## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

____________ N o. 07

- 3913 M AR S HA B ART EL, Plai nt i f f

-Appe l l ant, v. NBC U NI VE R S AL, I NC ., D efend a nt-A pp ellee.

____________ A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 07 C2925

—Jo hn W. Darrah, Judg e.

____________ A RG UE D M AY 28, 2008

— D ECI DE D S EP TE MBE R 11, 2008

____________
Befo re E A S T E RB R OO K, C h i ef Judge, an d R IPPLE a nd W OO D , C ircu it Judges. W OO D , C ircu it Judge. M a r s ha Ba r t e l l o s th e r j ob a tNBC U ni ver sal, I nc. , after s he co m pla i ned that the t el evi si on show fo r w hi ch she w as re sponsibl e was notadheri ng to N BC ’ s i nter nal ethi cal sta nd ar ds. N BC fi rs t turned a d eaf ea r t o he r c o m pl ai nt s; B artelthe n r efus ed to c o nt i nue ac tinga s pr o duce r f o r the s ho w; a nd fi na l l y Ba r te l f o und he r s e l fo utthe do o r . S he s ue d NBC i n f e de r a l co urt,2 N o. 07

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r el y i ngo n di ve r si ty j ur i sdi ct i o n, f o r br ea cho fc o nt r ac t. The dist ri ct c ourtdism iss ed the com pla i nt f orf ai l ure to sta te a c l a i m, a n d w e a f fi r m.

I T he accou n t o f th e facts th at fol low s acce p ts B artel’s acco un ta s t r ue , s i nc e thi s i s a n a pp e a l fr o m a di s mi s sal un d er F ED . R. C IV . P . 1 2(b )(6)
. Mo r a n s k iv . G MC, 43 3 F
. 3d 537, 5 39 ( 7th Ci r. 20 05)
. I fshe has no t s tat ed a c l ai m ev en und erthi s favor abl e a pp ro ach, then i t was co rr ect to ter m i nate the l i ti gat i on a t i ts outse t. Barte l worke d as a j ournal i st f orN BC U ni ver sal, I nc. , f or 21 yea rs . S he won aw ar ds f orher w or k and w as re gar ded a s o ne o fthe b e s ti nv e s t i g a t i v e j o ur na l i s t s o n t he NBC new s t eam . I n A ugust 2 006, N BC as si gned Bart elto be th e so l e pr o duce r o f a se g m en t en ti tl ed “T o Ca tc h a Predato r, ” which was pa rt of N BC ’ s Date l i ne te l evi si on progra m . N BC worke d w i th an or gani zati on ca l l ed “Per ver ted J usti ce, ” wh ich u ses ag ents prete nd i ng to be m i nor s t o l ure adult m en int o c h at ro om s. The part i es m ake a date t o m eet, and the m en ar e l ed to bel i eve they ar e a rr angi ng a sexu al assi gnati on with a m i nor . W hen th e m an ar riv es at th e m ee tin g pla c e, h e is arr es te d , w h ile the c onfro nt atio n sce ne i s fi l m ed. The se quence i s l ate r tel evi sed o n the Predato r seg m ent o fDatel i ne. A s a j ou rna li st an d prod uc er forN B C , one of Barte l’ s m ai n re spo ns ibi l i ti es was t o e ns ur e co m pl i an ce wi ththe ethi calstandards of j ournal i sm and N BC ’ s i nter nal gui del i nes. Bart elf ound nu m er ous a spects o f t he Pr edatorN o. 07

- 3913 3

s e g men tp r o du c t i o n t o b e i n v i o l a t i o n o fthe s e s t a nd a r ds and gui del i nes. S he be l i eve d, f orexam ple , thatN BC was provi ding com p en sati on di re ctl y o r i nd i re ctl y t o the l aw en f o r ce m en t o f fi ce r s par ti ci pat i ngi n the st i ng s. S he thought i t wrong that “Per ver ted J usti ce” re prese ntati ves d id n ot p ro vid e N B C w ith co m p et e t r a n sc rip ts of th eir conve rs ati ons w i th the ta rg ets , and that they did not i denti fy a l l o fthei r volunteer s t o N BC
. S he al so obj ec te d tha t Dat el i ne an d Pe r ve r te d J us ti ce wer e st ag i ngthe ar r es t s i n a wa y th a tma x i mi z e d th e h u mi l i a t i o n o ft he tar get
. Bart eli nfo rm ed her superi or s a t N B C o f thes e probl em s, but they to ok no steps to cure them

. Bart elthen to l d he r s upe r vi so r s th ats he c o ul d no t pr od uc e th e seg m en t. On N ove m ber17, 20 06, N BC i nfo rm ed Barte l t h a th e r c o n t r a c tw o u l d b e t e r mi n a t e d e f f e c t i v e D e c e mber 25, 2006. N B C asserted that this act io n w as p art of a prog ra m of l ay- off s that i t was m aki ng be cause ofge nera l eco nom i c co nd i ti ons. Bar te l di d no t be l i ev e th i s ex pl an at i o n, a nd s o s he su ed N BC f o r b r ea cho fc o nt r ac t. S he a ss er ted th at th e ter m i nati on was prem atur e i n l i gh t of the pro tect i on her co nt r ac t aff o r ded he r . I n a ddi ti o n, s he c ha r g ed th atthe r ea so n g i ve n f o r he r t er m in at i o n was pr et ex tu al ; tha t th e re alr eas on was her refusal to pro du ce a se gm ent that vi o l a t e d e t hi c a l a nd c o mpa ny s t a nd a r ds ; a nd t ha ther contr act i ncl ud ed an i m pli ci t re str i cti on aga i nst fi ri ng her f o r thi s k i nd o fr ea so n, thu s r en der i ngNBC’s a ct i o n a bre ach o fco ntra ct. N BC m ove d t o dism i ss the com pla i nt f or f ai l ure to sta te a cl ai m . I t argu ed tha t th e co nt r ac t Bar te l a tt ac he d t o the4 N o. 07

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com p lai nt w as u na m biguou s an d all ow ed it to en d Ba rtel’ s empl o y m en t when an d why i t di d. The c o nt r ac t, NBC w en t on, co ntai ned no re str i cti ons on a l l owable r eas ons f or dism i ssa l

. N BC al so ar gued that N ew Yor k l aw , wh i ch both parti es agr ee gov er ns thi s ca se, does notal l ow court s to re cogni ze the i m pli ci t r est ri cti on f orwh i ch Bart elwas ar gui ng. The di str i ct c ourtgr anted N BC ’ s m oti on t o dism i ss, and Barte l appeal s.

II W e g i ve de no vo r evi ew to a dist ri ct c ourt ’ s di sm i ssa l und er Rule 12 ( b) ( 6) f orf ai l ure to sta te a cl ai m upon w hi ch r el i efcan be g ra nted

. M o r ans ki, 43 3 F
. 3d at 539. T h e qu e s t i o n w h e t h e r t h e l a n g u a g e o fa c o n t r a c ti s a mbi guous i s o ne o fl aw , and so we also r evie w that deno vo . Palm i e r iv. Al l s t at eIns . Co. , 4 4 5 F
. 3 d 1 79, 18 7 ( 2d C ir. 2006). Barte l fi rs t a rg ues that NB C w as not perm i tte d und er t he c o nt r a c tt o e nd h e r e mp l o y men twh e n i tdi d. In s up p or t o f th is p os itio n, sh e s ou gh t t o in tr od u c e e x tr in sic evi dence abo ut the parti es’ understan d in g ofthe contr actu ala r r an g ement s, b utthe di stri ctc o ur t he l d tha t th e l anguage o f t h e co ntra ct was unam bi guous and ther ef or e deni ed her r equest. The prov i si on that di re ctly a d d resse s the ti m e a t which N B C w as en tit led to t er m in at e B ar te l’s e m p loy m en t is Pa r ag r aph4 ( a) o fthe Le tt erAgr ee m en t be twe enNBC and B ar te l:N o. 07

- 3913 5 T h e t e r m o fth i s A g r e e me n ts h a l l c o mme n c e o n D e c e mbe r 2 6, 2 00 5 an d sha l l c o nt i nue , s ubj ec t to s us pen si o n, extensi on o r ter m i nati on a s her ei nafterpro vi ded , f or a per i od oftwo hun d red and ei ght ( 208) co nsecuti ve w eek s there afte r. The te rm her eofshal l be divi ded i nto f our ( 4) co nsecuti ve cycl es offi fty- tw o ( 52) weeks each. N BC shal l have the r i ght t o ter m i nate thi s Agree

m en t eff ec ti ve a t th e en d of a ny c y cl e pr i o r t o the l astby gi vi ng Arti st w ri tte n noti ce no t l ess than tw enty- ei ght ( 28) days pri or t o the e nd o fany such cycle. This A gr eem ent s hal l auto m ati cal l y t er m i nate at the e nd o fthe l astcy cl e without not i ce, unl ess the par ti es agr ee othe rwis e. The Le tt erAgr ee m en t was exe cut ed o n Mar ch3 1, 2 00 6, b ut w as re tr oac ti vel y e f f ecti ve as ofDecem ber26 , 20 05. B artel ar g u es th at “term ” an d “cycle” are term s of art th at a re notdefi ned i n the contr act. But thi s i s pl ai nl y no t s o : th e t wo w o r d s a r e d e fi n e d r i g h ti n th e p a r a g r a p h we have j u st quote d. The “te rm o fthi s Agree m ent” i s 2 08 c o ns e c ut i ve w e e k s , wi t h a s pe c i fi e d s t a r t
- po i nta nd e nd

poi nt. T h at per i od i s di vi ded i nto f our conse cuti ve, equal 52- w eeksub- i nter val s, ea ch ofwh i ch i s r efer re d to as a c y c l e . A r e a s o nab l e p e r s o n r e a di ng thi s p a r a g r a ph wo ul d n o tb e c o nfus e d about t he me a ni ngo fthe wo r ds “t er m ” o r “c yc le” as th ey are u se d i n t h e ag re em en t. A defi ni ti on does nothave to r ead “no u n X i s defi ned as . . . .” Barte l buttr ess es her am bi gui ty ar gum ent by p oi nti ng to Para gr aph 5( a) of the Letter A gr eem ent. This, sh e a sse rt s, dem onst ra tes that Para gr aph 4( a) i s am bi guous b ecause 5( a) al so uses the word “t er m , ” but i n a di f fer ent way:6 N o. 07

- 3913 Infu ll p ay m en t fo r th e s er vic es an d / o r m at er ials furni shed by A rt i st and i n consi derat i on o fthe ri ghts gr anted by A rt i st to N BC and the f ai thful perf or m ance ofA rti st’ s o bl i gat i ons here und er, N BC ag re es to pay A rt i st and A rt i st agr ees to acc ep t the g uarant eed annual ra te ofco m pensati on be l ow, payabl e bi

- w eek l y. The annual r ate ( s) o f pay re fl ecte d here i n m ay not co r r es po nd e xa ct l y t o the a m o untreceive d i n a c al en dar y ear . B i

- w eek l y c om pensati on i s ca l cul ate d by divi ding annual com pensati on by26
. 0833 5. Pe riod of Term A nnual Rate ofCom pensati on 12/26/ 05- 06/24/ 07 $175 , 000. 00 06/25/ 07- 12/21/ 08 $180 , 000. 00 12/22/ 08- 12/20/ 09 $185 , 000. 00 (Em p ha sis add ed ). T his p aragrap h a lso crea tes n o am biguity. T he w ord “t er m ” is u s e d c o n sis te n tly in P ar ag ra p h s 4 (a) a n d 5(a ); i t m eans the 2 08 w eek s begi nning on Decem ber26 , 20 05, and e n d in g o n Decem ber20 , 20 09. Par agr aph 5( a) i ntro
du ces the ne w word “Per iod ,” w h i ch i s a subdi vi si on o f “T er m ” d ist in c t a nd in d ep en d en t fro m th e “ c yc le” su b d ivisi on defi ned i n P ar agr aph 4( a)
. “Per i ods” r eferto subi nter val s o fthe Term i n w hi ch Bart el is enti tl ed to be p aid a p a r t i c u lar an d fixe d sa lar y (p ro vid ed sh e is st ill em p loyed). “C ycles” r e fe r to sub -i nt ervals of th e Te rm that defi ne thr ee disc re te opportunit i es at w hi ch N BC can el ect to ter m i nate Barte l ’ s em plo ym ent bef or e the en d o f th e Te rm . Ev en i f B artel m ay be correc t tha t t h e w ord “P eriod” in P aragrap h 5(a) could ha ve bee n d efi ne d m oreN o. 07

- 3913 7 pr e c i s e l y , tha tdo e s n o th e l p he r cas e b e c a us e P a r a g r a ph 5( a) does notdi scuss ti m es f orte rm i nati on; Par agr aph 4( a) d oes th at, and “Period ” is not used i n P aragrap h 4(a). W e ho l d that the co ntra ct i s un am b iguous. Because N BC ga ve Barte l wri tte n noti ce on N ove m ber17, 20 06, that i t was te rm i nati ng h erco ntra ct e f f ecti ve Decem ber25 , 20 06 ( th e end of t he f i r stc y cl e) , NBC ga ve mor e th anthe r equi red a m ou nto fno ti ce . Thu s, i t di d no t br ea chthe c o nt r a c t, a s s umi ngi t s a c t i o n di d not v i o l a t e a nyi mpl i e di n- l aw r es tr i ct i o ns o n r ea so n f o r di smi ss al, th e po i nt to whi chwe ne xttur n.

III Even if N BC ’ s t er m i nati on o fBart el ’ s co ntra ct was pe r mi s s ib l e a s a ma t t e r o f t i mi n g, B a r t e l a r g u e s t h a tNBC never thel ess breache d the ag re em ent b ecause o fan i m pli ci t r est ri cti on i n i t. S peci fi cal l y, B ar telal l ege s that N BC ’ s s tat ed re aso n for firi ng her

— l ay- off s a s a ge nera l cost-sav in g m easu re

— i s a pre text; the re alr eas on w as Barte l ’ s i nsi ste nce that NB C l i ve up t o the e thi cal st an dar ds r ec o g ni ze d b y the pr o fes si o n o fj o ur na l i sm an d i m po se d b y NBC’s i nt erna l g ui del ines. The l at te r r ea so n, she c onti nues, i s j ust a s i m perm i ssibl e a s s om ethi ng l i ke a r aci al l y di scr i m i nator y m oti ve. U n til Wie derv. Skala , 80 N
. Y. 2d 628 (19 92), the sol e ca se on wh i ch Bart elr el i es, was deci ded , N ew Yor k decl i ned to r ec o gn i ze a ny j udi ci al l y c r ea te d e xc ept i o ns t o the c o m m o nlaw u n d er st an d in g of at -w ill em p loy m en t. Mu rp h y v . A m. H om e Prod s . Corp. , 58 N
. Y. 2d 293, 305 ( 1983 ) , was a typi cal8 N o. 07

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case . There , the cour t r ej ecte d th e pl ai nti f f’ s i nvi tat i on t o r e a d a n i mp l i e d r e q u i r e me n to fg o o d f a i t h i n t o hi s e mplo ym ent c ontr act, ev en tho ugh the pla i nti f f’ s j ob re quir ed hi m t o disc l ose acc ounti ng i m propri eti es and he w as disc harg ed f ordoi ng so . I t hel d that “und er N ew Yor k l aw as it n ow st an d s, ab se n t a co n st itu tio n ally im p er m iss ible pu rpos e, a sta tutor y proscr i pti on, o r an expre ss l i m i tat i on i n the i ndi vi dualc o nt r ac t o fe m pl o y m en t, a n e m pl o y er’s rig h t a t a n y t i m e t o t er m in at e a n em p loy m en t a t w ill re m ain s u n im p air ed .” Barte l does notco ntend that the t er m i n ati on o fher em p loy m en t c on tr ac t v iola te d th e C on st itu tio n, a st atut o r y pr o sc r i pti o n, o r a n e xpre ss l i m i ta ti o n i n the contr act ( pu tti ng as i de the tim i ng ar gum ent that we have rej ecte d). I nstea d, she a rg ues that Wiederr eco gni zes an ex ce pti o n n o t o nl y t o the rul es f o r e m pl o y m en t- at
- wi l l, b ut al so i ns er ts a n i m p li ed ter m i nt o a l l e m pl o y m en t co ntr ac ts
. I n Wieder, an att or ney work i ng as an a sso ci ate ata law firm w as fi red after dem an d ing tha t t h e f irm report an oth er associate’s m isc ond uc t to the sta te d iscipli na ry com m i tte e. The C ourtof A pp eal s o fN ew Yor k f ound that “i n any hi ri n g of a n att or ney a s a n ass oci ate to prac ti ce l aw with a fi rm ther e i s i m pli ed an underst anding so fun d am en tal to the relationsh ip an d essen tia l t o i ts p urp ose as to r equi re no express i on: thatbo th the as soc i ate an d th e firm in c o n d u c tin g t h e p ra c tic e w ill d o s o in ac c or d an c e w ith th e e th ica l st an d ar d s o f th e p ro fes sio n .” 80 N .Y .2d a t 63 5-3 6. B ar te l arg u es th at th e s am e ru le shoul d apply to a j ournal i st w or ki ng f ora new s o rg ani zati o n su ch as N BC. Buti n Wiederit se lf t h e C ou rtof A p p ea ls w as car eful to dist i ngui sh the si tuat i on o fa l aw yerfro mN o. 07

- 3913 9 that ofo ther s who m i ght a l so have ethi calduti es, bu t fo r w hom i t re fused to re cogni ze an i m pli ci t re str i c tio n o n ter m i nati on. S ee Sabet a y v. Ste rl ing D rug, Inc. , 69 N
. Y. 2d 32 9 (1 98 7) (d ire c to r of fin an c ial p r ojec ts ); M urphy, 58 N
. Y. 2 d a t3 0 5 ( a c c o un t a nta nd a s s i s t a ntt r e a s ur e r )
. S ee Wieder, 80 N
. Y. 2d at 635. The Courthas conti nued to draw thatl i ne si nce Wieder : se e H o r n v . New Yo rk Tim es , 100 N
. Y. 2d 85 ( 2003 ) ( physi ci an em plo yed by nonm edi cal or gani zati on, wh er e phys ici an was see ki ng to enf or ce p atient confide nt ial ity). A s we r e a d Wieder, t he c o ur t we nt t o g r e a t l e ng ths t o hi ghl i ght the uni quenes s o fthe l ega l pro f ess i on a nd to narr ow i ts hol ding to that parti cul arpro f ess i on

— pe r ha ps eve n to the parti cul ardi sci pli naryr ule at i ssue i n that case . T h e op i ni on i s r i dd l ed w i th l i m i ti ng l anguage , so m e o f w hi ch w e hi ghl i ght he re : [ 1] [P l ai nti f f’ s] em plo ym ent a s a l aw yerto r ender p ro fe s s io na l services as an associate w ith a l aw firm d iffer s in se ve ra l res p e c t s fr om th e e m p loy m en ts in M urph y a nd Sab e t ay . . . . pl a i nt i f f’ s pe r f o r man c e o f profess i onalse rv i ces f or the fi rm ’ s cl i ents as a duly a dm i t t e d mem b e rof

t heBarwa s a tthe v e r y c o r e a nd , i nd eed, the onl y purpose o fhi s a sso ci ati on w i th defe nd ants. A sso ci ate s a re , to be sure , em plo yee s o f th e fi r m b utthe y r emai n indepe nde ntof f i ce rs of t he co urtres p on sib le in a b ro ad er p u b lic s en se for t h eir profess i onalo bl i gat i ons. Wieder, 80 N
. Y
. 2d at 635 (em p ha sis add ed ). [ 2] I t is in t hi s di s t i nc t i ver el ati onshi p between a l aw fi r m a n d a l aw yer hired as an ass ociate th at p lai nt iff10 N o. 07

- 3913 fi nds the i m pl i ed- i n- l aw obl i g at iono n whi chhe f o u n d s h i s c l a i m. Id. at 635-36 (agreeing w ith p lai nt iff) ( em p ha sis add ed ). [3] T h e p ar tic u lar ru le of p r o fes sio n al c on d u c t im p licate d here ( DR 1-1 03[ A ] ) , it m ust be not ed, i s cr i ti calto the uni q uefu nc ti o n o fs el f

- r egul at i o n b e l ongi ng t o t he l egal prof

e s s i on . . . . Mo r e o v e r, a s p l a i nt i f fp o i nt s o ut, f ai l ure t o c om pl y wi t h therepor t i ng r e q ui r e m e ntm ay r e s ul ti n s us pe ns i on ordi s b ar m e nt
. Id. at 636 (citation om itted ) (em p ha sis add ed ). [ 4] W e agr ee w i th pl ai nti f fthatthes e un ique ch a rac terist i cs of t hel egal prof

e s s i on in re sp ec t t o t h is c or e D isc ipli naryRule m ake the r e l at i ons hip of a n a ss oc i at et o a la w firm i nt r i ns i ca l l y di f f eren t fr o m tha t o fthe fi na nci almana g er s to the c o r p orate e m pl o y er s i n M urphy a nd Sab e t ay . Id. at63 7 ( cl ar i fyi ng the narr own ess ofthe Wiederho l di ng by noti ng tha t no t e ver y r ule o fpro f ess i onalr esponsibi l i ty f orl aw yer s i s “ deem ed i ncor pora ted as an i m pli ed-in-l aw te r m i n ever y c o nt r ac tu alr el at i o ns hi p b et wee n o r a m o ng law yers”) (em p ha sis add ed ). M o r e te l l i nge ve n tha n the l an g ua g e i n Wi e deri s th e l a n g u a g e i n H o rn v . New Yo rk Tim es , sup ra . Po st dat i ng Wiederby ele ve n ye ar s, H o rn discus se s th atc as e an d the ot h er r el evantcas es at l ength. I t i s the m ostr ecentpro nouncem ent b y the Courto fA p peal s o fN ew Yor k o n i ts v i e w o fth e l a w. B e c a u s e w e a r e s i t t i n gi n d i v e r s i t y , we m ust r ule as we thi nk the hi ghestco urt of the s tat eN o. 07

- 3913 11 woul d r ul e i fi t wer e dec i di ngthe c as e, e ve n i fwe th i nk that anothe r approach w oul d be pre f er abl e. I n declini ng to expand the “nar ro w exce pti on t o the a twi l l e mpl o y me n t d o c t r i n e a d o p t e d i n Wieder, ” H o rn r ea f fi r m ed N ew Yo r k ’ s po si ti o n tha t “s ucha s i gn i fi ca nt change i n our l aw i s be st l eft t o the Leg i sl atur e. ” 1 00 N
. Y
. 2d at 92, 96-97 & n.4 ( not ing tha t “th e L egislature r e mai ns a c t i v e i n t hi s a r e a , j us tl a s ty e a r h a v i nge na c t e d a ne w W histleblow e r L aw to protec t certain h ealth ca re w or ke rs ”). H o rn not ed N ew Yor k’ s “strong disincl i nati on to al terthe tr adit i onalr ule o fat
- w i l l em plo ym en t.” Id. at 93
. It the n c at al o g ue d the “ uni que ” as pec ts o fthe l ega l pro f ess i on that were cri ti calto the re cogni tio n o f ane xc ept i on i n Wieder

. Id. at94

- 96. I t poi nted out that th e N ew Yor k Leg i sl atur e has del ega ted to the sta te j udi ci ar y the t as ko fo ve r se einga tt o r ne y s el f

- r egul at i o n, and so the l eave - i t- to- the- Legi sl atur e a rg um ent had l ess f o r ce f o r the s ituat i o n i n Wieder

. Id. a t 94
. Re co g ni zi ng th e i m po rtan ce o fphy si ci an - pat i en t co nfi den ti al i ty, the cour t a cknowle dged that Pl ai nti f f H or n “st ri kes a sym patheti c, and eve n a s educti ve, chor d,” but she had nonethel ess “fa i l ed to ple ad f acts that p l ace her cl ai m f orbr each ofco ntrac t withi n the Wiederex c ep tio n to th e a t-w ill em plo ym ent r ule

. ” Id. at95 , 96
. H o rn lea ve s us c on vin c ed th at th e C ou rt o fA p p e als o f Ne w Yo r k wo ul d de c l i ne to ex pa nd Wiedert o i nc l ud e j ournal i sts
. W e there f or e fi nd no bre ac h of contr act on N BC’ s par t, ev en as su m i ng th at Bar te l ca n pr o ve th at the re as on N B C offe re d for t h e la y-o ff w as p re te x tu al. * * *12 N o. 07

- 3913 W e A F F I R M the j ud gm ent o fthe dist ri ct c ourt
.

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