In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 03-1593

CARL E. THOMAS,

Plaintiff-Appellant,

v.

GUARDSMARK, INC.,

Defendant-Appellee.

____________

Appeal from the United States District Court 

for the Northern District of Illinois, Eastern Division.

No. 02 C 8848óSuzanne B. Conlon, Judge.

____________

ARGUED NOVEMBER 3, 2003óDECIDED AUGUST 27, 2004

____________

Before POSNER, DIANE P. WOOD, and EVANS, Circuit

Judges.

DIANE P. WOOD, 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 convictions. Almost a year later,

Thomas filed suit against Guardsmark, alleging retaliatory

discharge in violation of Illinois public policy. After removing to federal district court, Guardsmark successfully moved

for judgment on the pleadings pursuant to FED. R. CIV. P.

12(c). Guardsmark argued, and the district court agreed,

that Thomas was ìeffectively dischargedî at the time he was
2 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 discussed below, we reverse

and remand to the district court 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 CITGO 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 the

statutes 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 likely

terrorist 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. After filing its answer, to which

it attached the Employment Agreement, Guardsmark

moved for a judgment on the pleadings pursuant to FED. R.

CIV. 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 that we disregard several pages

of Thomasís supplemental appendix that were not included

in the record before the district court. These materials document his efforts to access his Guardsmark 401(k) retirement

plan following his indefinite suspension. We deny

Guardsmarkís motion, on the ground that Thomas provided
4 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 follows

makes 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. In

evaluating 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 with 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 contrary
No. 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 valid contract containing a choice

of law clause existed, it was appropriate for the court to

apply Illinois law to the contract to determine the threshold

question 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 legitimate
6 No. 03-1593

ìdocuments that do not by their nature imply some level of

credibilityî). We need not verify this documentís authenticity

or otherwise confirm Guardsmarkís 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 by

conduct 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 the 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 the

Agreement constituted valid consideration for the legal detriment imposed by the terms of the Agreement.

Thomas next argues that, even if the Agreement is a valid

contract, 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 governed
No. 03-1593 7

by Tennessee law. As we have already noted, Illinois courts

respect a contractual choice-of-law clause if the contract is

valid, and the law chosen is not contrary to Illinoisís fundamental public policy. Fulcrum, 230 F.3d at 1011. In

addition, consistent with RESTATEMENT (SECOND) of CONFLICT of LAWS ß 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 (Ill. 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 shortening 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 statute, 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 prohibitory 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 recanting, 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 sitting 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 statutes of limitations to be

procedural questions governed by the law of the forum. See

Belleville Toyota, Inc. v. Toyota 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 the

plaintiff 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 discharge

claim under Illinois law. In the closely related area of discriminatory termination cases, the Tennessee Supreme

Court has held that a discriminatory discharge is complete

ìwhen 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) in retaliation 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 WEBSTERíS THIRD NEW

INTERNATIONAL DICTIONARY 644 (1993); BLACKíS LAW

DICTIONARY 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 for 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 ëconstructive 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 held

that 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, 2354
No. 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 with

employees 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 the

hope 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 words 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 the

employerís 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 to

indefinite 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 for

summary judgment, Guardsmark cannot prevail as a matter of law at this stage in the proceedings, given that a disputed question of fact remains 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

REVERSE the district courtís judgment for Guardsmark and

REMAND 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