Baron v. Port Authority of NY & NJ

• Decision Date: 22 May 2001
• Docket Number: Docket No. 00-9065,PLAINTIFFS-APPELLANTS,DEFENDANTS-APPELLEES
• Parties: (2nd Cir. 2001) PATRICIA GAYLE BARON, LISA DIAZ, LAURA L. TOOLE, AND AMOS ILAN,, v. PORT AUTHORITY OF NEW YORK AND NEW JERSEY; GEORGE J. MARLIN, INDIVIDUALLY AND AS EXECUTIVE DIRECTOR OF THE PORT AUTHORITY; A. PAUL BLANCO, INDIVIDUALLY AND AS CHIEF ADMINISTRATIVE OFFICER OF THE PORT AUTHORITY; LOUIS J. LACAPRA, INDIVIDUALLY AND AS DIRECTOR OF HUMAN RESOURCES OF THE PORT AUTHORITY; KATHLEEN A. DONOVAN, INDIVIDUALLY AND AS CHAIRPERSON OF THE PORT AUTHORITY; LEWIS M. EISENBERG, JAMES G. HELLMUTH, HENRY G. HENDERSON, JR., ROBERT C. JANISZEWSKI, PETER KALIKOW, GEORGE D. O'NEILL, ALAN PHILIBOSIAN, MELVIN L. SCHWEITZER, VINCENT TESE, FRANK J. WILSON, INDIVIDUALLY AND AS COMMISSIONERS OF THE PORT AUTHORITY; CHARLES A. GARGANO, INDIVIDUALLY AND AS VICE CHAIRPERSON OF THE PORT AUTHORITY; RICHARD CODD, INDIVIDUALLY AND AS DIRECTOR OF COMMUNITY AFFAIRS OF THE PORT AUTHORITY, Argued:
• Court: U.S. Court of Appeals — Second Circuit

Page 81

271 F.3d 81 (2nd Cir. 2001)

PATRICIA GAYLE BARON, LISA DIAZ, LAURA L. TOOLE, AND AMOS ILAN, PLAINTIFFS-APPELLANTS, v. PORT AUTHORITY OF NEW YORK AND NEW JERSEY; GEORGE J. MARLIN, INDIVIDUALLY AND AS EXECUTIVE DIRECTOR OF THE PORT AUTHORITY; A. PAUL BLANCO, INDIVIDUALLY AND AS CHIEF ADMINISTRATIVE OFFICER OF THE PORT AUTHORITY; LOUIS J. LACAPRA, INDIVIDUALLY AND AS DIRECTOR OF HUMAN RESOURCES OF THE PORT AUTHORITY; KATHLEEN A. DONOVAN, INDIVIDUALLY AND AS CHAIRPERSON OF THE PORT AUTHORITY; LEWIS M. EISENBERG, JAMES G. HELLMUTH, HENRY G. HENDERSON, JR., ROBERT C. JANISZEWSKI, PETER KALIKOW, GEORGE D. O'NEILL, ALAN PHILIBOSIAN, MELVIN L. SCHWEITZER, VINCENT TESE, FRANK J. WILSON, INDIVIDUALLY AND AS COMMISSIONERS OF THE PORT AUTHORITY; CHARLES A. GARGANO, INDIVIDUALLY AND AS VICE CHAIRPERSON OF THE PORT AUTHORITY; RICHARD CODD, INDIVIDUALLY AND AS DIRECTOR OF COMMUNITY AFFAIRS OF THE PORT AUTHORITY, DEFENDANTS-APPELLEES.

Docket No. 00-9065

U.S. Court of Appeals, Second Circuit

Argued: May 22, 2001

Decided: November 06, 2001

Steve S. Efron, New York, N.Y. (Renee L. Cyr, on the briefs), for Plaintiffs-Appellants.

Anne M. Tannenbaum, New York, N.Y., (Milton H. Pachter, Arthur P. Berg, and Megan Lee, on the brief), for Defendants-Appellees.

Before: Walker, Chief Judge, Jacobs, Circuit Judge, and Larimer, ^* Chief District Judge.

John M. Walker, Jr., Chief Judge.

Plaintiffs-appellants are four former managerial employees of the Port Authority of New York and New Jersey (the "Port Authority"), who were terminated in the fall of 1995 pursuant to a Port Authority reduction in force ("RIF"). They sued the Port Authority in the United States District Court for the Southern District of New York (Constance B. Motley, District Judge). Although the plaintiffs asserted a variety of federal and state claims, the crux of each claim was that the Port Authority had promised over a period of decades that in the event of a RIF, any decision to terminate or demote them would take account of their performance records and seniority, and that the Port Authority failed to honor this commitment. The district court granted summary judgment in favor of the Port Authority and dismissed the complaint. See Baron v. Port Auth. of New York and New Jersey, 105 F. Supp. 2d 271, 275-80 (S.D.N.Y. 2000) (dismissing implied employment contract claims and Contract Clause claims); Baron v. Port Auth. of New York and New Jersey, 977 F. Supp. 646, 649-52 (S.D.N.Y. 1997) (dismissing Fourteenth Amendment due process claims); see also Baron v. Port Auth. of New York and New Jersey, 968 F. Supp. 924 (S.D.N.Y. 1997).

On appeal, plaintiffs argue that the Port Authority (1) breached an implied contractual obligation when it failed to consider their performance and seniority prior to the terminations, (2) violated the Contract Clause of the Federal Constitution, and (3) denied due process to plaintiffs by not affording them pre-termination hearings.

For the reasons discussed herein, we disagree. Accordingly, the judgment of the district court dismissing the action is affirmed.

BACKGROUND

A. The Parties

The Port Authority is a body "corporate and politic" established in 1921 pursuant to a bi-state compact between New York and New Jersey, see N.Y. Unconsol. Law § 6407 (McKinney 2000), and assented to by Congress, see 42 U.S. Stat. 174 (1921). The Port Authority's mission was, and remains, the development of public transportation, terminal, and other facilities of commerce within the statutorily defined Port Authority district, which includes the area in and around New York City harbor. See N.Y. Unconsol. Law § 6403. The Port Authority is governed by a board of commissioners, see id. §§ 6405-06, whose resolutions are essentially legislative acts of the bi-state entity that must be approved by the governors of both states. See id. §§ 7151-52.

Plaintiffs Patricia Baron, Amos Ilan, Laura Toole, and Lisa Diaz were hired by the Port Authority in 1966, 1970, 1984, and 1987, respectively. Each plaintiff contends that "job security" was of "great importance" and a "substantial factor" in his or her decision to accept and continue employment with the Port Authority.

B. The Port Authority's Merit and Seniority Policy

Throughout their employment with the Port Authority, the Authority issued "employment manuals" explaining that in the event of a RIF, any decision as to whom to fire would be based on past performance and seniority. One such manual, the multi-volume Port Authority Instructions ("PAIs"), provided that in the event of a RIF, the termination of employees would proceed from lowest performance category to highest, with seniority governing terminations in any particular performance category. The PAIs were not distributed to the plaintiffs, but instead were provided only to division and department heads, supervisors and the Port Authority library. Plaintiffs contend, however, that employees were encouraged to refer to the library's copies of the PAIs for information regarding the Port Authority's policies, rules or procedures.

A second writing containing the policy, the Guide for Port Authority Personnel (the "Port Authority Guide" or the "Guide"), was distributed to Baron at the time she was hired, but was no longer issued when the other plaintiffs commenced employment with the Port Authority. The Guide stated that although the Port Authority might need to eliminate positions "for reasons of economy and efficiency," "[i]n the event of any reduction in the work force merit and ability as well as length of service and salary step will be considered in deciding how the reduction will be accomplished."

In addition to these written employment manuals, the plaintiffs claim that over the course of their employment they were orally assured by Port Authority supervisors that merit and seniority would be considered in the event of a RIF. The plaintiffs contend that these writings and accompanying oral assurances, taken together, gave rise to an implicit contractual obligation on the part of the Port Authority to take merit and seniority into consideration in the event of a RIF.

The Port Authority counters that, although it did have a general corporate policy of considering merit and seniority, this policy did not rise to the level of an implied contractual obligation. In support of this argument, the Port Authority identifies various disclaimers in the PAIs and the Port Authority Guide that, it argues, disavowed any intent to obligate itself to a policy of considering merit and seniority, and thereby preserved its ability to terminate the plaintiffs at will.

C. The 1995 RIF

On September 7, 1995, following the advice of an outside consultant who suggested that the Port Authority needed to "trim" its work force for efficiency reasons, the commissioners of the Port Authority authorized a RIF. On that day, the commissioners also eliminated the merit and seniority provision of the PAIs and replaced it with the following: ¹

Each affected department director, consistent with sound business and policy discretion and in order to improve [the] effectiveness and efficiency of the Port Authority, [should] identif[y] the particular employees who are subject to involuntary removal[.]

Shortly thereafter, the Port Authority identified and notified approximately 316 persons, including the plaintiffs, that their positions would be eliminated in 30 days. Over the next 18 months, the Port Authority eliminated an additional 648 positions through RIFs and early retirement packages.

Approximately a year after their termination, plaintiffs filed this suit, claiming (insofar as relevant to this appeal) violations of (1) New York's common law of implied-employment contracts, (2) the Contract Clause of the Federal Constitution, see U.S. Const. art. I, § 10, cl. 1, and (3) the procedural due process guarantee of the Fourteenth Amendment, see U.S. Const. amend. XIV, § 1.

DISCUSSION

We review the district court's grant of summary judgment de novo. See Young v. County of Fulton, 160 F.3d 899, 902 (2d Cir. 1998). Summary judgment is appropriate only where "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

1. Implied Contract Claims Under New York Law

In New York, it has long been "settled" that "an employment relationship is presumed to be a hiring at will, terminable at any time by either party." Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 333 (1987) (citation omitted); see also Rooney v. Tyson, 91 N.Y.2d 685, 690 (1998); Murphy v. Am. Home Prods. Corp., 58 N.Y.2d 293, 305 (1983). This presumption can be rebutted, however, by establishing an "express limitation in the individual contract of employment" curtailing an employer's right to terminate at will. Gorrill v. Icelandair/Flugleidir, 761 F.2d 847, 851 (2d Cir. 1985).

Policies in a personnel manual specifying the employer's practices with respect to the employment relationship, including the procedures or grounds for termination, may become a part of the employment contract. See, e.g., Marfia v. T.C. Ziraat Bankasi, 147 F.3d 83, 87-89 (2d Cir. 1998) (holding that policies set out in employee handbook formed implied contractual obligations); Gorrill, 761 F.2d at 851-53 (same; notably no express disclaimer in company's operations manual). To establish that such policies are a part of the employment contract, an employee alleging a breach of implied contract must prove that (1) an express written policy limiting the employer's right of discharge exists, (2) the employer (or one of its authorized representatives) made the employee aware of this policy, and (3) the employee detrimentally relied on the policy in accepting or continuing employment. See Lobosco v. New York Tel., 96 N.Y.2d 312, 316 (2001). The New York Court of Appeals has admonished that this is a ...