Pearson v. John Hancock

• Court: Court of Appeals for the First Circuit
• Decided: November 10, 1992
• Docket: 92-1684
• Status: Published

Opinion

USCA1 Opinion

November 10, 1992

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

_________________________

          No. 92-1684

                               HAROLD F. PEARSON, III,

                                 Plaintiff, Appellee,

                                          v.

                       JOHN HANCOCK MUTUAL LIFE INSURANCE CO.,

                                Defendant, Appellant.

                              _________________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Edward F. Harrington, U.S. District Judge]
                                               ___________________

                              _________________________

                                        Before

                                Selya, Circuit Judge,
                                       _____________

                            Coffin, Senior Circuit Judge,
                                    ____________________

                              and Boudin, Circuit Judge.
                                          _____________

                              _________________________

               Robert  P. Joy, with whom Benjamin Smith and Morgan, Brown &
               ______________            ______________     _______________
          Joy were on brief, for appellant.
          ___
               G.  Rosalyn Johnson,  with  whom Harold  Owen  Beede and  G.
               ___________________              ___________________      __
          Rosalyn Johnson, P.C. were on brief, for appellee.
          _____________________

                              _________________________

_________________________

SELYA, Circuit Judge.  This hard-fought appeal presents
                    SELYA, Circuit Judge.
                           _____________

          one  overarching   question  of  Massachusetts  law:     could  a

          reasonable  jury, viewing the facts in  the light most hospitable

          to  the plaintiff,  find  that the  defendant's personnel  manual

          constituted a contract with its employees such that the defendant

          was  bound to  rehire the  plaintiff, a former  at-will employee,

          following  the  plaintiff's completion  of  a  leave of  absence?

          Because  Massachusetts law  requires  a negative  answer to  this

          inquiry, we  reverse the judgment  below.  Consequently,  we need

          not reach the other issues briefed by the appellant.

                                          I.
                                          I.
                                          __

                                      Background
                                      Background
                                      __________

                    From  1966 until  1987,  plaintiff-appellee  Harold  F.

          Pearson, III, worked in  the Agricultural Investments  Department

          at John Hancock Mutual Life Insurance Company (Hancock).  In late

          1986, Pearson made arrangements to take an unpaid six-month leave

          of absence  from the firm.   At  that time,  and before,  Hancock

          maintained a personnel manual  for the guidance of administrators

          and employees.   Pearson  testified  that Hancock  held out  this

          manual  as  authoritative regarding  company  rules and  employee

          benefits.  Pearson also said that, when he arranged for his leave

          of absence, the  Hancock personnel assistant  with whom he  spoke

          referred to  the  manual while  explaining the  mechanics of  the

          leave.   Read most generously  to plaintiff, certain  language in

          the manual suggests  that Hancock, subject  to the discretion  of

          the  corporate  hierarchs,  would  try assiduously  to  place  an

2

employee  seeking to return  from a leave  of absence in  the job

          most  nearly comparable to his  last previous job.   Pearson said

          that, before taking his leave, he told several  Hancock officials

          that he  expected to  be rehired  pursuant  to the  terms of  the

          manual.   Pearson has not  argued that remarks  made during these

          conversations    including  his  initial  conversation  with  the

          Hancock personnel assistant   themselves constitute a contract.1

                    "Optimism," Voltaire wrote, "is a mania for maintaining

          that all is well when things are going badly."   F.M.A. Voltaire,

          Candide (1759).   So it was here.  Approximately one month before
          _______

          Pearson's leave  was due  to expire,  he contacted  Hancock about

          resuming  his employment.    After ordering  an investigation  to

          ascertain if appropriate positions were available, and concluding

          that none  were open,  one of Hancock's  vice-presidents directed

          that a termination letter be sent to Pearson.  He never returned.

                    In July of  1989, Pearson  brought suit  in the  United

          States  District Court  for the  District  of Massachusetts.   He

          claimed that Hancock  had violated his rights  under the Employee

          Retirement Income  Security Act  of  1984 (ERISA),  29 U.S.C.    
                              
          ____________________

               1In the same  vein, we note  that, before Pearson  departed,
          the parties signed a memorandum concerning his leave  of absence.
          The memorandum states unequivocally  that Pearson was "advised of
          the difficulties involved in offering an individual with a highly
          specialized job at [Pearson's] grade level a comparable position"
          following  completion of a leave of absence.  The memorandum also
          memorialized  Pearson's  understanding  that  he  would  "not  be
          reinstated  to [his]  current position"  and that  his employment
          might possibly "be terminated  at the expiration of the  leave of
          absence."  Not surprisingly, Pearson has  not suggested that this
          memorandum  constitutes a source of rights  arising in his favor,
          and  we do not consider either that possibility or theories alien
          to Pearson's basic breach of contract claim.  See infra note 5.
                                                        ___ _____

                                          3

1001-1461 (1988),  and sought to recover  severance pay allegedly

          due  him.  The  ERISA count  was tried to  the bench.   The judge

          found that  the plaintiff was  not eligible to  receive severance

          benefits and  exonerated Hancock  of any  ERISA violation.   That

          ruling has not been appealed.

                    In   addition  to  the  alleged  ERISA  violation,  the

          complaint  included   several  pendent  state-law  claims.    The

          district court  jettisoned the  majority of the  pendent claims.2

          However, Pearson's breach of contract  claim survived and went to

          the jury  over the  defendant's objection.   Apparently believing

          that Hancock's search for a suitable opening was perfunctory, the

          jury awarded him damages of $345,000.  The jury explicitly found,

          on  special questions,  that the  personnel manual  constituted a

          contract  between  the  parties  and that  Hancock  breached  its

          contract by failing to  rehire Pearson.  When the  district court

          denied  Hancock's renewed motion for judgment as a matter of law,

          this appeal ensued.  

                                         II.
                                         II.
                                         ___

                                  Standard of Review
                                  Standard of Review
                                  __________________

                    In reviewing a district court's  denial of a motion for

          judgment as a matter of law, we must examine the evidence and the

          inferences  reasonably  to be  drawn from  it  in the  light most

          flattering  to the verdict-winner.   See Veranda  Beach Club Ltd.
                                               ___ ________________________

          Partnership v.  Western Surety Co.,  936 F.2d 1364,  1383-84 (1st
          ___________     __________________

____________________

               2Pearson  has  not  appealed  from the  dismissal  of  these
          claims.

                                          4

Cir.  1991);  Wagenmann v.  Adams, 829  F.2d  196, 200  (1st Cir.
                        _________     _____

          1987).   This means that  "[w]e take  the facts as  shown by  the

          [winner's]  evidence and by at  least [as much]  of the [loser's]

          uncontradicted  and  unimpeached  evidence  as,  under   all  the

          circumstances, the jury virtually  must have believed."  Karelitz
                                                                   ________

          v. Damson  Oil Corp.,  820 F.2d  529, 530 (1st  Cir. 1987).   If,
             _________________

          without  gauging  witness   credibility,  resolving   testimonial

          conflicts, or weighing the evidence, we ascertain that the proof,

          even  when viewed  through these  rose-colored glasses,  will not

          rationally support  a finding of liability, then  we must reverse

          the district court's  refusal to  enter judgment as  a matter  of

          law.   See Hendricks  & Assocs., Inc.  v. Daewoo Corp.,  923 F.2d
                 ___ __________________________     ____________

          209, 214 (1st Cir. 1991); Wagenmann, 829 F.2d at 200. 
                                    _________

                                         III.
                                         III.
                                         ____

                                       Analysis
                                       Analysis
                                       ________

                    The parties  agree that  Massachusetts law  governs the

          breach-of-contract   claim.     Pearson  argues   that,  applying

          Massachusetts law,  the personnel manual  formed the basis  of an

          enforceable  agreement  between  himself  and  Hancock  and that,

          pursuant  to the  terms  thereof, Hancock  had  an obligation  to

          rehire  him following  his leave  of absence.   In  contrast, the

          centerpiece  of  Hancock's appeal  is  the  proposition that  the

          personnel manual did not  constitute a binding contract.   On the

          facts  of   this  case,  we  find  Hancock's  proposition  to  be

          compelling.

                                          A
                                          A

5

The cornerstone of our analysis is the decision of  the

the  employer's  personnel  manual.     In  determining  that  no
          for  Boston Community Development, Inc., 403  Mass. 8, 525 N.E.2d
          _______________________________________
          Massachusetts Supreme  Judicial Court (SJC) in  Jackson v. Action
                                                          _______    ______

411 (1988).   Jackson involved a  former employee who  challenged
                        _______

          his discharge as violative of the grievance  procedures limned in

6
          modifiable, (2) merely hortatory,  (3) negotiated in a particular

          instance,  (4)   specially  emphasized  by   the  employer,   (5)
          at-will  employee, the SJC emphasized six factors; viz.:  (1) the
          an  express or implied  contract altering Jackson's  status as an

had negotiated  concerning the language contained  in the manual;
          employer's course of conduct, as the manual's stated  purpose was
          any  time;  (2)  there  was no  firm  commitment  concerning  the
          employer retained the right unilaterally to modify the manual  at

"policies"; (3) there was no evidence that  employer and employee
          merely   to  provide   "guidance"   concerning   the   employer's
          reasonable juror could find  that the manual formed the  basis of

attention"  to the manual; (5)  there was no  evidence that, when

          hired  or, indeed,  thereafter, the  employee had  manifested his

consider whether  or not the manual's terms were (1) unilaterally
          To  paraphrase, the  SJC  indicated that,  in order  to determine
          stipulated nor identified a  term of employment.  Id.  at 415-16.
                                                            ___
          assent  to  the  manual's  terms;  and  (6)  the  manual  neither

document constitutes a binding  contract, an inquiring court must
          whether the terms  of an employer's  personnel manual or  kindred
          (4) there was no  evidence that the employer had  called "special
          seasonably accepted  by the employee, and  (6) characterizable as

          specifying  some period  of employment  (or, alternatively,  some

          definitive  limit  on  the  otherwise  fluid  nature  of  at-will

          employment).3  

                    We  recently discussed  the correspondence  between the

          Jackson factors and basic  principles of contract law in  Biggins
          _______                                                   _______

          v. Hazen  Paper Co., 953 F.2d  1405 (1st Cir.),  cert. granted on
             ________________                              _____ _______ __

          other  grounds, 112 S. Ct. 2990, cross petition for cert. denied,
          _____  _______                   _____ ________ ___ _____ ______

          112 S.  Ct. 3035 (1992).   There, we held that,  when an employee

          seeks to  show that  a personnel  manual forms  the  basis of  an

          employment   contract,  Massachusetts  law   requires  him     to

          "establish  all  of the  elements  ordinarily  necessary for  the

          formation of  a contract."   Id.  at 1422.   Because Biggins  had
                                       ___

          failed to demonstrate either the occurrence of negotiations anent

          the manual's terms or the employer's calling of special attention

          to the manual  prior to the  time it fired  him, we reversed  the

          district court's  denial of  the defendant's motion  for judgment

          n.o.v.  Id. at 1423-24.
                  ___

                    We  think  that  these  decisions  carry  the  day  for

          Hancock.   For one thing,  although the Jackson  court took great
                                                  _______

          pains to stress that  its decision was circumstance-specific, 525

____________________

               3We  do not  read Jackson  as suggesting  that this  list of
                                 _______
          factors  is  necessarily exclusive.    Rather, Jackson  envisions
                                                         _______
          focusing the lens of  inquiry on "the conduct of the parties, and
          their relation,"  under the  totality of  the circumstances  in a
          given case.  Jackson, 525 N.E.2d at 416.   Here, however, neither
                       _______
          the plaintiff nor the district court suggested that  the equation
          should  be   reshaped  to  include  any   integers  beyond  those
          considered by the Jackson court.
                            _______

                                          7

N.E.2d  at  414-16,  the  circumstances  here  seem  sufficiently

          similar  to warrant  an identical  outcome.   For another  thing,

          Biggins augurs poorly for  Pearson's plight.  In Biggins,  two of
          _______                                          _______

          the six Jackson factors  were missing.  We termed  the absence of
                  _______

          these  two factors "fatal  to [the employee's]  claim."  Biggins,
                                                                   _______

          953 F.2d  at 1424.  Here,  the plaintiff finds himself  in a much

          deeper  hole:   the uncontroverted  evidence establishes  that no

          fewer than  four of the Jackson  factors are lacking.   We review
                                  _______

          the tally.

                    First, the personnel  manual upon which Pearson  relies

          explicitly  states that  Hancock  "retains the  right to  revise,

          suspend, or  cancel  in whole  or  in part  any  of the  policies

          appearing  in this manual without advance notice."  What is more,

          the  uncontradicted,  unimpeached  evidence   establishes  beyond

          peradventure  that  Hancock  unilaterally  exercised  this  right

          several times during Pearson's tenure.  Second, the manual is not

          couched   in   language   traditionally   associated   with  firm

          commitments.  Rather, it says that it "provides a description" of

          "personnel policies and procedures."  Third, there is no evidence

          in  the record  suggesting  that Pearson  and Hancock  negotiated

          concerning  the contents  of the  manual    or, indeed,  that any

          employee was consulted in  that regard.  Fourth, the  manual sets

          forth no term of employment.

                                          B
                                          B

                    Realizing that the  facts of  this case  are a  carrion

          call  to the vulturous flock of factors enunciated in Jackson and
                                                                _______

8

echoed in  Biggins, the plaintiff gamely asserts  that Jackson is
                     _______                                     _______

          an  avocet of a different plume.   He theorizes that, in Jackson,
                                                                   _______

          the  employee was attempting to establish  that the manual formed

          the  basis of an employment  contract for some  term greater than

          "at  will."   Thus, Pearson's  thesis runs,  the employee  had to

          overcome  many  obstacles, including  the  "general rule  [that],

          where an employment contract . . . contains no definite period of

          employment,  it establishes  employment at  will."   Jackson, 525
                                                               _______

          N.E.2d at  412.   Pearson  argues that  in this  case, unlike  in

          Jackson, he does not claim that  the manual alters his status  as
          _______

          an  at-will employee.  Rather, he concedes his status, but wields

          the  manual as a means  of proving Hancock's  contractual duty to

          provide a benefit described therein, namely, the benefit of being

          rehired after taking a leave of absence.4

                    Pearson's  argument  is  far   from  epigonic;  to  our

          knowledge,  it  remains unaddressed  in  the  relevant case  law.

          Nevertheless, the  district court endorsed  it.  We  do not.   No

          less an  authority on  state law  than the  Massachusetts Appeals

          Court has  recently rejected  this argument sub  silentio, citing
                                                      ___  ________

          Jackson  as  the  mainstay  of  its  conclusion  that  the  equal
          _______

          opportunity  policy announced  in an  employee handbook  "did not
                              
          ____________________

               4Pearson  also tries  to distinguish  Jackson as  a case  in
                                                     _______
          which the plaintiff relied only upon the employer's dissemination
          of the manual and not,  as here, upon additional factors  such as
          the conduct of the  employer in conformity with the manual.  This
          effort  will not withstand the mildest scrutiny.  In Jackson, the
                                                               _______
          SJC expressly  noted "the defendant's adherence  to the grievance
          procedures," but  found evidence of such  a practice insufficient
          to overcome the  inadequacies in the plaintiff's case.   Jackson,
                                                                   _______
          525 N.E.2d at 415.

                                          9

establish contractual  rights which  would support an  action for

          breach of contract."  Cherella  v. Phoenix Technologies, Ltd., 32
                                ________     __________________________

          Mass. App. Ct.  919, 586 N.E.2d 29, 31 (1992).   See also Coleman
                                                           ___ ____ _______

          v.  Boston Edison  Co., ___  Mass. App. Ct.  ___, ___  N.E.2d ___
              __________________

          (1992)  [No.  91-P-133] (applying  Jackson  to  defeat claim  for
                                             _______

          increased salary based on management salary program).

                    There is, moreover, a  fundamental flaw in  plaintiff's

          approach.  The definitional hallmark of employment at will is its

          terminability  by "either  the employee  or the  employer without

          notice, for almost any reason or for no reason at all."  Jackson,
                                                                   _______

          525 N.E.2d at  412 (collecting  cases).   To be  sure, there  are

          exceptions, inasmuch as the law traditionally frowns upon certain

          specific reasons for  terminating employment relationships.   The

          fact  that one's employment  is at  will does  not mean  that his

          employer  can   terminate  him  for   invidiously  discriminatory

          reasons, see, e.g., Mass. Gen. Laws Ann. ch. 151B,   4 (West 1982
                   ___  ____

          & Supp. 1992), or reasons which countervail some well established

          public policy,  see, e.g., DeRose  v. Putnam Management  Co., 398
                          ___  ____  ______     ______________________

          Mass. 205, 496 N.E.2d  428, 430-31 (1986), or reasons  which stem

          from the employer's  nefarious desire to deprive  the employee of

          benefits  otherwise due him, see, e.g.,  Fortune v. National Cash
                                       ___  ____   _______    _____________

          Register  Co., 373  Mass. 96,  364 N.E.2d  1251,  1255-56 (1977).
          _____________

          But, absent  proof  of a  prohibited  reason, the  ordinary  rule

          pertaining  to termination  of employment  at will applies.   See
                                                                        ___

          Wright v. Shriners Hospital for Crippled Children, 412 Mass. 469,
          ______    _______________________________________

          589 N.E.2d  1241, 1244 (1992)  (categorizing "prohibited  reason"

10

situations as "exceptions to th[e] general rule").

                    Such proof  is utterly lacking  here.  Pearson  has not

          suggested, let  alone proved, that Hancock  possessed an improper

          reason for not rehiring him.  The undisputed fact is that Hancock

          did  no  more  than   terminate  (or,  in  a  sense,   refuse  to

          reinstitute) an at-will employment  relationship.  So viewed, the

          instant case reduces to  a prototypical employment case  in which

          one party has  exercised its  legal right to  end a  relationship

          with no  stated term.  There  is simply no evidence  upon which a

          reasonable  jury  could  find  that  Hancock's  actions  were  in

          derogation of a contractual obligation owed to Pearson.

                                          C 
                                          C

                    It  is  important to  emphasize  that  this  is  not  a

          situation  in  which the  plaintiff  produced  evidence that  the

          defendant terminated an at-will  employment relationship in order

          to deprive an employee of some other right independently due him.

          See, e.g., Fortune, 364 N.E.2d 1251; McCone v. New England Tel. &
          ___  ____  _______                   ______    __________________

          Tel.  Co., 393  Mass. 231, 471  N.E.2d 47, 49-50  (1984); Gram v.
          _________                                                 ____

          Liberty Mut. Ins.  Co., 384 Mass. 659, 429 N.E.2d  21, 29 (1981).
          ______________________

          Rather, it is a  situation in which the plaintiff  contends that,

          notwithstanding   the   at-will    nature   of   the   employment

          relationship, the act of discharge (or its functional equivalent,

          the  refusal  to  reinstate),  in and  of  itself,  constituted a

          deprivation of  a contractually assured  right.  In  other words,

          Pearson,  while  admitting that  he was  an at-will  employee, is

          claiming that  the company's personnel  manual somehow  conferred

11

upon him a contractual right to remain in Hancock's employ.   Not

          only  is such a "right" inconsistent with the gravamen of at-will

          employment (a  concept which enables  either party  to scrap  the

          relationship  at   any  time,  without  notice   or  cause),  but

          plaintiff's  articulation  of  the  right,  brought  full circle,

          places  it  squarely  within  the  purview  of  Jackson  and  its
                                                          _______

          progeny.5

                    The situation  which would  have obtained  if Pearson's

          rationale were  adopted illustrates  the legal  impracticality of

          the  distinction  that  he  advocates.    To  skirt  the term-of-

          employment  obstacle, Pearson  would  have us  hold that  Hancock

          promised only that it would rehire him   not that it would retain

          him.   But,  if his  employment remained  at will,  Hancock would

          remain   free  to   fire  him   simultaneous  with,   or  perhaps

          milliseconds  after, the act of  reinstating him.   We think this

          scenario   forcefully  indicates  that  the  employer's  putative

          "promise"  to  rehire was  at best  illusory  and, in  any event,

          lacked the  mutuality required to constitute  a binding contract.

          See,  e.g., Jackson,  525 N.E.2d at  415 (suggesting  that merely
          ___   ____  _______
                              
          ____________________

               5It  is important  to note  that this  appeal is  limited to
          Pearson's suit for breach of contract.   In suits based on  other
          theories,  the  effect  of  Jackson's  holding   regarding  terms
                                      _______
          contained  in employee  manuals may  be somewhat  diluted.   See,
                                                                       ___
          e.g., Sinkevich  v. School Committee  of Raynham, 403  Mass. 420,
          ____  _________     ____________________________
          530 N.E.2d 173, 175 (1988) (in action for wrongful discharge, the
          employer's personnel manual could potentially confer an otherwise
          absent right  to resign  with minimal  notice);  Corion Corp.  v.
                                                           ____________
          Chen, ___ F. Supp. ___,  ___ (D. Mass. 1991) [1991 WL  280-288 at
          ____
          *7-8]  (holding the terms of a personnel manual to be enforceable
          on a  theory of promissory  estoppel); cf.  Maddaloni v.  Western
                                                 ___  _________     _______
          Mass.  Bus Lines, Inc., 386 Mass. 877, 438 N.E.2d 351, 355 (1982)
          ______________________
          (noting possibility of recovery in quantum meruit).

                                          12

hortatory or unilaterally modifiable "promises" are unenforceable

          as  illusory); Gill  v.  Richmond Co-Operative  Ass'n, Inc.,  309
                         ____      __________________________________

          Mass. 73, 34 N.E.2d 509, 513-14 (1941) (where one party committed

          itself to purchase only  so much as it wanted,  neither party was

          bound  by the agreement due  to want of  mutuality); Bernstein v.
                                                               _________

          W.B.  Mfg. Co., 238 Mass. 589,  131 N.E. 200, 201 (1921) (because
          ______________

          one  party remained  free  to exit  at  any time,  the  agreement

          violated "the  accepted legal maxim that . . . both of the mutual

          promises must be binding or neither will be").

                                         IV.
                                         IV.
                                         ___

                                      Conclusion
                                      Conclusion
                                      __________

                    In the last analysis, the plaintiff invites us to build

          a legal  wall separating suits alleging  that grievance procedure

          provisions in a personnel manual constitute a contract from suits

          alleging that rehire provisions constitute a contract.  Accepting

          this invitation would require  us to erect an  eclectic structure

          without  the benefit of  either state-law blueprints  or even the

          slightest intimation by the SJC that  Massachusetts jurisprudence

          might  be receptive  to  so  unprecedented  a  design.    We  are

          unwilling, however,  to tinker with seemingly  settled state law.

          Nor is our renitency unfair to the plaintiff:  after all, Pearson

          deliberately chose to bring this action in federal court when the

          state  courts were  equally available  to him.6   A  litigant who
                              
          ____________________

               6Plaintiff's   counsel  suggested  at   oral  argument  that
          Pearson's suit was brought  in federal court because  it included
          an ERISA  count along with  the salmagundi  of state-law  claims.
          But, the state courts  have concurrent original jurisdiction over
          ERISA  claims  which  are  brought  by  participants  to  recover

                                          13

seeks out a  federal forum  when a state-court  forum is  equally

          available to him cannot justifiably complain if the federal court

          manifests great  caution in blazing  new state-law  trails.   See
                                                                        ___

          Ryan v. Royal Ins. Co., 916 F.2d 731, 744 (1st Cir. 1990); Porter
          ____    ______________                                     ______

          v. Nutter, 913 F.2d 37, 41 (1st Cir. 1990).
             ______

We need  go no further.   On the record  before us, the

          plaintiff has failed sufficiently  to differentiate his case from

          those  of the  unsuccessful  plaintiffs in  Jackson and  Biggins.
                                                      _______      _______

          Thus, these precedents apply  to determine whether the employment

          manual at issue here  elevated Pearson's status above that  of an

          at-will employee.   If that  potential did  not exist,  Pearson's

          case  evaporates.   Because, as  we have  already  explained, the

          record is devoid of  evidence that would enable Pearson  to vault

          this hurdle, the district judge erred in denying Hancock's motion

          for judgment as a matter of law.

Reversed.
          Reversed.
          ________

____________________

          benefits due under employee welfare benefit plans.  See 29 U.S.C.
                                                              ___
            1132(e)(1). Pearson's suit is of this genre.

                                          14