Court Opinion

ID: 812656
Source: CourtListenerOpinion
Date Created: 2012-11-27 20:40:51+00
Date Added: 2024-06-11T18:00:45.471754
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                               No. 11-1584

JENNIFER R. SCOTT,

                Plaintiff - Appellee,

           v.

MERCK & COMPANY, INCORPORATED,

                Defendant - Appellant.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.    Benson Everett Legg, District Judge.
(1:09-cv-03271-BEL)

Argued:   September 21, 2012                 Decided:   November 27, 2012

Before DUNCAN, AGEE, and DIAZ, Circuit Judges.

Reversed and remanded by unpublished opinion. Judge Agee wrote
the opinion, in which Judge Duncan and Judge Diaz concurred.

ARGUED: Raymond Charles Baldwin, SEYFARTH SHAW, LLP, Washington,
D.C., for Appellant.   Andrew Howard Baida, ROSENBERG, MARTIN &
GREENBERG, LLP, Baltimore, Maryland, for Appellee.     ON BRIEF:
Reenah L. Kim, SEYFARTH SHAW, LLP, Washington, D.C., for
Appellant.

Unpublished opinions are not binding precedent in this circuit.
AGEE, Circuit Judge:

     In this diversity action, Merck & Company, Inc., (“Merck”)

appeals   a   $555,000.00    jury   verdict          in    favor       of     its    former

employee Jennifer R. Scott, who alleged that her termination of

employment    by   Merck   constituted      a    breach          of    contract      under

Maryland law. 1    For the reasons set forth below, we reverse the

district court’s judgment and remand the case for entry of final

judgment in favor of Merck.

                                     I.

     In   1992,    Merck    hired   Scott       as    a    pharmaceutical            sales

representative.     The parties agree that she was hired as an at-

will employee.      During the final years of Scott’s employment,

Scott’s     relationship     with   her      direct         supervisor,             William

Liberato,     deteriorated.          Liberato             gave        Scott     negative

performance    reviews,    warned   that    if       she   did        not   improve    her

performance    “appropriate     next       steps”         would       be    taken,     and

eventually placed Scott on a “performance improvement plan” to

monitor her work.      Scott challenged Liberato’s instructions on

more than one occasion and eventually reported him to Merck’s

     1
       As this is an action with federal jurisdiction by virtue
of diversity of citizenship, we apply the law of the relevant
state, Maryland, to the state law contract claims.          See
Universal Concrete Prods. v. Turner Constr. Co., 595 F.3d 527,
529 (4th Cir. 2010).

                                       2
Office of Ethics for conduct that she believed violated Merck’s

ethical      standards.       Merck   terminated   Scott’s       employment    in

January 2008.

     Scott originally filed this breach of contract case in the

Circuit Court for the City of Baltimore, Maryland, but Merck

removed the case to the United States District Court for the

District     of   Maryland.     In    her   complaint,   Scott    alleged     that

policy statements issued by Merck subsequent to the date of her

employment limited Merck’s ability to terminate her employment

at will. 2     Scott also claimed that Merck’s decision to terminate

     2
       Scott asserts that two Merck policy statements created an
enforceable contractual obligation that Merck employees would
not be terminated from employment for raising good faith
business practice complaints. First, she points to Merck’s Code
of Conduct, which states:     “Any employee or third party who
raises a business practice issue will be protected from
retaliation.”   (J.A. 21.)    In addition, the Code of Conduct
provides that “[t]he fact that an employee has raised concerns
in good faith, or has provided information in an investigation,
cannot be a basis for denial of benefits, termination, demotion,
suspension, threats, harassment or discrimination.”   (J.A. 45.)
Second, she relies on a policy statement (“Policy 57”) issued by
Merck’s Office of Ethics that states:

     Retaliation   and   threats  of   retaliation   against
     employees who raise concerns, or against individuals
     who   appropriately   bring important   workplace   and
     business issues to the attention of management, are
     serious violations of Merck’s values and standards and
     will not be tolerated.

             . . . .

          All directors, officers[,] and employees are
     strictly prohibited from engaging in retaliation or
     retribution, or threats of retaliation . . . .
(Continued)
                                        3
her employment breached that obligation because it retaliated

against her for having raised concerns about Liberato to the

Office of Ethics.

     After discovery, Merck moved for summary judgment on the

basis that Scott was an at-will employee who could be terminated

at any time and for any reason, and thus could not bring a claim

for breach of her employment contract.              Particularly relevant to

this appeal, Merck asserted that neither the Code of Conduct nor

Policy   57    created   contractual        obligations    because   they   were

general statements of policy rather than “definite and specific”

declarations of benefits.          In addition, Merck argued that Scott

could    not    justifiably      rely   on    the   non-retaliation      policy

statements as creating a contractual right to non-retaliation in

light of specific disclaimers that Scott’s employment was at

will and that any policy statements did not create employment

obligations or contractual rights.            (J.A. 55.)

     The      district   court    denied      Merck’s     motion   for   summary

judgment, concluding that the non-retaliation policy statements

Merck had issued subsequent to Scott’s hiring were “sufficiently

              . . . .

          Anyone who is involved in an act of retaliation
     against a reporting employee or other individual will
     be subject to appropriate disciplinary action.

(J.A. 52.)      (Collectively “non-retaliation policy statements.”)

                                        4
specific   and   definite   to   constitute    an    enforceable   contract

term” under Maryland law. 3      (J.A. 307.)        In addition, the court

concluded there was sufficient evidence from which a jury could

     3
       The district court found no ambiguity in any of the
contractual language either party relied on (i.e., the Code of
Conduct, Policy 57, the employment application, or the Manager’s
Policies). And, in reviewing that language, the district court
concluded:

     Scott’s reliance on Merck’s non-retaliation policies
     as part of her employment contract was reasonable.
     The promise that employees will be protected from
     retaliation for reporting business practice issues in
     good faith, and that such reporting may not be the
     basis   for   demotion,   denial   of   benefits,  or
     termination, is sufficiently specific and definite to
     constitute an enforceable promise under the Staggs
     framework.   Though Merck’s policy is in some sense
     aspirational, in that it states that retaliation is
     “unacceptable” and “will not be tolerated,” it also
     promises an identifiable and unambiguous benefit:
     employees will not be fired as a result of good-faith
     whistle blowing.

           . . . The policy in this case is far closer to
     those specific promises found to be enforceable than
     to the general aspirational statements in other cases.
     . . .

          Given   the  unambiguous   nature of   the   non-
     retaliation policy, the disclaimers that Merck relies
     upon are insufficient to defeat Scott’s reasonable
     expectation that Merck intended to limit its ability
     to terminate her for retaliatory reasons.       Unlike
     other cases where courts have found disclaimers
     effective in defeating contract formation, this case
     involves an attempt by Merck to disavow, through use
     of broad disclaimers, a specific benefit that clearly
     implicates grounds for termination.

(J.A. 303-04.)

                                    5
conclude    that    Merck   breached       those     contractual      provisions      in

terminating Scott.        The case proceeded to trial.

     The jury returned a verdict in favor of Scott, finding that

Merck breached its employment contract by terminating her in

retaliation for raising a good faith business practice issue to

Merck’s    Office    of   Ethics.      Scott        was   awarded    $555,000.00     in

consequential damages.           The district court denied Merck’s motion

for judgment as a matter of law or, alternatively, a new trial,

adopting     its    prior   rationale       regarding        the    existence   of    a

contractual limitation on Merck’s ability to terminate Scott’s

employment.        It also held that the evidence adduced at trial

supported both the jury’s verdict and the damages award.

     Merck noted a timely appeal, and we have jurisdiction under

28 U.S.C. § 1291.

                                        II.

     Merck    raises      four    issues       on   appeal    by    challenging      the

district court’s threshold determination that Scott’s employment

was anything other than at will, raising two issues related to

the scope and conduct of the trial, and contending that the

evidence did not support the verdict in favor of Scott.                     Because

we agree with Merck that the district court erred in concluding

that the non-retaliation policy statements altered the terms of

                                           6
Scott’s at will employment in light of clear disclaimers to the

contrary, we need only address the first issue.

       We    review       the   district    court’s     denial   of   a    motion      for

judgment as a matter of law de novo.                     See PBM Prods., LLC v.

Mead       Johnson    &    Co.,    639    F.3d   111,   119-20   (4th      Cir.    2011)

(citation omitted). 4             Contract interpretation is also subject to

de novo review.            Frahm v. United States, 492 F.3d 258, 262 (4th

Cir. 2007).

       Moreover,

       [a]s a court sitting in diversity, we have an
       obligation to interpret the law in accordance with the
       Court of Appeals of Maryland, or where the law is
       unclear, as it appears that the Court of Appeals would
       rule.   To forecast a decision of the state’s highest
       court   we  can   consider,  inter  alia:   canons  of
       construction, restatements of the law, treatises,
       recent pronouncements of general rules or policies by
       the state’s highest court, well considered dicta, and
       the state’s trial court decisions.

Wells v. Liddy, 186 F.3d 505, 527-28 (4th Cir. 1999) (internal

citations       omitted).            In    addition,     “[a]n    opinion         of   an

intermediate appellate court is persuasive in situations where

the highest state court has not spoken . . . .”                           Sanderson v.

Rice, 777 F.2d 902, 905 (4th Cir. 1985) (footnote omitted).

       4
       If “a reasonable jury would not have a legally sufficient
evidentiary basis to find for the party on [an] issue,” judgment
as a matter of law is appropriate. Fed. R. Civ. P. 50(a); see
also Gregg v. Ham, 678 F.3d 333, 341 (4th Cir. 2012).

                                             7
                                          III.

       Maryland follows the common law principle of employment at

will, meaning that an employment contract of indefinite duration

may be terminated by either party at any time.                           Adler v. Am.

Standard       Corp.,    432    A.2d     464,     467   (Md.     1981).       Maryland

recognizes       a   limited      exception       to    this     principle     whereby

subsequent       “policy       statements        that    limit     the     employer’s

discretion to terminate an indefinite employment or that set

forth a required procedure for termination of such employment

may, if properly expressed and communicated to the employee,

become     contractual         undertakings       by    the    employer      that    are

enforceable by the employee.”                    Staggs v. Blue Cross of Md.,

Inc., 486 A.2d 798, 803 (Md. Ct. Spec. App. 1985); see also

Fournier v. U.S. Fid. & Guar. Co., 569 A.2d 1299, 1301-05 (Md.

Ct. Spec. App. 1990).             Maryland courts have “caution[ed] that

not    every    statement       made   in    a    personnel    handbook      or     other

publication will rise to the level of an enforceable covenant. .

. . [G]eneral statements of policy are no more than that and do

not meet the contractual requirements for an offer.”                           Staggs,

486 A.3d at 804 (internal quotation marks and citation omitted).

       In applying the so-called Staggs exception, Maryland courts

have     been    clear     that    “an      employer     may     avoid    contractual

liability by any terms which clearly and conspicuously disclaim

contractual intent.”            Castiglione v. Johns Hopkins Hosp., 517

                                            8
A.2d 786, 793 (Md. Ct. Spec. App. 1986).                              This is so because

“[t]he purpose of the Staggs exception to the at will doctrine

is to protect the legitimate expectations of employees who have

justifiably         relied         on     manual        provisions        precluding       job

termination except for cause.                   Justifiable reliance is precluded

where,   as    in     the    case       at    hand,    contractual       intent    has    been

expressly disclaimed.”              Id. at 793-94 (emphasis added) (internal

citation      omitted).        Thus,          Maryland’s       courts    have    refused    to

apply    the    Staggs        exception          where      the      employer     “expressly

negated, in a clear and conspicuous manner, any contract based

upon the handbook for a definite term and reserved the right to

discharge its employees at any time.”                             Id. at 793; see also

Fournier, 569 A.2d at 1304 (holding that language stating that

employment      was    at     will       precluded       employee       from    “justifiably

rely[ing]      on   any     indication         in     the   employee     manual    that    his

employment      would       only    be       terminated     after     certain     procedures

were followed by the [employer]”).

       Having reviewed the relevant documents in the record, as

well    as    Maryland       case       law    on     point,    we    conclude     that    the

district court’s analysis was incorrect.                          It erred in failing to

grant    Merck’s      motion       for       summary    judgment      and,     subsequently,

Merck’s motion for judgment as a matter of law.                                 The district

court began by reviewing whether the policy statements Scott

cited created an “unambiguous” binding contractual promise, and

                                                 9
upon    finding      that        they    had        done     so,     then       rejected     the

disclaimers Merck relied on as “insufficient to defeat” those

promises.          Cf.   supra     n.2.        That        approach       misconstrues       the

salient analysis under Maryland law.

       An    employee      must     show     both      that        the    policy       statement

limited the employer’s discretion to terminate the employment at

will and that the employee justifiably relied on that statement.

The presence of a clearly expressed disclaimer precludes the

employee from proving the element of justifiable reliance on a

claim   of    breach       of    contract      regardless           of    how    readily    the

employee could satisfy the other part of the analysis.                                      Put

another way, “[t]he disclaimer of any contractual intent . . .

on the part of [the employer] effectively bar[s] [the employee

from demonstrating justifiable] reliance.”                               Fournier, 569 A.2d

at 1304.      The district court incorrectly reversed this analysis.

It is the unambiguous nature of the disclaimer that Maryland

courts have found to defeat an employee’s reliance on policy

statements, not the other way around.                          That is, proof of the

clear   disclaimer         renders      moot    any        claim    that    the       employer’s

discretion was otherwise limited by a policy statement.

       The issue before the court, then, is whether the language

Merck points to clearly and conspicuously precludes justifiable

reliance      on     the        provisions      Scott         contends          modified     her

employment      contract.           See    Fournier,          569        A.2d    at    1303-04;

                                               10
Castiglione,          517       A.2d        at     793-94.            Merck     identifies          two

provisions as being “disclaimers” of a contractual intent that

Scott’s employment would be anything other than at will.                                            The

first is a statement in Scott’s employment application, in which

Scott       acknowledged:          “I      understand         that    I    have     the     right    to

terminate my employment at any time and for any reason and that

Merck & Co., Inc. retains a similar right.”                                    (J.A. 63.)           The

second is the Manager’s Policies, which state, in relevant part:

(1)     “[e]mployment            at        Merck    is     at-will,          which     means      that

employees are not hired for a specific duration of time and

either        Merck     or       the        employee          may     sever     the       employment

relationship          at     any      time,        for   any        reason    with     or    without

notice,” and (2) “[n]one of the Company’s policies, procedures,

or    practices       should          be    viewed       as    creating        promises      or     any

contractual rights to employment for a specific duration of time

or to any specific benefits of employment.” 5                                (J.A. 55.)

        The    plain       language         of     these      policies        demonstrates        that

Merck       clearly        and      conspicuously              informed        Scott      that      her

employment       was       at      will.           Indeed,      the       precise     analysis       in

Castiglione can be applied to this case:

        5
       Nearly identical language is located in Merck’s Manager
Policy E1 and Policy E5.      For simplicity, we refer to them
collectively as “Manager’s Policies.”

                                                    11
       The disclaimer language in the [employment application
       and Manager’s Policies] does not indicate any intent
       to limit the discretion of [Merck] to discharge
       [Scott] only for cause, as was the case in Staggs.
       Moreover, [the disclaimers] actually served to reserve
       the right[] of [Merck to discharge Scott at will].
       Finally, unlike the situation in Staggs, in this case
       [Merck] expressly negated, in a clear and conspicuous
       manner, any contract based upon the [non-retaliation
       policy statements] and reserved the right to discharge
       its employees at any time.

517 A.2d at 793. 6

       The disclaimers in the case at bar thus precluded Scott

from       being   able   to   show   that    she   justifiably   relied   on   the

language in the Code of Conduct or Policy 57 as creating any

contractual rights (assuming that they could be so construed)

limiting Merck’s ability to terminate her employment at will. 7

The fact that the disclaimers appear in different locations from

       6
       We have considered Scott’s additional arguments that the
provisions   Merck  points   to  are  legally   insufficient  to
constitute “disclaimers” under Maryland law.   We do not agree.
The provisions at issue in the case at bar are closely analogous
to those in Castiglione and Fournier, in that they affirmatively
declare that Scott’s employment was at will, and that she could
be terminated for any reason.
       7
       On appeal, Scott persists in asserting that the Manager’s
Policies do not apply to her, an argument that she made to the
district court as well.     The district court rejected Scott’s
argument, explicitly finding that the policies’ plain language
made them applicable to her.    Scott brought no cross-appeal as
to this specific finding.    (J.A. 300.)  The district court did
not clearly err in its finding, as the Manager’s Policies state
that they apply to “all Merck & Co., Inc. employees based in the
U.S. not covered by a collective bargaining agreement.”    (J.A.
55, 57 (emphasis added).) Scott was such a Merck employee.

                                             12
the    Code     of    Conduct    and    Policy    57   policy    statements    is   not

material.        The Maryland Court of Special Appeals considered and

rejected that precise argument as to placement of the disclaimer

in Fournier.          569 A.2d at 1304 (“The fact that in this case the

disclaimer       appeared       in   the   application     for   employment     rather

than       in   the    [policy]        handbook   itself    is    not   a     material

distinction.”).          Merck clearly and conspicuously disclaimed any

limitation on its ability to terminate Scott’s employment at

will. 8     It further stated that policy statements such as the ones

Scott relies on should not be viewed as creating any contractual

rights and obligations.                Scott therefore cannot show that her

termination constituted a breach of contract, for her employment

was at will. 9         Accordingly, the district court erred in denying

Merck’s motion for judgment as a matter of law.

       8
       We observe that troubling consequences may flow from a
blanket rule permitting an employer’s broad disclaimer to
nullify preemptively any employment guarantees provided for in
an employer’s later-in-time policy statements. Cf. Toussaint v.
Blue Cross & Blue Shield of Mich., 292 N.W.2d 880, 895 (Mich.
1980) (“Having announced the policy, presumably with a view to
obtaining the benefit of improved attitudes and behavior and
improved quality of the work force, the employer may not treat
its promise as illusory.”).     Whether a clear and conspicuous
disclaimer will always suffice under Maryland law to defeat an
employer’s policy statements guaranteeing certain employment
protections to its employees is not an issue we need to reach
here, and is in any case more properly determined by that
state’s courts and legislature.
       9
        We do not take any position on whether the policy
statements Scott relies on were, on their own, sufficient under
(Continued)
                                            13
                                       IV.

      For   the     aforementioned     reasons,        we    conclude      that   the

district    court    erred,   as   a   matter     of    Maryland     law,    in   its

threshold ruling that Scott’s employment had been modified from

its original at will status.           The case should not have proceeded

to trial because there is not otherwise a legally sufficient

evidentiary basis upon which Scott could prevail.                          Merck was

entitled to judgment as a matter of law.                    We therefore reverse

the   district    court’s     judgment      and   remand      the   case    for   the

district court to enter final judgment in favor of Merck.

                                                            REVERSED AND REMANDED

Maryland law to modify the nature of Scott’s employment.    Our
holding concludes only that Scott could not justifiably rely on
any such policy statements in light of Merck’s disclaimers.

                                       14