USCA1 Opinion
United States Court of Appeals
United States Court of Appeals
For the First Circuit
For the First Circuit
______________________
No. 96-1430
JOHN R. KIELY
Plaintiff, Appellant,
v.
RAYTHEON COMPANY,
Defendant, Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]
___________________
____________________
Before
Torruella, Chief Circuit Judge,
___________________
Bownes, Senior Circuit Judge, and
____________________
Stahl, Circuit Judge,
_____________
____________________
William F. Green with whom Robert A. Rossi, Law Office of
_________________ _______________ _____________
William F. Green and George E. Brankey were on brief for
_________________ ___________________
appellant.
James F. Kavanaugh, Jr. with whom Christine G. Messer and
________________________ ____________________
Conn, Kavanaugh, Rosenthal, Peisch & Ford, L.L.P. were on brief
__________________________________________________
for appellee.
____________________
January 28, 1997
____________________
Per Curiam. This is an appeal from a dismissal of
Per Curiam.
___________
two contract claims. See Fed. R. Civ. P. 12(b)(6).
___
Plaintiff John R. Kiely ("Kiely") was employed by defendant
Raytheon Company ("Raytheon") from 1967 to 1990. Part of
Kiely's job was to obtain classified Department of Defense
("DOD") documents. Some of those documents were released by
DOD to representatives of defense contractors like Raytheon,
and some were not officially released. The receipt of the
latter documents is a federal crime, and both Kiely and
Raytheon have been convicted thereof. Those convictions are
not at issue here.
Raytheon's sentence required the corporation to pay
fines and damages of $1,000,000. It was not precluded from
entering into government contracts. Kiely was sentenced to
two years imprisonment, with all but six months, which were
to be served in a halfway house, suspended. He was debarred
from working on government contracts for a period of three
years.
Kiely sued Raytheon, asserting five claims. Three
tort claims were dismissed on statute of limitations grounds
and have not been appealed to this court. Kiely's other two
claims sounded in contract: promissory estoppel relating to
Kiely's "forced" retirement, and breach of a mutual defense
agreement that was allegedly made when Kiely and Raytheon
learned that they were targets of a federal criminal
-2-
-2-
investigation. The district court granted Raytheon's motion
to dismiss both claims. We now affirm.
On appeal, we "review[] the granting of a motion to
dismiss de novo, applying the same criteria that obtained in
__ ____
the court below." Garita Hotel Ltd. v. Ponce Fed. Bank, 958
____________________________________
F.2d 15, 17 (1st Cir. 1992). We must accept the complaint's
allegations as true, indulging all reasonable inferences in
favor of Kiely. Id. Dismissal is proper only if it is clear
___
that no relief could be granted, under any theory, "under any
set of facts that could be proved consistent with the
allegations." Hishon v. King & Spalding, 467 U.S. 69, 73
___________________________
(1984); Vartanian v. Monsanto Co., 14 F.3d 697, 700 (1st Cir.
_________________________
1994).
I. Promissory Estoppel
I. Promissory Estoppel
___________________
Kiely's promissory estoppel claim is that Raytheon,
"by requesting Kiely to commit acts in violation of the DOD
security laws (receiving unreceipted classified . . .
documents) over the course of Kiely's employment from 1967
through 1985, [was] implicitly promising Kiely that he could
commit these acts without being coerced at some future time
into taking early retirement" or suffering other employment-
related detriment. Am. Compl. 43. Kiely alleges that he
"relied on this promise to his detriment, as Raytheon in fact
did coerce him into taking early retirement effective
January 2, 1990." Kiely asserts that "Raytheon is,
-3-
-3-
therefore, estopped from denying the unenforceability [sic]
of this promise which it made to him." Id., 45-46.
___
This claim fails. The applicable Massachusetts law
recognizes that a promisee's reasonable and detrimental
reliance on a promise may serve as a substitute for
consideration and render the promise "enforceable pursuant to
a traditional contract theory," but only if the promisee can
prove "all the necessary elements of a contract other than
consideration." Rhode Island Hosp. Trust Nat. Bank v.
__________________________________________
Varadian, 647 N.E.2d 1174, 1178-79 (Mass. 1995) (quotation
________
omitted).
The district court held that Kiely failed to state
a valid promissory estoppel claim. First, the court found
that Kiely failed to meet the first requirement for a
promissory estoppel cause of action, namely, that a binding
promise be made. Id.; Santoni v. FDIC, 677 F.2d 174, 179
___ ________________
(1st Cir. 1982). The court agreed with Raytheon that the
company's alleged promise was not definite, certain, or
explicit enough to bind the company to any specific actions.
Santoni, 677 F.2d at 179. Raytheon asserts, in particular,
_______
that the promise alleged by Kiely in this case does not
carry, even implicitly, manifestations of an intent to be
bound, so that it would be binding under a contract theory,
i.e., so that it would "justify a promisee in understanding
____
that a commitment had been made." Rhode Island Hosp., 647
___________________
-4-
-4-
N.E.2d at 1179 (quoting Restatement (Second) of Contracts 2
(1981)). Raytheon also avers that it was unreasonable for
Kiely to rely on such a vague, implicit promise, so he fails
to meet the reasonable reliance requirement for a promissory
estoppel claim. See Restatement (Second) of Contracts,
___
90(1) & cmt. b; cf. United States v. Maling, 988 F.2d 242,
___ ________________________
245 (1st Cir. 1993) (estoppel in criminal sentencing). The
district court also agreed with Raytheon that the alleged
agreement was to violate the law, which is unenforceable as
against public policy. See Green v. Richmond, 337 N.E.2d
___ __________________
691, 695 (Mass. 1975).
We reach a different conclusion than the district
court did as to its first ground for dismissal. Under the
applicable standard of review, we must accept as established
that Raytheon hired Kiely and requested him to perform
certain tasks as part of his job, including receiving
unreceipted classified documents. Based upon such factual
allegations, it seems to us sufficiently "definite and
certain" that Raytheon was implicitly promising that it would
not terminate or discipline Kiely for following his
superiors' orders.1 The key is the parties' understanding
____________________
1. Kiely is not claiming a contractual right to lifetime
employment, as Raytheon misstates his position. Rather,
Kiely appears to claim that, while Raytheon can fire him
without stating any reason at all, if Raytheon does state a
reason, it cannot be an improper one. And Kiely asserts that
it is improper to fire him solely for following Raytheon's
instructions to co-conspire with the company in the
-5-
-5-
and intent: were they merely engaged in preliminary
negotiations, with details to be worked out later, or did
their minds meet on a firm commitment? Here, it appears
closer to a firm commitment. There was nothing left to
negotiate; the parties were not engaged in mere "inchoate
negotiations" that failed to rise to the level of a
commitment to be bound, from which Kiely could reasonably
develop no more than a "well-founded hope" that he could
perform his job functions without fear of reprisals. See
___
Hall v. Horizon House Microwave, Inc., 506 N.E.2d 178, 184
______________________________________
(Mass. App. Ct. 1987). An "explicit" statement to that
effect is not necessary to create a contract. An employee
may reasonably rely on an employer's instructions to perform
certain tasks as including an implicit promise that he can
perform those tasks without fear of being fired solely
because he performed them.
On the other hand, we agree with the district court
that the alleged contract was an agreement to achieve mutual
benefit from the parties' cooperative violation of the law.
Such a contract, even if explicitly agreed to by both
parties, is void and unenforceable as against public policy.2
____________________
commission of a crime.
2. Kiely relies on the Restatement to render this rule
inapplicable. If an agreement contains an illegal provision
that is not central to the agreement and the illegal
provision does not involve serious moral turpitude, the
illegal portion of the agreement is discarded, and the
-6-
-6-
See Green, 337 N.E.2d at 695. "[C]ourts will not lend their
___ _____
aid to relieve parties from the results of their own illegal
adventures." Tocci v. Lembo, 92 N.E.2d 254, 256 (Mass.
________________
1950). It would have been unreasonable for Kiely to rely on
such an illegal contract. Cf. American Viking Contractors,
___ ____________________________
Inc. v. Scribner Equip. Co., 745 F.2d 1365, 1372 (11th Cir.
____________________________
1984) (promise which is unenforceable cannot be reasonably
relied upon). We reject Kiely's contention that it was
reasonable to commit a crime in reliance on an implicit
promise that he would not be fired for doing so.
II. Breach of Contract
II. Breach of Contract
__________________
Kiely's breach of contract claim alleges that
Raytheon "entered into an oral agreement" with Kiely,
____________________
balance of the agreement is enforceable. See Restatement
___
(Second) of Contracts, 184. In the instant case, however,
the illegal conduct is not minor or incidental, which might
remove it from the rule forbidding enforcement of contracts
that are against public policy. See Green, 337 N.E.2d at
___ _____
695. The very essence of the contract alleged in Kiely's own
complaint is that Raytheon asked him to commit acts in
violation of national security laws. Indeed, this is the
only reason why Kiely claims to be in a position different
from any at-will employee, who would be terminable for any
reason or for no reason. He claims that his employment
cannot be interfered with solely on account of his
involvement in this illegal activity. As a result,
ironically, he is claiming that his employment status, which
would otherwise be at-will, was strengthened because he
engaged in criminal acts (or that his employer's management
prerogatives were diminished because the company joined with
its employee in committing such acts). This is more an
equitable estoppel claim -- that the employer is estopped
from exercising its normal management prerogatives because it
conspired with its employee to commit criminal acts -- than a
promissory estoppel contract-based claim. But the only
claims before us are the contract claims.
-7-
-7-
"fiduciary in nature, where each party placed trust and
confidence in the other and promised mutually to support and
defend each other with respect to any and all claims by the
[United States] Government" in its investigation of unlawful
use of documents. Am. Compl. 64. The complaint does not
mention any written agreement.3 It alleges that Raytheon
"undertook a clandestine course of action against Kiely in
breach of these promises" (without any further specification
of which "promises" were broken), "whereby it sought to
exculpate itself and its officers and directors from any
actionable wrongdoing or debarment from bidding on government
contracts, by falsely and in bad faith stating to DOJ
officers and by falsely and in bad faith giving oath before a
U.S. District Judge that Kiely acted alone and contrary to
Raytheon policy, and without the knowledge of Raytheon
management in knowingly obtaining and conveying secret DOD
[documents]." Id. at 65. The complaint adds that
___
Raytheon's "clandestine campaign" in breach of its promises
"culminated" in its plea agreement, "without Kiely's
____________________
3. Kiely moved to amend his complaint again to add a
reference to a written mutual defense agreement of which he
claims he had been unaware at the time he drafted his initial
complaint. He asserts that he only recently learned about
this written agreement when his prior lawyer (on the criminal
case) provided him a copy. The inconsistencies between the
oral and written agreements need not detain us here, nor
should any implications (such as credibility questions noted
by Raytheon) which might flow from the series of events as
recounted by Kiely.
-8-
-8-
knowledge or participation," in which plea Raytheon "falsely
and in bad faith blamed the entire matter on Kiely."4 Id. at
___
66.
This breach of contract claim has no more merit
than the promissory estoppel claim. The district court
dismissed the breach of contract claim for three reasons:
the alleged contract is unenforceable because it is contrary
to public policy; Kiely has not alleged any harm for which
redress is available; and there is no causal connection
between Raytheon's alleged conduct and Kiely's claimed harm.
In accepting Raytheon's public policy argument, the
district court misinterprets Kiely's claim. As worded by
Raytheon in its brief, "in essence plaintiff's allegation is
that the agreement prohibited Raytheon from providing
information to the government or conducting plea negotiations
without his knowledge or participation." Defendant's Brief
at 35-36. Having set up this straw man, Raytheon knocks it
down by asserting that such an agreement cannot be enforced
because it would violate public policy by restricting parties
____________________
4. Kiely also alleged that Raytheon breached its agreement
by sending to its own professional staff a memorandum stating
that the criminal charge to which Raytheon had pled guilty
was the result of one former employee's conduct. Id. at
___
69. We cannot understand how this memorandum -- sent after
entry of the plea agreement -- could conceivably constitute a
breach of the alleged agreement to mutually defend against
government claims, especially where those claims had already
been concluded as to Raytheon. The agreement cannot be
deemed to survive Raytheon's entry of a separate plea
agreement and Kiely's learning of that plea agreement.
-9-
-9-
from negotiating with the government and discouraging parties
from providing true information to the government and from
entering into plea agreements, all of which are favored by
public policy.
Kiely, however, does not assert that the mutual
defense agreement should be understood to preclude those
worthy goals. He claims only that the agreement (1)
precluded Raytheon from making false statements about Kiely
_____
and (2) required Raytheon to notify him that the mutual
______
defense agreement was terminated so he would be aware that
Raytheon was pursuing its own defense separately and possibly
in conflict with his. Kiely apparently takes the position
that, if he had received such notice, he might have taken a
different course in his own defense. So framed, Kiely's
claim for enforcement of the agreement would not prohibit
Raytheon from pursuing its own separate defense or from
negotiating a plea bargain. Nor would it restrict Raytheon's
ability to provide true information to the government in its
criminal investigation. The notice to which Kiely claims he
was entitled under the agreement would simply permit Kiely to
defend himself most effectively under the changed
circumstances. Such a mutual defense agreement is not void
as against public policy.
On the other hand, we agree with the district
court's second reason for dismissing the breach of contract
-10-
-10-
claim: that the damages alleged by Kiely are "not the kind
of specific, demonstrable harm for which remedy can be
given." A. 294-95. Kiely alleges that Raytheon's breach of
contract -- through its allegedly false statements and its
failure to notify him that it was terminating the mutual
defense agreement -- caused him to suffer the following
harms: (1) he refrained from effectively defending himself;
(2) he was denied the opportunity to plea bargain with the
government; (3) he was denied the de facto immunity granted
________
to other Raytheon employees; (4) he was indicted; and (5) he
suffered emotional injuries resulting from the foregoing.
Am. Compl. 27, 33, 35, 36, 40. These alleged harms are
too speculative to be legally cognizable and redressable.
See Johnson v. Comm'r of Correction, 652 A.2d 1050, 1057
___ _________________________________
(Conn. App.), cert. denied, 659 A.2d 183 (Conn. 1995); cf.
_____ ______ ___
Veranda Beach Club v. Western Sur. Co., 936 F.2d 1364, 1380-
_______________________________________
81 (1st Cir. 1991) (tort and promissory estoppel claims).
As to the first alleged harm, Kiely had as much
legal right as Raytheon did to pursue his own defense
separately, whether or not he thought it immoral. Kiely was
represented by counsel during the course of the criminal
investigation and his trial; indeed, Kiely's attorney was one
of the architects of the mutual defense agreement with
Raytheon. Presumably, his counsel advised him in some detail
as to the advantages and disadvantages, the risks and
-11-
-11-
pitfalls of each possible course of action, including the
possibility that his alleged partner in crime, Raytheon,
might at some point decide to pursue its own separate
interests which might not coincide with Kiely's. In
addition, Kiely was no doubt aware, through counsel if not
otherwise, that the mutual defense agreement did not deprive
the parties of the right to make strategic decisions for
themselves regarding their respective defenses, since their
interests were similar but not identical. Kiely himself made
his own decisions and took his chances, for his own reasons.
Kiely has not alleged any ineffectiveness in the assistance
he received from counsel, nor any conflict of interest based
on the fact that his counsel was chosen and paid by Raytheon.
As for Kiely's second and third alleged harms,
Kiely did not have a legal right to a plea bargain or to
immunity. Those were within the discretion of the
prosecutor, which this court will not second-guess.5 Virgin
______
____________________
5. It appears to us that Kiely's real complaint is with the
prosecutors and the Pentagon for prosecuting him and letting
Raytheon off the hook with what Kiely considers to be a slap
on the wrist, permitting Raytheon not only to avoid some
forms of criminal punishment (incarceration for any of its
officers or employees other than Kiely) but also to continue
to bid on government contracts. Kiely may be right that he
might have been able to arrange a favorable plea bargain with
the prosecutors in exchange for his testifying against
Raytheon, if the government had wanted to pursue such a
course against the "bigger fish." Kiely may also be right
that his chances of obtaining such a deal might have been
enhanced if he had pursued that course from the outset rather
than relying on his "mutual defense agreement" with Raytheon.
But it is not the role of this court to second-guess a
-12-
-12-
Islands v. Scotland, 614 F.2d 360, 365 (3d Cir. 1980).
_____________________
Moreover, Kiely's indictment for a crime of which he was
later convicted surely does not rise to the level of a
legally cognizable harm. Finally, Kiely's claim that he
suffered emotional harm as a result of the first four types
of harm is not legally cognizable because the four events
underlying the emotional harm are not cognizable.
Kiely's allegations are doubly speculative: that,
if Raytheon had not breached their agreement, he might have
had some opportunity to plea bargain; and that such a plea
might have been more advantageous to him than the sentence he
received after trial. The basic assumption underlying
Kiely's claim is that he would have received a lesser
sentence had he plea bargained rather than exercised his
right to go to trial.6 This assumption is too speculative to
be enforceable. See Bush v. United States, 765 F.2d 683, 685
___ _____________________
(7th Cir.), cert. denied, 474 U.S. 1012 (1985). After all,
____________
Kiely's obtaining unreceipted classified documents
constituted a crime, with or without Raytheon's knowledge.
If Kiely had thought it helpful, he could have provided
____________________
prosecutor's decision as to which defendant to pursue more
vigorously or what sentence to seek in each case. Moreover,
having chosen one course of action, Kiely cannot now complain
about what might have been if he had made a different choice.
6. We leave aside here the fact that Kiely had the same
legal right that Raytheon exercised to take independent
_____
action that best served his own interests.
-13-
-13-
information -- to the prosecutors after he was indicted, to
the jury at trial, or to the court prior to sentencing --
contradicting Raytheon's "rogue employee" statements. He has
offered no reason to believe that his sentence was enhanced
because of Raytheon's alleged statements that Kiely acted
alone rather than in concert with Raytheon. In short, Kiely
_____
has failed to allege that he has suffered cognizable harm as
required in order to state a claim upon which relief may be
granted.7
Moreover, Kiely has not alleged a valid causal
connection between Raytheon's breach and the damage he
suffered. Raytheon argues that: "To sustain a contract
claim based on the allegation of a convicted criminal that
someone else, rather than his own conduct, was the proximate
cause of his conviction would entirely subvert the policy and
societal interests inherent in criminal punishment. Allowing
a convicted criminal to receive civil compensation for the
harm caused by his conviction would lessen the effect of the
punishment determined by the criminal justice system, allow
____________________
7. Thus, while Raytheon's provision of false information to
DOJ or the court might subject the company to criminal
liability (if the government believes the information was
false and exercises its discretion to prosecute), civil
liability to third parties like Kiely does not necessarily
flow from such conduct. Such liability is not embraced by
Kiely's contract claims which are now before us. To the
extent that Kiely sought to impose civil liability in his
claims of defamation, negligent misrepresentation, and
intentional interference with business relations, those
causes of action have not been appealed.
-14-
-14-
him to profit from his own wrongful acts, and undermine the
deterrent and retributive purposes of criminal punishment."
Defendant's Brief at 47. We need not address whether
Raytheon is estopped from arguing this point, either because
it too was convicted for its role in the same crime, or
because of the unseemly cynicism of Kiely's partner in crime
relying on such a position to escape civil liability. In
circumstances such as these, the law presumes that Kiely's
conviction was based on his own illegal acts, not on
Raytheon's breach of a mutual defense agreement. The breach
of contract claim was properly dismissed.
In conclusion, it is not for us to say whether
Raytheon's treatment of Kiely was immoral or "nasty."
Plaintiff's Brief, Addendum at 54. Nor are we presented with
the question of whether Kiely might have a legitimate legal
claim against anyone not a party to this litigation. All we
decide today is that Kiely's claims against Raytheon in this
appeal are without merit.
Affirmed.
Affirmed.
________
-15-
-15-