Scherer v. Rockwell Intern. Corp.
| Decision Date | 16 September 1992 |
| Docket Number | No. 91-2277,91-2277 |
| Citation | 975 F.2d 356 |
| Parties | 59 Fair Empl.Prac.Cas. (BNA) 1301, 60 Empl. Prac. Dec. P 41,849, 61 USLW 2219, 123 Lab.Cas. P 57,136, 7 IER Cases 1340 Claus D. SCHERER, Plaintiff-Appellant, v. ROCKWELL INTERNATIONAL CORPORATION, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Alan O. Amos, Amos & Associates, Chicago, Ill., argued for plaintiff-appellant.
Richard H. Schnadig (argued), Bruce R. Alper, Brian S. Williams, Vedder, Price, Kaufman & Kammholz, Chicago, Ill., for defendant-appellee.
Before BAUER, Chief Judge, POSNER, Circuit Judge, and FAIRCHILD, Senior Circuit Judge.
Claus Scherer was employed by Baker-Perkins Printing Machinery Corporation (Baker-Perkins) from 1971 to 1989. In 1989 the company was acquired by the defendant, Rockwell International. Shortly thereafter, Rockwell terminated Scherer's employment for alleged sexual harassment of several co-workers, including his secretary, Terry Pendy. Scherer filed an action for breach of his employment contract, which contract Rockwell had assumed in the acquisition. Rockwell removed the action to federal court based upon diversity, 1 and Rockwell and Scherer both moved for summary judgment. The district court granted summary judgment for Rockwell dismissing the action in its entirety. Scherer now appeals.
Following Rockwell's acquisition of Baker-Perkins and its assumption of Scherer's employment contract, Richard Luzzi, vice-president for human resources, and William Boston, another vice-president, discussed the terms of that contract. The contract provided for annual compensation in the range of $300,000 to $400,000. Boston and Luzzi were concerned about the fact that Scherer's compensation greatly exceeded that of comparable Rockwell executives. Luzzi testified in his deposition that the figure was approximately double what Scherer would have been compensated as a Rockwell executive. Both Luzzi and Boston informed Scherer that Rockwell thought his compensation was too high. Scherer indicated that he would honor his contract, and Luzzi testified that he got the impression that Scherer would not be willing to renegotiate his compensation under the contract.
With regard to termination, Scherer's contract required that Rockwell give him a three year notice of termination, unless he was guilty of some misconduct or breach of the contract. The contract provided in relevant part as follows:
5. This agreement and your employment shall cease without notice on the last day of the month in which you attain the age of 65 years but subject thereto the employment may be terminated at any time by the Company giving you written notice effective on a date not less than three years from the date of giving such notice.
. . . . .
13. If at any time during the employment you
(a) shall be guilty of any gross default or misconduct or material breach or non-observance of any of the stipulations herein contained ...
then in any such case the Company may terminate your employment forthwith without any notice.
Luzzi and Boston decided that Rockwell should give Scherer the three year notice required by paragraph 5 of his contract. Boston informed Scherer in person that Rockwell intended to honor his contract but would be giving him a three year notice of termination. Written notice, however, was never sent to Scherer. While the letter of notice was being approved by Rockwell's legal department, allegations of sexual harassment surfaced. Terry Pendy, Scherer's secretary, complained of sexual harassment to a lower level executive at Baker-Perkins, who inquired of Luzzi what Pendy could do about it. Luzzi suggested that Pendy contact him, and she did. Luzzi met with Pendy, who described three instances of sexual harassment by Scherer. Joseph Salter was then sent to Baker-Perkins to perform an organizational audit in which employees were encouraged to communicate openly with Salter about their concerns. The published purpose of the audit was "to determine trends in the work place that may have contributed to recent turnover of employees as well as determine other sources of employee discontent." (R. at 56, Ex. C.) Pendy spoke with Salter at length about Scherer's sexual harassment of her. Several other employees reported experiencing, observing, or hearing of Scherer's sexually harassing behavior. Salter reported his findings to Boston and Luzzi, who then determined that Scherer should be terminated for "misconduct," pursuant to paragraph 13(a) of his contract. A termination letter was sent to Scherer which identified sexual harassment as the reason for his termination.
In his pleadings, Scherer admitted that he was terminated by Rockwell and that the reason given was alleged sexual harassment of several co-workers. Scherer then affirmatively stated that the allegations of misconduct were untrue and unfounded. Rockwell moved for summary judgment. In support of its motion, it submitted excerpts from the depositions of Scherer himself; his secretary, Terry Pendy; the Rockwell investigator, Joseph Salter; two Rockwell vice-presidents, Richard Luzzi and William Boston; and Scherer's direct superior, Michael Leggatt. Rockwell also submitted transcripts of Leggatt's interviews with Baker-Perkins employees, in which several employees related specific incidents of sexual harassment by Scherer. 2 In response to Rockwell's motion and in support of his own cross motion for summary judgment, Scherer submitted further excerpts from all of the same persons' depositions, except for Pendy's deposition. Scherer asserted that Rockwell actually terminated him because of his refusal to renegotiate his employment contract which Rockwell executives considered to be "too rich."
Pendy described many specific instances of sexual harassment in her deposition. She told of Scherer's comments to her regarding her anatomy, of instances of unwelcome touching, and of his comments about his extramarital affairs with other women. She described these incidents in detail, relating the location, what was said, who was present, and how she felt. She also testified that Scherer told her that he had told others that they were having an affair. She then described an incident where she had asked for a pay raise, and she remembered that he responded, " 'Well, you could be making more money if you perform favors, certain favors, on the side and you could receive bonuses' [or] something to that effect." She further testified that Scherer asked her out for drinks three to five times and to his cabin in Michigan for a weekend. She declined all of his invitations and frequently objected to his behavior, but to no avail. Instead, she testified that the frequency of his offensive behavior increased during the term of her employment.
In Scherer's deposition, he admitted inviting one of his co-workers out for dinner and drinks and sending her flowers. When questioned about other specific incidents, he testified that he could not recall those incidents. He was then asked whether he denied that those incidents occurred, and he responded only that he could not recall them. Later in his deposition when asked about the charges contained in his termination letter, he stated that the charges were untrue and generally denied that he had ever sexually harassed a co-worker. He further testified that he had told others at the time of his termination that the charges were untrue and unfounded.
The district court held that the term "misconduct" in paragraph 13(a) of Scherer's contract was unambiguous when read in its plain and ordinary meaning. Scherer argued that any misconduct must relate to the stipulations and duties set out in the contract itself and could not, therefore, relate to sexual harassment which was not mentioned in the contract. The district court rejected this argument stating, "Such a construction is grammatically awkward and nonsensical." The court further noted that such an interpretation would make the list of terms in paragraph 13(a) redundant. The district court then determined that there was no disputed issue of fact concerning Scherer's breach of contract claim and granted summary judgment for Rockwell.
Because Judge Shadur has thoroughly and completely analyzed Scherer's arguments concerning the ambiguity of the term "misconduct" in his contract, and any additional discussion by this court would add little, if anything, we adopt the district court's opinion on that issue as the opinion of this court. The district court's opinion is published at 766 F.Supp. 593 (N.D.Ill.1991). In response to Scherer's criticism of the district court's opinion, we note only that a contractual term may be unambiguous even though its ordinary meaning encompasses more than one type of conduct. Under this contract, there was no reason to limit the term "misconduct" to its narrowest possible scope.
We now turn our attention to Scherer's challenges to the district court's judgment on the merits of...
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