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Schlichtig v. Inacom Corp.

July 8, 2003

THOMAS SCHLICHTIG AND MARY LOU SCHLICHTIG, PLAINTIFFS,
v.
INACOM CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Brotman, District Judge.

FOR PUBLICATION

OPINION REGARDING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Plaintiff Thomas Schlichtig ("Plaintiff" or "Schlichtig"), and his wife, Mary Lou Schlichtig, originally filed this action in the Superior Court of New Jersey, Law Division, Gloucester County, on January 19, 1999, asserting claims against Plaintiff's former employer, Defendant Inacom Corporation, for breach of an implied contract of employment (Count I), breach of the duty of good faith and fair dealing (Count II), "prima facie" tort (Count III), violation of New Jersey's Conscientious Employee Protection Act ("CEPA") (Count IV), defamation (Count V), negligent infliction of emotional distress (Count VI), and loss of consortium (Count VII). Defendant thereafter removed the case to this Court pursuant to 28 U.S.C. § 1446(a), asserting jurisdiction based on 28 U.S.C. § 1332 (diversity of citizenship). In an Opinion and Order dated February 22, 2000, the Court denied Defendant's motion to dismiss Plaintiff's CEPA claim, but granted that motion with respect to Plaintiff's claims for "prima facie" tort, defamation, negligent infliction of emotional distress, and loss of consortium, as the pleadings underlying those claims failed "to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). The Court also granted Defendant's motion to have Plaintiff's demands for punitive damages and counsel fees stricken from the breach of contract claims asserted in the first two counts of his complaint.

Defendant now moves for summary judgment with respect to the three surviving counts of Plaintiff's complaint: Count I (breach of an implied contract of employment), Count II (breach of the duty of good faith and fair dealing), and Count IV (violation of New Jersey's CEPA). For the reasons set forth below, Defendant's motion will be granted with respect to the breach of contract claims asserted in the first two counts of Plaintiff's complaint, and denied with respect to Plaintiff's CEPA claim (Count IV).

I. FACTUAL AND PROCEDURAL BACKGROUND

In early December 1997, Schlichtig, then a detective with the New Jersey State Police, filled out an employment application for a position as a Loss Prevention Specialist at Inacom's Swedesboro, New Jersey facility. (Def.'s Rule 56.1 Stmt. of Undisp. Mat. Facts at ¶ 1). That application contained the following disclaimer located just above the signature line:

APPLICANT: PLEASE READ THOROUGHLY

I understand that if I obtain employment with Inacom, my employment will not be for a fixed period of time and that it can be terminated by Inacom, or me, with or without notice for any reason or no reason, and without liability for wages, salary, or other compensation or benefits except what I have earned as of the date of termination or specified by federal, state, or local law. I understand that no employee, officer, or agent of Inacom may bind the Company to anything contrary to the above by oral or printed statements, including, but not limited to, handbooks, benefit booklets, or other forms of communications.

(See Employment Application dated December 15, 1997, attached as Ex. B to the Declaration of Joseph P. Paranac, Jr., Esq.). Plaintiff attended a series of interviews and was offered a position with Inacom on January 23, 1998. (Schlichtig Dep. 11/23/99 at 220:16-19). He immediately accepted the company's offer and executed a contract of employment that same day. (Id. at 221:5-17; Def.'s Rule 56.1 Stmt. at ¶ 6). That employment agreement, like the disclaimer set forth in Schlichtig's employment application, expressly reserved Inacom's right to terminate his employment "with or without cause or notice at any time." (Employment Agreement dated January 23, 1998, attached as Ex. C to Paranac Decl.). The contract further provided that its terms and conditions constituted the "whole agreement of the parties relevant to" Schlichtig's employment and that any future modification of those terms and conditions would have to be "in writing" and "executed by both parties." (Id.).

Before beginning his employment with Inacom on February 9, 1998, Schlichtig asked Karen Bishop, the Swedesboro facility's human resources manager, to provide him with the names and social security numbers of several Inacom employees. (Bishop Dep. 11/3/99 at 106:13-18, attached as Ex. E to the Declaration of Sally E. Heckeroth, Esq.; Schlichtig Dep. 11/23/99 at 45:22-46:15). After receiving this information, Schlichtig proceeded to run "record checks" on each of these individuals. (Schlichtig Dep. 11/23 at 45:9-21). At his deposition, Schlichtig explained that he had been told during his interviews that Inacom was experiencing as much as $6 million a year in losses due to computer theft and thought it might be beneficial to take advantage of some of the resources available to him by virtue of his position with the State Police to run background checks on some of the facility's employees to "see what we had there." (Schlichtig 11/23 Dep. at 45:24-46:10; 49:1-7). These record checks turned up 25 employees with criminal records. (McKeever Dep. at 281:16-21). On February 10th, Schlichtig's second day of work, he showed the results of these background checks to the director of the Swedesboro facility, Helmut Kalman, who then "immediately" told Mark Ross, Schlichtig's supervisor, about the record checks. (Schlichtig Dep. 11/23 at 24:12-17; Kalman Dep. at 69:10-20, attached as Ex. F to Heckeroth Decl.). After reviewing the results of the background checks, Kalman told Schlichtig he had "carte blanche" to examine the company's personnel files and requested that he conduct similar background checks for all new Inacom hires. (Schlichtig Dep. 11/23 at 24:12-25:10).

Sometime between March 11 and March 21st, an incident occurred in which one of the company's employees was found in possession of marijuana while entering through a security gate at the entrance to the Swedesboro facility. (Ross Dep. at 113:15-25). Schlichtig advised Ross of the situation and recommended that Inacom report the incident to the local police department. (Ross Dep. at 113:15-114:11). According to Kelly McKeever, the facility's director of human resources, Ross "instructed" Schlichtig that there was no reason to get the police involved because Inacom planned to terminate the employee for violating its strict drug and alcohol policy and did not intend on pressing any charges. (McKeever Dep. at 100:20-101:19; 103:21-24). Nevertheless, over Ross's objection, Schlichtig reported the incident to the Logan Township Police Department and invited the department's officers to come to the facility to take possession of the marijuana. (Id. at 100:13-102:24). On March 26, 1998, approximately five to fifteen days later, Ross informed Schlichtig that he was being terminated for, among other things, getting the police involved in the "marijuana incident." (McKeever Dep. at 100:13-103:24; 276:25-279:14; Schlichtig's 12/6/99 Dep. at 117:21-118:5; 118:7-19; 158:5-7; 174:18-22; 183:24-184:6; Ross Dep. at 113:15-25).

II. LEGAL STANDARD GOVERNING A MOTION FOR SUMMARY JUDGMENT

The standard for granting a motion for summary judgment is a stringent one, though it is not insurmountable. Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment may be granted only when the evidence contained in the record, including "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Serbin v.Bora Corp. 96 F.3d 66, 69 n.2 (3d Cir. 1996). In deciding whether there are any disputed issues of material fact which must be reserved for trial, the court must view the record in the light most favorable to the non-moving party, together with all reasonable inferences which can be drawn therefrom. The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

Once the moving party has carried its burden of establishing the absence of a genuine issue of material fact, "its opponent must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Indeed, relevant Supreme Court decisions mandate that a summary judgment motion be granted unless the party opposing the motion "provides evidence `such that a reasonable jury could return a verdict in favor of the nonmoving party.'" Lawrence v. National Westminster Bank New Jersey, 98 F.3d 61, 65 (3d Cir. 1996) (quoting Anderson, 477 U.S. at 248). In other words, the non-moving party must "make a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial." Serbin, 96 F.3d at 69 n. 2 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). Thus, if the non-movant's evidence on any essential element of the claims asserted is merely "colorable" or is "not significantly probative," the court must enter summary judgment in favor of the moving party. Anderson, 477 U.S. at 249-50; see also Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir. 1991) (observing that non-movant's effort to defeat summary judgment may not "rest upon mere allegations, general denials, or . . . vague statements").

III. DISCUSSION AND ANALYSIS

A. Count I: Breach of Implied Contract of Employment

In New Jersey, as in most other states, absent an agreement to the contrary, the relationship between an employer and its employees is presumed to be for an indefinite period and terminable at the will of either party - that is, except in certain limited instances where an employee's termination is statutorily proscribed or contrary to a clear mandate of public policy. See Witkowski v. Thomas J. Lipton, 136 N.J. 385, 397-398 (1994); see also D'Agostino v. Johnson & Johnson, Inc., 133 N.J. 516, 527 (1993). In an employment relationship of this nature, an employer is ordinarily free to discharge an employee at any time, with or without notice, and for any reason whatsoever or even no reason at all. See Witkowski, 136 N.J. at 397. However, New Jersey courts have generally exhibited a greater willingness than the courts of most other jurisdictions to recognize a cause of action for breach of contract against employers who fail to honor the express or implied promises made in an employee manual or handbook. See Woolley v. Hoffmann-La Roche, Inc., 99 N.J. 284, modified, 101 N.J. 10 (1985); see also Nicosia v. Wakefern Food Corporation, 136 N.J. 401 (1994).

In Woolley, the seminal decision in this area, the New Jersey Supreme Court held that "when an employer of a substantial number of employees circulates a manual that, when fairly read, provides that certain benefits are an incident of the employment (including, especially, job security provisions), the judiciary, instead of `grudgingly' conceding the enforceability of those provisions . . . should construe them in accordance with the reasonable expectations of the employees." 99 N.J. at 297-98. In applying this "reasonable expectations" test to the facts of that case, the Court found it particularly significant that Woolley, like most of his co-workers, had been employed "without any individual employment contract" explicitly setting forth the terms and conditions of his employment. 99 N.J. at 299. Under the circumstances, the Court observed, it was "almost inevitable" that Woolley, having been "given this one document [the employee manual] that purports to set forth the terms and conditions of his employment," would "regard it as a binding commitment, legally enforceable, concerning the terms and conditions of his employment." Id. The Court observed that an employer wishing to avoid making any binding contractual commitments could very simply accomplish this task by including "in a very prominent position an appropriate statement that there is no promise of any kind by the employer contained in the manual; that regardless of what the manual says or provides, the employer promises nothing and remains free to change wages and all other working conditions without having to consult anyone and without anyone's agreement; and that the employer continues to have the absolute power to fire anyone with or without good cause." Id. at 309.

In attempting to ascertain "whether an employee may reasonably understand that an employment manual is intended to provide enforceable employment obligations," the New Jersey courts have typically considered such factors as the "definiteness and comprehensiveness" of the manual's termination policies and progressive disciplinary procedures and the context of it's preparation and distribution. Witkowski, 136 N.J. at 393; Nicosia, 136 N.J. at 408-409. Thus, under Woolley and its progeny, an employment manual or handbook which is "widely disseminated" to a substantial portion of a company's workforce, fairly "definite and comprehensive in its terms," and "contains no clear and prominent disclaimer" expressly reserving the employer's right to terminate its employees at any time, with or without prior notice, and for any reason or no reason at all, may reasonably be construed as "a unilateral offer to contract that an employee may accept through continued employment." Witkowski, 136 N.J. at 399.

The Woolley doctrine does have its limits, however. For instance, as the Appellate Division observed in Ware v. Prudential Insurance Company, the basic principles articulated in Woolley do not extend to situations in which an "employee has an individual written employment contract which expressly states that his employment is at will." 220 N.J.Super. 135, 142-143 (App. Div. 1987) (rejecting breach of contract claim based on implied promises allegedly contained in employment handbook where the undisputed facts established that plaintiff had signed an individual employment contract with his employer which, by its terms, could "be terminated by either party at any time"). As the court explained:

The Court in Woolley [] emphasized that a company's general personnel practices embodied in a policy manual do not automatically become legally binding terms and conditions of employment. To avoid this consequence, "[a]ll that need be done is the inclusion in a very prominent position of an appropriate statement that there is no promise of any kind by the employer contained in the manual; . . . and that the employer continues to have the absolute power to fire anyone with or without good cause." 99 N.J. at 309. Since an employer may avoid any legally binding effect being given to personnel policies set forth in a policy manual by a unilateral statement in the manual, it follows a fortiori that this effect may be avoided by the execution of a written employment contract by which the employee expressly agrees to an at will employment status.

Id. at 144. (emphasis added); see also D'Alessandro v. Variable Annuity Life Insurance Company, 1990 WL 191914 at *5 (D.N.J. 1990) (Fisher, J.) (holding that certain "standard practice memoranda" which employer had distributed to plaintiff and its other employees did not create "an implied contract that [plaintiff's] employment [could] be terminated only for cause" because plaintiff had entered into a separate written employment contract which, by its express terms, could "be terminated by either party for any reason"). The Appellate Division's holding is consistent with the principles set forth in Woolley and simply re-affirms a fundamental tenet of contract law: where an employee has executed a separate written contract in which he has expressly agreed that his employment can be terminated "at will," it is that agreement, and not the disciplinary policies and termination procedures of his employer's policy manual or handbook, which establishes the employee's "reasonable expectations" concerning the nature of his employment relationship. See D'Alessandro, 1990 WL 191914 at *5 (observing that the basic principle underlying the holding in Woolley is the "notion that the circulation of materials containing job security provisions should be ...


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