Mannix v. Monroe Cnty

• Court: Court of Appeals for the Sixth Circuit
• Decided: November 3, 2003
• Docket: 02-1001
• Status: Published

Opinion

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 Mannix v. County of Monroe No. 02-1001 ELECTRONIC CITATION: 2003 FED App. 0390P (6th Cir.) File Name: 03a0390p.06 GOSSETT, Ann Arbor, Michigan, for Appellant. Leslie J. Nearpass, Gerald J. Briskin, Shannon M. Meechan, NEARPASS & ASSOCIATES, Temperance, Michigan, for UNITED STATES COURT OF APPEALS Appellee. FOR THE SIXTH CIRCUIT _________________ _________________ OPINION DONALD MANNIX , X _________________ Plaintiff-Appellee, - BOGGS, Chief Circuit Judge. The County of Monroe - - No. 02-1001 (“County”) appeals the district court’s denial of its motion for v. - judgment as a matter of law in the action for discharge > without just cause brought by its former employee, Donald , Mannix. Michigan state law presumes that employment is at COUNT Y OF MONROE, - Defendant-Appellant. - will, Mannix’s employment contract expressly provided for employment at will, and numerous County policies stated that N employment could be terminated by either party without Appeal from the United States District Court cause. However, Mannix claimed that he failed to receive, for the Eastern District of Michigan at Detroit. read, or understand any of these statements. Instead, because No. 00-71627—Julian A. Cook, Jr., District Judge. a County policy he did read set specific levels of discipline for specific infractions, Mannix argued that he had a Submitted: August 7, 2003 legitimate expectation of just-cause employment. The court denied the County’s motions to dismiss for failure to state a Decided and Filed: November 3, 2003 claim and for summary judgment. A jury rendered a verdict in favor of Mannix and the district court rejected the County’s Before: BOGGS, Chief Circuit Judge; SILER, Circuit subsequent motion for judgment as a matter of law. We Judge; and RICE, Chief District Judge.* reverse for several reasons.

_________________ I

COUNSEL Mannix accepted an offer of employment as a network administrator for the County contained in an October 9, 1998 ON BRIEF: Rosemary G. Schikora, DYKEMA GOSSETT, letter. This letter expressly described the position as “an ‘at Detroit, Michigan, Daniel J. Stephenson, DYKEMA will’ non-union position.” Mannix admits reading the letter and understanding all of its content except the term “at will,” which was not defined in the letter. The letter recommended * that Mannix contact the County’s Human Resources The Hono rable Walter Herbert Rice, Chief United States District Supervisor if he had any questions or concerns, but he did not Judge for the Southern District of Ohio, sitting by designation.

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do so. Instead, Mannix accepted the offer by signing the Policy 423, adopted on the same day as, and pursuant to, letter and returning it to the County. Policy 101, was entitled “Separation from Employment” and reiterated that “[e]mployment with the [County] is not for any When Mannix began work, he received a copy of the definite term and may be terminated at any time with or Personnel Policies of Monroe County (“Personnel Policies”), without cause and without advance notice.” Policy 423 also first enacted in 1977 and most recently amended in 1989. listed specific reasons for termination, but again did not The Personnel Policies indicated that “[a]pplicants are to indicate that this list was exhaustive. As a County understand that their employment with Monroe County is not administrator later testified, both policies were posted to the for any definite term and may be terminated at any time with database in August 1999 and “were put on the computer email or without cause and without advance notice.” The Personnel system so that all employees would have access to them at Policies also provided a list of twenty-three different offenses, any time.” Mannix admits that he, as network administrator, including gambling, wasting time, parking in the wrong spot, knew about the posting of the new policies, but denies insubordination, and theft, and the resulting discipline ranging reading them. from verbal warnings through discharge. However, the Personnel Policies contained no explicit statement that Mannix reported to Jeffrey W. Katke, the Information discipline could not be imposed for other infractions. Systems Director. Katke in turn reported to Charles Londo, Furthermore, the Personnel Policies made clear that the the County’s Chief Administrative Officer. While working as disciplinary “rules and regulations may be changed by the a network administrator, Mannix became aware of what he [County] Board of Commissioners by action taken in regarded as financial improprieties involving Katke and accordance with the Board’s rules of procedure. Employees Londo. In particular, Mannix was concerned that a private will be notified of such changes as they occur.” In addition company operated by Katke performed work for several local to the Personnel Policies, Mannix also received and signed for municipalities, and as a favor to Katke was provided with a copy of the County Work Rules and Regulations, most County employees to accomplish some of these tasks. On recently amended in 1997. The work rules set out three February 1, 1999, Mannix expressed his concerns about groups of offenses of declining severity. Notably, offenses in potential conflicts of interests to several County the first group were deemed to warrant immediate dismissal, commissioners. Thereafter Mannix’s relationship with Londo in contradiction to a three-day waiting period in the Personnel and Katke deteriorated. On June 25, Mannix had a private Policies. Mannix admits to reading both the Personnel conversation with Londo in which Londo “use[d] very violent Policies and the work rules. language” and “wound up telling [Mannix that] if he found out who was spreading rumors around the county that he During the course of Mannix’s employment with the would take them to court and sue them for everything that County, the County Board of Commissioners updated its they had.” This conversation greatly upset Mannix, who was employment policies by means of posting to an internal worried not only about lawsuits but also about losing his job. database. Policy 101, adopted on March 23, 1999, set the The following week, Mannix began using his privileges as procedures for such updates and stated that “[n]o person or network administrator to monitor Londo’s email representative of the [County, except the County Board of correspondence with Katke, County commissioners, and Commissioners] has any authority to enter into any agreement others. One of the letters from Katke to Londo that Mannix for employment for any specific period of time, or to make obtained over the following months indicated that Katke any agreement contrary to the provision contained herein.” wished to fire Mannix. Mannix printed that letter and showed No. 02-1001 Mannix v. County of Monroe 5 6 Mannix v. County of Monroe No. 02-1001

it to several County commissioners, which eventually led to the County and no damages on Londo and Katke.2 The court Londo’s discovery that Mannix had been tapping his email. reconciled these apparent inconsistencies by entering On January 7, 2000, in a letter signed by Katke, the County judgment for the full amount in favor of Mannix against the terminated Mannix. County and against Mannix with respect to the other defendants. On November 13, the court denied the County’s On April 4, 2000, Mannix filed a six-count complaint renewed motion for judgment as a matter of law. Before this against the County, Katke, and Londo in the United States court now is the County’s timely appeal of the denial of this District Court for the Eastern District of Michigan. In it he motion. claimed that he had been discharged wrongfully, that he had been discharged against public policy, that he could recover II under a theory of promissory estoppel, that the defendants had intentionally inflicted emotional distress on him, that the The County appeals the denial of its post-verdict motion for defendants had defamed him, and that the defendants had judgment as a matter of law. “If during a trial by jury a party violated the Michigan Whistleblower’s Protection Act.1 The has been fully heard on an issue and there is no legally federal court had diversity jurisdiction because Mannix was sufficient evidentiary basis for a reasonable jury to find for a citizen of Ohio, all defendants were either citizens of that party on that issue, the court may determine the issue Michigan or Michigan entities, and the amount in controversy against that party and may grant a motion for judgment as a exceeded the jurisdictional amount. The defendants filed a matter of law against that party with respect to a claim or motion to dismiss for failure to state a claim under Fed. R. defense that cannot under the controlling law be maintained Civ. P. 12(b)(6) or, in the alternative, for summary judgment or defeated without a favorable finding on that issue.” Fed. under Fed. R. Civ. P. 56. The court granted the motion in R. Civ. P. 50(a)(1). “In federal court diversity cases, this part, dismissing the emotional distress, defamation, and circuit adheres to the minority rule that state law governs the promissory estoppel claims against all defendants and the standard for granting motions for directed verdicts and discharge against public policy claim against the County. judgments notwithstanding the verdict.” J.C. Wyckoff & Assoc. v. Standard Fire Ins. Co., 936 F.2d 1474, 1482 (6th The surviving claims were tried to a jury. At the close of Cir. 1991) (citing Fitzgerald v. Great Cent. Ins. Co., 842 F.2d Mannix’s case, the court denied the defendants’ motion for 157, 159 (6th Cir. 1988), and Lewis Refrigeration Co. v. judgment as a matter of law under Fed. R. Civ. P. 50. The Sawyer Fruit, Vegetable & Cold Storage Co., 709 F.2d 427, jury returned a verdict for Mannix on the wrongful discharge 430 n.3 (6th Cir. 1983)); cf. Orth v. Emerson Elec. Co., 980 claim and for the defendants on all other claims. While the F.2d 632, 635 (10th Cir. 1992) (federal law governs standard jury declared all defendants to be liable for the wrongful discharge, it imposed damages in the amount of $80,000 on 2 The jury appeared to be confused abou t the legal nature o f Ma nnix’s claim. In a note to the distric t judge, the jury stated that “it was the lack of application of the personnel policies that [it] found in violation of the law.” In gene ral, a violation of perso nnel policies not contractua lly agreed to, even if proven and related to a discharge, is not actionable. In 1 cases like the present one the relevant legal question is not whether the Mannix did not raise any co nstitutional argument, such as those policies were abided by, but whether they created a legitimate expectation available against state employers under the Due Process Clause. of just-cause em ploym ent. No. 02-1001 Mannix v. County of Monroe 7 8 Mannix v. County of Monroe No. 02-1001

for granting of j.n.o.v., even in diversity cases);Miles v. Tenn. the employment setting.” Rood v. Gen. Dynamics Corp., 507 River Pulp & Paper Co., 862 F.2d 1525, 1527-28 (11th Cir. N.W.2d 591, 598 (Mich. 1993) (internal quotation marks 1989) (same); John Hancock Mut. Life Ins. Co. v. Dutton, 585 omitted). The legitimate-expectations theory “is grounded F.2d 1289, 1292 (5th Cir. 1978) (same). In Michigan courts, solely on public policy considerations” and “was founded on “[t]he standard of review for judgments notwithstanding the the [Michigan Supreme] Court’s common-law authority to verdict requires review of the evidence and all legitimate recognize enforceable obligations that arise outside the inferences in the light most favorable to the nonmoving operation of normal contract principles.” Ibid. (internal party.” Orzel v. Scott Drug Co., 537 N.W.2d 208, 212 (Mich. quotation marks omitted). Such a claim, if successful, creates 1995). “Only if the evidence so viewed fails to establish a a contractual provision implied in law. Lytle v. Malady, 579 claim as a matter of law, should a motion for judgment N.W.2d 906, 911 (Mich. 1998). notwithstanding the verdict be granted.” Ibid. Hence, we review the denial of judgment as a matter of law under a Mannix was discharged by the County. As the County does standard akin to the federal summary judgment standard. not here make the argument that the verdict must be overturned because it had just cause, the wrongful-discharge Under Michigan law, employment contracts without verdict must be affirmed unless Mannix was an at-will “distinguishing features or provisions” are “terminable at the employee. As at-will employment is the default rule under will of either party.” Lynas v. Maxwell Farms, 273 N.W. Michigan law and there is no evidence of an express 315, 316 (Mich. 1937). This rule remains the default provision creating a just-cause employment relationship, the principle. “It is black letter law in Michigan that when an sole remaining question before this court is whether the employment agreement is silent regarding the type of County’s statements created in Mannix a legitimate employment relationship, at-will employment, not just-cause expectation of just-cause employment. Toussaint, 292 employment, is presumed.” Franzel v. Kerr Mfg. Co., 600 N.W.2d at 885. N.W.2d 66, 73 (Mich. Ct. App. 1999) (citing Rowe v. Montgomery Ward & Co., 473 N.W.2d 268, 276 (Mich. Initially we note that Mannix entered an express at-will 1991)). However, in Toussaint v. Blue Cross & Blue Shield employment relationship with the County. The letter offering of Michigan, 292 N.W.2d 880 (Mich. 1980), the Michigan employment so provided and became a binding contract when Supreme Court established a significant exception to this rule. Mannix accepted by signing it. Mannix replies that the See Brocklehurst v. PPG Indus., 836 F. Supp. 1354, 1359 question whether he understood the term “at will” as used in (E.D. Mich. 1993) (recognizing modification of Lynas by the contract was a jury issue. While this may have been a Toussaint). The Toussaint court held that “a provision of an genuine issue, it was not a material issue. Absent employment contract providing that an employee shall not be circumstances not present here, Mannix was bound by the at- discharged except for cause is legally enforceable . . . [and will language regardless of whether he knew its legal that] such a provision may become part of the contract either meaning. “One who signs a contract cannot seek to avoid it by express agreement, oral or written, or as a result of an on the basis that he did not read it or that he supposed that it employee’s legitimate expectations grounded in an was different in its terms.” Nieves v. Bell Indus., 517 N.W.2d employer’s policy statements.” 292 N.W.2d at 885. 235, 238 (Mich. Ct. App. 1994). The employee “had an Toussaint establishes two separate theories on which just- obligation to seek assistance before she signed if she felt she cause employment may be found. The express-contract did not understand the application.” Reid v. Sears, Roebuck theory “is grounded solely on contract principles relative to No. 02-1001 Mannix v. County of Monroe 9 10 Mannix v. County of Monroe No. 02-1001

& Co., 790 F.2d 453, 461 (6th Cir. 1986) (citing Sponseller for employment at will.” Ibid. “When an employment v. Kimball, 224 N.W. 359 (Mich. 1929)). contract expressly provides for employment at will, a plaintiff, by signing the contract, assents to employment at Mannix cites no precedent, nor have we discovered any, will and cannot maintain an action based on a prior oral that an expressly at-will employment relationship may be agreement for just-cause employment.” Nieves, 517 N.W.2d turned into a just-cause relationship by no more than a at 238 (emphasis added); accord Novak v. Nationwide Mut. legitimate expectation on the part of the employee. In all Ins. Co., 599 N.W.2d 546, 550 (Mich. Ct. App. 1999). cases where courts have found a Toussaint just-cause relationship created by legitimate expectations, the initial Mannix counters this conclusion by contending that his employment contract was silent on the question of whether it receipt of the Personnel Policies constituted a novation of the could be terminated at will. The Toussaint court repeatedly employment contract. Mannix rightly notes that his recognized that express at-will contracts would not be employment contract did not contain an integration clause or affected by its holding. “Employers are most assuredly free any language indicating that it could not be modified. Cf. to enter into employment contracts terminable at will without Novak, 599 N.W.2d at 550 (rejecting discharged employee’s assigning cause.” Toussaint, 292 N.W.2d at 890. “Where the claim that defendant had orally modified the express at-will employer has not agreed to job security, it can protect itself provision of the employment contract which “contained a by entering into a written contract which explicitly provides provision requiring that modifications of the contract be in that the employee serves at the pleasure or at the will of the writing and be signed by a company representative”). Under employer or as long as his services are satisfactory to the these circumstances, Mannix and the County could have employer.” Id. at 891 n.24. “[N]o employer is obliged to agreed to replace their express at-will employment contract enter into . . . a contract [requiring cause for discharge].” Id. with an express just-cause contract. However, the novation at 896-97. Later courts interpreting Toussaint reached the of a contract must meet the same formal requirements as a same conclusion. “The ‘implied contract’ theory of Toussaint new contract. See Univ. Leaseway Sys. v. Herrud & Co., 115 may not be relied upon in Michigan when there is an express N.W.2d 294, 297 (Mich. 1962). Mannix does not even contract covering the same subject matter.” Bracco v. Mich. contend that the receipt of the Personnel Policies satisfies the Tech. Univ., 588 N.W.2d 467, 472 (Mich. Ct. App. 1998) general requirements of contract formation. Instead, Mannix (citing Scholz v. Montgomery Ward & Co., 468 N.W.2d 845 solely argues the issue of legitimate-expectations. But, as (Mich. 1991), and Wallace v. Recorder’s Court, 525 N.W.2d Toussaint taught, legitimate expectations may only imply a 481 (Mich. Ct. App. 1994)). “It is well settled in Michigan just-cause clause in an express contract otherwise silent on the that there cannot be an implied contract covering the same issue. Such expectations cannot themselves establish an subject as an express one.” Reid, 790 F.2d at 462 (citing express contract, or novate one.3 To hold otherwise would Steele v. Cold Heading Co., 336 N.W.2d 1 (Mich. Ct. App. reverse the holding not only of Toussaint but most of its 1983), and In re DeHaan’s Estate, 134 N.W. 983 (Mich. 1912)). “Toussaint held that employers can avoid misunderstanding over the term of employment by requiring prospective employees to acknowledge that they serve[] at the 3 will or pleasure of the company.” Reid, 790 F.2d at 462 Novak is not to the contrary, because the court there found it (internal citations omitted). Obtaining such an necessary to inquire into the contra ctual limitation on modification because the plaintiff argued that there had been an express novation by acknowledgment is “all that was required to create contracts oral agreem ent. No. 02-1001 Mannix v. County of Monroe 11 12 Mannix v. County of Monroe No. 02-1001

progeny. Therefore, Mannix’s claim can be rejected without Hotel Corp., 486 N.W.2d 61, 62 (Mich. Ct. App. 1992) further inquiry. (“Plaintiff’s reliance in this case on the disciplinary scheme established in the employment manual does not establish a But even if Mannix’s employment contract had been silent promise of termination for just cause only. Nothing in the on the question whether it created an at-will relationship, employment manual states that an employee would not be there still would not have been a just-cause contract under the terminated except for one of the reasons listed in the Toussaint legitimate-expectations test, because the Personnel disciplinary section.”); Ozuruigbo v. Ogden Martin Sys., 173 Policies did not create any such expectations. In general, a F.3d 429, 1999 WL 96849, at *3 (6th Cir. 1999) (table). jury can find the existence of a legitimate expectation based “Neither the adoption of systematic procedures for dealing on the “employer’s written policy statements set forth in the with employees nor the creation of disciplinary guidelines manual of personnel policies.” Toussaint, 292 N.W.2d at transforms an at-will relationship into one prohibiting 885. Where the plaintiff argues a legitimate-expectations discharge except for just-cause.” Mitchell v. White Castle theory, the trial court should only allow the case to proceed if Sys., 86 F.2d 1156, 1996 WL 279863, at *5 (6th Cir. 1996) the “policies are reasonably capable of being interpreted as (table). “If such documents were sufficient, no employer promises of just-cause employment.” Rood, 507 N.W.2d at could ever establish policies informing its employees of 606; see also Nieves, 517 N.W.2d at 238. A “contract to reasons why they could be fired without creating a discharge only for cause may not be based on ‘a mere ‘just-cause’ labor force.” Ibid. subjective expectancy.’” Reid, 790 F.2d at 460 (citing Schwartz v. Mich. Sugar Co., 308 N.W.2d 459 (Mich. Ct. This conclusion is strengthened by the fact that the same App. 1981)); accord Nieves, 517 N.W.2d at 238. Personnel Policies explicitly stated that all County employment was terminable at-will by either party. See Reid, Here, Mannix argues that the list of specific offenses and 790 F.2d at 460 (“[T]he listing of causes that ‘may result in associated levels of discipline in the Personnel Policies the termination of your employment’ in the [employer’s] created a legitimate expectation of just-cause employment. handbook [did not] detract[] in any way from the language in See Murphy v. Birchtree Dental, 964 F. Supp. 245, 248 (E.D. the application [stating that employees agreed that Mich. 1997) (“Even if the policy statement does not contain employment and compensation could be terminated with or an express just cause statement, it can create legitimate without cause at option of employer] or provide[] a expectations if it sets forth disciplinary procedures and reasonable basis for the conclusion that the plaintiffs were sanctions and does not retain the right to discharge at will.”). employed under a ‘for cause’ contract.”). See also Lytle, 579 However, while a “a specific list of disciplinary violations N.W.2d at 913 (holding “that provisions in a handbook will and the penalties for each along with an optional grievance not create enforceable rights when the handbook expressly procedure” may help establish a legitimate expectation of states that such provisions are not intended to create an just-cause employment, see Rood, 507 N.W.2d at 607 (citing employment contract” (citing Heurtebise v. Reliable Bus. Renny v. Port Huron Hosp., 398 N.W.2d 327 (Mich. 1986)), Computers, 550 N.W.2d 243 (Mich. 1996))). Therefore, there it is not by itself sufficient to create such an expectation. See was no legitimate expectation of just-cause employment, and Rood, 507 N.W.2d at 608 (“A nonexclusive list of hence no just-cause clause implied-in-law under Toussaint. common-sense rules of behavior that can lead to disciplinary action or discharge . . . clearly reserves the right of an Mannix attempts to distinguish these binding precedents on employer to discharge an employee at will.”); Biggs v. Hilton the basis that the Personnel Policies failed to state that they No. 02-1001 Mannix v. County of Monroe 13 14 Mannix v. County of Monroe No. 02-1001

did not imply a just-cause employment relationship. But the updated manual constitutes reasonable notice in Highstone v. Personnel Policies go further than the materials considered in Westin Engineering, 187 F.3d 548, 552-53 (6th Cir. 1999): our precedents. The Personnel Policies do not merely disclaim an implication of just-cause employment; they During Highstone’s employment Westin revised its expressly state that employment was terminable at will. In manual . . . . The revisions to the manual were . . . law, no document taken as a whole can be construed to imply published on-line . . . one month before Westin what it expressly disavows. Mannix also points to the fact terminated Highstone. At that time, Westin sent an that the Personnel Policies merely state that employment may e-mail message to all employees advising them of the be “terminated at any time with or without cause and without changes. Notice was also given during staff meetings, advance notice,” without using the words “at will.” which employees often attend. . . . The record shows that Considering the considerable effort that Mannix expended in Westin sent two e-mails notifying its employees of an attempt to demonstrate that he did not know what “at will” changes to the policy manual and published the manual meant, it is difficult to see what the inclusion of that phrase on-line so all employees could have easy access to the would have accomplished. manual. Westin satisfied its burden by reasonably notifying affected employees of the changes to the Finally, even if Mannix’s employment contract had not manual. expressly created an at-will relationship and the Personnel Policies had not failed to give rise to a legitimate expectation We reach the same conclusion here. The County revised its of just-cause employment, Mannix still could not prevail policies more than nine months before Mannix’s termination because the County amended its employment policies before and posted the revised version at least four months before the his discharge. “[A] company’s written policy statements, termination. These revised policies made clear that County which created legitimate expectations in the employee of employees could be terminated with or without cause or discharge for cause only, [can] be unilaterally modified by the notice. These revised policies were posted on an internal employer.” Rowe, 473 N.W.2d at 277 (citing In re Certified database available to employees. To spread the word of the Question, 443 N.W.2d 112 (Mich. 1989)). “To effectively revised policies, the County held meetings between add [the at-will] provision and bind employees to this specific department heads and employees and put the policies on the just-cause disclaimer . . . , the employer needed to give County’s email system. This was reasonable notice. reasonable notice to all affected employees.” Lytle, 579 N.W.2d at 912. Mannix responds that he never received actual notice of the revised policies. Under the electronic distribution system, in Distribution of a new employee handbook constitutes contrast to the older hard copy distribution of revised policies, reasonable notice, regardless of whether the affected no proof of actual receipt was collected. While Mannix, as employee actually reads it. See Rowe, 473 N.W.2d at 276 network administrator, was aware of the existence of the (holding that “that plaintiff cannot maintain an action for revised policies, he claims not to have read them. This, breach of contract on the basis of the disciplinary guidelines Mannix argues, creates a genuine issue of fact whether he because the last handbook which plaintiff received clearly set received actual notice properly to be resolved by the jury and forth an employment-at-will policy”). We most recently not judges. However, actual notice to Mannix, while addressed the question of whether electronic posting of an arguably a genuine issue, is not material. The material issue is reasonable notice to the workforce in general because a No. 02-1001 Mannix v. County of Monroe 15

“claim based on legitimate expectations rests on the employer’s promises to the work force in general rather than to an individual employee.” Nieves, 517 N.W.2d at 238 (citing In re Certified Question). Uncontradicted evidence establishes that the County did provide reasonable notice, in that it undertook steps reasonably calculated to reach the affected employees. Considering the advancement and ubiquity of electronic corporate communications, we will not induce a return to older practices by imposing a paper receipt requirement. III Given the express contract, the lack of legitimate expectation of just-cause employment, and the amendment to the employment policy once again disclaiming just-cause employment, “[i]t is difficult to imagine what more the defendant might have done to make it crystal clear to [the plaintiff] that . . . employees are employees ‘at will’ who may be discharged with or without cause.” Dell v. Montgomery Ward & Co., 811 F.2d 970, 974 (6th Cir. 1987). Therefore, we REVERSE the district court’s judgment and direct the district court to DISMISS the underlying action.