## In the 

# United States Court of Appeals

For the Seventh Circuit

____________

No. 03-1593

C ARL E. T HOMAS
, Plaintiff-Appellant

,
v.

G UARDSMARK
, I NC
., Defendant-Appellee.

____________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 02 C 8848ó Suzanne B. Conlon

, Judge.

____________ ARGUED N OVEMBER 3, 2003óD ECIDED A UGUST 27, 2004

____________

Before P OSNER
, D IANE P. W OOD , and E VANS
, Circuit Judges.

D IANE P. W OOD
, Circuit Judge. On November 16, 2001,Guardsmark, Inc. indefinitely suspended its employee, security officer Carl Thomas, after he suggested in a televised interview that Guardsmark did not adequately screen its employees for prior felony conv ictions. Almost a year later, Thomas filed suit against Guardsmark, alleging retaliatorydischarge in violation of Illinois public policy. After removing to federal district court, Guardsmark successfully moved for judgment on the pleadings pursuant to F ED

. R. C IV

. P. 12(c). Guardsmark argued, and the district court agreed, that Thomas was ìeffectively dischargedî at the time he was2 No. 03-1593

suspended, and thus his action was barred by a six-month limitations period found in his Employment Agreement with
Guardsmark. For the reasons di scussed below, we reverse
and remand to the district cou rt for development of the record regarding Thomasís employment status after Guardsmark indefinitely suspended him in November 2001.

I

In September 1998, Guardsmark hired Thomas to work as a security officer for a CI TGO oil refinery in Lemont, Illinois. As a condition of his employment, Thomas signed an Employment Agreement, which detailed the terms and conditions of his employment . The Agreement specified that ì[e]xcept for charges or claims filed with the Equal Employment Opportunity Commission or under any of thestatutes enforced by said agency, any legal action or proceeding related to or arising out of this Agreement or the employment of Employee by Guardsmark must be brought by Employee within six months of the date the cause of
action arose or it shall be time -barred.î It also provided that Tennessee law would ìgovern the interpretation, validity,and effect of this Agreement.î Thomas and a Guardsmark representative signed the Agreement on September 21, 1998.

In November 2001, an investigative reporter for a local news station contacted Thomas in connection with a story about regulation of the security industry in Illinois. In an on-camera interview, Thomas stated that a fellow Guardsmark security officer at the CITGO refinery had bragged about his felony record. Thomas also opined that convicted felons should not be trusted to provide security at installations that are likelyterrorist targets, such as oil refineries. The story was broadcast on November 8, 2001, and eight days later, Edward Healy, Vice President and Manager of Guardsmarkís Chicago office, informed Thomas that his employment was indefinitely suspended because of his unauthorized inter-No. 03-1593 3

view with the news station. Since then, Guardsmark has not compensated Thomas or allowed him to perform services for the company.

On October 31, 2002, Thomas filed a one-count complaint against Guardsmark and Healy in the Circuit Court of Cook County, alleging retaliatory discharge in violation of the public policy of the State of Illinois. Guardsmark removed to federal district court, arguing that Thomas, an Illinois citizen, had improperly joined Healy, also an Illinois citizen,and that full diversity would exist if the latter were dismissed. When Thomas filed suit, Guardsmark was a Delaware corporation with its principal place of business in Tennessee; by the time it filed its notice of removal, it had converted into a limited liability corporation, with members who are citizens of New York and Tennessee. See Kanzelberger v. Kanzelberger, 782 F.2d 774, 776 (7th Cir. 1986) (providing that ìdiversity must exist both when the suit is filedóas the statute itself makes clear, see 28 U.S.C. ß 1441(a)óand when it is removedî). The court granted Guardsmarkís motion to dismiss Healy and then denied Thomasís motion to remand. Af ter filing its answer, to which it attached the Employment Agreement, Guardsmark moved for a judgment on the pleadings pursuant to F ED

. R. C IV

. P. 12(c). The court granted the motion, finding Thomasís claim barred by the six-month limitations period provided in the Agreement. This appeal followed.

II

As a preliminary matter, we briefly address Guardsmarkís motion to strike, which asks t hat we disregard several pages of Thomasís supplemental appendix that were not included in the record before the distri ct court. These materials document his efforts to access hi s Guardsmark 401(k) retirement plan following his indefinite suspension. We deny Guardsmarkís motion, on the ground that Thomas provided4 No. 03-1593

these materials not for evidentiary, but rather for illustrative purposesóthat is, not to establish the truth of their contents, but to show that there might be a set of facts consistent with his allegations in the complaint, such that the Agreementís six-month limitations period would not bar his claim. In any event, as the discussion that followsmakes clear, we have not taken these documents into account in holding that Guardsmark cannot prevail on its motion for judgment on the pleadings.

We review de novo Rule 12(c) motions for judgment on the pleadings. Midwest Gas Servs., Inc. v. Ind. Gas Co., 317 F.3d 703, 709 (7th Cir. 2003). Such a motion should be granted ìonly if it appears beyond doubt that the plaintiff cannot prove any facts that would support his claim for relief. Inevaluating the motion, we accept all well-pleaded allegations in the complaint as true, drawing all reasonable inferences in favor of the plaintiff.î Id. (internal citations and quotation marks omitted); Forseth v. Vill. of Sussex , 199 F.3d 363, 368 (7th Cir. 2000) (ìA complaint may not be dismissed unless it is impossible to prevail under any set of facts that could be proved consistent wi th the allegations.î (internal quotation marks omitted)).

Thomas presents three arguments in support of his position that his retaliatory discharge claim is not barred by the six-month limitations period provided in the Employment Agreement. First, he contends that the Agreement does ìnot constitute a binding and enforceable contract.î In order to evaluate this point, we must determine what body of law governs the validity of the Agreement. The Agreement itself provides that Tennessee law ìgovern[s] the interpretation, validity, and effect of this Agreement.î In a diversity case, the federal court must apply the choice of law rules of the forum state to determine applicable substantive law. Klaxon Co. v. Stentor Elec. Mfg. Co. , 313 U.S. 487, 496 (1941). Illinois respects a contractís choice-of-law clause as long as the contract is valid and the law chosen is not contraryNo. 03-1593 5

to Illinoisís fundamental public policy. Fulcrum Fin. Partners v. Meridian Leasing Corp. , 230 F.3d 1004, 1011 (7th Cir. 2000). As an abstract matter, we see nothing in Illinoisís choice-of-law rules that would preclude recognizing the selection of Tennessee law on the question of the validity of the contract. (No one is disputing that the Agreement exists, or that both parties signed it.) Nonetheless, Guardsmark concedes in its brief that ì[u]ntil the district
court had determined that a va lid contract containing a choice of law clause existed, it was appropriate for the court to apply Illinois law to the contract to determine the thresholdquestion of validity.î Appelleeís Brief at 9 n.4. This concession makes it unnecessary for us to decide whether Illinois or Tennessee law applies to this threshold issue, or if those two laws differ in any material sense.

Thomas argues that the Agreement is unenforceable both because Guardsmark did not review and approve the Agreement, as required by the Agreement itself, and because the Agreement ìcreate[d] no obligation on Guardsmark.î Neither of these arguments is persuasive. The preamble of the Agreement says that ì[t]he Agreement shall not become binding upon Guardsmark until reviewed and approved by the Compliance Control Officer in Guardsmarkís Executive Offices in Memphis, Tennessee.î Thomas asserts that ì[t]here
is no evidence to show that Guardsmark ever fulfilled this lone obligation,î but the record indicates otherwise. Guardsmark attached to its answer to Thomasís complaint a document entitled, ìGuardsmark: Personnel File Review,î
which lists Thomasís name and date of hire. This document is initialed by a ìSelection Controllerî and has a check next to the heading ìAPPROVED.î Thomas nonetheless insists that Guardsmark cannot rely on this document because its ìpurpose and authenticity . . . is completely unexplained.î
See N. Ind. Gun & Outdoor Shows, Inc. v. City of South
Bend , 163 F.3d 449, 456 (7th Cir. 1998) (holding that, for purposes of Rule 12(c), courts need not accept as legitimate6 No. 03-1593

ìdocuments that do not by th eir nature imply some level of credibilityî). We need not verify this documentís authenticity or otherwise confirm Guardsma rkís approval of Thomasís application, however, because ì[p]arties to a contract have the power to waive provisions placed in the contract for their benefit and such a waiver may be established byconduct indicating that strict compliance with the contractual provisions will not be required.î In re Liquidation of
Inter-Am. Ins. Co. of Ill. , 768 N.E.2d 182, 193 (Ill. App. Ct. 2002). As Guardsmarkís approval of Thomasís employment application was exclusively for the companyís benefit,Thomas cannot now use this term as a ground for invalidating the Agreement.

Thomas also argues that the Agreement is invalid because ì[t]here is simply nothing that Guardsmark agrees to do in exchange for the many obligations it seeks to impose
on Mr. Thomas.î It is well-established that consideration consists of some detriment to th e offeror, some benefit to the offeree, or some bargained-for exchange between them. Doyle v. Holy Cross Hosp. , 708 N.E.2d 1140, 1145 (Ill. 1999).Under Illinois law, ì[c]ontinued employment for a substantial period of time is sufficient consideration to support an employment agreement.î Lawrence & Allen, Inc. v. Cambridge Human Res. Group, Inc. , 685 N.E.2d 434, 441 (Ill. App. Ct. 1997); see also Schoppert v. CCTC Int’l, Inc. , 972 F. Supp.444, 447 (N.D. Ill. 1997) (stating that, under Illinois law, ìcontinued performance is seen as both acceptance and considerationî for an at-will employment agreement). Thomasís continued acceptance of the benefits of employment by Guardsmark for three years after both parties signed theAgreement constituted valid consideration for the legal detriment imposed by the terms of the Agreement.

Thomas next argues that, even if the Agreement is a validcontract, his claim is not barred because the six-month limitations period is unenforceable. Under the terms of the Agreement, the enforceability of this provision is governedNo. 03-1593 7

by Tennessee law. As we have already noted, Illinois courts respect a contractual choice-of-law clause if the contract isvalid, and the law chosen is not contrary to Illinoisís fundamental public policy. Fulcrum , 230 F.3d at 1011. In addition, consistent with R ESTATEMENT(S ECOND ) of C ON

FLICTof L AWSß 187 (1971), some Illinois courts have also required that ì ëthere be some relationship between the chosen [law] and the parties or the transaction.í î See, e.g. , Mastrobuono v. Shearson Lehman Hutton, Inc. , 20 F.3d 713, 719 (7th Cir. 1994) (quoting Potomac Leasing Co. v. Chuck’s Pub, Inc. , 509 N.E.2d 751, 754 (I ll. App. Ct. 1987)), rev’d on other grounds, 514 U.S. 52 (1995); Newell Co. v. Petersen

, 758 N.E.2d 903, 922 (Ill. App. Ct. 2001); Int’l Surplus Lines
Ins. Co. v. Pioneer Life Ins. Co. of Ill. , 568 N.E.2d 9, 14 (Ill. App. Ct. 1990).

Neither Guardsmark nor Thomas suggests that Tennessee law upholding contractual limitations periods is contrary to Illinoisís public policy, as both states have routinely upheld contractual provisions shorteni ng a limitations period otherwise provided by statute. See Taylor v. W. & S. Life Ins. Co.

,966 F.2d 1188, 1203 (7th Cir. 1992) (ì[C]ontractual limitations of action are generally upheld under Illinois law.î); United States v. Republic Ins. Co. ,775 F.2d 156, 160 (6th Cir. 1985) (ìIn Tennessee, limitation of action clauses have long been upheld as long as a reasonable period of time is provided [for bringing suit]. î (internal quotation marks omitted)). Furthermore, under Illinois law, the sufficient relationship requirement is generally satisfied when the contractual choice of law is that of the state in which one of the parties is headquartered. See Mastrobuono , 20 F.3d at 719 (applying Illinois conflicts law, state of principal place of business was reasonable for choice of law provision); Newell
Co. , 758 N.E.2d at 922 (same). As Guardsmarkís principal place of business is Tennessee, the sufficient relationship requirement is satisfied, and Tennessee law therefore governs the enforceability of the Agreementís limitations period.8 No. 03-1593

In Tennessee, ìit is a well established general rule that in the absence of a prohibitory st atute, a contract provision is valid which limits the time for bringing suit, if a reasonable period of time is provided, and that the general statutes of limitations are not prohibitor y of such contractual provisions as between private individuals or corporations.î State
v. Evans , 334 S.W.2d 337, 342 (Tenn. Ct. App. 1959); see
also Republic Ins. Co., 775 F.2d at 160 (same); Webb v. Ins.
Co. of N. Am. , 581 F. Supp. 244, 250 (W.D. Tenn. 1984) (same); Hill v. Home Ins. Co. , 125 S.W.2d 189, 192 (Tenn. Ct. App. 1938) (ìContractual limitations . . . are valid and enforceable.î); cf. Irving Pulp & Paper, Ltd. v. Dunbar Transfer & Storage Co., 732 F.2d 511, 514 (6th Cir. 1984) (defendant equitably estopped from relying on contractual limitations defense where it misled plaintiff by initially admitting liability but later re canting, causing plaintiff to file suit after limitations period expired). As Thomas points to no statute prohibiting the Agreementís six-month limitations period and does not suggest that this period was per

se unreasonable, we find the limitations period enforceable
under Tennessee law.

We turn, then, to Thomasís final argument: that his retaliatory discharge claim is not barred by the Agreementís limitations period because his cause of action did not arise more than six months before he filed suit. Illinois law governs our analysis of this issue, because it relates to an aspect of the statute of limitations not addressed in the agreement. A federal court sitti ng in diversity must follow the statute of limitations that the state in which it is sitting
would use. See Guaranty Trust Co. v. York, 326 U.S. 99, 110 (1945). Illinois considers stat utes of limitations to be procedural questions governed by the law of the forum. See Belleville Toyota, Inc. v. T oyota Motor Sales, U.S.A., Inc., 770 N.E.2d 177, 194 (Ill. 2002). We therefore turn to Illinois
law to decide when Thomasís claim accrued; we add comparisons to Tennessee law to illustrate the point that the same result is likely no matter which stateís law is used.No. 03-1593 9

In general, Illinois courts hold that ìa limitations period begins to run when facts exist that authorize one party to maintain an action against another.î Feltmeier v. Feltmeier, 798 N.E.2d 75, 85 (Ill. 2003); see Ind. Ins. Co. v. Machon & Machon, Inc., 753 N.E.2d 442, 445 (Ill. App. Ct. 2001). According to Guardsmark, Thomas was in possession of such facts on November 16, 2001, which it characterizes as the effective date of his discharge. As of that date, Thomas was indefinitely suspended without pay. If it is the relevant date to use, then his claim is barred because he did not file suit until almost a year later, on October 31, 2002. The district court agreed with Guardsmarkís argument, citing Vector-Springfield Properties, Ltd. v. Central Ill. Light Co.

, 108 F.3d 806, 809 (7th Cir. 1997), for the proposition that ìtort claims, like retaliatory discharge, accrue when theplaintiff ëbecame possessed of sufficient information concerning [his] injury to put a reasonable person on inquiry to determine whether actionable conduct was involved.í î The court found Thomasís claim untimely because he ìshould have realized shortly after November 16, 2001 that Guardsmark effectively terminated his employment.î

The problem with this position is that only an actual termination can support an employeeís retaliatory dischargeclaim under Illinois law. In the closely related area of discriminatory termination cases, the Tennessee Supreme Court has held that a discrimi natory discharge is completeìwhen the plaintiff is given unequivocal notice of the employerís termination decision, even if employment does not cease until a designated date in the future.î Weber v. Moses, 938 S.W.2d 387, 391-92 (Tenn. 1996). In Illinois, a plaintiff states a claim for retaliatory discharge ìonly if she alleges that she was (1) discharged; (2) inretaliation for her activities; and (3) that the discharge violates a clear mandate of public policy.î Zimmerman v. Buchheit of Sparta, Inc. , 645 N.E.2d 877, 880 (Ill. 1994) (internal quotation marks omitted). ìDischarge in an employment context is commonly under-10 No. 03-1593

stood to mean the release, dismissal, or termination of an employee.î Welsh v. Commonwealth Edison , 713 N.E.2d 679, 683 (Ill. App. Ct. 1999) (citing W EBSTER í S T HIRD N EW I NTERNATIONAL D ICTIONARY 644 (1993); B LACK í S L AW D ICTIONARY 463 (6th ed. 1990)).

The Illinois Supreme Court ìhas consistently sought to restrict the common law tort of retaliatory discharge.î Fisher v. Lexington Health Care, Inc. , 722 N.E.2d 1115, 1121 (Ill. 1999). In particular, the court ìhas thus far declined to recognize a cause of action fo r retaliatory constructive discharge.î Id. ; see also Buckner v. Atl. Plant Maint., Inc. , 694 N.E.2d 565, 569 (Ill. 1998) (noting the Illinois Supreme Courtís ìpast precedent admonishing against the expansion of this tortî); Zimmerman , 645 N.E.2d at 882 (ìIllinois courts have refused to accept a ëconst ructive dischargeí concept.î);
Graham v. Commonwealth Edison Co. , 742 N.E.2d 858, 864 (Ill. App. Ct. 2000) (ìThe tort of retaliatory discharge does not encompass any behavior other than actual termination of employment.î). On this basis, Illinois courts have heldthat an employeeís suspension does not qualify as a ìdischargeî for purposes of a retaliatory discharge action and has therefore rejected such claims. See, e.g. , Melton v. Cent.
Ill. Pub. Serv. Co. , 581 N.E.2d 423, 425-26 (Ill. App. Ct. 1991) (denying plaintiffsí request that the court ìexpand the notion of retaliatory discharge to cases . . . where the employer takes disciplinary action short of discharge, such as the suspension of one of the plaintiffs in this caseî).
While Tennessee has taken a somewhat more liberal view of retaliatory constructive discharge, it has focused on the situation in which conditions have become so intolerable for the employee that the employeeís abandonment of the job is equivalent to a discharge, not the situation in which the employer gives ambiguous signals to the employee about the continued status of his employment. See Crews v. Buckman Laboratories Int’l, Inc., 78 S.W.3d 852, 865 (Tenn. 2002). Compare Pa. State Police v. Suders, 124 S.Ct. 2342, 2354No. 03-1593 11

(2004) (constructive discharge plaintiff ìmust show working conditions so intolerable that a reasonable person would have felt compelled to resignî).

In light of these decisions, we decline to find Thomasís retaliatory discharge claim barred on the theory that Guardsmarkís action in November 2001 was equivalent to a discharge. Such a holding would contravene Illinois law,

see Prince v. Rescorp Realty , 940 F.2d 1104, 1107 (7th Cir. 1991), and it would disregard the requirement in Tennessee law of an ìunequivocalî notice of a termination. It would invite employers to manipulate their communications withemployees so as to avoid liability. Rather than fire employees and risk a retaliatory discharge action, employers would have an incentive indefinitely to ìsuspendî them in thehope that they will not realize that they have been discharged until after the limitations period has expired. See Hinthorn v. Roland’s of Bloomington, Inc. , 519 N.E.2d 909, 912 (Ill. 1988) (emphasizing that ìan employer cannot escape responsibility for an improper discharge simply
because he never uttered the wo rds ëyouíre firedí î). We also recognize, however, that substance should prevail over form, and if Thomasís indefinite suspension was or became an actual discharge, the contractual limitations period would begin to run at that point. See id. (ìSo long as theemployerís message that the employee has been involuntarily terminated is clearly and unequivocally communicated to the employee, there has been an actual discharge, regardless of the form such discharge takes.î). Thomas must therefore tread a thin line: On the one hand, he can avoid the Agreementís limitations period only if his indefinite suspension in November 2001 did not constitute an actual discharge. On the other hand, he must establish that, at some point prior to his filing suit in October 2002, his suspension was converted into an actual discharge, such that he can now state a retaliatory discharge claim.12 No. 03-1593

Because this case comes to us on a Rule 12(c) motion for judgment on the pleadings, we lack sufficient information to determine when, if ever, Thomasís indefinite suspension became an actual discharge. Discovery might reveal more about Guardsmarkís corporate practices with respect toindefinite suspensions, including whether such a suspension is the equivalent of a discharge because no suspended employee is in fact ever recalled. In addition, Guardsmarkís employee and insurance records and information regarding Thomasís access to the funds in his 401(k) retirement plan might assist in clarifying Thomasís employment status during the period between November 2001 and October 2002. While this case may ultimately prove appropriate forsummary judgment, Guardsmark cannot prevail as a matter of law at this stage in the proceedings, given that a disputed question of fact remain s as to whether Thomas was discharged and, if so, when he was.

III

As it is not beyond doubt that Thomas will be unable to prove any facts that would support his claim for relief, we
R EVERSE the district courtís judgment for Guardsmark and
R EMAND for proceedings consistent with this opinion.No. 03-1593 13

A true Copy:

Teste:

________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit

USCA-02-C-0072ó8-27-04