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Parties Involved:
American Airlines, Inc.
Appellee
Keith Grayson
Appellant

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

No. 87-2682 

KEITH GRAYSON, ) 

) 

Plaintiff-Appellant, ) 

) 

v. ) 

) 

AMERICAN AIRLINES, INC., ) 

) 

Defendant-Appellee. ) 

FILED 

United States Court of Appeals 

Tenth Circ•!it 

JAN 0 91989 

ROBERT L. HOECKER 

Clerk 

Appeal from the United States District Court 

For the Northern District of Oklahoma 

(D.C. No . 83-C-298-C) 

Kathy Evans Borchardt, Tulsa, Oklahoma, for Plaintiff-Appellant. 

David P. Page {Frederic N. Schneider, III, with him on the brief), 

Tulsa, Oklahoma, for Defendant-Appellee. 

Before HOLLOWAY, Chief Judge, and BRORBY and McWILLIAMS, Circuit 

Judges. 

McWILLIAMS, Circuit Judge. 

Appellate Case: 87-2682 Document: 01019674312 Date Filed: 01/09/1989 Page: 1 
Keith Grayson began his employment with American Airlines, 

Inc., in 1966 and continued in that employment until he was 

discharged in 1982 . Following the discharge, Grayson brought suit 

against American in an Oklahoma state court claiming a breach of 

his employment contract and promissory fraud. American removed 

the case under 28 u.s.c. § 144l(a) (1948 as amended) to the United 

States District Court for the Northern District of Oklahoma on the 

basis of diversity of citizenship. 28 u.s.c. S 1332 (1956 as 

amended). 

American then filed a motion for summary judgment. In connection with Grayson's cause of action for wrongful termination of 

his employment contract, it was American's position that Grayson 

was an at will employee or, alternatively, that the termination 

was based on good cause. With respect to Grayson's cause of action based on promissory fraud, American argued on summary judgment that Grayson. did not rely to his detriment on any oral 

promise of American's of continued, or permanent, empl oyment. The 

district court granted summary judgment in favor of American on 

both of Grayson•s claims. Grayson's motion for reconsideration 

was denied and Grayson appealed. 

On appeal, we reversed in part, affirmed in part, and 

remanded for further proceedings. 

Inc. (Grayson I), 803 F.2d 1097 (lOth 

Grayson v. American Airlines, 

Cir. 1986). The salient 

facts are described in Grayson I and will not be repeated in great 

detail here. 

In Grayson I, we upheld the district court's holding that 

Grayson did not have a cause of action based on promissory fraud. 

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That holding is not involved in this appeal. Concerning the claim 

for breach of employment contract, we held in Grayson I that 

although Grayson's initial contract with American was an 11 at will" 

contract, meaning that either party had the right to end the 

relationship at any time 11 for any reason or no reason, .. an 

"employee handbook" converted Grayson's employment contract to one 

which could only be terminated for "good cause." we also held 

that the record showed an economic turndown in the airline 

industry which constituted "good cause" for Grayson's termination, 

further noting that Grayson conceded that s uch a condi tion existed 

in the economy and that it constituted good cause. 

The limited reversal in Grayson I was based on our reading of 

Hall v. Farmers Insurance Exchange, 713 P.2d 1027 (Okla. 1986), a 

case that was announced after the district court 's order granting 

summary judgment for American. In Grayson I, we read Hall as 

holding that under Oklahoma law "a covenant of good faith is 

implicit in every contract, even in at will employment 

contracts." * 803 F.2d at 1099. 

Regarding the ••good faith" claim, we noted in Grayson I that 

Grayson's complaint alleged, in effect, that American breached its 

implied duty to exercise ••good faith" when it discharged Grayson 

and refused to reassign Grayson to another position for which he 

was qualified, despite the fact that he had indicated a willingness to accept a lower paying position. We also observed that in 

* In Grayson I, we rejected American's argument that under · Hall 

the covenant of good faith dealing applies only if the employee 

has been denied some earned benefits to be paid in the future. 

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resisting American's motion for summary judgment, Grayson "identified enough specific information to present a material question of 

fact as to whether or not American breached the implied covenant 

of good faith by its actions." Id. at 1101. On this basis, we 

reversed the district court's summary judgment on Grayson's claim 

of bad faith dealing by American. 

On remand, American again filed a motion for summary judgment 

regardi ng Grayson's only remaining claim of breach of an implied 

duty to deal in good faith. This motion was based on Hinson v. 

Cameron, 742 P.2d 549 (Okla. Sup. Ct. 1987), an opinion which the 

Oklahoma Supreme Court issued after Grayson I and which considered 

Hall and interpreted it more narrowly than we had in Grayson I. 

In Hinson, the Supreme Court of Oklahoma "viewed" Hall as standing 

.for the rule that an agent, distinguished from an employee, "may 

recover from his principal when the latter has, i n bad faith, 

deprived him of the fruit of his own labor." Id. at 552. Thus, 

according to the Supreme Court of Oklahoma, Hall did not create a 

cause of action in favor of an at-will employee discharged in "bad 

faith." 

In response to American's second motion for summary judgment, 

Grayson conceded that "the Tenth Circuit Court of Appeals misapplied Hall v. Farmers Insurance Exchange, 713 P.2d 1027 (Okla. 

1985} to the facts in this case." Plaintiff's Response, July 10, 

1987, p. 3. However, he argu~d that Hinson created a different 

cause of action based on "an implied contract of permanent employment or tenured job security." Id. at p. 1. 

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A different district judge than the one who granted 

American's first motion for summary judgment heard and granted 

American's second motion for summary judgment, holding that o ur 

limited remand in Grayson I was controlled by Hinson. Grayson 

again appeals. We a ffirm. · 

We are not here concerned with Grayson's second cause of action based on promissory fraud. The district court granted summary judgment for American on that claim, and in Grayson I we 

affirmed. 

Rather, this appeal concerns the first cause of action, where 

Grayson alleged that he had an oral contract of employment with 

American and that American wrongfully and "without justifiable 

cause" discharged him. The district court granted summary judgment for American on that claim too. On appeal, we held that 

because of an employee's handbook Grayson's employment, even 

though an at will employment, could only be terminated for "good 

cause." However, as concerns "good cause," we a lso held in 

Grayson I that there was no genuine i ssue of material fact on that 

particula r issue, and that indeed Grayson conceded that the 

11 economic downturn in the airline industry ••• constituted good 

cause." 803 F.2d at 1099. Accord ingly , the law of the case is 

that Grayson was discharged for good cause, and we must follow 

tha t holding on this appeal. Ashland Oil, Inc. v. Phillips, 561 

F.2d 1351, 1363 {lOth Cir. 1977). 

As above stated, in Grayson I, the limited reversal and 

remand was confined to the district court's further consideration 

of Grayson's claim that American breached its implied duty of good 

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faith dealing in connection with Grayson's claim that he should 

not have been discharged when he was willing to accept transfer, 

or even demotion, rather than be discharged. The limited reversal 

and remand was based on our reading of Hall. However, by the time 

the district court, after remand, considered Grayson's claim of 

bad faith dealing, the Oklahoma Supreme Court in Hinson clearly 

indicated that Hall was limited to its own facts and would not 

apply to a fact situation like the present one . In Hinson, the 

Oklahoma Supreme Court held that Hall was limited to a principalagent relationship and only applied where the agent was deprived 

of earned income to be paid in the future. 742 P.2d at 552. 

Grayson was an employee, not an agent, and no aspect of his clai ms 

involves deferred payment of earned income. Based on Hinson, the 

district court entered summary judgment for American. Our reading 

of Hinson convinces us that Grayson has no claim based on bad 

faith dealing. Accordingly, we affirm. 

In his brief, Grayson, as we read it, concedes that Hinson 

limits Hall to principal-agent relationships and to claims for the 

unconscionable denial of earned benefits. Opening Brief, Dec. 11, 

1987, p. 5. In our view, such an interpretation of Hinson 

terminates the present controversy. The only issue remanded to 

the district court in Grayson I resulted from our belief that, 

under Hall, Grayson had a claim based on bad faith dealing by 

American. Otherwise, Grayson I affirmed the first order of the 

district court granting American summary judgment. By the time 

the district court thereafter considered the one matter which we 

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remanded, the Oklahoma Supreme Court interpreted Hall in such 

fashion that Grayson had no claim of bad faith dealing. 

We are not impressed with Grayson ' s argument that under 

Hinson he may have a cause of action based on "tortious bad faith" 

and "breach of an implied contract of permanent employment." 

Neither was pled in the complaint. It is too late in the day to 

start over. See Robinson Ve Volkswagen of America, Inc . , 803 F.2d 

572 (lOth Cir. 1986). 

Judgment affirmed . 

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