo was mailed
2 to all of Byrd's co-workers. At the end of March 1994 Hayes
terminated Byrd.
Discussion
Title VII
Plaintiff brings her claim under Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000e-2(a), claiming she was the
subject of unlawful sex discrimination. Title VII prohibits
discrimination in employment "against any individual with respect
to his compensation, terms, conditions, or privileges of
employment, because of such individual's race, color, religion,
sex, or national origin." 42 U.S.C. § 2000e-2(a) (1) . Her Title
VII claim can be separated into two parts. First, she claims
Quantum treated her unfavorably with respect to the conditions
and terms of her employment on account of her gender. Second,
she claims Quantum terminated her employment because she is a
woman.
Byrd's claim that Quantum unlawfully discriminated against
her with regard to the terms of employment is clearly without
merit. Byrd claims that her supervisor Hayes and one of the
other female North East Area Marketing Representatives, Jane
Poirier, were having a sexual relationship, and for that reason
Hayes treated Poirier more favorably than Byrd in regard to the
3 conditions and terms of employment. Specifically, Byrd alleges
that Hayes reassigned some of Byrd's more lucrative sales
territory to Poirier in return for her amorous affections. Even
if these factual allegations are true, Byrd has not set forth a
cognizable claim for sex discrimination. Despite some contrary
authority, see King v. Palmer, 778 F.2d 878 (D.C. Cir. 1985)
(implicitly recognizing Title VII action premised on voluntary
sexual relationship), this court believes that Title VII's
prohibition against sex discrimination only proscribes
distinctions based on gender, not on sexual affiliation.
DeCintio v. Westchester County Medical, 807 F.2d 304, 306-07 (2d
Cir. 1986). Generally, Title VII prohibits discrimination based
on immutable characteristics such as "race, color, religion, sex
[and] national origin." Classifications defined by immutable
characteristics are invidious and unjust because they deprive a
person of entitlements and opportunities on the basis of a
characteristic the person cannot change. Such classifications
result from power exercised by a dominant group for no other
reason than the perpetuation of hierarchy and oppression. Gender
is a highly visible immutable characteristic that has
historically formed the basis for illegitimate discrimination.
Frontiero v. Richardson, 411 U.S. 677 (1973). Thus, Title VII
was intended to "strike at the entire spectrum of disparate
4 treatment of men and women." Sproqis v. United Air Lines, 444
F.2d 1194, 1198 (7th Cir.), cert, denied, 404 U.S. 991 (1971).
In contrast, workplace favoritism for the employer's sexual
partner disadvantages both males and females who are not sexually
involved with the employer. Membership in the disadvantaged
group is defined by voluntary association rather than an
immutable characteristic. Title VII was not intended to
dismantle a system of classifications premised on voluntary
sexual associations. Hayes's preferential treatment of his
paramour, Poirier, discriminated against Byrd based on her sexual
affiliation rather than her gender, and is therefore not
actionable under Title VII.
Byrd's second Title VII claim, that Quantum terminated her
for gender-based reasons, is also meritless. The central point
of contention between the parties is whether Quantum terminated
Byrd for discriminatory reasons based on her gender or, rather,
for permissible nondiscriminatory reasons. Quantum claims that
Byrd was terminated for poor performance, and offers evidence
that she failed Quantum's performance expectations of its
marketing representatives. Quantum's stated primary objective
for its marketing representatives was obtaining patient
referrals. In 1993, Quantum set a goal for its marketing
representatives to obtain 30 referrals in a year. Byrd obtained
5 only 16 referrals in 1993, placing her at 33rd in rank out of 42
other Quantum marketing representatives. At the end of 1993
Hayes reviewed the performance of the North East Area Marketing
Representatives and, of them, Byrd had the lowest number of
referrals. In mid-January 1994 Hayes provided Byrd with a
written memorandum regarding the level of performance expected of
her. The letter provided:
Your efforts in developing your assigned territory are commendable but have not generated significant referrals to date. In 1993 your Chronicare referrals totaled 16 patients against a plan of 30 Chronicare patients for the 12 month period. For 1994, the commission plan has even higher expectations and reguires >40 Chronicare patients for the year.
During the first two months of this year, you will be reguired to produce no less than 7 patient referrals which must be cleared for insurance and shipped. This number is based on an expected of >40 new chronic patient gains in 1994 to gualify for annuity payment.
Defendant's Memorandum in Opposition to Motion for Summary
Judgment at 7 (guoting Byrd Deposition, Exhibit 11). In
addition, the letter reguested Byrd to submit to Hayes a written
improvement plan detailing long-range goals and weekly agendas.
The letter ended, "failure to improve overall patient gains and
meet the performance guidelines specified above will result in
disciplinary action and/or termination." Id.
6 Byrd failed to either obtain the required seven referrals or
submit the written improvement plan. In a monthly sales report
prepared by Hayes, he stated that Byrd's performance provided
grounds to question her continued employment with Quantum. The
report read:
II. Personnel Issues
A). Exemplary Performance: Kay Barry & Susan Martin - 6 new Chronicare referrals.
Problems: Adelle (sic) Byrd - 60 day program ends 3/15/94 - has five new referrals 1994 needs two more shipped by 3/15/94; Behind in paperwork; attitude needs improvement; will made a decision on continued employment with QHR by 3/21/94 .
Defendant's Memo at 8 (quoting Byrd Deposition, Exhibit 13).
When Byrd was terminated, Hayes provided her written notice of
the grounds or reasons for her termination, citing her failure to
obtain the required seven referrals:
Adele, I have reviewed your progress to date against the performance program which was documented in my memo to you dated January 13, 1994 and have determined that you have not successfully met the minimum criteria established for your continued employment with Quantum.
Please recall you were to have achieved a minimum of seven (7) Chronicare™ referrals (cleared and shipped) during the first two months of '94, to date you have five (5). In addition, you were to have completed a detailed business plan for your sales area with weekly and monthly plans to achieve this annual plan. These plans have not been completed adequately. Both of these
7 objectives were critical elements of the performance program and your results, to date, are unsatisfactory.
Therefore, your employment will be terminated effective 3/23/94.
Defendant's Memorandum at 9 (quoting Byrd Deposition, Exhibit
14) .
This evidence substantiates Quantum's claim that the reason
for terminating Byrd's employment was poor performance rather
than the fact of her gender. As evidence that poor performance
was not the reason for her termination, Byrd offers a favorable
employee performance appraisal written by her previous
supervisor, Virginia Kraus, in December 1993, three months prior
to her termination. In evaluating the significance of this
evidence, it must be remembered that the primary focus remains on
lawfulness of the defendant's subjective motivation rather than
the objective accuracy of the defendant's judgments and
evaluations. Menard v. First Sec. Services Corp., 848 F.2d 281,
287 (1st Cir. 1988) (plaintiff's "proffered evidence does little
but dispute the objective correctness of [defendant's] decision"
to terminate plaintiff). There is no discrimination if Hayes's
subjective motivation for terminating Byrd was poor performance,
even if his unfavorable evaluation of her performance was
objectively erroneous or unfair. Kraus's favorable evaluation of
Byrd's performance merely indicates that Hayes may have been objectively harsh or unfair in assessing Byrd's work performance.
Kraus's evaluation, however, provides no insight into Hayes's
subjective state of mind and motive for terminating Byrd. In
sum, a favorable evaluation of Byrd's performance completed four
months prior to her termination by a former supervisor cast no
light on the reasons why Hayes terminated Byrd.
Next, plaintiff offers a cryptic handwritten office memo
that insinuates Hayes was asserting poor performance as a pretext
to firing Byrd for other reasons. The memo reads:
12-30-93 Conversation with David Hayes re Adele Byrd - possible hostile suit against QHR - improper handling of her performance. She has had surgery for carpal tunnel syndrome - has not ret'd voice mails left by V. Kraus - advise she call [at] home today - got recorder - I faxed Firemen's the 1st report & asked for status - told Kraus to fedex letter to Byrd - Hayes seems very concerned & would like her termed for poor performance.
Plaintiff's Objection to Motion for Summary Judgment and
Memorandum of Law in Support Thereof, Exhibit B. According to
Byrd, this memo indicates that Quantum's asserted reasons for her
termination are a pretext.
The First Circuit has made clear that a plaintiff cannot
necessarily meet the burden of showing discrimination solely by
relying on proof that the defendant's proffered nondiscriminatory
reasons for the adverse action are pretextual. Smith v. Stratus
Computer, Inc., 40 F.3d 11, 16 (1st Cir. 1994). The plaintiff has the burden of proving that the defendant's true motivation
underneath the pretext was discriminatory. St. Mary's Honor
Center v. Hicks, 509 U.S. 502, 511 (1993). Under some
circumstances, rejection of the defendant's proffered reason as
pretextual may give rise to an inference that the true motivation
was discriminatory. Id. However, this is not such a case
because, while the office memo may indicate that poor performance
was a pretext, there is no indication that unlawful
discriminatory animus lurked beneath the pretext. Read in a
light most favorable to plaintiff, the memo may suggest that
Hayes wanted Byrd terminated under the pretext of poor
performance. But the memo suggests that the true reason was
Hayes's concern about a "possible hostile suit against
[Quantum]," rather than Byrd's gender.
In sum, there is not a shred of evidence supporting Byrd's
claim that Quantum terminated her because of her gender. Quantum
has produced competent evidence that Byrd was terminated for the
permissible, nondiscriminatory reason of poor performance. In
addition. Quantum replaced Byrd with another woman. Byrd is left
with little more than allegations that she is in a protected
class and was terminated from employment. This is insufficient
to survive a motion for summary judgment.
10 Breach of Contract
Next, Byrd claims that Quantum terminated her in violation
of the covenant of good faith and fair dealing that inheres in
all contracts. Byrd alleges that Quantum terminated her in bad
faith in order to deprive her of commissions to which she
otherwise would have been entitled. Quantum's commission policy
states that " [c]ommissions . . . will only be paid to individuals
employed at the time of disbursement." Defendant's Memo, Exhibit
1, "Offer Description". Byrd claims Quantum terminated her five
days prior to the date on which commissions were to be disbursed
in order to avoid any contractual obligation to pay her
commissions.
The "implied covenant of good faith and fair dealing is not
a catch-all cause of action aimed at eradicating all taint of the
unethical from contract dealing." Carriage Hill Health Care v.
Havden, No. 96-101-SD, slip op. at 6 (D.N.H. Apr. 30, 1997).
Rather, the covenant arises in response to "the particular
problem raised by a promise subject to such a degree of
discretion that its practical benefit could seemingly be
withheld." Centronics Corp. v. Genicom Corp., 132 N.H. 133, 140,
562 A.2d 187, 191 (1989). Justice Souter, writing for the New
Hampshire Supreme Court, defined the scope of the covenant as
follows:
11 [U]nder an agreement that appears by word or silence to invest one party with a degree of discretion in performance sufficient to deprive another party of a substantial proportion of the agreement's value, the parties' intent to be bound by an enforceable contract raises an implied obligation of good faith to observe reasonable limits in exercising that discretion, consistent with the parties' purpose or purposes in contracting.
Id. at 143, 562 A.2d at 193.
Here, Quantum's promise to pay commissions is subject to
their unfettered discretion under the employment contract to
terminate employees at any time. Under Quantum's compensation
policy, commissions are not payable to employees who are
terminated before the date of commission disbursement, and under
the employment contract. Quantum retains the discretion to
terminate employees "at any time." Defendant's Memorandum,
Exhibit 1, "Offer Description." Quantum may avoid paying
commissions by exercising its discretion to terminate an employee
before commissions are to be disbursed. This scheme renders
Quantum's promise to pay commissions entirely illusory, and a
faithful employee may be denied the fruits of his labor by an
abusive exercise of Quantum's discretion to terminate employees
at any time. This is clearly, in the words of Justice Souter, "a
promise subject to such a degree of discretion that its practical
benefit could seemingly be withheld." Id. at 140, 562 A.2d at
121. For that reason. Quantum's discretion to terminate "at any
12 time" is circumscribed by the covenant of good faith, imposing an
obligation to observe reasonable limits in exercising that
discretion. It is a guestion for the jury whether Quantum
exceeded reasonable limits in terminating Byrd five days before
her commissions were to be disbursed.
Next, Byrd claims that Quantum breached its promise to pay
her commissions for a ninety-day period for referrals from her
old territory that was reassigned to Poirier. At a November 1993
meeting with Hayes and Kraus, Byrd objected to the reassignment
of a portion of her sales territory to Poirier. In answer to her
objection, Hayes promised that Quantum would pay her commissions
for referrals from her old territory for a ninety-day period. At
that time, Byrd understood that the ninety-day period would begin
in January when the reassignment became effective. At the end of
November, Hayes wrote Byrd a memo regarding the reassignment of
her territory which explained that the ninety-day period would
begin in December. Quantum paid Byrd commissions for a ninety-
day period beginning December 1 and ending in February. However,
Byrd claims the ninety-day period was to begin January 1 and end
in March.
Quantum argues that Hayes's November memo informing Byrd
that the period would begin in December conclusively resolves the
issue, and Byrd's understanding that the period would begin in
13 January is "wishful thinking," with no significance in
interpreting the contract between the parties. However, the
contract between the parties was formed at the November meeting
when Hayes orally promised to pay Byrd's commissions for a
ninety-day period. At that time, the terms of the contract were
ambiguous with regard to when the ninety-day period would begin.
Hayes's subseguent memo merely expresses his subjective
understanding, or "wishful thinking, " that the ninety-day period
would begin in December. Hayes's subjective understanding of the
ambiguous contract term is no more controlling in interpretation
than Byrd's contrary subjective understanding. In fact, under
the objective theory of contracts, which is controlling in New
Hampshire, Echo Consulting Services v. North Conway Bank, 140
N.H. 566, 569, 669 A.2d 227, 230 (1995), neither party's
subjective understanding of an ambiguous contract term is
entitled to significant weight. Rather, "the standard is the
meaning that the party making the manifestation should reasonably
expect the other party to give it--the standard of reasonable
expectation." Calamari and Peri ll o, Contracts § 3-10, at 118 (2d ed.
1977). When Hayes told Byrd in the November meeting that Quantum
would pay her commissions for a ninety-day period, he should have
reasonably expected Byrd would understand the ninety-day period
to cover January to March. Both parties understood that the
14 ninety days of commissions was additional compensation to Byrd
for her loss of territory. Since the reassignment of territory
from Byrd to Poirier became effective in January, a promise to
pay commissions for December referrals would not provide Byrd
with additional compensation because she would be entitled to
December commissions in any event. Rather, a reasonable person
who knew that the promise was intended to provide Byrd with
additional compensation would understand the ninety-day period to
begin in January when the reassignment of territory became
effective.
In sum, Byrd has made sufficient showing that Quantum
breached the contract between the parties.
Defamation
Next, Byrd claims that Hayes defamed her by publishing an
office memorandum to all Quantum's North East Area Marketing
Representatives that stated, "Adele Byrd: Behind in paperwork;
attitude needs improvement; will make decision on continued
employment with QHR by 3/21/94." Defendant's Memo, supra, at 8.
The R estatement defines defamation as " (a) false and
defamatory statement concerning another; (b) an unprivileged
publication to a third party; (c) fault amounting to at least
negligence on the part of the publisher; and (d) either
15 actionability ability of the statement irrespective of special
harm or the existence if special harm caused by the publication.
Defendant's Memorandum at 21-22 (citing R e s t a t e m e n t (S e c o n d ) of T orts
§ 558 (1977)).
Quantum claims that the statement consists of protected
opinion, as opposed to defamatory facts. In Gertz v. Robert
Welch, Inc., 418 U.S. 323 (1974), the Supreme Court said "[u]nde
the First Amendment there is no such thing as a false idea," id.
at 339, precluding a finding that a statement of opinion is
defamatory. However, the R estatement notes that " [a] defamatory
communication may consist of a statement in the form of an
opinion, but a statement of this nature is actionable only if it
implies the allegation of undisclosed defamatory facts as the
basis for the opinion." Restatement, supra, § 566, at 170. A
statement of discharge from employment generally implies no more
than an opinion or a subjective evaluation of the discharged
employee. Davis v. Ross, 754 F.2d 80, 84 (1985). However, the
publication of discharge may contain, by implication, an
underlying objective evaluation of the employee, and thus may be
considered defamatory under section 566 of the Restatement. Id.
Hayes's memo announcing an intent to consider discharging
Byrd is not purely opinion, but contains, both expressly and by
implication, underlying objective evaluations as bases for the opinions expressed. First, the memo expressly states that one
basis for terminating Byrd is that she is "behind in her
paperwork," which is clearly an objective evaluation of her
performance. Second, the statement that her "attitude needs
improvement" implies the fact that she has displayed a poor
attitude in the performance of her duties as a Quantum employee.
Clearly, if Hayes told one of Byrd's prospective employers that
Byrd's "attitude needs improvement," that employer would
understand the statement to imply an objective evaluation of her
job performance at Quantum. Thus, Hayes's memo is not protected
opinion.
Quantum next argues that the statements of fact in the memo
are true and, for that reason, cannot be defamatory. Since truth
is a defense to defamation. Quantum bears the burden of proof on
the issue. Quantum argues that the statement in the memo, "will
make a decision on continued employment with QHR by 3/21/94," is
demonstratively true because Hayes did in fact terminate Byrd by
that date. This argument misses the point. When an opinion is
held to be defamatory because it implies an underlying objective
evaluation, truth value must attach to the objective evaluation,
not to the opinion. The issue here is the veracity of Hayes's
objective evaluations concerning Byrd's poor attitude and neglect
of her paperwork. There remains a disputed issue of fact as to
17 whether these evaluations are accurate. Thus, even though Hayes
may in fact have intended to discharge Byrd, Quantum has not met
its burden of proving that Hayes's defamatory statements were
true.
Next, Quantum argues that there was no publication of the
memo. The R estatement states, "Publication of defamatory matter is
its communication intentionally or by a negligent act to one
other than the person defamed." Restatement, supra, at § 577.
Quantum claims that communication of the memo to all the North
East Area Marketing Representatives was neither intentional nor
negligent. According to Quantum, Hayes intended the memo to be
mailed only to his immediate supervisor, but his assistant
mistakenly addressed and mailed the memo to all the marketing
representatives. Quantum thereby concedes that communication to
the marketing representatives was caused by an administrative
mistake of its employees. Thus there is no failure of proof of
the acts said to constitute negligence, as would be the case, for
instance, if no one was sure how the memo got mailed to all the
marketing representatives. Rather, Quantum argues that mistaken
dissemination of the memo was not negligent because it was
"inadvertent and accidental." The court finds this an unusual
argument, since it is hornbook tort law that inadvertent and
accidental conduct may constitute negligence. The guestion is
18 whether the accident, mistake, inadvertence (or whatever else we
may call it) was unreasonable and negligent.
Defendant's remaining argument on this issue consists of the
assertion that this case is "on all fours with Morrow v. Morrow,
Inc., 911 P.2d 964, 967-68 (Or. Ap p . 1996)," in which the Oregon
Supreme Court held that, as a matter of law, it was not negligent
for an employee to save a defamatory computer-generated memo to a
public disk drive accessible to all the coworkers. With all due
respect to the Morrow court, this court cannot concur in the
conclusion that, as a matter of law, saving a defamatory memo to
a public disk drive was a reasonable mistake. But, even
accepting that conclusion as accurate, the case at hand is
distinguishable from Morrow. In Morrow, the defendant's mistake
related to the operation of his computer, and computers are
complex technology, whose proper operation often eludes even the
most technically skilled. In this case, however, Hayes or his
assistant cannot rely on the complexities of technology to excuse
their conduct. Addressing a memo to the intended recipient and
to no one else is a relatively simple task, especially in light
of the sensitive nature of the memo's subject matter. Mistaken
execution of this simple task is farther outside the bounds of
the reasonable than the computer mistake made by the defendant in
Morrow. On these grounds, the case at hand is distinguishable
19 from Morrow.
There remains a disputed issue of fact as to whether
mistaken communication of the defamatory memo to the marketing
representatives was unreasonable and negligent.
Wrongful Termination
Lastly, plaintiff claims she was terminated because "she did
not conform her mode of dress to a more sexually suggestive style
and because she did not have a sexual relationship with Hayes.
Complaint at 14. Since plaintiff has offered no evidence to
substantiate these allegations, this claim cannot survive summary
judgment.
Conclusion
For the reasons outlined above. Quantum's motion for summary
judgment (document 13) is granted as to Counts I, IV, V, and VI.
Summary judgment is denied as to Counts II and III.
Byrd's motion to extend discovery (document 21) is granted
for a two-week period to commence on the date of this order.
Discovery is limited to ascertaining the identity of Hayes's
administrative assistant who allegedly mailed the defamatory memo
to Byrd's coworkers.
Byrd's motion to extend time to file a reply memorandum
20 (document 22) is denied, the court notes that the option of a
motion to reconsider is available to Byrd, and she may advance
any arguments therein that she would have advanced in a reply
memo.
SO ORDERED.
Shane Devine, Senior Judge United States District Court
July 16, 1997
cc: Marian Sagona Lynch, Esg. Edward A. Haffer, Esg. Mark J. Sifferien, Esg.