Court Opinion

ID: 171240
Source: CourtListenerOpinion
Date Created: 2010-08-14 18:30:15+00
Date Added: 2024-06-11T09:41:46.961753
License: Public Domain

FILED
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                   September 18, 2008
                            FOR THE TENTH CIRCUIT
                                                                  Elisabeth A. Shumaker
                                                                      Clerk of Court

    WILLIAM MONTANO; DORIS
    LUCERO,

                Plaintiffs-Appellants,
                                                         No. 07-2235
    v.                                        (D.C. No. 6:06-cv-00308-BB-ACT)
                                                          (D. N.M.)
    CHRISTMAS BY KREBS
    CORPORATION,

                Defendant-Appellee.

                             ORDER AND JUDGMENT *

Before McCONNELL, ANDERSON, and BRORBY, Circuit Judges.

         Plaintiffs William Montano and Doris Lucero appeal the district court’s

entry of summary judgment in favor of their former employer Christmas by Krebs

Corp. (CBK). They claim that their employment was terminated in a reduction in

*
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
force (RIF) in violation of the Age Discrimination in Employment Act (ADEA),

29 U.S.C. § 623(a)(1), and New Mexico state law. Exercising jurisdiction under

28 U.S.C. § 1291, we affirm in part, reverse in part, and remand for further

proceedings.

                                    Background

      Defendant operates a plant in Roswell, New Mexico, that manufactures

holiday ornaments. Both plaintiffs were long-time supervisory employees.

Mr. Montano worked there for thirty-one years, and Ms. Lucero for twenty-four.

Because it was a seasonal business, in late September of each year, supervisors

were asked to follow a written RIF policy to decide which nonsupervisory

workers would be let go at the end of the season. In 2004, CBK suffered major

financial losses, so in addition to the customary end-of-season lay-offs, it decided

to consolidate or eliminate supervisory positions and to lay off some supervisory

personnel in a RIF. Mr. Montano’s position was consolidated with another

supervisory job and Ms. Lucero’s position was eliminated. CBK’s executive

committee decided that plaintiffs would be discharged in the RIF. Mr. Montano,

aged 57, was terminated on November 16, 2004. Ms. Lucero, aged 60, was

terminated on December 13, 2004.

      Thereafter, both plaintiffs filed for social security disability insurance

(SSDI) benefits, claiming they became disabled prior to their respective

termination dates. The Social Security Administration (SSA) eventually awarded

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benefits to both plaintiffs. Mr. Montano was deemed disabled as of June 2006

and his benefits commenced at that time. Ms. Lucero was deemed disabled as of

April 2005 with benefits starting then.

      Following their terminations, both plaintiffs also filed complaints with the

EEOC and ultimately were issued right-to-sue letters. They filed suit in federal

district court on April 17, 2006, asserting that they were selected for the RIF

because of their ages in violation of the ADEA. They further asserted that CBK

breached an implied contract of employment that was not terminable at will.

      The district court granted summary judgment in favor of CBK. Plaintiffs

filed a motion to reconsider, which was denied. They do not challenge that ruling

on appeal. Rather, plaintiffs argue on appeal that the district court erred in

granting summary judgment to CBK on their breach-of-contract and ADEA

claims.

                                Standards of Review

      We review de novo the district court’s grant of summary judgment, viewing

the record in the light most favorable to the party opposing summary judgment.

McGowan v. City of Eufala, 472 F.3d 736, 741 (10th Cir. 2006). Summary

judgment is appropriate if there is no genuine issue of material fact and the

moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c);

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

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                           State-law Implied Contract Claims

      Plaintiffs challenge the district court’s grant of summary judgment to CBK

on their state-law contract claims. They maintain that an implied contract of

employment was created by CBK’s RIF policy, oral representations, and past

practices, such that their employment was not terminable at will. CBK responds

that plaintiffs were at-will employees whose employment could be terminated at

any time for any reason.

      We apply the law of the forum state, New Mexico, to determine the

existence and enforceability of a contract. See MediaNews Group, Inc. v.

McCarthey, 494 F.3d 1254, 1260 (10th Cir. 2007). Under New Mexico law,

“[e]mployment without a definite term is presumed to be at will.” Trujillo v.

N. Rio Arriba Elec. Coop., Inc., 41 P.3d 333, 341 (N.M. 2001). At-will

employment “can be terminated by either party at any time for any reason or no

reason, without liability.” Hartbarger v. Frank Paxton Co., 857 P.2d 776, 779

(N.M. 1993). Plaintiffs rely on an exception to this general rule: “where the

facts disclose the existence of an implied employment contract provision that

limits the employer’s authority to discharge.” Trujillo, 41 P.3d at 341 (quotation

omitted). “A promise, or offer, that supports an implied contract might be found

in written representations such as an employee handbook, in oral representations,

in the conduct of the parties, or in a combination of representations and conduct.”

Hartbarger, 857 P.2d at 780.

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      Plaintiffs argue that the following language of the RIF policy is mandatory

and thus created an implied contract of employment requiring CBK to follow it

before terminating their employment: “Supervisors must constantly evaluate their

employee’s attitude and work practices. . . . Supervisors need to formulate a

ranking of their employees . . . . Seniority does play a role in the decision to

lay-off.” Aplt. App. Vol. II at 249 (emphasis added). They also assert that the

deposition testimony of CBK’s President (the RIF criteria “needs to be considered

certainly,” id. at 222), and its Human Resources Director (CBK expected its

supervisors and other employees to know and follow the RIF policy), shows that

they “considered the ranking process and the criteria discussed in the RIF Policy

to be mandatory.” Aplt. Opening Br. at 26. In addition, even though the RIF

policy specifies that the listed criteria are “not all-inclusive, but [they] will serve

as a guide,” Aplt. App. Vol. II at 249, plaintiffs contend that the criteria that are

listed were mandatory. Finally, plaintiffs argue that because CBK required them,

as supervisors, to make a list ranking their employees from best to worst when

deciding who to lay off at the end of each season, they reasonably expected that

CBK would make a written list ranking the supervisors in the RIF process, but no

such list was made. In short, plaintiffs assert that the RIF policy and CBK’s

actions in previous RIFs created a contract by which CBK could not discharge

them except by adherence to the RIF policy. They claim that CBK did not follow

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the RIF policy in deciding to lay them off; therefore, it is liable for breach of

contract.

      New Mexico law requires “that the totality of the parties’ relationship,

circumstances, and objectives will be considered to overcome the presumption

that the employment contract was terminable at will.” Newberry v. Allied Stores,

Inc., 773 P.2d 1231, 1234 (N.M. 1989). The RIF policy provides: “Employment

is not guaranteed. Employment may be terminated with or without cause and with

or without prior notice.” Aplt. App. Vol. II at 249. In addition, each plaintiff

signed an Acknowledgment of Receipt and Understanding stating, “Nothing

contained in the [employee handbook] is intended to create (nor shall be

construed as creating) a contract of employment (express or implied) or

guarantee employment for a definite or indefinite term.” Id. Vol. I at 106;

Vol. IV at 496. We recognize that “a contractual disclaimer does not

automatically negate a document’s contractual status and must be read by

reference to the parties’ norms of conduct and expectations founded upon them.”

McGinnis v. Honeywell, Inc., 791 P.2d 452, 457 (N.M. 1990) (quotations and

brackets omitted). But plaintiffs’ evidence in support of an implied contract to

follow the RIF policy falls short in the face of the clear, unequivocal language

stating that employment was at will. Plaintiffs have not “shown that the employer

has demonstrated an intent to restrict its power to discharge.” Hartbarger, 857

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P.2d at 782. Accordingly, the district court properly granted summary judgment

to CBK on this claim.

                                    ADEA Claims

      “Under the ADEA, it is ‘unlawful for an employer . . . to fail or refuse to

hire or to discharge any individual or otherwise discriminate against any

individual with respect to his compensation, terms, conditions, or privileges of

employment, because of such individual’s age.’” Reeves v. Sanderson Plumbing

Prods., Inc., 530 U.S. 133, 141 (2000) (quoting 29 U.S.C. § 623(a)(1)). Both

plaintiffs were members of the protected class because they were at least forty

years of age. See 29 U.S.C. 631(a).

               Judicial Estoppel – Social Security Disability Rulings

      The district court granted summary judgment to CBK on plaintiffs’ ADEA

claims based on the doctrine of judicial estoppel, finding that the plaintiffs had

not explained the apparent conflict between their statements to the SSA that they

were totally disabled prior to their respective terminations, and their ADEA

claims that they were qualified for their jobs. The Supreme Court addressed the

similar question of whether a plaintiff is estopped from maintaining a claim under

the Americans with Disabilities Act (ADA), 42 U.S.C. § 12101-12213, if she has

been awarded SSDI benefits. In Cleveland v. Policy Management Systems Corp.,

526 U.S. 795, 806 (1999), the Court recognized the seeming contradiction in a

plaintiff’s claim that she is unable to work, thus entitling her to SSDI benefits,

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and her claim that she was qualified to perform her job. Nevertheless, the Court

held that such a plaintiff is not precluded from pursuing an ADA claim after being

awarded SSDI benefits. But “an ADA plaintiff cannot simply ignore the apparent

contradiction that arises out of the earlier SSDI total disability claim. Rather, she

must proffer a sufficient explanation.” Id.

      Here, of course, we are faced not with an ADA/SSDI dilemma, but a

possible conflict between an ADEA claim and an SSDI award. We adopt the

Third Circuit’s approach that “a prima facie showing under the ADEA that

conflicts with earlier statements made to the SSA is subject to the same analysis,

as the reasoning of the Court in Cleveland also applies in the context of the

ADEA.” Detz v. Greiner Indus., Inc., 346 F.3d 109, 117 (3rd Cir. 2003). Under

Cleveland, we first determine whether there is a genuine conflict between

plaintiffs’ respective statements to the SSA and their ADEA claims, and if so, we

then evaluate whether their explanations for the inconsistency are sufficient. See

Cleveland, 526 U.S. at 806.

      CBK argues that Cleveland’s reliance on the ADA’s requirement that the

employer provide “reasonable accommodation” to the disabled worker, id. at 803,

dictates a different result here because the ADEA does not include such a

requirement. But CBK’s concession that both plaintiffs were performing their

jobs satisfactorily, Aplt. App. Vol. II at 228, obviates any inquiry into whether

                                         -8-
either plaintiff could perform his or her job satisfactorily with reasonable

accommodation.

      We conclude that plaintiffs are not estopped from claiming they remained

able to perform their jobs after they were terminated, even though both claimed in

their SSDI applications that they became disabled before their employment

ended. 1 In Cleveland the Court recognized that “if an individual has merely

applied for, but has not been awarded, SSDI benefits [when the statement is

made], any inconsistency in the theory of the claims is of the sort normally

tolerated by our legal system.” Cleveland, 526 U.S. at 805. Because a plaintiff

“may not be sure in advance upon which legal theory she will succeed,” the rules

of procedure “permit parties to ‘set forth two or more statements of a claim or

defense alternately or hypothetically,’ and to ‘state as many separate claims or

defenses as the party has regardless of consistency.’” Id. (quoting

Fed. R. Civ. Proc. 8(e)(2)).

      Mr. Montano submitted his SSDI application on March 24, 2006, claiming

disability since November 13, 2004, three days before he was terminated. The

agency determined he was disabled and therefore entitled to benefits as of June

2006. Although his claim of disability starting November 13, 2004, apparently

1
      Ms. Lucero disputes that she said she became disabled on October 12,
2004, stating that she underwent surgery on that date. Even if she did claim
October 12 as her disability date, she is not estopped from pursuing her ADEA
claims.

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conflicts with his claim that he was able to do his job with CBK on and after the

date he was terminated, under Cleveland, Mr. Montano was permitted to state

alternately or hypothetically that he was disabled as of November 13, 2004, and

also able to work as of that date. CBK’s admission that he was doing his job

satisfactorily when he was laid off in November 2004, coupled with the agency’s

determination that he was not disabled until June 2006, adequately explains the

apparent conflict in his statements. Therefore, Mr. Montano is not estopped from

pursuing his ADEA claims.

      Similarly, Ms. Lucero filed her SSDI application on January 21, 2005,

almost a month after she was terminated, claiming disability since October 12,

2004. In April 2005, she was deemed eligible for benefits and began receiving

payments. As with Mr. Montano, CBK conceded that Ms. Lucero was performing

her job satisfactorily at the time she was terminated and the agency did not

determine that she was disabled until after she was laid off. Ms. Lucero’s

explanation for the apparently conflicting statements that she was disabled and

able to do her job is also sufficient and she also is not estopped from pursuing her

ADEA claims.

      Therefore, we decline to affirm the district court’s ruling that plaintiffs are

estopped by their SSDI claims from bringing their ADEA claims.

                Direct and Indirect Evidence of Age Discrimination

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      The district court did not evaluate the parties’ evidence pertaining to the

ADEA claims because it entered summary judgment in defendants’ favor based on

its finding that plaintiffs were estopped by their SSDI applications from pursuing

them. “Rather than examining and resolving the merits of these contentions, . . .

we adopt the better practice of leaving the matter to the district court in the first

instance.” Evers v. Regents of Univ. of Colo., 509 F.3d 1304, 1310 (10th Cir.

2007). Accordingly, we reverse the judgment in defendant’s favor on the ADEA

claims and remand for further proceedings.

                                      Conclusion

      We AFFIRM the district court’s summary judgment in defendant’s favor on

the state-law contract claims. We REVERSE the summary judgment entered on

the ADEA claims and REMAND for further proceedings consistent with this

order and judgment.

                                                      Entered for the Court

                                                      Wade Brorby
                                                      Circuit Judge

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