Hartnett v. Papa John's Pizza USA, Inc.

• Decision Date: 29 October 2012
• Docket Number: No. CIV 10–1105 JB/CG.,CIV 10–1105 JB/CG.
• Citation: 912 F.Supp.2d 1066
• Parties: Timothy HARTNETT, Plaintiff, v. PAPA JOHN'S PIZZA USA, INC., Defendant.
• Court: U.S. District Court — District of New Mexico

912 F.Supp.2d 1066

Timothy HARTNETT, Plaintiff,

v.PAPA JOHN'S PIZZA USA, INC., Defendant.

No. CIV 10–1105 JB/CG.

United States District Court,

D. New Mexico.

Oct. 29, 2012.

Patrick L. Fogel, The Fogel Law Firm, Albuquerque, NM, for Plaintiff.

Donald Jay Summer, Charlotte A. Lamont, Littler Mendelson P.C., Albuquerque, NM, Peter Prynkiewicz, J. Mark Ogden, Littler Mendelson, P.C., Phoenix, AZ, for Defendant.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on Defendant Papa John's Motion for Summary Judgment Re: Plaintiff's Breach of Contract Claim, filed August 29, 2012 (Doc. 92)(“MSJ”). The Court held a hearing on October 15, 2012. The primary issues are: (i) whether a reasonable jury could find that Defendant Papa John's Inc., by its words and conduct, modified an express at-will employment contract, and communicated to Plaintiff Timothy Hartnett that he would only be terminated for cause and in accordance with specified procedures; and (ii) whether, if an implied contract exists that modified the express contract, a genuine issue of material fact exists whether Papa John's terminated Hartnett in accordance with that implied contract. Because the Court concludes that genuine issues of material fact are present and evidence exists to support all of Hartnett's claims, the Court will deny Papa John's motion. The Court is not persuaded that Papa John's is entitled to judgment as a matter of law that no implied contract for employment exists that modified Hartnett's at-will status. Although Papa John's Management Agreement, filed August 29, 2012 (Doc. 92–3)(“Management Agreement”), and Papa John's Corporate Restaurant Team Member Handbook, filed August 29, 2012 (Doc. 92–2)(“Team Member Handbook”), expressly provide Hartnett's employment to be at-will, neither document disclaims the possibility of modifying Hartnett's at-will status through either written or oral communications. Additionally, Hartnett attended five mandatory training workshops, at which he was taught that certain procedures must be followed prior to terminating an employee in certain instances, and was taught that guidelines, including investigating circumstances and communicating with the investigated team member, should be followed in a termination process. When Hartnett was promoted to a Director of Operations in 2003, he was told by a supervisor, Dan Braafhart, that he need not worry about leaving Papa John's, as long as Hartnett continued to perform and did not violate company policy or procedures. Lastly, Hartnett received a memorandum from a supervisor who oversaw his own termination process, Memorandum from Rick Woods Re: People Policies, filed September 12, 2012 (Doc. 101–18)(“Woods Memo.”), which established mandatory policies and procedures that must be followed by Directors of Operations, such as Hartnett, and applied to the termination of management team members, such as Hartnett. In light of the totality of Hartnett's relationship with Papa John's, the Court concludes that a reasonable jury could find that Hartnett could objectively and reasonably rely on Papa John's words and conduct for Hartnett's expectation that his employment would only be terminated for cause, and after certain procedures were followed. Additionally, evidence exists to support Hartnett's contention that Papa John's lacked sufficient cause to terminate Hartnett, because the evidence Papa John's relied upon in terminating Hartnett may not be objectively reasonable. Lastly, if an implied contract to follow certain procedures in terminating Hartnett was created, Hartnett has put forward evidence showing that Papa John's did not follow some procedures that could be part of that implied contract. Accordingly, the Court denies Papa John's motion for summary judgment.

FACTUAL BACKGROUND

The parties do not contest each other's facts.¹ Papa John's hired Hartnett on August 17, 1998. See MSJ ¶ 1, at 2. Papa John's terminated Hartnett on October 17, 2007, at which time Papa John's employed him as a Senior Director of Operations. See MSJ ¶¶ 2, 4, at 2. Papa John's terminated Hartnett for falsifying company documents, in violation of Hartnett's responsibility to comply with Papa John's policies and procedures. See MSJ at ¶¶ 3–4, at 2; Response ¶¶ 1–2, at 1 (citing Deposition of Robert Wesley Smith, taken May 16, 2012, filed Sept. 12, 2012 (Doc. 101–6)(“Smith Deposition”)).

1. Hartnett's Management Agreement.

Hartnett's Management Agreement with Papa John's, signed on the day he was hired, provides:

Notice to Employees. This document does not grant, create or extend any contractual rights the above employee [sic] with respect to (i) such employee's current or future employment, or (ii) any benefits in connection with such employment. The employee or the employer may sever the employment relationship at any time or for any reason at all.

Management Agreement, ¶ 6, at 1. Hartnett signed the Management Agreement, affirming that the contract was executed and delivered to him, and that he relied upon the agreement to explain his “consideration [for] such employment” with Papa John's. Management Agreement at 1.

2. Papa John's Corporate Restaurant Team Member Handbook.

Papa John's Corporate Restaurant Team Member Handbook provides that:

Neither this Code nor any of the policies described in this Code may be construed as an employment contract. Papa John's does not create any contractual rights for any team member by issuing this code or other policies.

Employment At Will

Employment with Papa John's is entered into voluntarily. Team members may resign at any time, for any reason, with or without notice. Similarly, Papa John's is free to conclude the employment relationship at any time.

Neither this handbook nor any of the provisions contained in the handbook can or should be construed as giving rise to any sort of contractual or legal obligation on the part of Papa John's. This team member handbook supersedes all previous team member handbooks. The effective date of this handbook is June 2006.²

MSJ ¶ 17, at 4–5 (citing “Team Member Handbook”). Additionally, in the section of the handbook titled “Standards of Conduct and Corrective Action,” the handbook states:

Violation of Papa John's standards of conduct in one of the following forms of corrective action [sic]: separation of employment, demotion, written warning, verbal warning, coaching or training. In arriving at the appropriate decision for corrective action, the following will be considered:

• the seriousness of the infraction;

• the past work record for the team member; and

• the circumstances surrounding the matter.

Team Member Handbook at 4 (Doc. 101–9). The Team Member Handbook then provides a “partial list of infractions which may result in corrective action up to and including separation of employment,” after which the Team Member Handbook states: “This list is intended to be representative of the types of activities which may result in corrective action. It is not intended to be comprehensive and does not alter the employment at-will relationship between the team member and Papa John's.” Team Member Handbook at 5 (Doc. 101–9).

3. Dan Braafhart's Statements to Hartnett.

Hartnett believed, while employed with Papa John's, that his employment would not be terminated except for cause or under performance. See MSJ ¶ 13, at 3 (citing Hartnett Depo. at 62:20–63:3). This belief is based largely on a conversation Hartnett had with his then Regional Vice President, Dan Braafhart, in 2003, when Hartnett was given a promotion and asked to sign a Confidentiality and Non–Competition Agreement. See MSJ ¶ 13, at 3 (citing Hartnett Depo. at 62:20–63:3); Response ¶ 5, at 2. Hartnett was concerned about the terms of the agreement, and wanted more time to consider executing agreement, but Braafhart told Hartnett: “Don't worry about it. As long as you perform, don't violate any policies and procedures, you'll be here forever.” MSJ ¶ 13, at 3 (citing Hartnett Depo. at 63:1–3); Response ¶¶ 4–5, at 2.³ Hartnett construed Braafhart's statements to mean that he would always work for Papa John's, and thus Hartnett believed he did not need to worry about any non-compete clauses, and on that belief Hartnett signed the agreement. See MSJ ¶ 14, at 4; Response ¶ 6, at 2.

Hartnett's “Confidentiality and Non–Competition Agreement,” with Papa John's, executed in 2003, does refer to Hartnett's at-will employment status. MSJ ¶ 18, at 5 (citing the Confidentiality and Non–Competition Agreement, filed Aug. 29, 2012 (Doc. 92–5)(“CNC Agreement”)). The CNC Agreement generally required Hartnett to not work in the pizza industry for eighteen months after leaving Papa John's. See Response ¶ 3, at 1 (citing Hartnett Dep. at 62:22–23). The CNC Agreement states that signing executing the CNC Agreement is “a condition to the employment of Employee.” CNC Agreement ¶ 4, at 3.

4. The Managing Within the Law Workshops.

Hartnett believed, based on Papa John's internal program, “Managing Within the Law,” he would only be terminated for cause or under performance. MSJ ¶ 15, at 4. Managing Within the Law is an annual workshop that Papa John's' human resources officers lead, and which Papa John's requires its managers and officers to attend. See Response ¶¶ 7, 9, at 2. Hartnett attended the workshop five times over the course of his employment with Papa John's. See Response ¶ 8, at 2. Hartnett received a participant's guide for the workshop. See Response ¶ 10, at 2. The human resources officers at the workshops informed Hartnett that Papa John's primarily terminated employees for violating company policy and poor performance, but did not give other reasons for termination. See Response ¶ 11, at 2 (citing Training Guide at 6, 22, Smith Dep. at 63:11–12). Papa John's human resources officer did not state during the Managing Within the Law seminar, nor did the Training Guide state, that employment with Papa John's was...