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MCDERMOTT v. CONTINENTAL/MIDLAND

January 30, 2003

MARK MCDERMOTT, PLAINTIFF,
v.
CONTINENTAL/MIDLAND, INC., A DELAWARE CORPORATION, INDIVIDUALLY AND D/B/A HUCK FASTENERS, HUCK INTERNATIONAL, INC., A DELAWARE CORPORATION, KORE II, INC., AN ILLINOIS CORPORATION D/B/A HUCK FASTENERS II, AND ALCOA, INC., A PENNSYLVANIA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Marvin E. Aspen, United States District Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff, Mark McDermott, filed a complaint against Defendants alleging breach of contract and defamation in the Circuit Court of Cook County, Illinois. Because of the diversity of the parties and the amount in controversy, Defendant Alcoa removed the case to this Court pursuant to 28 U.S.C. § 1332 and 1441. Before us is Alcoa's motion to dismiss both counts of McDermott's amended complaint. For the reasons stated below, we grant Alcoa's motion.

I. BACKGROUND

The following factual allegations are taken from McDermott's amended complaint and are deemed true for the purpose of Alcoa's motion. In September 1986, Midwest Fastener Corporation ("Midwest") hired Mark McDermott as a Manufacturing Supervisor. Midwest promoted McDermott to the position of Distribution Manager in June 1989. In early January 2001, Alcoa acquired possession of and assumed control over Midwest, its accounts, workforce, and other assets.*fn1 McDermott continued to work as a Distribution Manager until February 22, 2002 at which time Alcoa terminated his employment.

While employed by Alcoa, McDermott received an employee handbook ("Handbook"). The Handbook contains a disclaimer that appears on the bottom of the first page under the heading "Introduction." The disclaimer sets forth that the "Handbook is intended to provide employees with a general understanding of the Company's personnel policies, work rules and benefits and it is not intended to be an employment contract, promise, or guarantee of any kind or to contain all information employees need to know." The Handbook adds that Alcoa "reserves the right to change or revoke any of its benefits, conditions or privileges of employment, policies, practices, procedure or guidelines contained [here]in . . . at any time with or without notice or for any reason and without a written revision of the Handbook." The Handbook explains that "employment is "at-will" and is for no definite or specified period, regardless of the time and manner of payment of wages or salary.

The Handbook contains "Disciplinary Action Guidelines." According to the guidelines, "[i]t is the responsibility of every Supervisor to fairly evaluate employees conduct and to administer discipline when necessary." Although the Handbook lists various types of inappropriate conduct, it notes that the list is "not intended to include all rules of conduct and the Company shall, when it deems appropriate, change them, establish additional rules or eliminate some with or without notice." The Handbook further lists "Corrective Action Procedures." The Handbook does not mandate that the procedures be applied in an instance of employee misconduct. Rather, the Handbook describes the procedures as guidelines, noting that "[s]ome forms of misconduct are normally considered so improper as to reasonably justify immediate discharge." The Handbook states that "[v]iolations of Company policies or rules, unproductive or incompetent performance, or other actions that are detrimental to the Company cannot be condoned." Consequently, the Handbook explains that misconduct involving "a violation of Company policy, procedures, programs, rules, instruction, past practice, etc., or that is detrimental to the Company, customers, or employees, or performance that does not meet standards may result in discipline up to and including discharge."

On February 22, 2002, Robert Benning, McDermott's supervisor, told McDermott that he was being fired. Benning explained that Jeff Glazer, then director of the personnel department, had told him that McDermott was being terminated because he "talked back" and was "disrespectful to his supervisor," that he "lost product" and was "incompetent" in inventory control and employee supervision, and that he was "authorizing excessive overtime" and allowing others to "sleep on the job." McDermott subsequently filed the two count amended complaint presently before us. McDermott first claims that the above described Handbook constitutes an employment contract, which Alcoa breached when it fired him on February 22, 2002. McDermott secondly alleges that Alcoa defamed him per se when Glazer explained to Benning why McDermott was being fired.

II. ANALYSIS

A. Standard of Review

The purpose of a motion to dismiss under Rule 12(b)(6) is to decide the adequacy of the complaint, not the merits of the case. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a motion to dismiss, we must accept all well-pled allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. See MCM Partners, Inc. v. Andrews-Bartlett & Assoc., Inc., 62 F.3d 967, 972 (7th Cir. 1995), aff'd 161 F.3d 443 (7th Cir. 1998), cert. denied 528 U.S. 810 (1999). Therefore, a complaint should not be dismissed "unless it appears beyond all doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief" Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

B. Breach of Contract

McDermott's complaint alleges that the Handbook constituted a contract of employment between himself and Alcoa. Alcoa argues that McDermott's complaint fails to state a claim for breach of contract because the Handbook does not constitute a contract as a matter of law. We agree. In order for an employee handbook to constitute a contract of employment, the following three elements must be present:

First, the language of the policy statement must contain a promise clear enough that an employee would reasonably believe that an offer has been made. Second, the statement must be disseminated to the employee in such a manner that the employee is aware of its contents and reasonably believes it to be an offer. Third, the employee must accept the offer by commencing or continuing to work after learning of the policy statement. Doe v. First Nat'l Bank of Chicago, 865 F.2d 864, 872 (7th Cir. 1989) (quoting Duldulao v. St. Mary of Nazareth Hosp. Center, 505 N.E.2d 314, 318 (Ill. 1987)).
A disclaimer in an employee handbook, however, can foreclose contract formation by demonstrating that the employer did not make a clear promise of continuing employment. See Workman v. United Parcel Serv., Inc., 234 F.3d 998, 1000 (7th Cir. 2000). Indeed, "a disclaimer, if clear and forthright . . . is a complete defense to a suit for breach of contract based on an employee handbook." Id.; see also Freeman v. Chicago Park District, 189 F.3d 613, 617 (7th Cir. 1999).

The Handbook Alcoa provided to McDermott contains a disclaimer that is both clear and forthright. The disclaimer appears on the first page of the Handbook under the heading "Introduction." The disclaimer explicitly states that the Handbook "is not intended to be an employment contract, promise, or guarantee of any kind or to contain all information employees need to know." In Workman v. United Parcel Service, Inc., the Seventh Circuit explained that where an employee handbook expressly disclaims creating an employment contract, the handbook need not additionally state that the employment is at will. See 234 F.3d at 1001. Nonetheless, the Handbook at issue in ...


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