McKenny v. John V. Carr & Son, Inc.

Decision Date20 March 1996
Docket NumberNo. 2:94-CV-30.,2:94-CV-30.
CourtU.S. District Court — District of Vermont
PartiesRonald McKENNY, Plaintiff, v. JOHN V. CARR & SON, INC., Defendant.



Craig Weatherly, Gravel & Shea, Burlington, VT, for plaintiff.

Richard Thomas Cassidy, Hoff, Curtis, Pacht, Cassidy & Frame, P.C., Burlington, VT, Thomas H. Somers, Moon, Moss, McGill & Bachelder, P.A., Portland, ME, for defendant.


SESSIONS, District Judge.

This matter is before the Court on Defendant's Motion for Summary Judgment in accordance with Fed.R.Civ.P. 56(c). Plaintiff opposes this motion. Both parties have filed affidavits and other documents in support of their memoranda. In his complaint, Plaintiff alleges breach of express or implied contract, promissory estoppel, age discrimination in violation of both state and federal law, and emotional distress. He seeks compensatory and punitive damages. The Court has jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a). For the reasons stated below, the Motion is granted in part and denied in part.

Factual Background

Plaintiff is the former employee of Defendant. The gravamen of Plaintiff's complaint is that he was summarily terminated without just cause and because of his age. Defendant maintains that Plaintiff was an at will employee and that his position was eliminated as part of an economically motivated reduction in force ("RIF").

Resolving all doubts in favor of the nonmoving party for purposes of deciding the instant matter, the Court assumes the following facts are true. On June 16, 1993, Plaintiff, Ronald McKenny, was released from his employment with John V. Carr & Son, Inc. ("Carr"). Plaintiff is a resident of Vermont. Carr operates a customhouse brokerage business with a principal place of business in Detroit, Michigan and branch offices in approximately a dozen states. Its purpose is to assist clients involved in international trade by providing, inter alia, advise on customs regulations, tariffs and foreign freight forwarding.

The relationship between Plaintiff and Carr first arose in 1984. At that time, Plaintiff, along with his brothers, Stanley McKenny and Douglas McKenny, and Bruce Savage, owned a small customhouse brokerage business, doing business as C.S. Emery & Company, Inc. ("Emery"), in Derby Line, Vermont. On March 26, 1984, following a series of informal discussions between the Emery shareholders and representatives of Carr, the Plaintiff and his fellow shareholders agreed to transfer fifty-one percent of their capital stock to Carr for a purchase price based on the to-be-determined book value of Emery. See Def.'s Ex. 1A.1 Executive Vice Presidents Stephen Marr and Richard Lowrie negotiated the agreement on behalf of Carr.

The transaction was based upon mutual trust and respect. In fact, testifying as to how the deal was concluded, Mr. Lowrie stated:

And we were in his Stan McKenny's parlor and at that time, there was a comfortable feeling and they said to us — all of them — we looked at them individually, it's a deal, it's a deal. I think we felt real comfortable in it because we trusted each other so much. And I know business isn't done that way anymore and I think it's a damn shame it's not but we did the deal on basically a handshake and discussion. Yes, we bought some other companies and some other people had attorneys involved but Steve Marr, myself and the McKennys and Mr. Savage basically did most of it on a handshake. I think besides trust, respect. I think we had a great deal of respect for each other. We had known not only each other but their families, their children, went to social events, it was that feeling.

Pl.'s Ex. O, Lowrie Dep. at 15, 16.

The agreement was reduced to writing in a document entitled "Agreement for Sale of Corporate Stock" ("Agreement"). It included an option to purchase the remaining shares of Emery. Pursuant to the Agreement, the happening of one or more specified events triggered the option. See Def.'s Ex. 1A at § 5.1. The Agreement included a general provision stating: "This Agreement contains the entire agreement of the parties and no representations, inducements, promises, agreements oral or otherwise, not embodied or referenced herein shall be of any force and effect unless in writing and signed by the parties hereto." Id. at § 9.1. The terms of the Agreement are to be interpreted in accordance with Michigan law. Id. at § 9.6.

Although the Agreement did not address the subsequent employment of Plaintiff and the other Emery shareholders, two of the four Emery shareholders understood their employment to be secure as long as their job performance remained satisfactory. See Pl.'s Ex. B, Savage Dep. at 16, 26.; S. McKenny Dep. at 44. The remaining two Emery shareholders, Plaintiff and Doug McKenny, recall receiving specific oral assurances of continued employment as long as they performed their jobs to satisfaction.

Plaintiff testified that Mr. Marr and Mr. Lowrie told the Emery shareholders that "we would continue employment as long as performance was satisfactory" and that "we didn't have to worry because Dick Lowrie and Steve Marr were going to be around a lot longer than we were because they were younger." Pl.'s Ex. B, R. McKenny Dep. at 71, 69. Responding to a question about the amount of job security he thought the Emery shareholders would have after the sale, Doug McKenny stated that he felt "possibly more secure than when his dad was running the company because we had been verbally advised that our jobs were secure." Pl.'s Ex. B, D. McKenny Dep. at 29.

Moreover, Defendant didn't anticipate any changes in the Emery operations following the sale. When asked whether there was any agreement to continue the employment of the McKennys, Mr. Lowrie stated, "I think that it was in a discussion stage at several discussions, that it was assumed by both parties that things would remain the same." Pl.'s Ex. B, Lowrie Dep. at 24. In a letter to Stan McKenny dated March 26, 1984, Mr. Marr stated, "we would anticipate retaining all current directors of C.S. Emery ... on the Board of Directors of that firm, and adding three or four directors from John V. Carr & Son." Pl.'s Ex. A. The letter also assured Stan McKenny that Carr's bar on nepotism would not apply to the Emery shareholders and their family members. Id.

After the 1984 sale, the Emery shareholders continued in their employment and carried on business in the Emery name. Plaintiff remained Vice President of Vermont Operations. On January 2, 1986, Manufacturer's Bank, N.A. ("Manufacturer's") acquired Carr, which then became a wholly owned subsidiary of Manufacturer's. In 1990, Carr purchased the remaining shares of stock from Emery, although apparently none of the triggering events of the Agreement had occurred.

After the final transfer of stock, the Emery shareholders ceased doing business under the Emery name and began trading under Carr's name. At the same time, Plaintiff was re-designated Carr's Technical Advisor for Vermont Operations, although his duties remained the same. In 1992, Manufacturer's merged with Comerica Bank, and Carr became a wholly owned subsidiary of Comerica.

On June 22, 1992, Plaintiff received a copy of Carr's new Employee Handbook. Plaintiff acknowledged receipt of the Handbook by signing a form that was placed in his personnel file. Inside the cover page, the Handbook states:

Irrespective of any statement contained in this Handbook or in any other document or statement issued by the Company or any of its representatives, you have the right to terminate your employment at any time, with or without cause or notice, and the Company retains a similar right. All statements contained in this handbook shall be interpreted consistent with this termination policy and no officer or employee of the Company has any authority to modify this statement in any way.

See Def.'s Ex. 2C.

Carr also maintains an Administration Manual that is given to supervisors and managers setting forth the Company's policies and procedures regarding discipline. See Pl.'s Ex. A, Douras Dep., attach. to Paper # 17. Parts of the Administration Manual apply to both exempt and nonexempt employees. Id. at 16. Plaintiff is an exempt employee.

The purpose of the Administration Manual, as defined therein, is "to inform supervisory and management personnel of the laws which affect the employer/employee relationship; to explain company policies and procedures to those who are responsible for implementing those policies; and to present the JVC approach to employee relations." Pl.'s Ex. V. In a section entitled "Policies and Procedures," the Manual states:

The following material is an elaboration of the policies explained in the Employee Handbook. For brevity's sake, the policies will not be repeated in their entirety, but will be referred to by page number in the Employee Handbook for your review. Additional policies not addressed in the Employee Handbook are also included for your information. Supervisors are responsible for implementation of company policies, which requires communicating and promoting them to your staff and ensuring compliance.

Id. Finally, the Manual sets forth a progressive disciplinary system under a section called "Effective Supervision." The preliminary statement to "Effective Supervision" reads: "The material in this section deals with issues which are primarily the responsibility of supervisors. Variations in treatment of individuals by different supervisors under the same circumstances is unfair and destructive of good personnel relations."

It then provides for a three step disciplinary procedure. The first step is an oral reminder, the next is a written reminder, and the third is referred to as decision-making leave. At the third stage, the employee is told to remain home the day after the violation and use that time to decide whether he or she can meet the...

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