Johnson v. Honeywell Information Systems, Inc.

Citation955 F.2d 409
Decision Date09 March 1992
Docket NumberNos. 90-2139,90-2205,s. 90-2139
Parties57 Fair Empl.Prac.Cas. (BNA) 1362, 58 Empl. Prac. Dec. P 41,271, 60 USLW 2544, 120 Lab.Cas. P 56,785, 7 IER Cases 197 Mildred A. JOHNSON, Plaintiff-Appellee, Cross-Appellant, v. HONEYWELL INFORMATION SYSTEMS, INC., Defendant-Appellant, Cross-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

Charles Gottlieb (briefed), Thomas R. Eckhardt (argued), Josef A. Conrad, Gottlieb & Goren, Southfield, Mich., for plaintiff-appellee, cross-appellant.

Richard J. Seryak (argued and briefed), Gillian Steinhauer, George D. Mesritz, Miller, Canfield, Paddock & Stone, Detroit, Mich., Stephen S. Lewenberg, Bull HN Information Systems, Inc., Billerica, Mass., defendant-appellant, cross-appellee.

Before RYAN and BOGGS, Circuit Judges, and GODBOLD, Senior Circuit Judge. *

RYAN, Circuit Judge.

Honeywell Information Systems, Inc. appeals a jury verdict in favor of Mildred Johnson on a wrongful discharge claim. Johnson cross-appeals a directed verdict in favor of Honeywell on her claim that the discharge was in retaliation for her opposition to alleged violations of Michigan's Elliott-Larsen Civil Rights Act, Mich.Comp.Laws §§ 37.2101 to 37.2804.

The principal issue in this diversity action is whether, under Michigan law, an employer may rely upon an employee's false representations made at the time of employment, of which the employer was unaware, and which were not the grounds for the employee's discharge, as a just cause defense to the employee's wrongful discharge and state civil rights claims. We hold that, in the circumstances presented in this case, it may.

For the reasons set forth below, we reverse the district court's denial of Honeywell's motion for summary judgment on the wrongful discharge claim and affirm the directed verdict granted in favor of Honeywell on the Elliott-Larsen claim.

I.

Mildred Johnson was employed by Honeywell as a field relations manager between November 1976 and November 1984. In this position, Johnson was responsible for providing assistance to Honeywell's branch managers in establishing affirmative action programs, responding to Equal Employment Opportunity Commission charges, hirings, and other employment matters. Performance reviews of Johnson's work were generally positive until about the middle of 1983. Beginning in July 1983, Johnson's supervisors and several of her "clients," i.e., managers within Honeywell, began to complain to Johnson about her unavailability by phone, lack of cooperation, and ineffectiveness. Some later performance reviews noted improvement while others perceived little change in Johnson's performance and noted that Johnson was inflexible and lacked employee relations knowledge.

Honeywell discharged Johnson on November 2, 1984, after she declined the company's request that she voluntarily resign. Honeywell contends that Johnson's performance was unsatisfactory and that she refused to improve her availability, flexibility, or knowledge. Specifically, the company cited Johnson's refusal to follow the reasonable directions of a supervisor as the cause for her dismissal.

Johnson admitted that she did not change her work habits in response to criticisms. She maintains that at all times her work was satisfactory and that no changes were necessary. According to Johnson, the motivating factor in the decision to fire her was not poor job performance as stated by Honeywell, but her conflicts with certain branch managers at Honeywell, particularly Bob Schramm, a regional manager for marketing and one of Johnson's main clients. The conflict with Schramm and the other managers involved affirmative action goals and the resistance of Schramm and the others to Johnson's efforts to meet those goals. Nearly a year prior to her dismissal, Johnson complained in a memorandum sent to her supervisors Michael Gavigan and George Whelan of "discrimination" against her as a result of her confrontations with Schramm over affirmative action. Johnson alleges that Schramm and others sought to "shut [her] out" of important meetings and other opportunities and that they unfairly criticized her in an attempt to coerce her into dropping her insistence on meeting affirmative action goals. One of Johnson's supervisors, Christine Kramer, investigated Johnson's complaint and found it to be without merit.

Johnson filed this action in state court, alleging that Honeywell's retaliatory termination of her employment breached a just cause employment contract and violated Michigan's Elliott-Larsen Civil Rights Act. The case was removed to federal court on motion by defendant.

During discovery, Honeywell learned that Johnson had falsified her employment application in several respects. The application signed by Johnson in November 1976 stated: "I understand ... that the submission of any false information in connection with my application for employment, whether on this document or not, may be cause for immediate discharge at any time thereafter should I be employed by Honeywell."

Johnson's most glaring misrepresentations involved her education. While she claimed in her employment application to have earned a Bachelor of Arts degree from the University of Detroit, Johnson actually completed only four courses at the university and audited two others. The newspaper advertisement to which Johnson replied specifically called for applicants with a college degree and significant work experience: "The successful candidate will possess a college degree and have a minimum of 4 to 6 years combined personnel and industrial employee relations experience." Johnson similarly submitted false information regarding the nature and extent of her studies at Wayne State University, stating that she had studied Applied Management for one year. Wayne State had no record of her enrollment. Johnson also exaggerated some prior job descriptions and falsely claimed to have been managing some of her properties in the year between her prior job and her hiring at Honeywell. In fact, she owned no such properties, and during the interim she had been unemployed and looking for work.

Honeywell moved for summary judgment on the breach of contract claim, arguing that the misrepresentations in Johnson's employment application provided a complete defense to liability for wrongful discharge under theories of just cause and fraudulent misrepresentation. First, it argued that the misrepresentations provided the company with just cause for dismissing Johnson even though it did not know of the falsifications at the time of her discharge. Second, Honeywell argued that Johnson's fraudulent misrepresentations on the employment application barred formation of a just cause contract.

The district court rejected the just cause argument, holding that, under Michigan law, evidence of misconduct discovered after the termination of employment could not serve as the basis of a just cause defense. It also held that there remained disputed questions of fact as to the materiality of Johnson's misrepresentations and Honeywell's reliance upon them, thereby precluding summary judgment on the fraudulent misrepresentation theory. Honeywell argued that the misrepresentations barred relief on the Elliott-Larsen civil rights claim as well, but the district court never addressed that issue.

Honeywell later moved for a directed verdict on both claims. The district court granted a directed verdict in Honeywell's favor on the Elliott-Larsen claim, holding that Johnson had "failed to prove by a preponderance of the evidence that the legitimate reasons that the defendant ... offered for her termination were but a pretext for retaliation." Honeywell's motions for directed verdict and judgment n.o.v. on the breach of contract claim were denied.

II.

The first issue we must address is whether an employer may rely upon evidence of an employee's misconduct, discovered after termination, as a defense to a wrongful discharge claim in a just cause employment contract case. Honeywell concedes the existence of a just cause contract but argues that Johnson's admittedly false statements in her employment application constitute just cause for termination as a matter of law, even though Honeywell was not aware of the statements at the time of dismissal and they could not, therefore, have been an inducing motive for the discharge.

Generally, an employer may defend a wrongful discharge claim on the basis of facts unknown at the time of discharge and, therefore, not an actual or inducing motive for the termination. See 56 C.J.S. Master and Servant § 51; 53 Am.Jur.2d, Master and Servant § 46; see also Leahey v. Federal Express Corp., 685 F.Supp. 127, 128 (E.D.Va.1988). To the best of our knowledge, the Michigan Supreme Court has never addressed this issue and, thus, our first task as a federal court exercising diversity jurisdiction is to "divine what the Michigan high court would say if faced with the issue." Janikowski v. Bendix Corp., 823 F.2d 945, 948 (6th Cir.1987). "Where no state supreme court precedent is applicable, '[i]n predicting how a state's highest court would rule, federal courts must follow intermediate state court decisions, policies underlying the applicable legal principles, and the doctrinal trends indicated by these policies.' " Id. at 950 (quoting Weiss v. United States, 787 F.2d 518, 525 (10th Cir.1986)).

The district court took note of the general rule permitting employers to establish just cause for a dismissal on the basis of facts unknown at the time of discharge but denied Honeywell's motion for summary judgment. Relying on its reading of Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980), the district court determined that Michigan apparently does not follow the general rule and that Michigan law "seems to require that the employee have been discharged for the reason which the employer claims...

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