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USCA1 Opinion
November 10, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 92-1684
HAROLD F. PEARSON, III,
Plaintiff, Appellee,
v.
JOHN HANCOCK MUTUAL LIFE INSURANCE CO.,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
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Before
Selya, Circuit Judge,
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Coffin, Senior Circuit Judge,
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and Boudin, Circuit Judge.
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Robert P. Joy, with whom Benjamin Smith and Morgan, Brown &
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Joy were on brief, for appellant.
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G. Rosalyn Johnson, with whom Harold Owen Beede and G.
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Rosalyn Johnson, P.C. were on brief, for appellee.
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SELYA, Circuit Judge. This hard-fought appeal presents
SELYA, Circuit Judge.
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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.
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Background
Background
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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
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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.
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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.
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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.
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Standard of Review
Standard of Review
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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.
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Partnership v. Western Surety Co., 936 F.2d 1364, 1383-84 (1st
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2Pearson has not appealed from the dismissal of these
claims.
4
Cir. 1991); Wagenmann v. Adams, 829 F.2d 196, 200 (1st Cir.
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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
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v. Damson Oil Corp., 820 F.2d 529, 530 (1st Cir. 1987). If,
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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.
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III.
III.
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Analysis
Analysis
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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
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Massachusetts Supreme Judicial Court (SJC) in Jackson v. Action
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411 (1988). Jackson involved a former employee who challenged
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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.
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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
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v. Hazen Paper Co., 953 F.2d 1405 (1st Cir.), cert. granted on
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other grounds, 112 S. Ct. 2990, cross petition for cert. denied,
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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
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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.
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We think that these decisions carry the day for
Hancock. For one thing, although the Jackson court took great
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pains to stress that its decision was circumstance-specific, 525
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3We do not read Jackson as suggesting that this list of
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factors is necessarily exclusive. Rather, Jackson envisions
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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
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the plaintiff nor the district court suggested that the equation
should be reshaped to include any integers beyond those
considered by the Jackson court.
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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
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the six Jackson factors were missing. We termed the absence of
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these two factors "fatal to [the employee's] claim." Biggins,
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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
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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
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8
echoed in Biggins, the plaintiff gamely asserts that Jackson is
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an avocet of a different plume. He theorizes that, in Jackson,
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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
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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
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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
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Jackson as the mainstay of its conclusion that the equal
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opportunity policy announced in an employee handbook "did not
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4Pearson also tries to distinguish Jackson as a case in
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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
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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,
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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
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Mass. App. Ct. 919, 586 N.E.2d 29, 31 (1992). See also Coleman
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v. Boston Edison Co., ___ Mass. App. Ct. ___, ___ N.E.2d ___
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(1992) [No. 91-P-133] (applying Jackson to defeat claim for
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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,
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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
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& Supp. 1992), or reasons which countervail some well established
public policy, see, e.g., DeRose v. Putnam Management Co., 398
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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
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Register Co., 373 Mass. 96, 364 N.E.2d 1251, 1255-56 (1977).
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But, absent proof of a prohibited reason, the ordinary rule
pertaining to termination of employment at will applies. See
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Wright v. Shriners Hospital for Crippled Children, 412 Mass. 469,
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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. &
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Tel. Co., 393 Mass. 231, 471 N.E.2d 47, 49-50 (1984); Gram v.
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Liberty Mut. Ins. Co., 384 Mass. 659, 429 N.E.2d 21, 29 (1981).
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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
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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
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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
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contained in employee manuals may be somewhat diluted. See,
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e.g., Sinkevich v. School Committee of Raynham, 403 Mass. 420,
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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.
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Chen, ___ F. Supp. ___, ___ (D. Mass. 1991) [1991 WL 280-288 at
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*7-8] (holding the terms of a personnel manual to be enforceable
on a theory of promissory estoppel); cf. Maddaloni v. Western
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Mass. Bus Lines, Inc., 386 Mass. 877, 438 N.E.2d 351, 355 (1982)
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(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
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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.
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W.B. Mfg. Co., 238 Mass. 589, 131 N.E. 200, 201 (1921) (because
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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.
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Conclusion
Conclusion
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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
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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
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Ryan v. Royal Ins. Co., 916 F.2d 731, 744 (1st Cir. 1990); Porter
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v. Nutter, 913 F.2d 37, 41 (1st Cir. 1990).
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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.
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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.
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benefits due under employee welfare benefit plans. See 29 U.S.C.
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1132(e)(1). Pearson's suit is of this genre.
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Document Info
Docket Number： 92-1684
Filed Date： 11/10/1992
Precedential Status： Precedential
Modified Date： 9/21/2015