Jennifer Scott v. Merck & Company, Incorporated , 497 F. App'x 331 ( 2012 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1584
JENNIFER R. SCOTT,
Plaintiff - Appellee,
v.
MERCK & COMPANY, INCORPORATED,
Defendant - Appellant.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Benson Everett Legg, District Judge.
(1:09-cv-03271-BEL)
Argued: September 21, 2012 Decided: November 27, 2012
Before DUNCAN, AGEE, and DIAZ, Circuit Judges.
Reversed and remanded by unpublished opinion. Judge Agee wrote
the opinion, in which Judge Duncan and Judge Diaz concurred.
ARGUED: Raymond Charles Baldwin, SEYFARTH SHAW, LLP, Washington,
D.C., for Appellant. Andrew Howard Baida, ROSENBERG, MARTIN &
GREENBERG, LLP, Baltimore, Maryland, for Appellee. ON BRIEF:
Reenah L. Kim, SEYFARTH SHAW, LLP, Washington, D.C., for
Appellant.
Unpublished opinions are not binding precedent in this circuit.
AGEE, Circuit Judge:
In this diversity action, Merck & Company, Inc., (“Merck”)
appeals a $555,000.00 jury verdict in favor of its former
employee Jennifer R. Scott, who alleged that her termination of
employment by Merck constituted a breach of contract under
Maryland law. 1 For the reasons set forth below, we reverse the
district court’s judgment and remand the case for entry of final
judgment in favor of Merck.
I.
In 1992, Merck hired Scott as a pharmaceutical sales
representative. The parties agree that she was hired as an at-
will employee. During the final years of Scott’s employment,
Scott’s relationship with her direct supervisor, William
Liberato, deteriorated. Liberato gave Scott negative
performance reviews, warned that if she did not improve her
performance “appropriate next steps” would be taken, and
eventually placed Scott on a “performance improvement plan” to
monitor her work. Scott challenged Liberato’s instructions on
more than one occasion and eventually reported him to Merck’s
1
As this is an action with federal jurisdiction by virtue
of diversity of citizenship, we apply the law of the relevant
state, Maryland, to the state law contract claims. See
Universal Concrete Prods. v. Turner Constr. Co., 595 F.3d 527,
529 (4th Cir. 2010).
2
Office of Ethics for conduct that she believed violated Merck’s
ethical standards. Merck terminated Scott’s employment in
January 2008.
Scott originally filed this breach of contract case in the
Circuit Court for the City of Baltimore, Maryland, but Merck
removed the case to the United States District Court for the
District of Maryland. In her complaint, Scott alleged that
policy statements issued by Merck subsequent to the date of her
employment limited Merck’s ability to terminate her employment
at will. 2 Scott also claimed that Merck’s decision to terminate
2
Scott asserts that two Merck policy statements created an
enforceable contractual obligation that Merck employees would
not be terminated from employment for raising good faith
business practice complaints. First, she points to Merck’s Code
of Conduct, which states: “Any employee or third party who
raises a business practice issue will be protected from
retaliation.” (J.A. 21.) In addition, the Code of Conduct
provides that “[t]he fact that an employee has raised concerns
in good faith, or has provided information in an investigation,
cannot be a basis for denial of benefits, termination, demotion,
suspension, threats, harassment or discrimination.” (J.A. 45.)
Second, she relies on a policy statement (“Policy 57”) issued by
Merck’s Office of Ethics that states:
Retaliation and threats of retaliation against
employees who raise concerns, or against individuals
who appropriately bring important workplace and
business issues to the attention of management, are
serious violations of Merck’s values and standards and
will not be tolerated.
. . . .
All directors, officers[,] and employees are
strictly prohibited from engaging in retaliation or
retribution, or threats of retaliation . . . .
(Continued)
3
her employment breached that obligation because it retaliated
against her for having raised concerns about Liberato to the
Office of Ethics.
After discovery, Merck moved for summary judgment on the
basis that Scott was an at-will employee who could be terminated
at any time and for any reason, and thus could not bring a claim
for breach of her employment contract. Particularly relevant to
this appeal, Merck asserted that neither the Code of Conduct nor
Policy 57 created contractual obligations because they were
general statements of policy rather than “definite and specific”
declarations of benefits. In addition, Merck argued that Scott
could not justifiably rely on the non-retaliation policy
statements as creating a contractual right to non-retaliation in
light of specific disclaimers that Scott’s employment was at
will and that any policy statements did not create employment
obligations or contractual rights. (J.A. 55.)
The district court denied Merck’s motion for summary
judgment, concluding that the non-retaliation policy statements
Merck had issued subsequent to Scott’s hiring were “sufficiently
. . . .
Anyone who is involved in an act of retaliation
against a reporting employee or other individual will
be subject to appropriate disciplinary action.
(J.A. 52.) (Collectively “non-retaliation policy statements.”)
4
specific and definite to constitute an enforceable contract
term” under Maryland law. 3 (J.A. 307.) In addition, the court
concluded there was sufficient evidence from which a jury could
3
The district court found no ambiguity in any of the
contractual language either party relied on (i.e., the Code of
Conduct, Policy 57, the employment application, or the Manager’s
Policies). And, in reviewing that language, the district court
concluded:
Scott’s reliance on Merck’s non-retaliation policies
as part of her employment contract was reasonable.
The promise that employees will be protected from
retaliation for reporting business practice issues in
good faith, and that such reporting may not be the
basis for demotion, denial of benefits, or
termination, is sufficiently specific and definite to
constitute an enforceable promise under the Staggs
framework. Though Merck’s policy is in some sense
aspirational, in that it states that retaliation is
“unacceptable” and “will not be tolerated,” it also
promises an identifiable and unambiguous benefit:
employees will not be fired as a result of good-faith
whistle blowing.
. . . The policy in this case is far closer to
those specific promises found to be enforceable than
to the general aspirational statements in other cases.
. . .
Given the unambiguous nature of the non-
retaliation policy, the disclaimers that Merck relies
upon are insufficient to defeat Scott’s reasonable
expectation that Merck intended to limit its ability
to terminate her for retaliatory reasons. Unlike
other cases where courts have found disclaimers
effective in defeating contract formation, this case
involves an attempt by Merck to disavow, through use
of broad disclaimers, a specific benefit that clearly
implicates grounds for termination.
(J.A. 303-04.)
5
conclude that Merck breached those contractual provisions in
terminating Scott. The case proceeded to trial.
The jury returned a verdict in favor of Scott, finding that
Merck breached its employment contract by terminating her in
retaliation for raising a good faith business practice issue to
Merck’s Office of Ethics. Scott was awarded $555,000.00 in
consequential damages. The district court denied Merck’s motion
for judgment as a matter of law or, alternatively, a new trial,
adopting its prior rationale regarding the existence of a
contractual limitation on Merck’s ability to terminate Scott’s
employment. It also held that the evidence adduced at trial
supported both the jury’s verdict and the damages award.
Merck noted a timely appeal, and we have jurisdiction under
28 U.S.C. § 1291.
II.
Merck raises four issues on appeal by challenging the
district court’s threshold determination that Scott’s employment
was anything other than at will, raising two issues related to
the scope and conduct of the trial, and contending that the
evidence did not support the verdict in favor of Scott. Because
we agree with Merck that the district court erred in concluding
that the non-retaliation policy statements altered the terms of
6
Scott’s at will employment in light of clear disclaimers to the
contrary, we need only address the first issue.
We review the district court’s denial of a motion for
judgment as a matter of law de novo. See PBM Prods., LLC v.
Mead Johnson & Co., 639 F.3d 111, 119-20 (4th Cir. 2011)
(citation omitted). 4 Contract interpretation is also subject to
de novo review. Frahm v. United States, 492 F.3d 258, 262 (4th
Cir. 2007).
Moreover,
[a]s a court sitting in diversity, we have an
obligation to interpret the law in accordance with the
Court of Appeals of Maryland, or where the law is
unclear, as it appears that the Court of Appeals would
rule. To forecast a decision of the state’s highest
court we can consider, inter alia: canons of
construction, restatements of the law, treatises,
recent pronouncements of general rules or policies by
the state’s highest court, well considered dicta, and
the state’s trial court decisions.
Wells v. Liddy, 186 F.3d 505, 527-28 (4th Cir. 1999) (internal
citations omitted). In addition, “[a]n opinion of an
intermediate appellate court is persuasive in situations where
the highest state court has not spoken . . . .” Sanderson v.
Rice, 777 F.2d 902, 905 (4th Cir. 1985) (footnote omitted).
4
If “a reasonable jury would not have a legally sufficient
evidentiary basis to find for the party on [an] issue,” judgment
as a matter of law is appropriate. Fed. R. Civ. P. 50(a); see
also Gregg v. Ham, 678 F.3d 333, 341 (4th Cir. 2012).
7
III.
Maryland follows the common law principle of employment at
will, meaning that an employment contract of indefinite duration
may be terminated by either party at any time. Adler v. Am.
Standard Corp., 432 A.2d 464, 467 (Md. 1981). Maryland
recognizes a limited exception to this principle whereby
subsequent “policy statements that limit the employer’s
discretion to terminate an indefinite employment or that set
forth a required procedure for termination of such employment
may, if properly expressed and communicated to the employee,
become contractual undertakings by the employer that are
enforceable by the employee.” Staggs v. Blue Cross of Md.,
Inc., 486 A.2d 798, 803 (Md. Ct. Spec. App. 1985); see also
Fournier v. U.S. Fid. & Guar. Co., 569 A.2d 1299, 1301-05 (Md.
Ct. Spec. App. 1990). Maryland courts have “caution[ed] that
not every statement made in a personnel handbook or other
publication will rise to the level of an enforceable covenant. .
. . [G]eneral statements of policy are no more than that and do
not meet the contractual requirements for an offer.” Staggs,
486 A.3d at 804 (internal quotation marks and citation omitted).
In applying the so-called Staggs exception, Maryland courts
have been clear that “an employer may avoid contractual
liability by any terms which clearly and conspicuously disclaim
contractual intent.” Castiglione v. Johns Hopkins Hosp., 517
8
A.2d 786, 793 (Md. Ct. Spec. App. 1986). This is so because
“[t]he purpose of the Staggs exception to the at will doctrine
is to protect the legitimate expectations of employees who have
justifiably relied on manual provisions precluding job
termination except for cause. Justifiable reliance is precluded
where, as in the case at hand, contractual intent has been
expressly disclaimed.” Id. at 793-94 (emphasis added) (internal
citation omitted). Thus, Maryland’s courts have refused to
apply the Staggs exception where the employer “expressly
negated, in a clear and conspicuous manner, any contract based
upon the handbook for a definite term and reserved the right to
discharge its employees at any time.” Id. at 793; see also
Fournier, 569 A.2d at 1304 (holding that language stating that
employment was at will precluded employee from “justifiably
rely[ing] on any indication in the employee manual that his
employment would only be terminated after certain procedures
were followed by the [employer]”).
Having reviewed the relevant documents in the record, as
well as Maryland case law on point, we conclude that the
district court’s analysis was incorrect. It erred in failing to
grant Merck’s motion for summary judgment and, subsequently,
Merck’s motion for judgment as a matter of law. The district
court began by reviewing whether the policy statements Scott
cited created an “unambiguous” binding contractual promise, and
9
upon finding that they had done so, then rejected the
disclaimers Merck relied on as “insufficient to defeat” those
promises. Cf. supra n.2. That approach misconstrues the
salient analysis under Maryland law.
An employee must show both that the policy statement
limited the employer’s discretion to terminate the employment at
will and that the employee justifiably relied on that statement.
The presence of a clearly expressed disclaimer precludes the
employee from proving the element of justifiable reliance on a
claim of breach of contract regardless of how readily the
employee could satisfy the other part of the analysis. Put
another way, “[t]he disclaimer of any contractual intent . . .
on the part of [the employer] effectively bar[s] [the employee
from demonstrating justifiable] reliance.” Fournier, 569 A.2d
at 1304. The district court incorrectly reversed this analysis.
It is the unambiguous nature of the disclaimer that Maryland
courts have found to defeat an employee’s reliance on policy
statements, not the other way around. That is, proof of the
clear disclaimer renders moot any claim that the employer’s
discretion was otherwise limited by a policy statement.
The issue before the court, then, is whether the language
Merck points to clearly and conspicuously precludes justifiable
reliance on the provisions Scott contends modified her
employment contract. See Fournier, 569 A.2d at 1303-04;
10
Castiglione, 517 A.2d at 793-94. Merck identifies two
provisions as being “disclaimers” of a contractual intent that
Scott’s employment would be anything other than at will. The
first is a statement in Scott’s employment application, in which
Scott acknowledged: “I understand that I have the right to
terminate my employment at any time and for any reason and that
Merck & Co., Inc. retains a similar right.” (J.A. 63.) The
second is the Manager’s Policies, which state, in relevant part:
(1) “[e]mployment at Merck is at-will, which means that
employees are not hired for a specific duration of time and
either Merck or the employee may sever the employment
relationship at any time, for any reason with or without
notice,” and (2) “[n]one of the Company’s policies, procedures,
or practices should be viewed as creating promises or any
contractual rights to employment for a specific duration of time
or to any specific benefits of employment.” 5 (J.A. 55.)
The plain language of these policies demonstrates that
Merck clearly and conspicuously informed Scott that her
employment was at will. Indeed, the precise analysis in
Castiglione can be applied to this case:
5
Nearly identical language is located in Merck’s Manager
Policy E1 and Policy E5. For simplicity, we refer to them
collectively as “Manager’s Policies.”
11
The disclaimer language in the [employment application
and Manager’s Policies] does not indicate any intent
to limit the discretion of [Merck] to discharge
[Scott] only for cause, as was the case in Staggs.
Moreover, [the disclaimers] actually served to reserve
the right[] of [Merck to discharge Scott at will].
Finally, unlike the situation in Staggs, in this case
[Merck] expressly negated, in a clear and conspicuous
manner, any contract based upon the [non-retaliation
policy statements] and reserved the right to discharge
its employees at any time.
517 A.2d at 793. 6
The disclaimers in the case at bar thus precluded Scott
from being able to show that she justifiably relied on the
language in the Code of Conduct or Policy 57 as creating any
contractual rights (assuming that they could be so construed)
limiting Merck’s ability to terminate her employment at will. 7
The fact that the disclaimers appear in different locations from
6
We have considered Scott’s additional arguments that the
provisions Merck points to are legally insufficient to
constitute “disclaimers” under Maryland law. We do not agree.
The provisions at issue in the case at bar are closely analogous
to those in Castiglione and Fournier, in that they affirmatively
declare that Scott’s employment was at will, and that she could
be terminated for any reason.
7
On appeal, Scott persists in asserting that the Manager’s
Policies do not apply to her, an argument that she made to the
district court as well. The district court rejected Scott’s
argument, explicitly finding that the policies’ plain language
made them applicable to her. Scott brought no cross-appeal as
to this specific finding. (J.A. 300.) The district court did
not clearly err in its finding, as the Manager’s Policies state
that they apply to “all Merck & Co., Inc. employees based in the
U.S. not covered by a collective bargaining agreement.” (J.A.
55, 57 (emphasis added).) Scott was such a Merck employee.
12
the Code of Conduct and Policy 57 policy statements is not
material. The Maryland Court of Special Appeals considered and
rejected that precise argument as to placement of the disclaimer
in Fournier. 569 A.2d at 1304 (“The fact that in this case the
disclaimer appeared in the application for employment rather
than in the [policy] handbook itself is not a material
distinction.”). Merck clearly and conspicuously disclaimed any
limitation on its ability to terminate Scott’s employment at
will. 8 It further stated that policy statements such as the ones
Scott relies on should not be viewed as creating any contractual
rights and obligations. Scott therefore cannot show that her
termination constituted a breach of contract, for her employment
was at will. 9 Accordingly, the district court erred in denying
Merck’s motion for judgment as a matter of law.
8
We observe that troubling consequences may flow from a
blanket rule permitting an employer’s broad disclaimer to
nullify preemptively any employment guarantees provided for in
an employer’s later-in-time policy statements. Cf. Toussaint v.
Blue Cross & Blue Shield of Mich., 292 N.W.2d 880, 895 (Mich.
1980) (“Having announced the policy, presumably with a view to
obtaining the benefit of improved attitudes and behavior and
improved quality of the work force, the employer may not treat
its promise as illusory.”). Whether a clear and conspicuous
disclaimer will always suffice under Maryland law to defeat an
employer’s policy statements guaranteeing certain employment
protections to its employees is not an issue we need to reach
here, and is in any case more properly determined by that
state’s courts and legislature.
9
We do not take any position on whether the policy
statements Scott relies on were, on their own, sufficient under
(Continued)
13
IV.
For the aforementioned reasons, we conclude that the
district court erred, as a matter of Maryland law, in its
threshold ruling that Scott’s employment had been modified from
its original at will status. The case should not have proceeded
to trial because there is not otherwise a legally sufficient
evidentiary basis upon which Scott could prevail. Merck was
entitled to judgment as a matter of law. We therefore reverse
the district court’s judgment and remand the case for the
district court to enter final judgment in favor of Merck.
REVERSED AND REMANDED
Maryland law to modify the nature of Scott’s employment. Our
holding concludes only that Scott could not justifiably rely on
any such policy statements in light of Merck’s disclaimers.
14