Robards v. Gaylord Bros., Inc.

• Decision Date: 15 August 1988
• Docket Number: No. 87-2574,87-2574
• Citation: 854 F.2d 1152
• Parties: 111 Lab.Cas. P 56,028 Herbert E. ROBARDS, Plaintiff-Appellee, v. GAYLORD BROTHERS, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1152

854 F.2d 1152

111 Lab.Cas. P 56,028

Herbert E. ROBARDS, Plaintiff-Appellee, v. GAYLORD BROTHERS, INC., Defendant-Appellant.

No. 87-2574.

United States Court of Appeals Ninth Circuit.

Argued and Submitted May 11, 1988.

Decided Aug. 15, 1988.

Phyllis E. Andelin and Robert E. Noel, Rosen, Wachtell & Gilbert, San Francisco, Cal., for defendant-appellant.

Bernard J. Allard, Jeffry Lochner and Suchitra V. Narayen, Popelka, Allard, McCowan & Jones, San Jose, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before SCHROEDER, NOONAN and O'SCANNLAIN, Circuit Judges.

SCHROEDER, Circuit Judge:

Gaylord Brothers, Inc. appeals a jury verdict in favor of Herbert E. Robards in this diversity action alleging wrongful discharge under California law. Gaylord Brothers discharged Robards from its employ after thirty-five years of service. The jury awarded $200,000 in damages for breach of implied contract and negligent infliction of emotional distress. Gaylord Brothers contends that the district court lacked subject matter jurisdiction due to the presence of Doe defendants, that the breach of employment contract claim is barred by the statute of frauds, that the jury instructions were confusing, and that the negligent infliction of emotional distress claim is barred by California's worker compensation laws. The case cuts across a number of areas of rapidly developing California state law in the field of employment relationships. We affirm.

The facts are not disputed. Gaylord Brothers manufactures and distributes library furniture, equipment, and supplies. Gaylord Brothers hired Robards as a sales representative in 1948. Robards held this position until he was terminated in 1984.

Apparently Robards' performance was considered satisfactory until 1983. In June 1983, the employer's National Sales Manager, Robert Sweet, met with Robards and requested written "call reports," detailed summaries of sales calls with customers. In September 1983, Sweet expressed in a memo dissatisfaction with Robards' reports, and Robards acknowledges he received the memo. Gaylord Brothers then terminated Robards in January 1984, after Robards had served more than thirty-five years with the company and was approximately four years from earning his full pension.

Robards filed this action against Gaylord Brothers and several Doe defendants in California state court on May 23, 1984, for breach of implied contract, breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional The action went to trial on July 6, 1987. Robards contended that it was Gaylord Brothers' policy to terminate employees only for a justifiable reason; the defense position was that Robards' employment was at will and that Robards was terminated because his sales were unsatisfactory. The evidence demonstrated that there was no express employment contract, that Robards had received awards and bonuses for his job performance, and that the employer had never received any complaints from Robards' customers. Robards did not contend that he suffered physical injuries as a result of his emotional distress from being terminated. On August 13, 1987, the jury, on the basis of special verdicts, awarded Robards $150,000 for breach of implied contract and $50,000 for negligent infliction of emotional distress, but found for the employer on the breach of the implied covenant of good faith and fair dealing claim. The employer timely appeals pursuant to 28 U.S.C. Sec. 1291.

distress, negligent infliction of emotional distress, fraud, and negligent misrepresentation. Gaylord Brothers then removed the action to federal court pursuant to 28 U.S.C. Sec. 1441(b) on the basis of diversity. A pretrial order of September 29, 1986 dismissed the Doe defendants and narrowed the issues for trial to breach of implied contract, breach of the implied covenant of good faith and fair dealing, and negligent infliction of emotional distress.

DISCUSSION

On appeal, Gaylord Brothers contends that (1) the district court lacked subject matter jurisdiction due to the presence of Doe defendants at the time of removal; (2) Robards' breach of implied contract claim is barred by the statute of frauds; (3) the jury instructions were confusing; and (4) Robards' negligent infliction of emotional distress claim is barred by California's worker compensation laws.

A. Doe Defendants

Gaylord Brothers contends that the presence of Doe defendants in this action at the time of removal deprived the district court of subject matter jurisdiction, citing Bryant v. Ford Motor Co., 844 F.2d 602 (9th Cir.1987) (en banc). In Bryant, the en banc court held that the presence of Doe defendants destroys diversity.

[T]he 30-day time limit for removal contained in 28 U.S.C. Sec. 1446(b) will not commence until all Doe defendants are either named, unequivocally abandoned by the plaintiff, or dismissed by the state court. If a defendant attempts to remove a case prior to this time, the district court must remand the case to state court.

Id. at 605-06.

However, in examining the retroactive application of Bryant, we recently held that "Bryant does not require remand in cases where 'Doe' defendants were stricken by the district court prior to the November 6, 1987 decision in Bryant." Brandchaft v. E.F. Hutton & Co., Inc., 841 F.2d 886 (9th Cir.1988).

Here, the Doe defendants were dismissed pursuant to the joint pretrial statement filed September 29, 1986. Thus, the Doe defendants were dismissed prior to the November 6, 1987 Bryant decision, and therefore the district court did not lack subject matter jurisdiction.

B. Statute of Frauds

Gaylord Brothers next contends that the statute of frauds bars Robards' breach of employment contract claim. The statute of frauds forbids enforcement of certain classes of contracts unless they are reduced to writing. Restatement (Second) of Contracts Sec. 110 (1981); see also 1 B. Witkin, Summary of California Law, Contracts Sec. 197 (8th ed. 1973). California's statute of frauds provides that:

The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party's agent:

(a) An agreement that by its terms is not to be performed within a year from the making thereof....

Cal.Civ.Code Sec. 1624 (West Supp.1988).

In the only California Supreme Court decision in this area, the court held that the statute of frauds does not apply to an oral employment contract unless its terms foreclose the employee's completion of the performance of the contract within one year.

[T]he courts have been perhaps even less friendly to this provision [the "one year" section] than to the other provisions of the statute [of frauds]. They have observed the exact words of this provision and have interpreted them literally and very narrowly.... To fall within the words of the provision, therefore, the agreement must be one of which it can truly be said at the very moment it is made, 'This agreement is not to be performed within one year'; in general, the cases indicate that there must not be the slightest possibility that it can be fully performed within one year.

White Lighting Co. v. Wolfson, 68 Cal.2d 336, 340 n. 2, 438 P.2d 345, 349 n. 2, 66 Cal.Rptr. 697, 701 n. 2 (1968) (citations omitted) (emphasis in original).

Gaylord Brothers relies heavily upon Foley v. Interactive Data Corp., 193 Cal.App.3d 28, 219 Cal.Rptr. 866 (1985), review granted, 712 P.2d 891, 222 Cal.Rptr. 740 (1986), and Newfield v. Insurance Co. of the West, 156 Cal.App.3d 440, 203 Cal.Rptr. 9 (1984), for its argument that Robards' oral employment contract violated the statute of frauds. However, because the California Supreme Court has granted review in Foley, it may not be cited for any proposition, see Mottola v. R.L. Kautz & Co., 199 Cal.App.3d 98, 244 Cal.Rptr. 737, 741 (1988), and thus provides no support for Gaylord Brothers' contentions. Subsequent decisions have repeatedly discredited the application of the statute of frauds advocated in Newfield. See Eisenberg v. Insurance Co. of North America, 815 F.2d 1285, 1291 (9th Cir.1987) ("[w]e find that the rule of Newfield is not representative of California law and accordingly hold that if an oral agreement is capable of being performed within a year, it is not within the confines of the statute of frauds"); Steward v. Mercy Hospital, 188 Cal.App.3d 1290, 1295, 233 Cal.Rptr. 881, 884 (1987) ("upon the weight of authority, Newfield constitutes a minority view"); Gray v. Superior Court, 181 Cal.App.3d 813, 822, 226 Cal.Rptr. 570, 574 (1986) (having "doubt" as to Newfield 's interpretation of the law, noting that the California Supreme Court's White Lighting case has not been overruled and that the court has granted review of a case following Newfield on the point that an oral employment contract was barred by the statute of frauds).

Here, Robards contends that he and his employer had an implied employment contract that permitted termination only for good cause. Such a contract could have been completed within one year because Robards could have been terminated at any time for cause. Directly on point is Mercy Hospital, in which the court stated:

A contract which limits the power of the employer with respect to reasons for termination is no less enforceable because it places no equivalent limits upon the power of the employee to quit his employment.... Thus, such a contract is capable of being performed within one year, for even though the employer may not be permitted to terminate an employee without good cause, good cause may exist within one year and, also, the employee may still terminate at will, i.e., within one year of formation of the contract.

188 Cal.App.3d at 1296, 233 Cal.Rptr. at 884. Thus we conclude that under currently applicable California law, the statute of frauds does not bar Robards'...