Murphy v. Birchtree Dental, P.C.

• Decision Date: 30 May 1997
• Docket Number: Civil Action No. 96-71358.
• Parties: Claudia MURPHY, Plaintiff, v. BIRCHTREE DENTAL, P.C., a Michigan Corporation, and Dr. Arthur Fediuk, jointly and severally, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

964 F.Supp. 245

Claudia MURPHY, Plaintiff, v. BIRCHTREE DENTAL, P.C., a Michigan Corporation, and Dr. Arthur Fediuk, jointly and severally, Defendants.

Civil Action No. 96-71358.

United States District Court, E.D. Michigan, Southern Division.

May 30, 1997.

COPYRIGHT MATERIAL OMITTED

Steven Z. Cohen, Cohen & Ellias, P.C., Bloomfield Hills, MI, for Plaintiff.

Lorrey Michela, Novara, Tesija & Michela, P.C., Southfield, MI, for Defendants.

OPINION AND ORDER

FEIKENS, District Judge.

Plaintiff Claudia Murphy worked as a dental hygienist for defendants Birchtree Dental, P.C. and Dr. Arthur Fediuk (a Birchtree partner) from October 1984 until August 1995. She now claims wrongful discharge, tortious interference with contract, and breach of fiduciary duty in the administration of her pension funds in violation of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1104. Defendants have moved for summary judgment. For the reasons stated below, defendants' motion is granted as to plaintiff's tortious interference claim but denied as to her wrongful discharge claim.

As regards the ERISA claim, defendants' only objection is that Dr. Fediuk was improperly named, since he was never the plan fiduciary. Because plaintiff has moved for leave to amend her complaint to name the actual fiduciary, Dr. Richard Martella, and has dropped her ERISA claim against Dr. Fediuk, defendants' motion to dismiss this claim is moot. Plaintiff's motion to amend is granted.

I. Standard of Review

A motion for summary judgment will be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ. P. 56(c). In deciding defendants' motion, I must consider whether the evidence is such that a reasonable jury could return a verdict for plaintiff. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1478 (6th Cir.1989). The facts must be viewed in the light most favorable to plaintiff, the non-moving party. Monette v. Electronic Data Systems, 90 F.3d 1173 (6th Cir.1996), citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970).

II. Wrongful discharge

Murphy claims that she was wrongfully discharged in violation of a just cause employment relationship. She argues that just cause employment was created by oral representations by management and statements in Birchtree's employee handbook. Defendants maintain that Murphy was an at will employee. They also say they fired Murphy because of her difficulties with other employees. Defendants do not explicitly state whether they believe any problems with other employees would constitute just cause for Murphy's discharge, and they do not seek summary judgment on that basis.

The parameters of just cause employment are laid out in three Michigan Supreme Court cases, Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980); Rowe v. Montgomery Ward & Co., Inc., 437 Mich. 627, 473 N.W.2d 268 (1991); and Rood v. General Dynamics, 444 Mich. 107, 507 N.W.2d 591 (1993).¹ Toussaint held that just cause employment may be established by express agreement (oral or written), or as a result of an employer's policy statements which create a "legitimate expectation" of just cause employment. While the first prong is based in contract, the "legitimate expectations" prong recognizes enforceable obligations that arise "outside the operation of normal contract principles." Rood at 117, 507 N.W.2d 591, citing In re Certified Question (Bankey v. Storer Broadcasting Co.), 432 Mich. 438, 458, 443 N.W.2d 112 (1989).

Under the contractual prong, an objective test is used to determine whether the parties mutually assented to just cause employment. Rowe at 640, 473 N.W.2d 268. The question is thus whether a reasonable person could have interpreted the words or conduct to establish just cause employment, taking into account all relevant circumstances surrounding the transaction. Rood at 119, 507 N.W.2d 591, citing Rowe at 641, 473 N.W.2d 268. Oral statements must be "clear and unequivocal" in order to overcome the presumption of at will employment. Rowe at 640, 473 N.W.2d 268.

The "legitimate expectations" prong is based in public policy. Where an employer has put in place policies establishing discharge only for cause, and benefits from the good will generated by those policies, just cause employment will be enforced. Toussaint at 613, 292 N.W.2d 880. In order to create legitimate expectations, a policy statement must rise to the level of a promise (express or implied) of just cause employment; in other words it must be "reasonably capable of instilling legitimate expectations of just cause employment." Rood at 139, 507 N.W.2d 591, citing Renny v. Port Huron Hospital, 427 Mich. 415, 398 N.W.2d 327 (1986). The policy must also be "reasonably related to employee termination." Rood at 139, 507 N.W.2d 591.

Even if the policy statement does not contain an express just cause statement, it can create legitimate expectations if it sets forth disciplinary procedures and sanctions and does not retain the right to discharge at will. Rood at 140, 507 N.W.2d 591, citing Renny at 430-431, 398 N.W.2d 327. In Rood, although neither a "Guide to Good Conduct," nor an annual evaluation policy, nor a merit pay policy were capable of instilling legitimate expectations of just cause employment on their own, when considered together they could reasonably be thought to instill such expectations. Rood at 142-143, 507 N.W.2d 591.

Thus an employee handbook or other policy statement can establish contractual rights to just cause employment. Toussaint at 613, 292 N.W.2d 880. "We hold that employer statements of policy ... can give rise to contractual rights in employees without evidence that the parties mutually agreed that the policy statements would create contractual rights in the employee." Toussaint at 614-615, 292 N.W.2d 880. This is true even where the policy statement is signed by neither party, can be unilaterally amended by the employer without notice to the employee, contains no reference to a specific employee, and the employee did not learn of the policy until after his hiring. Id. Where the employer's policies relating to discharge are subject to differing interpretations, the issue is for the jury. Rood at 141, 507 N.W.2d 591.

Murphy alleges that she and other employees were told in 1995, "We don't fire you, you fire yourself." Defendants argue that since the statement was not in the context of a specific discussion regarding job security, it does not create a contract for just cause employment. Rowe at 643, 473 N.W.2d 268. However, plaintiff claims that the statement was made in a summer 1995 staff meeting shortly after another employee had been fired, and that it was uttered in response to her specific question about job security. Thus, viewed in the light most favorable to plaintiff, the statement was clearly "security related," and could reasonably be understood as a promise of just cause employment.

Defendants assert that in order to create legitimate expectations, an employee must inquire about job security at the time of hiring, citing Rood. However, in Rood the timing of the employers' oral statements was not relevant; statements to both plaintiffs failed to create just cause employment because they were not made in response to any inquiry regarding the plaintiffs' job security. Id. at 124, 134, 507 N.W.2d 591. There is no indication that the timing of the statement was determinative. Defendants have cited no other case law stating that an oral assurance must be made at the time of hiring.

As noted above, courts look at "all relevant circumstances" to determine if a contractual obligation existed. Pre-employment negotiations over job security are clearly powerful circumstantial evidence that a meeting of the minds regarding just cause employment existed. The court in Rood and Rowe contrasted unsuccessful plaintiffs' claims with the successful claim in Toussaint, where there were pre-employment discussions of job security. Rood at 124, 507 N.W.2d 591, Rowe at 643, 473 N.W.2d 268. However, neither Toussaint, Rowe, nor Rood specifies that discussion of job security must happen at the time of hiring in order to create just cause employment. In fact, Toussaint states that "no pre-employment negotiations need take place and the parties' minds need not meet on the subject," so long as the employer has established uniform policies calculated to make employees believe they will be fired only for cause. Toussaint at 613, 292 N.W.2d 880 (emphasis added). The later cases do not repudiate Toussaint on that point.

In addition to the oral assurance, plaintiff asserts that Birchtree's Office Manual contains language sufficient to instill legitimate expectations of just cause employment. The manual states, "All employees are on a 90 day probation, during which time they may be dismissed without cause. After this period of time, employees are considered regular employees with full benefits based on the type of employment." Defendants maintain that the language simply means that after 90 days employees will be entitled to regular benefits. While that is one reading, certainly a reasonable person could be led to believe that after probation employees will not be dismissed without cause. This is a factual dispute appropriate for a jury.

The manual also includes a "grievance procedure" with two steps, the first being for the employees involved to discuss the matter themselves, and the second being to take the grievance to "management" for review. Murphy argues that this creates a legitimate expectation of just cause employment. Defendants argue that because these procedures do not relate to termination, they do not establish just cause employment. In themselves, the...