Kiely v. Raytheon Co., Civil Action No. 95-10529.

• Decision Date: 07 February 1996
• Docket Number: Civil Action No. 95-10529.
• Citation: 914 F. Supp. 708
• Parties: John R. KIELY v. RAYTHEON COMPANY.
• Court: U.S. District Court — District of Massachusetts

914 F. Supp. 708

John R. KIELY v. RAYTHEON COMPANY.

Civil Action No. 95-10529.

United States District Court, D. Massachusetts.

February 7, 1996.

William F. Green, Cambridge, MA, George E. Brankey, Boston, MA, for Plaintiff.

James F. Kavanaugh, Jr., Conn, Kavanaugh, Rosenthal & Peisch, Boston, MA, for Defendant.

MEMORANDUM OF DECISION

O'TOOLE, District Judge.

In this suit, the plaintiff John R. Kiely claims that the defendant Raytheon Company broke its promises to him, first, when it forced him to retire prematurely because he was the target of a federal investigation into the improper use of classified documents from the United States Department of Defense, and second, when Raytheon itself pled guilty to a federal offense pursuant to a plea agreement that granted the company immunity from further prosecution, without giving Kiely advance notice that it intended to do so. For these breaches of promise, Kiely seeks compensatory damages. He also alleges that Raytheon is liable to him for damages caused by its tortious conduct in several respects. Kiely's amended complaint contains five counts, alleging claims of promissory estoppel (Count I), negligent misrepresentation (Count II), intentional interference with business relations (Count III), defamation (Count IV), and breach of contract (Count V).¹

Raytheon has moved to dismiss the complaint for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). For the reasons set forth below, the motion is GRANTED.

The amended complaint² alleges the following facts:

In 1967, after his retirement from the Air Force, Kiely went to work for Raytheon as manager of marketing intelligence for Raytheon's Missile Systems Division. (Amended Complaint at ¶¶ 8-9.) Among his principal tasks in that position were the duties to "establish and maintain rapport with marketing data sources ..." and to "maintain cognizance of available DOD Department of Defense budget information especially in the areas of prime concern to the division." (Id., Ex. 2, "Job Description.")

The Department of Defense from time to time provided contractors such as Raytheon with information to be used by them in bidding for defense contracts. Some of the information provided, including budget information, was classified by the Defense Department as "Secret." As manager of marketing intelligence, Kiely received "both receipted and unreceipted classified budget documents" from the government. (Id. at ¶ 13.) The information was highly useful to Raytheon, and "Raytheon's corporate culture was extremely dependent upon this DOD data." (Id. at ¶ 16.)

In March 1985, Kiely read about a federal investigation of the supposed practice among government contractors of trading in "unreceipted classified DOD budgetary documents." Kiely notified "various managers" at Raytheon that he "would no longer participate" in the practice, and thereafter he did not. (Id. at ¶ 17.)

Around the beginning of September, 1989, the United States Department of Justice notified Raytheon that "it and Kiely were being investigated relative to the practice of receiving and disseminating unreceipted classified DOD documents." (Id. at ¶ 18.) Raytheon's general counsel, acting on behalf of the company, then made an agreement with Kiely to work together in defending against potential criminal charges. (Id. at ¶ 19.) Raytheon intended thereby to "induce Kiely to forego exercising his right to plea bargain" if he were to be indicted and to control Kiely's disclosure of information to the government in the course of the investigation. (Id. at ¶ 21.) Raytheon hired and paid for a lawyer to represent Kiely. (Id. at ¶ 22.) When it made the joint defense agreement with Kiely, Raytheon had no intention of performing the promises it made. (Id. at ¶ 23.)

By encouraging Kiely to violate Department of Defense security laws and regulations, Raytheon also "implicitly" promised him that he could engage in the practice of receiving unreceipted classified documents as manager of marketing intelligence without the prospect of adverse employment action being taken against him. Contrary to this implicit promise, on which he relied to his detriment, Raytheon coerced him into accepting early retirement as of January 2, 1990. (Id. at ¶¶ 43-44.)

Raytheon failed to keep the promises it made to Kiely about a joint defense by secretly negotiating a plea agreement with the government. As a result of the plea agreement, Raytheon pled guilty to an information on March 20, 1990, in the United States District Court for the Eastern District of Virginia. (Id. at ¶¶ 28-30.) Neither Kiely nor his lawyer knew of the plea before it was entered. (Id. at ¶ 31.)

In a memorandum to the professional staff in his office, Raytheon's general counsel falsely said that the guilty plea was "the result of conduct by one former employee" who had "acted contrary to Raytheon policy and without the knowledge of Raytheon management." (Id. at ¶ 34; Ex. 3.) Although it was an internal memorandum, the substance of it was published in press reports, naming Kiely as the former employee. (Id., Ex. 10.) This report defamed Kiely. (Id. at ¶ 38.)

On March 21, 1990, the day after Raytheon's plea, Kiely was indicted for conspiracy to defraud the government by transferring classified Defense Department documents without authority. (Id. at ¶ 33.) Although the fact is not expressly pleaded in the complaint, it is undisputed that Kiely was subsequently convicted of the crime of conspiracy, and his conviction was affirmed on appeal. United States v. Caso, 935 F.2d 1288 (4th Cir.1991).

DISCUSSION

1. The Tort Claims

No extended discussion is required to sustain the motion to dismiss the three counts of the Amended Complaint alleging common law torts (Counts II, III, and IV). Each of these causes of action was asserted too late under the applicable statute of limitations. That statute is Mass.Gen.Laws ch. 260, § 2A in the case of the claims of negligent misrepresentation (Count II) and intentional interference with business relations (Count III), and id. at § 4, in the case of the claim of defamation (Count IV). As to each of the counts, the applicable statute prescribes that suit be commenced within three years of the accrual of the cause of action. This action was commenced in the state court on December 1, 1994. To have been timely, the tort causes of action must then have accrued not earlier than December 1, 1991. But they all did.

According to the Amended Complaint, the misrepresentations that Kiely complains of in Count II were made over the course of his employment (¶ 48) and particularly in September, 1989 (¶¶ 19-21). By his own allegations, Kiely discovered the falsity of the misrepresentations, and was injured by them, when Raytheon forced him to retire in January, 1990, and when Raytheon abandoned the promised joint defense and pled guilty in March, 1990. At the latest, then, the misrepresentation claim should have been brought within three years of the latter date, or by March, 1993.

In Count III, Kiely alleges that "during the period of September, 1989 to March 20, 1990" (¶ 54) Raytheon tortiously interfered with his "highly satisfying and favorable business relationship with Raytheon" (¶ 52). As a consequence, "Kiely was not only coerced into early retirement on January 2, 1990, but also was debarred from working with classified documents, and his reputation was defamed irreparably" (¶ 55). Thus, according to his own allegation, the period of tortious interference ended March 20, 1990. Moreover, the debarment referred to was the suspension of Kiely's ability to participate in contracting with the government. Attached to the Amended Complaint as Exhibit 11 is a letter from the Air Force dated December 17, 1990, notifying Kiely of his debarment for a three-year period beginning April 13, 1990. Even if that date marks the accrual of his claim, his assertion of it did not come until more than three years later.

Likewise, his claim for defamation arises out of the memorandum of Raytheon's general counsel in which he blamed Raytheon's guilty plea on Kiely. That memorandum was dated March 21, 1990 (Amended Complaint, Ex. 3), and was publicized as well that day (Id., Ex. 10). The defamation claim, therefore, accrued by March 21, 1990, and it was not timely asserted.

Thus, apart from whatever other defects may exist in the tort claims, it is clear that, even if they were wholly meritorious, they are barred by the statute of limitations and must be dismissed.

2. Promissory Estoppel

In Count I of the Amended Complaint, Kiely alleges that by requesting him to engage in the illegal practice of obtaining classified DOD budget documents, Raytheon implicitly promised him that he could commit these acts without fear of suspension or termination (or, as happened in this case, forced early retirement). Kiely says he relied on Raytheon's implicit promise to his detriment and that Raytheon is therefore estopped from denying the promise's enforceability.

Massachusetts law recognizes that a promisee's reliance on a promise may suffice as a substitute for consideration to bring about the formation of a binding and enforceable contract. Rhode Island Hosp. Trust Nat'l Bank v. Varadian, 419 Mass. 841, 647 N.E.2d 1174, 1178-79 (1995); Cambridgeport Sav. Bank v. Boersner, 413 Mass. 432, 597 N.E.2d 1017, 1023-24 (1992); Loranger Constr. Corp. v. E.F. Hauserman Co., 376 Mass. 757, 384 N.E.2d 176, 179 (1978). "An action based on reliance is equivalent to a contract action, and the party bringing such an action must prove all the necessary elements of a contract other than consideration." Rhode Island Hosp. Trust Nat'l Bank, 647 N.E.2d at 1179.

An essential element in the pleading and proof of a contract claim is, of course, the "promise" sought to be enforced. In the case of a contract formed by reliance, the putative promise must not only be definite and certain in its terms, see ...