McCalment v. Eli Lilly & Co., 79A05-0506-CV-325.

CourtCourt of Appeals of Indiana
Citation860 N.E.2d 884
Docket NumberNo. 79A05-0506-CV-325.,79A05-0506-CV-325.
PartiesMichael M. McCALMENT, Appellant-Plaintiff, v. ELI LILLY & COMPANY, Appellee-Defendant.
Decision Date31 January 2007

Michael C. Kendall, Kendall-Hahn, Carmel, IN, Attorney for Appellant.

Ellen E. Boshkoff, Susan W. Kline, Baker & Daniels, Indianapolis, IN, Attorneys for Appellee.



Michael McCalment appeals the trial court's grant of a motion to dismiss by Eli Lilly & Company ("Lilly"). McCalment raises five issues, which we consolidate and restate as whether the trial court erred by granting Lilly's motion to dismiss under Ind. Trial Rule 12(B)(6).

The relevant facts as alleged in McCalment's complaint follow. In September 1998, Lilly hired McCalment. At that time, Lilly gave him a document entitled "Employee Information A HANDBOOK FOR EMPLOYEES OF ELI LILLY AND COMPANY" (hereinafter "Handbook"). Appellant's Appendix Tab 1 at Exhibit 1 Cover. Lilly unilaterally drafted and prepared the Handbook, and the provisions were not subject to negotiation by the employees. Lilly informed McCalment that the Handbook was designed to help him understand various company policies, which should be of continuing interest to him as both a new and experienced employee. Lilly told McCalment that the employment relationship could be terminated by either party, at any time, with or without cause. Lilly told McCalment via the Handbook that if a concern could not be resolved through discussion between McCalment, supervision, and human resources, McCalment was encouraged to use Lilly's formal nonbinding grievance procedure, which would ensure prompt and thorough consideration of the problem. Lilly also told McCalment that his use of the grievance procedure would not jeopardize his future with Lilly. Lilly told McCalment that Lilly would follow a procedure upon submission of a written grievance within six months of the occurrence of a problem or an issue that would culminate in a factual hearing by a Grievance Review Board ("Board") and a written determination by the Board.

On December 8, 2000, Terral Platt, a supervisor, gave McCalment a written notice that his performance was unacceptable. McCalment told Platt that he disagreed with the evaluation. Platt told McCalment that the warning would be removed automatically from his file within one year or less and that the warning could not be used against him after the date it was removed. In reliance on Platt's representations, McCalment did not exercise his rights under the grievance procedure.

On June 9, 2001, McCalment received a "coaching"1 from Lilly. Appellant's Appendix Tab A at 8. McCalment was advised that the coaching would be removed from his file and could not be used against him after one year. In reliance on Lilly's representations, McCalment did not exercise his rights under the grievance procedure.

On November 27, 2002, two years after Lilly's written notice and one year and a half after Lilly's coaching, Trent Smith, a manager, employee, and agent of Lilly, placed McCalment on probation for six months. Lilly told McCalment that part of the justification for his probation was the warning notice of unacceptable performance in December 2000 and the coaching on June 9, 2001, coupled with an alleged personal use of a computer in October 2002. McCalment told Smith that Lilly had advised him that the December 2000 and June 2001 incidents were automatically removed from his files one year after the date of each and could not be used against him. Smith denied McCalment's protest without explanation.

Smith altered McCalment's job duties and placed McCalment on an operation known as the "PKC process." Id. at 9. McCalment told Smith that he had not been completely and properly trained for and instructed in the performance of the process. McCalment also told Smith that he was colorblind and would have difficulty with the process and quality control. Smith ordered McCalment to go ahead anyway. McCalment inadvertently contaminated mixtures of chemicals in a vat with liners from another mixture. On December 2, 2002, upon learning of his mistake, McCalment immediately reported the incident to management.

Four days later, Platt telephoned McCalment and told him to stay home from work until someone on behalf of Lilly contacted him. Fifteen days later, Lilly telephoned McCalment and told him to come in for a meeting the next day. McCalment reported for the meeting, and Lilly terminated him. Lilly informed him that he was being terminated because the mistake he reported on December 2 was in violation of his probation and that his termination was effective December 31, 2002.

On May 27, 2003, McCalment submitted a written grievance to Lilly. McCalment's grievance alleged that he had been improperly placed on probation by Lilly, and as a result, improperly terminated. On June 4, 2003, Lilly responded to McCalment's grievance and refused to honor, consider, or process the grievance.

On November 30, 2004, McCalment filed a complaint against Lilly alleging seven counts: (1) breach of a written contract; (2) breach of an oral contract; (3) promissory estoppel; (4) negligent misrepresentation; (5) intentional misrepresentation, fraud and deceit, and constructive fraud; and (6) two counts of retaliatory discharge. Lilly filed a motion to dismiss McCalment's complaint for failure to state a claim under Ind. Trial Rule 12(B)(6). On May 2, 2005, the trial court held a hearing on Lilly's motion to dismiss. The trial court later issued a written order, which stated, in pertinent part:


The following facts are based on the allegations in [McCalment]'s Complaint, which the Court takes as true for purposes of the Motion to Dismiss:

1. In December 2000, Lilly gave [McCalment] a written warning for unacceptable performance. (Complaint ¶¶ 18, 33.)

2. In June 2001, McCalment received further coaching for his performance. (Complaint ¶ 39.)

3. McCalment chose not to protest either action under Lilly's internal grievance procedure. (Complaint ¶¶ 38, 41.)

4. In November 2002, McCalment was placed on probation for six months for unacceptable performance, and the documentation of the probation referenced McCalment's 2000 and 2001 disciplinary actions. (Complaint ¶ 42, Exh. 2C.)

5. On December 2, 2002, McCalment violated the terms of his probation by committing a production error involving contamination of a vat of chemicals, and Lilly discharged him from employment effective December 31, 2002. (Complaint ¶¶ 56, 60.)

6. In May 2004,[2] McCalment attempted to grieve his discharge under the grievance procedure described in Lilly's employee handbook ("handbook"), but Lilly declined to process his grievance. (Complaint ¶¶ 65, 68.)

7. The handbook was explicitly identified as being for employees of Lilly, and the handbook grievance policy made clear that it was available to Lilly employees during their period of employment. (Complaint Exh. 1 cover and pp. 21-22.)

8. The handbook specifically states that employment at Lilly is at will; that the employment relationship can be ended at any time for any or no reason; that the handbook is not any agreement regarding terms of employment that differs from the handbook provisions. (Complaint Exh. 1 p. 1.)

9. The handbook states that disciplinary action is at the complete discretion of Lilly. (Complaint Exh. 1 p. 16.)


* * * * *

First Count: Breach of Written Contract

3. Under Indiana law, employee handbooks do not constitute unilateral contracts of employment. Orr v. Westminster Village North, Inc., 689 N.E.2d 712, 722 (Ind.1997); City of Indianapolis v. Byrns, 745 N.E.2d 312, 317 n. 3 (Ind.Ct.App.2001).

4. Accordingly, Lilly's handbook, which is attached as an exhibit to McCalment's complaint, is not a written contract and [McCalment]'s claim based on the handbook fails as a matter of law.

Second Count: Breach of Oral Contract

5. Indiana law requires independent consideration, which means a detriment to the employee and a corresponding benefit to the employer, for any assurances that the employee claims converted his employment at will to employment requiring good cause for termination. Ohio Table Pad Co. [of Indiana, Inc.] v. Hogan, 424 N.E.2d 144, 145-46 (Ind.Ct.App. 1981).

6. The employee's continued services are legally insufficient to constitute independent consideration. Orr, 689 N.E.2d at 719; see also Brown v. Branch, 758 N.E.2d 48, 53 (Ind.2001); Hogan, 424 N.E.2d at 146.

7. McCalment does not allege that he received any oral promises of employment security from Lilly, nor does he allege any detriment that would constitute legal consideration for any alleged promises, even if made. For both these reasons, his breach of oral contract claim fails as a matter of law.

Third Count: Promissory Estoppel

8. Under Jarboe v. Landmark Cmty. Newspapers of Indiana, Inc., 644 N.E.2d 118 (Ind.1994), [reh'g denied,] an at-will employee cannot recover wrongful discharge damages through a theory of promissory estoppel, because principles of estoppel do not convert at-will employment to employment requiring just cause for discharge.

9. As McCalment is seeking wrongful discharge damages pursuant to his claim of promissory estoppel, which is exactly what Jarboe forecloses, he has therefore not stated a viable claim of promissory estoppel.

10. Alternatively, the facts alleged in the Complaint establish that any reliance on McCalment's part was unreasonable as a matter of law.

Fourth and Fifth Counts: Negligent Misrepresentation, Actual Fraud, Constructive Fraud

11. In order to recover on a theory of fraud, McCalment must demonstrate a material misrepresentation of a past or existing fact. Wallem v. CLS Indus., Inc., 725 N.E.2d 880, 889 (Ind. Ct.App.2000).

12. McCalment's claims that he was falsely promised that his first two disciplinary actions would be expunged within a year constitute claims concerning...

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