Marcy v. Delta Airlines, s. 97-35464

• Decision Date: 05 February 1999
• Docket Number: Nos. 97-35464,s. 97-35464
• Citation: 166 F.3d 1279
• Parties: 137 Lab.Cas. P 58,555, 14 IER Cases 1377, 99 Cal. Daily Op. Serv. 985, 1999 Daily Journal D.A.R. 1257 Suzanne J. MARCY, Plaintiff-Appellee, v. DELTA AIRLINES, a Georgia corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1279

166 F.3d 1279

137 Lab.Cas. P 58,555, 14 IER Cases 1377,

99 Cal. Daily Op. Serv. 985,

1999 Daily Journal D.A.R. 1257

Suzanne J. MARCY, Plaintiff-Appellee, v. DELTA AIRLINES, a Georgia corporation, Defendant-Appellant.

Nos. 97-35464.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 7, 1998.

Decided Feb. 5, 1999.

Lawrence H. Wexler, Atlanta, GA, for Defendant-Appellant.

Michael J. San Souci, Bozeman, MT, for plaintiff-appellee.

Appeal from the United States District Court for the District of Montana Donald W. Molloy, District Judge, Presiding. No. D.C. No. CV-94-00021-DWM.

Before: BOOCHEVER, REINHARDT, and GRABER, Circuit Judges.

BOOCHEVER, Circuit Judge:

In this case, we must determine whether the Montana Wrongful Discharge from Employment Act ("WDEA"), Mont.Code Ann. §§ 39-2-901 et seq., provides a cause of action to an employee discharged by her employer for a reason based on mistaken facts, but where the employer exercised good faith in reaching its decision.

After a jury found that Delta Airlines wrongfully discharged Suzanne Marcy under the WDEA and the district court entered judgment for Marcy, Delta moved for judgment as a matter of law, or in the alternative, for a new trial, arguing that Marcy had failed to state a valid claim under the WDEA because she did not sufficiently prove that Delta had acted in bad faith in discharging her. The district court denied both motions, and Delta filed this timely appeal. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.

I. FACTS

Suzanne Marcy became an employee of Delta Airlines in 1987 when Delta merged with Marcy's former employer. At the time of her discharge, Marcy worked as a Senior Customer Service Representative at Delta's Gallatin Airport facility in Bozeman, Montana. She was generally rated as an "outstanding Delta employee." Delta terminated Marcy after she submitted her payroll records with three incorrect entries which would have allowed her to collect about $250 in unearned wages. While Marcy acknowledges that there were mistakes on her payroll records, she has maintained all along that the mistakes were unintentional, and that such mistakes were common in Delta's payroll system. Delta, on the other hand, has been equally steadfast in its assertion that Marcy's mistakes were part of an intentional plan to defraud the company. Marcy's mistakes were contained in two Delta personnel documents--the "Daily Work Schedule" and the "Daily Attendance Record."

Delta's scheduling tool at the Bozeman facility, called the Daily Work Schedule ("DWS"), was basically a sheet listing which shift and in what position each employee had been assigned to work for that day. The DWS would also list, among other things, which employees had taken that day off using vacation or compensatory ("comp") time. The DWS was prepared by Delta supervisors weekly, and approximately seven to ten days in advance. Schedule changes due to employees calling in sick or swapping shifts, for example, were not uncommon, and because the DWS was not always updated to include these changes, the actual number of hours that an employee worked might not be accurately reflected in the DWS.

The Daily Attendance Record ("DAR") was the document used by Delta to track the hours its employees worked and to calculate payroll. For example, an employee who recorded that she worked from "6:00 to 12:00" in the DAR would be paid for six hours. Delta employees were responsible for recording their own hours in the DAR on a daily basis, and Delta relied on its employees to record their information accurately.

When an employee wanted to take time off using her accrued vacation or comp time, Delta required the employee to follow several procedures. First, she had to obtain approval from a Delta supervisor by having the supervisor sign a "Time-Off Request Form." The supervisor would then staple the signed Time-Off Request Form to the back of the DWS for the day that the employee was taking off. Second, the employee would have to make a special notation on her DAR so that she would be paid for her time off, but would also have her vacation or comp time account deducted. For example, an employee using a vacation day would record "6:00 to 12:00--VAC DAY 6.0" in her DAR. This would inform Delta that it should pay the employee for six hours that day, but that it also should deduct six hours from that employee's vacation account. An employee using comp time to take all or part of a day off was similarly required to make a notation on the DAR so that her comp time account could be deducted.

When Marcy submitted her DAR for the first two weeks of May, 1993, it contained three mistaken entries, each involving the failure to note on the DAR that she had used vacation or comp time to take time off. These mistakes, left unnoticed, would have resulted in Marcy being paid about $250 in unearned wages without having her vacation or comp time accounts deducted.

The first mistaken payroll entry was for May 4, 1993. Marcy did not work her entire shift, but used 2.5 hours of comp time to leave her shift early. On her DAR, however, Marcy wrote down that on May 4 she worked from "6:00 to 12:30," and failed to include a notation that she had used any comp time. On the next day, May 5, Marcy took the entire day off using 6 hours of comp time. Again, however, she recorded that she worked from "6:00 to 12:30," without including a notation that she had used any comp time.

Marcy's third mistaken payroll entry was for May 10, which Marcy had taken off using a vacation day. On her DAR, however, Marcy recorded that she worked from "6:00 to 12:30," and failed to include a notation that she had used a vacation day. There were also inconsistencies on the DWS. An entry on the DWS that had once reported Marcy as being on vacation that day had been erased. Further, Marcy's name had been added to the DWS, in Marcy's handwriting. Finally, Marcy's Time-Off Request Form granting her permission to use a vacation day on May 10, which originally had been stapled to the May 10 DWS, was no longer attached.

Marcy's supervisor, Pam Bracken discovered the mistakes on May 11, and informed the station manager, Jack Reese, on May 14. They both agreed that they would not ask Marcy about the mistakes, but would return the DAR to where it belonged and see if Marcy would correct the mistakes on her own. The DAR binder was available to Marcy on May 11, 12, and 17, but she did not correct the mistakes. Reese and Bracken confronted Marcy on the morning of May 18. Marcy stated that all of the false entries were the result of honest mistakes. Marcy explained that on May 17, she had tried to find the DAR to see if her DAR entries were correct, but she could not find it because it was not hanging where it was supposed to be. Marcy stated that because she had taken off seven days that pay period using vacation and comp time, and had also switched shifts with another employee to take an eighth day off, she wanted to check the DAR to make sure it was correctly updated.

Later, after she became busy handling a flight, she stated that she simply forgot to go back to look at the DAR. Marcy was not worried though, because she stated that mistakes were not uncommon in Delta's payroll system, and that it was Bracken's usual practice to call employees to clarify any discrepancies between the DWS and DAR. Marcy assumed that she could correct any mistakes when Bracken asked her.

Marcy could not explain why her Time-Off Request form was missing or why her name was erased as an employee on vacation on the May 10 DWS sheet. She stated that the entry, made in her handwriting, adding her to the May 10 work schedule was the result of a simple mistake--Marcy thought that she was writing on the DWS sheet for May 11, when she actually was scheduled to work. She also stated that she told Reese that a co-worker, Stephanie Dunagan, would verify her story, but he did not investigate.

Based on the false payroll entries, as well as a previous incident of alleged fraud involving personal long-distance phone calls of minimal value made by Marcy, Reese prepared a report recommending the termination of Marcy. Other than interviewing Marcy, Reese did not question any witnesses or investigate any further. On May 18, Marcy's case was forwarded to Delta headquarters in Atlanta for review by a four-person panel consisting of Delta managers. Reese indicated that he thought Marcy's actions were intentional, and recommended that Marcy be terminated. The panel decided to terminate Marcy. On May 27, Reese called Marcy into his office and offered Marcy the right to resign, but she refused. Marcy was then terminated.

II. PROCEDURAL HISTORY

In December 1993, Marcy sued Delta in Montana state court, alleging numerous claims relating to her discharge, including one for wrongful discharge under the Montana WDEA. Delta removed the case to the United States District Court for the District of Montana. At the end of discovery, Marcy's only remaining claims were for wrongful discharge and defamation. At the end of Marcy's case-in-chief, Delta moved for a directed verdict, arguing that Marcy had failed to present any evidence that Delta's reason for terminating her was a pretext and not the honest reason, as required by the WDEA. The district court denied Delta's motion. A jury then found for Delta on the defamation claim, but returned a verdict in favor of Marcy on the wrongful discharge claim and awarded her $66,000 in damages.

Delta moved for judgment as a matter of law, or in the alternative, for a new trial, arguing that the Montana WDEA does not provide a cause of action to a discharged employee where the employer has acted in good faith, even where the reason given for the discharge is based on mistaken facts. To prove that an employer acted in bad faith, Delta argued, the WDEA required a plaintiff to prove that the stated reason for her discharge was...