Hodgkins v. New England Telephone Co.

• Decision Date: 12 January 1996
• Docket Number: No. 95-1818,95-1818
• Parties: 132 Lab.Cas. P 58,127, 11 IER Cases 1159 William J. HODGKINS, Jr., Plaintiff-Appellant, v. NEW ENGLAND TELEPHONE COMPANY, Defendant-Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1226

82 F.3d 1226

132 Lab.Cas. P 58,127, 11 IER Cases 1159

William J. HODGKINS, Jr., Plaintiff-Appellant, v. NEW ENGLAND TELEPHONE COMPANY, Defendant-Appellee.

No. 95-1818.

United States Court of Appeals, First Circuit.

Heard Jan. 12, 1996.

Decided May 7, 1996.

Appeal from the United States District Court for the District of Maine; Hon. D. Brock Hornby, U.S. District Judge.

Joel C. Martin, with whom Thomas C. Bradley and Petruccelli & Martin, Portland, ME, were on brief, for appellant.

Pamela A. Smith, for appellee.

Before TORRUELLA, Chief Judge, CYR and STAHL, Circuit Judges.

TORRUELLA, Chief Judge.

Plaintiff-appellant William J. Hodgkins ("Hodgkins") sued his former employer, defendant-appellee New England Telephone and Telegraph Company ("NET"), because he believes that NET paid him an insufficient amount for a cost-saving idea he submitted in its employee suggestion program. The district court granted NET's motion for summary judgment on Hodgkins' claims, which include breach of contract, quantum meruit, equitable estoppel, unjust enrichment, and negligent misrepresentation. Hodgkins appeals the district court's decision. We reverse in part, affirm in part, and remand for further proceedings.

BACKGROUND

Because the district court granted summary judgment in favor of the defendant, we recite the facts in the light most favorable to the plaintiff's claims, giving him the benefit of all reasonably supported inferences.

NET has an employee suggestion program named "Ideas at Work" ("the IAW program"), that encourages and rewards employee ideas that produce savings or increased profits for NET. According to NET's "Suggester's Guide," reviewed by Hodgkins before he submitted his idea, the IAW program "rewards the people who come up with ideas the company uses by paying the originators fifteen percent of the savings or earnings from the first year of implementation--up to a limit of $50,000." The IAW program provides for "Initial Awards" of 15 percent (minimum of $75 and maximum of $5,000) of the estimated net savings or profits for one year on so-called "tangible ideas," and "Special Merit Awards" of up to 15% of the actual savings or profits produced by the idea in its first year of implementation. According to an IAW program handbook that NET supplied to its employees, "[a]ll tangible ideas which were awarded an initial award will be re-evaluated one year from the date of implementation to determine the actual savings or profits."

William Hodgkins, Jr. was employed by NET in Maine from 1956 until February 1992. Hodgkins produced an idea that would reduce the cost of changing telephone service Hodgkins submitted his idea to the IAW program by signing a submission form in which he agreed to abide by the rules of the program as laid out on the reverse side of the form and in a NET document called General Administrative Procedure No. 53 ("GAP 53"). Both the back of the submission form and GAP 53 specified that NET had the

                for certain multisubscribers such as dormitories and nursing homes.   On April 20, 1989, Hodgkins submitted his idea to the IAW program.   Hodgkins conducted his own study, and based on his own managerial expertise, concluded that the idea would save NET money, and that therefore NET would implement the idea, evaluate it under the IAW program, and grant him fifteen percent of the first year's savings.   Based on his own knowledge of NET's operations and costs, Hodgkins expected that he would receive the maximum under the IAW program, $50,000
                

sole, exclusive, and complete discretion and right to determine the terms, policy, structure, operation and administration of the Program, including the right: ....

e) To determine the method for calculating the amount of any award.

f) To determine the amount of any award granted.

g) To determine the person entitled to receive any award.

h) To determine the extent, if any, of the application, implementation, or use of an idea.

The same documents also provided that "[t]he decisions of the Company concerning the terms, policy, structure, operation or administration of the Program are within the sole and exclusive discretion of the Company and are final, binding, and conclusive."

In August 1990, NET's initial evaluation reported that Hodgkins' suggestion was "an excellent idea to move the company forward in its goal of automated provisioning." As a result, he received the maximum Initial Award of $5,000 in September 1990. In January 1991, NET announced in its weekly in-house publication that Hodgkins' idea had been adopted and that it "earned for its suggester a Tangible Award of 15 percent of its estimated savings." NET implemented Hodgkins' idea in July 1991, and thus no determination of the first-year savings for a Special Merit Award could be made until after July 1992.

Expecting to receive the maximum award for his idea, Hodgkins retired from NET in February 1992, earlier than he would have retired had he not expected the award. In September 1992, NET manager Philip DuBois informed Hodgkins by telephone that NET had awarded him $17,500 for his idea. ¹ Hodgkins told DuBois that the amount of the award was too low. DuBois then sent the evaluation form back to the IAW program manager for re-evaluation.

In August 1993, NET informed Hodgkins that he would not receive a Special Merit Award. According to NET's re-evaluation report, NET could not quantify savings associated exclusively with Hodgkins' idea because other innovations had produced the same results as Hodgkins' idea. Hodgkins appealed this decision, and a second re-evaluation was performed, which arrived at the same conclusion. NET's evaluation reports indicated that the task of measuring savings had been rendered impossible by the destruction of cost records, given the passage of time.

As a result, NET has not awarded Hodgkins any money beyond the $5,000 Initial Award. Because Hodgkins did not receive the total amount he expected, his financial plans for retirement have been disturbed, causing him to draw prematurely on certain investments and incur early withdrawal penalties. On theories of breach of contract, quantum meruit, unjust enrichment, equitable estoppel and negligent misrepresentation, Hodgkins brought suit in district court seeking damages incurred in reliance on statements made by NET, as well as the additional $45,000 of award money he expected, plus money for income taxes, which NET had agreed to pay on any IAW program award amount. The district court granted summary judgment on all counts.

STANDARD OF REVIEW

We review a district court's grant of summary judgment de novo, viewing the facts in the light most favorable to the nonmovant, Hodgkins. Dominique v. Weld, 73 F.3d 1156, 1158 (1st Cir.1996); Coyne v. Taber Partners I, 53 F.3d 454, 457 (1st Cir.1995). Summary judgment is appropriate when, based upon the pleadings, affidavits, and depositions, "there is no genuine issue as to any material fact, and [where] the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Hope Furnace Assocs., Inc. v. F.D.I.C., 71 F.3d 39, 42 (1st Cir.1995); Grenier v. Cyanamid Plastics, Inc., 70 F.3d 667, 671 (1st Cir.1995). To succeed, the "moving party must show that there is an absence of evidence to support the non-moving party's position." Hope Furnace Assocs., 71 F.3d at 42 (quoting Rogers v. Fair, 902 F.2d 140, 143 (1st Cir.1990)). "An issue is only 'genuine' if there is sufficient evidence to permit a reasonable jury to resolve the point in the nonmoving party's favor." Id. at 42-43 (quoting NASCO, Inc. v. Public Storage, Inc., 29 F.3d 28, 32 (1st Cir.1994)).

DISCUSSION

On appeal, Hodgkins argues that the evidence sufficed to raise genuine issues of material fact as to whether he and NET formed an enforceable contract, and whether NET breached it. Alternatively, in the absence of an enforceable contract, Hodgkins claims that he is entitled to a trial on a theory of unjust enrichment or quantum meruit. Hodgkins also advances claims under theories of equitable estoppel and promissory estoppel. Finally, Hodgkins claims that the evidence requires that a factfinder decide whether NET negligently misrepresented to Hodgkins that he was entitled to additional compensation.

I. Breach of Contract

The district court decided that the IAW program formed part of Hodgkins' contract of employment with NET. The district court also found that the provision of the IAW program that states that "[a]ll ideas which result in Initial Awards for tangible ideas shall receive consideration for a Special Merit Award" was "clearly enforceable." However, the district court found crucial the IAW program's express condition that NET had "the sole, exclusive, and complete discretion and right to determine the terms, policy, structure, operation and administration of the Program." The district court pointed to the IAW program Submission Form, which along with allocating such discretion to NET, provides that NET has the right "to determine the method for evaluating ideas which are submitted" and "to determine the method for calculating the amount of any award to be granted." As a result, the district court found an enforceable contract--one which it found NET did not breach.

On appeal, Hodgkins argues that the IAW program is severable from his employment contract, and that by accepting his submission and implementing his idea, NET was bound to pay him if it was successful. Hodgkins also contends that while there was no explicit reasonableness requirement in Hodgkins' contract with NET, other terms in the contract substitute for it. Under this reading of the contract, Hodgkins asserts that a genuine issue of material fact persisted with respect to whether NET breached the contract.

Hodgkins argues that, in the event that NET's reserved discretion was so broad as to encompass its actions, such discretion must have been too broad for the district court to find an enforceable...