Parets v. Eaton Corp.

• Decision Date: 01 November 1979
• Docket Number: Civ. No. 8-71714.
• Citation: 479 F. Supp. 512
• Parties: Miguel PARETS, Plaintiff, v. EATON CORPORATION, an Ohio Corporation, Defendant.
• Court: U.S. District Court — Western District of Michigan

479 F. Supp. 512

Miguel PARETS, Plaintiff, v. EATON CORPORATION, an Ohio Corporation, Defendant.

Civ. No. 8-71714.

United States District Court, E. D. Michigan, S. D.

November 1, 1979.

Michael S. Hohauser, Rochester, Mich., for plaintiff.

Albert Calille, Dykema, Gossett, Spencer, Goodnow & Trigg, Detroit, Mich., for defendant.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

CORNELIA G. KENNEDY, Chief Judge.

Plaintiff has brought this action alleging national origin discrimination and breach of his employment contract with defendant. Jurisdiction exists by reason of diversity of citizenship. Defendant has moved to dismiss for failure to state a claim on which relief can be granted and for summary judgment.

I. STATEMENT OF THE CASE

The plaintiff was employed as an executive for Chrysler Corporation in Bogota, Colombia, when he was contacted by Herbert Hubbens, Vice-President-Management Resources of Eaton Corporation (the defendant), by letter sent from Cleveland, Ohio, and dated December 19, 1975. Mr. Hubbens offered plaintiff the position of Director of Manufacturing Services-South America. The plaintiff accepted by letter dated February 5, 1976, mailed to the Cleveland Office. Another letter was sent from Cleveland to San Jose dos Campos, Brazil, July 29, 1976, which outlines the terms and conditions of employment. The letter requested the plaintiff initial and return it to Cleveland if the terms were satisfactory. (The affidavit of Mr. Hubbens states that the plaintiff accepted these terms by a letter dated August 31, 1976, but a copy of the acceptance does not appear in the record.) The defendant's July 29 letter designated Detroit, Michigan as the plaintiff's "Post of Origin", to which annual home leave fares would be calculated and to which the plaintiff and eligible dependents would be repatriated upon satisfactory conclusion of the plaintiff's International Expatriate assignment. It also contained the following paragraph:

Reassignment

Upon satisfactory conclusion of your foreign assignment, should you wish reassignment to your Post of Origin, you may be assured that the company will do all it can to provide employment of at least equal stature to that which you held prior to assignment in San Jose dos Campos; you shall be entitled to the same rights, both statutory and company, as would apply under the same circumstances in the United States.

The plaintiff also alleges that the defendant made an oral promise to him after he started working that if a similar job should open in the continental United States, it would be his.

The plaintiff alleges that he started working for the defendant in South America, but at a lesser position than the one promised. In a letter dated May 23, 1977, the plaintiff was informed that his position as Manufacturing Services representative in South America was eliminated. The plaintiff claims the defendant fired him because of his national origin, Hispanic, in violation of the Michigan Fair Employment Practices Act and the Michigan Constitution. He claims the defendant intentionally interfered with his prior advantageous relationship and that it breached its contract by not giving him the original position discussed, by not giving him a similar position which had opened in the United States, and by failing to do anything to help him be reassigned.

The defendant asserts that the plaintiff has failed to state a claim upon which relief may be granted. Defendant asserts first that plaintiff was employed by a wholly owned subsidiary, Eaton S.A., not Eaton Corporation (the defendant), and that any claim the plaintiff has is against the foreign subsidiary and not defendant. Which entity employed plaintiff involves factual issues. For purpose of this opinion it is assumed that plaintiff was employed by defendant as he alleges. The defendant claims that between the February 5 letter of acceptance and the July 29 letter of terms, the plaintiff spent a short training period in Cleveland and was offered and accepted another position as manager of a plant in San Jose dos Campos, Brazil and that the letter of July 29, related to the new position, not the original one offered. The defendant denies there was an oral contract to place plaintiff in a similar job in the United States. It claims there can be no breach of an indefinite term employment contract and that plaintiff can assert no claim under the Michigan constitution or statutes because it would be unconstitutional to apply Michigan law to events that happened entirely outside of Michigan. Finally it asserts that Michigan's common law would not be applied by Michigan courts to events in South America. Defendant denies plaintiff was fired because of his Hispanic national origin. It claims he was terminated because a re-organization eliminated the need for his position. While plaintiff claims the designation of Detroit as Post of Origin establishes that the parties intended Michigan law be applied, the defendants deny any such intent.

Defendant argues that any factual disputes are immaterial because 1) Michigan law does not apply, so plaintiff cannot complain he was fired in violation of Michigan law and 2) under either Ohio or Michigan law, an indefinite employment contract may be terminated at will by either party.

II. CONFLICT-OF-LAW RULES FOR FEDERAL COURT SITTING IN DIVERSITY

The threshold question is what law applies. It is well settled that the federal court sitting in a diversity case must apply the choice of law rules that the forum state court would apply. See Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3, 96 S.Ct. 167, 46 L.Ed.2d 3 (1975); Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Grant v. Bill Walker Pontiac-G. M.C., Inc., 523 F.2d 1301 (6th Cir. 1975). This court then must look to Michigan law on each issue to see where the Michigan court would look.

III. PLAINTIFF'S CLAIM FOR WRONGFUL DISCHARGE IN VIOLATION OF THE STATUTE

A. PLACE OF INJURY TEST

In general, Michigan looks to the place of injury to determine if there is a cause of action for injury to the person or property. See Abendschein v. Farrell, 382 Mich. 510, 170 N.W.2d 39 (1969); Koserkoff v. Chesapeake & Ohio Railway Co., 427 F.2d 1049, 1050 (6th Cir. 1970), cert. den. 401 U.S. 947, 91 S.Ct. 924, 28 L.Ed.2d 230 (1971); Kaiser v. North, 292 Mich. 49, 257 N.W. 325 (1939). In Abendschein the Michigan Supreme Court had the opportunity to repudiate the lex loci delecti doctrine and adopt the significant contacts or dominant contacts doctrine in resolving choice-of-law problems. This it expressly refused to do. Although the Michigan Court of Appeals appears to have applied a contacts standard in Storie v. Southfield Leasing, Inc., 90 Mich.App. 612, 282 N.W.2d 417 (1979) (D. C. Riley, J., dissenting) the court stated that its decision was based on public policy under facts not applicable here.

B. APPLICATION OF FORUM LAW BEYOND FORUM'S BOUNDARIES

Further, to the extent that plaintiff bases his cause of action for discriminatory discharge on the Michigan Constitution or statutes he fails to state a claim on which relief can be granted. Ordinarily no constitution or statute can have effect beyond the limits of the sovereignty by which it is adopted or enacted. Such exceptions as exist are based on the sovereign's right to establish the duties of its own citizens. The nature of such exceptions was discussed by the United States Supreme Court in Skiriotes v. Florida, 313 U.S. 69, 61 S.Ct. 924, 85 L.Ed. 1139 (1941). Florida had enacted a criminal statute prohibiting the use of apparatus by deep-sea divers in the taking of sponges off the Coast of Florida. Skiriotes had been convicted of violation of that statute. It was his position that the place where he was arrested was more than three miles from the Florida coast and not within the jurisdiction of that state. Florida claimed that its boundaries extended more than the then traditional three miles. The Supreme Court refused to decide the extent of Florida boundaries. It noted that Skiriotes was a citizen of the state of Florida. It considered the question of whether such an enactment, the Florida Statute as applied to its citizens who are subject to the jurisdiction of Florida, is beyond the competency of that state. The Supreme Court held that a state may exercise its authority over its citizens on the high seas. Its authority over its citizens, the Supreme Court stated, is similar to that of the United States over its citizens, which extends to both the high seas and even "in foreign countries when the rights of other nations or other nationals are not infringed". 313 U.S. at 73, 61 S.Ct. at 927. The court held:

"There is nothing novel in the doctrine that a State may exercise its authority over its citizens on the high seas. That doctrine was expounded in the case of The Hamilton, 207 U.S. 398 28 S.Ct. 133, 52 L.Ed. 264. There, a statute of Delaware giving damages for death was held to be a valid exercise of the power of the State, extending to the case of a citizen of that State wrongfully killed on the high seas in a vessel belonging to a Delaware corporation by the negligence of another vessel also belonging to a Delaware corporation."

* * * * * *

"But the principle recognized in The Hamilton, supra, was not limited by the conception of vessels as floating territory. There was recognition of the broader principle of the power of a sovereign State to govern the conduct of its citizens on the high seas. The court observed that `apart from the subordination of the State of Delaware to the Constitution of the United States' there was no doubt of its power to make its statute applicable to the case at bar. And the basic reason was, as the court put it, that when so applied `the statute governs the reciprocal liabilities of two corporations, existing only by virtue of the laws of Delaware, and

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