2004 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-24-2004

Mele v. Fed Rsrv Bank NY

Precedential or Non-Precedential: Precedential

Docket No. 03-1556

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Recommended Citation

"Mele v. Fed Rsrv Bank NY" (2004). 2004 Decisions. Paper 941.

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1

 PRECEDENTIAL

UNITED STATES 

COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 03-1556

 

MICHAEL MELE, 

Appellant

v.

FEDERAL RESERVE BANK 

OF NEW YORK

 

On Appeal from the 

United States District Court for the

District of New Jersey

(Dist. Ct. No. 02-cv-01216)

District Judge: Hon. Anne E. Thompson

 

Argued: November 18, 2003

Before: RENDELL, BARRY, and

CHERTOFF, Circuit Judges

(Filed: February 24, 2004)

Brian E. Fleisig (Argued)

Pearce & Massler 

25 Main Street

Court Plaza North 

Hackensack, NJ 07601-7025 

Counsel for Appellant

Yoon Hi Greene (Argued)

Federal Reserve Bank of New York 

33 Liberty Street 

New York, NY 10045

Shari Leventhal

Federal Reserve Bank of New York 

33 Liberty Street 

New York, NY 10045 

Counsel for Appellee

 

OPINION

 

CHERTOFF, Circuit Judge.

Appellant Michael Mele alleges his

employment wasterminated in violation of

the Federal Reserve Bank of New York’s

(“the Bank”) Management Guide to

Personnel Policies (“Guide”). The District

Court granted the Bank’s motion to

dismiss all counts on the pleadings

pursuant to Fed. R. Civ. P. 12(c).1For the

1

 Rule 12(c) provides: “After the

pleadings are closed but within such time

as not to delay the trial, any party may

move for judgment on the pleadings. If,

on a motion for judgment on the

pleadings, matters outside the pleadings

are presented to and not excluded by the

court, the motion shall be treated as one

for summary judgment and disposed of as

provided in Rule 56, and all parties shall

be given reasonable opportunity to present

all material made pertinent to such a
2

reasons stated below, we will affirm the

District Court’s dismissal. 

I.

Jurisdiction in this Court is proper

because the judgment is a final order under

28 U.S.C. § 1291. This Court’s review of

a Rule 12(c) motion to dismiss is plenary.

Leamer v. Fauver, 288 F.3d 532, 535 (3d

Cir. 2002). As with a Rule 12(b)(6)

motion, this Court “view[s] the facts

alleged in the pleadings and the inferences

to be drawn from those facts in the light

most favorable to the plaintiff.” Id. That

is, the motion should not be granted

“unless the moving party has established

that there is no material issue of fact to

resolve, and that it is entitled to judgment

in its favor as a matter of law.” Id. 

Mele was employed as a facilities

engineer at the East Rutherford Operations

Center (“EROC”) of the Bank in Bergen

County, New Jersey, from July 1995 to

January 2000. Mele claims that, in early

January 2000, he was denied access to a

particular area of EROC on the ground that

he was required to be armed or

accompanied by an armed individual,

despite the fact that he had previously

enjoyed unhampered access to that area.

Thereafter, Mele reported to his supervisor

Terrence McCorry, who, he alleges,

denied his request for a written copy of the

Bank’s policy regarding access to the area,

became verbally and physically abusive,

and physically escorted Mele out of his

office. Mele immediately reported the

incident to the Bank’s Human Resources

Department. As a result of these events,

Mele was suspended with pay, and later

was terminated for what was deemed

“misconduct.”

On January 13, 2002, Mele filed a

four-count complaint against the Bank in

the Superior Court of New Jersey. Count

One alleged breach of contract based on

the Bank’s failure to adhere to the Guide’s

warning procedures or graduated

discipline measures in terminating Mele.

Count Two claimed wrongful termination

on the ground that Mele’s purported

“misconduct” did not fall into one of the

four categories of employee misconduct

set forth in the Guide. Count Three pled

breach of the implied covenant of good

faith and fair dealing, and Count Four

alleged wrongful interference with Mele’s

prospective economic advantage in

continued employment. Mele does not

advance any authority other than the Guide

to support any of these claims. 

On March 19, 2002, the Bank filed

a notice of removal, pursuant to 12 U.S.C.

§632.2 On January 23, 2003, the District

Court granted the Bank’s motion to

dismiss all counts on the pleadings

pursuant to Fed. R. Civ. P. 12(c). The

motion by Rule 56.” As the District Court

noted, because the Bank had already filed

an answer in the action, the motion is for a

judgment on the pleadings pursuant to

Rule 12(c). 

2

 This section provides, in pertinent

part: “[A]ny Federal Reserve bank which

is a defendant in any such suit may, at any

time before the trial thereof, remove such

suit from a State court into the district

court of the United States.” 
3

District Court explained that Mele’s claims

rested on the premise that he had an

employment contract with the Bank, a

conclusion undermined by both the

language of the Federal Reserve Act, 12

U.S.C. § 341, Note 3, and case law

interpreting the Act to restrict the Bank’s

power to enter into employment contracts.

The District Court, however, opted not to

address the open question of the Bank’s

power to contract, concluding that even

“assuming in arguendo that the Federal

Reserve Bank could enter into an

employment contract, nothing inside the

Guide prevents the Federal Reserve Bank

from terminating an employee in

plaintiff’s position, in view of the

disclaimer found on the front cover.” 

Notice of appeal was timely filed on

February 24, 2003. 

II. 

The Bank contends we should

affirm the dismissal of Mele’s claim

because the Federal Reserve Act, 12

U.S.C. § 341, Note 3, restricts the Bank’s

authority to enter into employment

contracts, so that any implied contract

created by the Guide is unenforceable.

The statute enumerates the general powers

of the Federal Reserve Bank:

Upon the filing of the organization

certificate with the Comptroller of

the Currency a Federal Reserve

bank shall become a body

corporate and as such, and in the

name designated in such

organization certificate, shall have

power—

. . .

Third. To make contracts.

. . .

Fifth. To appoint by its board of

directors a president, vice

presidents, and such officers and

employees as are not otherwise

provided for in this chapter, to

define their duties, require bonds

for them and fix the penalty

thereof, and to dismiss at pleasure

such officers or employees. . . . 

12 U.S.C. § 341 (emphasis added). The

Bank asserts that the language of

paragraph five confers an indefeasible

power to terminate employees at will. 

Mele argues that paragraph five’s

“dismiss[al] at pleasure” provision should

be read in conjunction with paragraph

three, so that it is not treated as a limitation

on the Bank’s authority to enter into

contracts, including employment contracts.

 Mele tries to reconcile these provisions by

suggesting that binding the Bank to

employment contracts is consistent with

the reserved power to dismiss employees

at will because “any party to any contract

can breach its duties provided only that it

pay damages ensuing from the breach.”

(Appellant Br. at 8). 

We reject such a strained

interpretation of the statute. Mele’s

position would rewrite Congress’sspecific

instruction that the Bank retain the power

to dismiss at pleasure into a statutory

damages clause. The better reading

recognizes that paragraph three generally

refers to “contracts,” and that the more

specific reference in paragraph five to
4

employment should be read as a limitation

on the general power to enter into

contracts. “[A] recognized tenet of

statutory interpretation directs that a

specific provision in an enactment prevails

over a seemingly irreconcilable general

one.” LaVallee Northside Civic Ass'n v.

Virgin Islands, 866 F.2d 616, 621 (3d Cir.

1989) (citing 2A A. Sutherland, Statutes

and Statutory Construction § 51.05, at 499

(N. Singer 4th ed. 1984)).

While this Court has not previously

addressed this particular statute, “[c]ourts

uniformly hold that [the Federal Reserve

Act] precludes the enforcement of any

employment contract against a Federal

Reserve Bank and prevents the

development of any reasonable

expectation of continued employment.”

Jaffee v. Federal Reserve Bank of

Chicago, 586 F. Supp. 106, 107-08 (N.D.

Ill. 1984) (citing cases); see Magel v.

FederalReserveBank of Philadelphia, 776

F. Supp. 200, 205 (E.D. Pa. 1991), aff’d 5

F.3d 1490 (3d Cir. 1993); Bollow v.

Federal Reserve Bank of San Francisco,

650 F.2d 1093, 1097-98 (9th Cir. 1981);

Little v. Federal Reserve Bank of

Cleveland, 601 F. Supp. 1372, 1375-77

(N.D. Ohio 1985); Obradovich v. Federal

Reserve Bank of New York, 569 F. Supp.

785, 790 (S.D.N.Y. 1983); Armano v.

Federal Reserve Bank of Boston, 468 F.

Supp. 674, 675-76 (D. Mass. 1979); see

also Inglis v. Fienerman, 701 F.2d 97 (9th

Cir. 1983) (analyzing similar language

under the Federal Home Loan Bank Act).

These courts have noted that “no

process or tenure rights are conferred on

reserve bank employees . . . [and] attempts

to create such rights by reference to

independent sources are violative of the

statute and void thereunder.” Bollow, 650

F.2d at 1098. Moreover, the cases have

specifically rejected claims, similar to

those of Mele, that an employee is

contractually protected by personnel

policies and practices, including written

policies of progressive discipline. See

Little, 601 F. Supp. at 1376; Armano, 468

F. Supp. at 675-76; Obradovich, 569 F.

Supp. at 790. Rather, “[a]ny implied

contract based upon the Federal Reserve’s

personnel rules would exceed the Federal

Reserv e’s autho rity , an d b e

unenforceable.” Id. at 790. Such a

contractual obligation would undermine

the Congressional intent to protect Federal

Reserve Banks from restrictions in

carrying out their duties. See Armano, 468

F. Supp. at 676.

 Mele points to no authority to the

contrary. We now explicitly join the

approach uniformly adopted by other

courts considering this issue. We hold that

the Federal Reserve Act precludes

enforcement against a Federal Reserve

Bank of an employment contract that

would compromise its statutory power to

dismiss at pleasure, and prevents the

development of a reasonable expectation

of continued employment. As a result,

Mele’s argument that he was terminated in

contravention of the Guide’s policies is

without merit.

III.

Mele contends that even if the Bank

has the power to dismiss employees at

will, the Guide relinquishes this right in
5

order to retain those employees, and the

Bank should not be allowed to disavow

this supposed quid pro quo. Mele,

however, cites no authority to support the

proposition that the Bank is authorized to

waive or relinquish the right to terminate

employees at will.3 We need not decide

whether it is ever possible for a Federal

Reserve Bank to relinquish this right

because in this case it is clear that it did

not do so. 

The Guide actually disclaims any

limitation on the Bank’s statutory powerto

dismiss at pleasure. The Guide contains

the following statement on the cover in

italicized font:4

This guide provides a description

of certain Bank policies,

procedures and benefits. This

guide is not intended to be a

contract of employment, nor does it

supersede or modify the Bank’s

Operating Bulletins and Circulars,

the specific contracts and

documents coveringBank-provided

benefits, or the Bank’s right, under

federal law, to terminate any

employee at will.5 

3

 At argument, even Mele concedes

that there is no case supporting the

proposition that the Bank has the authority

to waive the dismiss at pleasure provision.

Mele merely directs this Court’s attention

to a general line of estoppel cases. See,

e.g., Heckler v. Cmty. Health Servs. of

Crawford County, Inc., 467 U.S. 51, 59

(1984). None of the cases deal

specifically with the authority of the Bank

to relinquish an explicit statutory grant of

power to dismiss at pleasure. 

4

 Mele contended at argument that

the disclaimer is not actually on the cover

since the Guide was placed in a binder.

Even if the binder cover had to be opened

before the text of the disclaimer was

revealed, this does not undermine the

claim that the Bank specifically indicated

it was not relinquishing its power to

dismiss at pleasure, and that the disclaimer

was conspicuously placed such that Mele

cannot now complain that it is somehow

“unfair” or “unjust” for the Bank to

“disavow” the Guide. 

5

 Mele argues that the District Court

erroneously relied on the disclaimer in

ruling on the Rule 12(c) motion. The

general rule is that a “district court ruling

on a motion to dismiss may not consider

matters extraneous to the pleadings.” In re

Burlington Coat Factory Sec. Lit., 114

F.3d 1410, 1426 (3d Cir. 1997). 

However, an exception to this general rule

provides that a “‘document integral to or

explicitly relied upon in the complaint’

may be considered ‘without converting the

motion [to dismiss into one for summary

judgment.’” Id. (quoting Shaw v. Digital

Equip. Corp., 82 F.3d 1194, 1220 (1st Cir.

1996)) (emphasis added in In re

Burlington). Here, consideration of the

disclaimer in the Guide clearly falls within

this exception for documents “integral to

or explicitly relied upon in the complaint.”

The Guide forms the heart of Mele’s

complaint. Thus, the disclaimer is just the

kind of evidence that the “integral”
6

This disclaimer specifically emphasizes

the Bank’s federal right to terminate any

employee at will, and rejects any notion

that the Guide is intended to be a

relinquishment of this power. 

TheDistrictCourt concluded thatin

light of the disclaimer, nothing in the

Guide prevents the Bank from terminating

employees. Because we conclude above

that the Federal Reserve Act precludes

enforcement of an employment contract

that would compromise the Bank’s

statutory power to dismiss at pleasure, we

need not reach the issue of whether the

disclaimer is sufficient under ordinary

employment contract law principles. But

the disclaimer certainly rebuts Mele’s

contention that the Bank intentionally

relinquished the power to dismiss at

pleasure (assuming it could do so). 

IV.

Mele suggests on appeal that the

Bank cannot claim the protection of the

employment at will provision because the

termination was not undertaken by the

Board of Directors, as required by 12

U.S.C. § 341. In his complaint, Mele did

not allege the termination was invalid

because it was not authorized by the Board

of Directors or its valid delegate. What he

alleged—and what we have rejected—was

that his termination was forbidden by the

Guide. Mele first raised the suggestion

that the termination was unauthorized in a

letter submitted after a status conference in

which the District Court provided Mele

with a final opportunity to submit case law

in support of his opposition to the 12(c)

motion. 

“‘It is black-letter law that [a]

motion to dismiss for failure to state a

claim . . . is to be evaluated only on the

pleadings.’” A.D. Bedell Wholesale Co.,

Inc. v. Philip Morris, Inc., 263 F.3d 239,

266 (3d Cir. 2001) (quoting Mahone v.

Addicks Utility Dist., 836 F.2d 921, 935

(5th Cir. 1988)) (other internal quotations

omitted). An entirely new claim for relief

presented in a letter brief does not

constitute an amendment to the pleadings.

In deciding a Rule 12(c) motion, the court

does not consider matters outside the

pleadings.6 Here, viewing the complaint

“in the light most favorable to the

plaintiff,” the Bank has established that

“there is no material issue of fact to

resolve, and that it is entitled to judgment

in its favor as a matter of law.” Leamer,

288 F.3d at 534. 

documents exception was intended to

encompass, so that plaintiff cannot

maintain a claim “by extracting an isolated

statement from a document and placing it

in the complaint, even though if the

statement were examined in the full

context of the document, it would be clear

that the statement [did not support the

claim].” In re Burlington Coat Factory,

114 F.3d at 1426. 

6

 Mele’s own brief concedes that “a

Court may only consider the Complaint

and the reasonable inferences therefrom”

in deciding a Rule 12(c) motion.

(Appellant Br. at 27, n.5). 
7

V.

For the foregoing reasons, we

affirm the District Court’s grant of the

motion to dismiss pursuant to Fed. R. Civ.

P. 12(c).