Comeaux v. Brown & Williamson Tobacco Co., 89-15584

• Decision Date: 26 September 1990
• Docket Number: No. 89-15584,89-15584
• Citation: Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d 1264 (9th Cir. 1990)
• Parties: 116 Lab.Cas. P 56,387, Bankr. L. Rep. P 73,635, 5 Indiv.Empl.Rts.Cas. 1387, 1 A.L.R.5th 1087 Karon L. COMEAUX; Sherrika Marzette Comeaux, Plaintiffs-Appellants, v. BROWN & WILLIAMSON TOBACCO COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1264

915 F.2d 1264

116 Lab.Cas. P 56,387, Bankr. L. Rep. P 73,635,

5 Indiv.Empl.Rts.Cas. 1387, 1 A.L.R.5th 1087

Karon L. COMEAUX; Sherrika Marzette Comeaux, Plaintiffs-Appellants, v. BROWN & WILLIAMSON TOBACCO COMPANY, Defendant-Appellee.

No. 89-15584.

United States Court of Appeals Ninth Circuit.

Argued and Submitted June 7, 1990.

Decided Sept. 26, 1990.

William F. Murphy, Dillingham & Murphy, San Francisco, Cal., for plaintiffs-appellants.

Robert J. Stumpf, Bronson, Bronson & McKinnon, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before SNEED, FARRIS and FERNANDEZ, Circuit Judges.

SNEED, Circuit Judge:

Karon Comeaux (Comeaux) filed suit against Brown & Williamson Tobacco Corporation (B & W), alleging that B & W had reneged upon its promise of employment to Comeaux. He asserted six causes of action arising out of B & W's failure to employ him and three causes of action arising out of a credit check B & W performed during the course of the litigation. He appeals the district court's grant of summary judgment in favor of B & W. We affirm in part and reverse and remand in part.

I. FACTS AND PROCEEDINGS BELOW

In July 1987, plaintiff-appellant Comeaux applied for a position as a sales representative with defendant-appellee B & W. He alleges that after several interviews with B & W, the company's hiring manager told him orally that he was hired: "We are making you an offer.... Mr. Watratz ... gave me the okay to go ahead and hire you, but you have to take a physical and we have to wait on the rest of the paperwork to come down." Comeaux asserts that the hiring manager stated that the offer of employment was contingent upon his moving "within five minutes of his first sales stop in Fremont 'as soon as possible.' " In addition, his start date was to be around August 18 and he was to give his then-current employer one week's notice.

Comeaux passed the physical examination, gave notice to his then-current employer, moved with his new wife from San Jose to Fremont, and stood ready to report for work on August 18. On August 18, a B & W manager named Littleton called Comeaux. Littleton said that Comeaux's start date would be delayed, but that there were no problems with Comeaux's employment status.

B & W ran a credit check on Comeaux on August 19, 1987. It does not dispute that it never informed Comeaux that a credit check would be performed and that the findings of the report could affect Comeaux's employment with the company. Furthermore, B & W does not dispute that it violated its own internal policy by failing to inform Comeaux about the credit check and its role in B & W's employment decisions.

The credit report revealed that Comeaux had a poor credit history, but it did not indicate that he had filed for protection under Chapter 13 of the Bankruptcy Code. Comeaux states that on August 21, Littleton called him and said: " 'They are rejecting your employment. They are not going to be able to go through with everything because of a past credit history, your past credit history.' " Apparently Comeaux asked Littleton whether Comeaux's Chapter 13 bankruptcy was at issue. Allegedly, Littleton then indicated he did not know, since he was not privy to the report, but then stated: " 'Bankruptcy or not, it probably wouldn't even matter.' "

On August 25, Comeaux spoke with Paul Watratz, the individual he perceived as having the authority to hire and fire in this case. In the conversation, Watratz confirmed B & W's position regarding Comeaux's employment status. Watratz told Comeaux that B & W had previously found that some sales representatives had mishandled their contingency funds. Reportedly, he said to Comeaux: "[I]f that happened here you could not seek protection under Chapter 13."

Comeaux filed suit against B & W in the California Superior Court in Alameda County on December 15, 1987. B & W had the case removed to federal district court in the Northern District of California. During discovery, Comeaux learned that B & W had checked his credit again in the midst of the litigation.

It is undisputed that B & W requested that Trans Union Credit Information Company (Trans Union), a credit bureau with whom it had an ongoing relationship, check Comeaux's credit again in February 1988. It is also now undisputed that the purpose for which B & W intended to use and did use the credit report was to assist it in preparing its defense of this action. The contract between B & W and Trans Union, signed in November 1986, indicates that the parties are governed by the Federal Credit Reporting Act, 15 U.S.C. Sec. 1681 et seq. (1988) (FCRA); ¹ the contract also sets out the exclusive circumstances under which credit reports may be obtained. ² Deposition testimony of Donna B. Higdon, a B & W employee, revealed that B & W stated in its request to Trans Union for the February 1988 credit report that it sought the report for employment purposes. In her deposition, Darlene Edlin, the employee of B & W who signed the original contract with Trans Union, and who instructed Donna Higdon to order the February 1988 credit report, stated that B & W was not considering Comeaux for employment at the time it ordered that report from Trans Union.

Therefore, in May 1988, Comeaux amended his complaint, ultimately alleging the following nine causes of action: (1) breach of covenant of good faith and fair dealing; (2) termination in violation of the nondiscrimination provision of the Bankruptcy Code; (3) breach of contract; (4) promissory estoppel; (5) wrongful termination in violation of public policy, arising out of the alleged violation of the bankruptcy laws; (6) loss of consortium; ³ (7) invasion of privacy by the February 1988 credit check; (8) willful violation of the FCRA through the February 1988 credit check; and (9) negligent violation of the FCRA through the February 1988 credit check.

In November 1988, B & W moved for summary judgment, asserting that: (1) Comeaux's employment contract with B & W was terminable at will; therefore, there was no breach of the covenant of good faith and fair dealing or of contract as a matter of law; (2) Comeaux's performance was bargained for and that there could thus be no promissory estoppel; (3) B & W had no knowledge of Comeaux's bankruptcy before rendering its employment decision, so it therefore could not have violated 11 U.S.C. Sec. 525(b); (4) B & W violated no public policy as a matter of law, and therefore did not wrongfully terminate Comeaux in violation of public policy; (5) Comeaux did not allege any injury as a consequence of B & W's conduct sufficient to disturb the marital relationship and thus did not cause Mrs. Comeaux's asserted loss of consortium; (6) B & W did not invade Comeaux's privacy because it did not publish the information concerning him; and (7) B & W did not obtain a "consumer report" as defined by the FCRA, which means that it did not violate that Act willfully or negligently.

At a hearing on January 12, 1989, the district court granted partial summary judgment for B & W, issuing a written order on February 15, 1989. Specifically, the judge adopted the reasoning urged by B & W on all claims except the breach of covenant, breach of contract, and FCRA claims. It denied summary judgment as to these claims, ruling that genuine issues of fact material to the remaining claims existed and refuting B & W's claim that the February 1988 report was not a "consumer report."

On March 2, 1989, B & W filed a second motion for summary judgment. On April 3, 1989, the district court granted summary judgment for B & W on the remaining claims. Comeaux appeals the district court's judgment on all claims except the sixth cause of action: loss of consortium. Furthermore, he appeals the district court's refusal to grant him costs under Fed.R.Civ.P. 37(c). This court has appellate jurisdiction under 28 U.S.C. Sec. 1291 (1988).

II. STANDARDS OF REVIEW

We review grants of summary judgment de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990). We must determine whether there exist any genuine issues of material fact and whether the district court applied the law correctly. Tzung v. State Farm Fire & Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir.1989). Denials of motions for costs under Fed.R.Civ.P. 37(c) are reviewed for abuse of discretion. National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 642, 96 S.Ct. 2778-2780, 49 L.Ed.2d 747 (1976) (per curiam).

III. CLAIMS ARISING OUT OF B & W'S DECISION NOT TO EMPLOY COMEAUX

A. Violation of 11 U.S.C. Sec. 525(b)

Amendments to the Bankruptcy Code, effective in 1984, provide a remedy against discrimination by private employers for those seeking or receiving the protection of the Act. Specifically, the amendments bar termination of an employee solely because that individual: (1) has sought the protection of the Bankruptcy Code; (2) has been insolvent before seeking protection under the Act; or (3) has not paid a debt that is dischargeable under the Act. 11 U.S.C. Sec. 525(b) (1988). ⁴

In their appellate briefs and before the district court, the parties focused on the first of the three provisions and therefore focused on whether B & W failed to employ Comeaux solely because Comeaux had filed for bankruptcy. Comeaux failed to show that B & W knew of the bankruptcy prior to August 21, the date on which B & W informed Comeaux that it would not employ him because of his credit history. Comeaux alleges, however, that B & W did not "finalize" its decision not to hire him until several days later, at which time it clearly knew that Comeaux had filed for bankruptcy. ⁵ Although there may be a genuine issue as to when B & W's decision not to employ Comeaux was finalized, the resolution of that issue is not material. Comeaux has failed to show that...