Court Opinion

ID: 182011
Source: CourtListenerOpinion
Date Created: 2010-12-30 15:51:20+00
Date Added: 2024-06-11T17:25:57.799358
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 10a0797n.06

                                             No. 09-2631                                     FILED
                                                                                         Dec 30, 2010
                           UNITED STATES COURT OF APPEALS                          LEONARD GREEN, Clerk
                                FOR THE SIXTH CIRCUIT

MICHAEL SANDERS,                                           )
                                                           )
        Plaintiff-Appellant,                               )         ON APPEAL FROM THE
                                                           )         UNITED STATES DISTRICT
                v.                                         )         COURT FOR THE EASTERN
                                                           )         DISTRICT OF MICHIGAN
KETTERING UNIVERSITY,                                      )
                                                           )
        Defendant-Appellee.                                )
                                                           )

BEFORE: KENNEDY, COLE, and ROGERS, Circuit Judges.

        ROGERS, Circuit Judge. Plaintiff Michael Sanders alleges that the decision of his employer,

Kettering University, to terminate him constituted retaliation in violation of Michigan’s Elliott-

Larsen Civil Rights Act, Mich. Comp. Laws Ann. § 37.2701. Sanders also alleges that his

termination constituted a breach of contract. The district court granted Kettering’s motion for

summary judgment on all of Sanders’ claims. Because there is no genuine issue of material fact as

to whether Kettering had an honest belief in misconduct by Sanders, Sanders cannot establish that

Kettering’s stated reasons for terminating him were pretext for unlawful retaliation. However,

Sanders presented a genuine issue of material fact on whether Kettering breached its contractual

obligation not to fire him except for “just cause.” Partial reversal of the district court’s judgment is

therefore required.

                                                   1
       Sanders was employed as an assistant professor of industrial engineering at Kettering from

November 2000 to July 2006, when he was terminated. Sanders was born in Iran and immigrated

to the United States in 1984. Prior to his employment at Kettering, Sanders worked at Texas Tech

University as an associate director of technology transfer and as a senior engineering/manufacturing

specialist. During Sanders’ employment at Kettering, he applied for tenure twice, in 2004 and 2005,

and was rejected twice. The stated reasons for both rejections were the same: numerous deficiencies

in Sanders’ scholarship—including publishing few papers and conducting no research in his area of

expertise—and teaching abilities—including repeated absences, poor student evaluations, and failing

to establish expertise or strength in any particular subject. Though Sanders challenged his 2005

tenure denial, it was upheld at all levels of Kettering’s tenure review process.

       Sanders claims that during this same year, his faculty mentor, Ken Morrison, made

derogatory comments about Sanders’ nationality and/or Sanders’ affinity for foreign business

methodologies. Morrison allegedly called Sanders a “Japs Lover” (which Sanders claims was in

reference to his experience with Japanese engineering models) in March 2005 and stated in August

2005 that “foreigners of Sanders’ type could never understand the General Motors way of doing

business.” Sanders also claims that in early 2005, Morrison asked Sanders to consider severing

Kettering’s relationship with Cordys Corporation and instead work with Morrison and Cordys

privately, which Sanders refused. Sanders says he complained to his department head, David Poock,

about Morrison’s behavior in August 2005 and complained to Morrison directly in October 2005.

Soon afterwards, Sanders received an email from Morrison stating, among other things: “Your view

on the situation is really unworthy of response”; “You did not respect the system and you paid the

price”; “This process is impressive for its fairness”; and “My research only affected my vote. In 5

                                                 2
years, you did the rest of the damage yourself.” Sanders believes Morrison sent the email in response

to Sanders’ complaints.

       Several days after Morrison sent this email, several faculty members, including Morrison,

submitted a faculty misconduct complaint against Sanders.1 The complaint accused Sanders of

numerous acts of misconduct, including: submitting inconsistent employment histories;

misrepresenting himself as the prime author on a paper; representing that his relationship with

Cordys was on-going when it had actually ceased due to Sanders’ inappropriate behavior; and falsely

claiming that approximately twenty percent of a $1 million software grant from Cordys to Kettering

was “in cash” when in fact the grant included no cash component. In November 2005, these faculty

members submitted a revised version of the complaint, further alleging (in relevant part) that Sanders

falsely claimed to be a keynote speaker for a conference, falsely claimed $334,500 in secured grant

money that Kettering never realized, and fraudulently received $25,000 from Cordys to organize a

conference representing Kettering. Sanders met with Poock on November 2, 2005 and denied the

allegations. Sanders submitted a written response denying the further allegations in the revised

complaint on December 14, 2005.

       Poock initiated Kettering’s informal resolution process and mailed Sanders a copy of the

complaint. Sanders demanded copies of the documentation supporting the complaints’ allegations,

and Poock informed Sanders how to access it. After this informal process failed, allegedly due to

Sanders’ refusal to participate in meetings with Poock, Poock instituted Kettering’s formal

procedures and suspended Sanders with pay pending the complaint’s investigation. The stated

       1
       While the complaint was submitted in October 2005, some of the signatories dated it
December 2005. It is not clear whether this was done intentionally or accidentally.

                                                  3
purpose of the suspension was to separate physically Sanders from the complainants, in order to

maintain the orderly functioning of the engineering department.

       After Sanders in turn filed several complaints against Poock, Kettering removed Poock from

the review process of the faculty complaint against Sanders. Kettering instead set up an independent

committee, composed of Kettering employees from other departments, to investigate the faculty

complaint. The committee members had no prior connection to Sanders and had no knowledge of

his alleged complaints. The committee investigated the allegations in the faculty complaint over the

course of seven months, although Kettering’s formal procedures only allowed for a twenty-day

investigation period. On March 23, 2006, committee head Mark Wicks asked Sanders to meet with

the committee and answer questions regarding several matters. The committee also asked Sanders

to bring documentation of his past employment to this meeting. This meeting took place on April

20, 2006.    Kettering describes Sanders’ behavior at this meeting as uncooperative and

obstructive—arriving late and announcing that he would need to leave early, repeatedly raising the

same objection to the few questions the committee managed to ask in the limited time available,

demanding copies of all documentation, and badgering the committee with questions implying

misconduct on the part of the committee members.

       The committee issued its final report (“the Wicks Report”) on June 19, 2006. Although the

committee dismissed the majority of the allegations brought against Sanders, it found that Sanders

took several improper actions during his employment at Kettering. First, the committee found that

Sanders deliberately misrepresented that the $1 million Cordys software grant contained a twenty-

percent cash portion. The committee determined that the grant actually consisted of “university wide

use of Cordys CBP for $2,500 per seat for 400 seats,” and that there was no evidence of a cash

                                                 4
contribution. Second, after delving further into the $334,500 secured-grant-money allegation, the

committee found that Sanders deliberately misrepresented the value of this grant as being in excess

of $500,000. Third, the committee found that Sanders misrepresented himself on his resume as the

primary author of an article when he was actually the secondary author. Fourth, the committee found

Sanders’ claim to be the keynote speaker at a 2001 conference to be a misrepresentation. Fifth, the

committee found that Sanders inappropriately withheld a portion of a $25,000 grant Cordys provided

him to organize a conference that ended up being cancelled due to low attendance. Furthermore, the

committee also found that Sanders misrepresented numerous employment dates on his employment

application and/or 2005 tenure application and misrepresented his most recent salary prior to his

employment at Kettering. Finally, the committee found that Sanders obstructed the committee’s

investigation by altering the contents of an email message that was part of the investigation record,

and that he had shown contempt for the committee and disregard for the effective use of Kettering’s

resources by delaying meeting with the committee and then engaging in the aforementioned

disruptive conduct at the meeting.

       In response to these findings, Sanders claimed that the $1 million Cordys grant included

technical/maintenance support as the supposed “cash” contribution, that the $334,500 grant amount

would increase by $5,000 per additional license (accounting for the claimed $500,000 value), that

any indication of himself as the primary author when he was in fact the secondary author was only

a typo, that he in fact acted as a replacement keynote speaker, and that he did not claim to represent

Kettering at the cancelled conference and that he and Cordys had settled the associated $25,000 grant

issue. After reviewing the committee’s findings, Kettering Provost Robert Simpson terminated

Sanders’ employment effective July 28, 2006.

                                                  5
        Sanders brought suit against Kettering on May 15, 2007. He claimed that Kettering’s denial

of Sanders’ tenure and termination constituted national-origin discrimination and unlawful

retaliation, in violation of Title VII of the Civil Rights Act, 42 U.S.C. §§ 2000e-2 to e-3, and

Michigan’s Elliott-Larsen Civil Rights Act, Mich. Comp. Laws Ann. § 37.2701. Sanders also

claimed that his termination constituted a breach of his employment contract with Kettering.

Kettering moved for summary judgment on all Sanders’ claims.2                   The magistrate judge

recommended granting Kettering’s motion in full, and the district court agreed. The district court

held that Sanders had presented no direct evidence of national-origin discrimination or unlawful

retaliation. Although the court held that Sanders had established a prima facie case of national-origin

discrimination on the basis of circumstantial evidence, and reached no decision about a prima facie

case of retaliation on circumstantial evidence, it held that Sanders could not prove that Kettering’s

stated reasons for terminating him were pretext for discrimination or retaliation. Next, the district

court held that the “same actor inference” supported granting Kettering’s motion. Finally, the court

held that Sanders had not made out a prima facie case for his breach of contract claim.

        Sanders then filed a motion for reconsideration with respect to the breach of contract

disposition, arguing that this claim raised fact questions that only the jury could resolve. The district

court denied this motion, holding that Kettering had reserved sole discretion to determine just cause

for terminating Sanders. Sanders appealed the district court’s grant of summary judgment to

Kettering, but only with respect to his retaliation and breach of contract claims.

        2
         Following Kettering’s filing of its motion for summary judgment, Sanders agreed to dismiss
his denial-of-tenure claims.

                                                   6
I.     Retaliation claim

       Sanders cannot show a genuine issue of material fact that Kettering’s stated reasons for

terminating him were pretext for unlawful retaliation, since Kettering clearly had an honest belief

in its proffered reasons for his termination. Hence, Sanders’ retaliation claim fails. Sanders brought

his claim pursuant to Michigan’s Elliott-Larsen Civil Rights Act, Mich. Comp. Laws Ann. §

37.2701. Though Sanders litigated this claim on both direct and indirect (circumstantial) evidence

theories, he only challenges the district court’s dismissal of the claim on a circumstantial evidence

theory. To survive summary judgment, such claims must satisfy the burden-shifting framework

familiar to federal retaliation claims. See Garg v. Macomb Cnty. Cmty. Mental Health Servs., 696

N.W.2d 646, 653, (Mich. 2005); Edwards v. Credit Acceptance Corp., No. 243140, 2004 WL

1103773, at *3 (Mich. Ct. App. May 18, 2004). The first two steps of this framework—Sanders’

prima facie case and Kettering’s proffered non-retaliatory reasons for terminating Sanders—are not

disputed on appeal. Sanders challenges the district court’s conclusion that his retaliation claim fails

because he cannot make out a genuine issue of material fact that Kettering’s stated reasons for his

termination were actually pretext for unlawful retaliation.

       Sanders argues that Kettering’s stated reasons for his termination—the findings of Sanders’

wrongdoing contained in the Wicks Report—have “no basis in fact,” and therefore must have been

pretext for retaliation, because he offered evidence which supposedly refuted the findings and

highlighted procedural irregularities in the committee’s investigation. However, the proper inquiry

for arguing that Kettering’s stated reasons are pretextual in that they have “no basis in fact” is not

whether the stated reasons are ultimately shown to be incorrect. “[T]he plaintiff cannot simply show

that the employer’s decision was wrong or mistaken, since the factual dispute at issue is whether

                                                  7
discriminatory animus motivated the employer, not whether the employer is wise, shrewd, prudent,

or competent.” Hazle v. Ford Motor Co., 628 N.W.2d 515, 527 (Mich. 2001) (alteration in original).

Rather, the proper inquiry is whether Kettering had an “honest belief” in its proffered rationale. See

Swartz v. Berrien Springs Pub. Sch. Dist., No. 286285, 2009 WL 4163539, at *5 (Mich. Ct. App.

Nov. 24, 2009); Nizami v. Pfizer, Inc., 107 F. Supp. 2d 791, 803-04 (E.D. Mich. 2000). “An

employer’s honest belief in a proffered reason for a challenged employment decision will be upheld

against a charge of pretext as long as the employer can identify particularized facts for its honest

belief.” Swartz, 2009 WL 4163539, at *5.

        All the evidence shows that Kettering made a reasonably informed and considered decision

to terminate Sanders, and that it therefore had an honest belief in its proffered non-retaliatory reasons

for the termination. Sanders offers what he considers a point-by-point refutation of the Wicks

Report’s conclusions about his alleged improprieties. However, while Sanders’ arguments may help

discount some of Kettering’s allegations, they simply do not call into question whether Kettering had

an honest belief in the truth of these allegations. First of all, Sanders argues that he never

misrepresented the nature of the cash component of the $1 million Cordys grant, explaining that

twenty percent of the grant was cash “in that Cordys would pay for training and support of the

Cordys application.” Kettering quite sensibly responds that it always took “cash” to mean

“currency,” and that Sanders’ attempt to redefine “cash” as “training and support” does evidence a

deliberate misrepresentation on his part. Next, Sanders says he did not misrepresent himself as a

keynote speaker at a conference, since he had to step in for a keynote speaker who could not attend,

as confirmed by an eyewitness. Kettering, however, cited conflicting evidence showing that the

conference’s keynote speaker in fact attended and that Sanders’ speech could not be characterized

                                                   8
as a keynote speech. This appears to show a good-faith factual dispute between the parties,

something which cannot undermine Kettering’s honest belief in its conclusions. As for the allegation

that Sanders received money from Cordys to organize a conference that never took place and then

failed to return the money, Sanders responded to the Wicks Report by arguing that his involvement

in this matter had nothing to do with Kettering. Kettering’s reply is quite reasonable—fraud

committed off-the-job is still fraud.3 Sanders provides no explanation for the disruptive behavior

identified by the Wicks Committee, including fraudulently modifying an email in the committee’s

record. In addition, Sanders only responded to the alleged employment-history misrepresentation

on appeal and not to the investigatory committee. These arguments do not raise any genuine issues

of material fact as to Kettering’s honest belief in its stated reasons for terminating Sanders.

       As for the remainder of the allegations against him, Sanders argues that he did not

deliberately misrepresent the value of a $334,500 grant as being in excess of $500,000, because

according to Sanders, the original $334,500 value later increased to the claimed $500,000 value due

to additional licenses, training, and/or upgrades.       Sanders also explains away his alleged

misrepresentation of himself as the primary author of a publication as a typographical mistake.

While these arguments do provide some explanation for the alleged misrepresentations, Kettering’s

decision not to credit them cannot alone impugn Kettering’s honest belief in its reasoning,

       3
         Sanders further explains that he and Cordys settled the matter of the conference money, but
it appears that Sanders only argued this on appeal and not to the investigatory committee. Moreover,
Sanders’ evidence and the Wicks Report indicate that he made only a “partial payment” of this
money to Cordys, rather than a full reimbursement. While Cordys may consider the matter closed,
this does not foreclose Kettering from considering Sanders’ apparent failure to return the entire
conference money to be a dishonest or unethical act.

                                                  9
particularly in light of the other findings to which Sanders offers no credible explanation or simply

no explanation at all.

       Similarly, the supposed procedural irregularities Sanders cites also do not undermine the fact

that Kettering held an honest belief in its stated reasons for terminating Sanders. Among these,

Sanders argues that after Kettering opened its investigation into Sanders, Kettering introduced new

allegations of misconduct to which Sanders was not given a chance to respond. Presumably, Sanders

refers to the employment history and disruptive-behavior allegations. The employment-history

allegation, however, is not exactly new, as it was mentioned in the original faculty complaint.

Moreover, during its investigation the committee wrote Sanders asking him to bring information

about his employment history to their April 20, 2006 meeting. Sanders was not without notice of

this allegation. As for the disruptive-behavior allegations, these only arose during the course of the

committee’s investigation, making meaningful prior notice impractical, if not impossible.

       Citing further procedural irregularities, Sanders also argues that his paid suspension was not

justified by Kettering’s procedural rules. As Kettering notes, though, Sanders’ suspension had

nothing to do with the committee’s investigation of the faculty complaints and played no role in the

termination decision. The court therefore need not address this matter on appeal. While the

committee’s seven-month investigation exceeded the twenty-day period called for in Kettering’s

operating procedures, the significant number of allegations that the committee needed to investigate,

as well as the new ones disclosed during the investigation, make this delay more of an act of

thoroughness rather than a “fishing expedition,” as Sanders calls it. The Wicks Report noted that

“[b]ecause of the large number of allegations (fifteen) in the complaint filed against Professor

Sanders, this investigation was complex and therefore time-consuming,” and Sanders was warned

                                                 10
at the very beginning of the investigation that the committee might not be able to complete its work

before Kettering’s 2006 Winter term. As a final attack on the procedural fairness of Kettering’s

investigation, Sanders argues that the committee failed to consider the evidence supporting his

explanations. The Wicks Report refutes this claim. The report mentions Sanders’ principal evidence

in its analysis, including his conference-keynote-speech eyewitness, documentation on Sanders’

partial repayment of the Cordys conference money, and documentation from the sales coordinator

for the $334,500 grant. The fact that the committee apparently chose to reject Sanders’ evidence as

not credible or insufficient does not mean the committee ignored it altogether. Sanders met with the

committee on April 20, 2006, was informed of the matters the committee was exploring, and was

invited to submit any documents he felt necessary to support his side of the story. Sanders also

submitted written responses to the initial faculty complaint, the revised faculty complaint, and the

Wicks Report. Although the committee obviously rejected these responses, this does not mean that

the committee refused to accept or consider them altogether. Sanders’ miniscule evidence of

procedural irregularities in the committee’s investigation does not discredit Kettering’s honest belief

in its proffered reasons for Sanders’ termination and therefore does not raise a genuine issue of

material fact on this matter.

       Nothing else suggests any bias, prejudgment, or other impropriety in the committee’s

decision-making process so as to impeach Kettering’s honest belief in its stated termination

rationale. The individuals on the investigating committee had no prior connection with or

knowledge of the allegations against Sanders; nor did the final decision-maker in the matter, Provost

Simpson. Sanders presents no evidence that Morrison—whom Sanders identifies as the source of

the discriminatory comments and the faculty complaints that directly led to Sanders’

                                                  11
termination—played any role in the investigation or termination decision (or that any of the other

complaining faculty members did). Moreover, the Wicks Report noted that the committee decided,

“[i]n fairness to Professor Sanders, . . . to disregard ‘evidence’ provided by the complainants that the

team could not trace back to its original source.” To this end, the committee actually dismissed most

of the allegations charged in the faculty complaint (ten out of fifteen), strongly evidencing the

fairness of the committee’s investigation. In the end, the record supports, rather than detracts from,

the conclusion that Kettering had an honest belief in its proffered reasons for terminating Sanders.

Sanders thus has not established a genuine issue of material fact on whether Kettering’s stated

reasons had “no basis in fact,” which is his only pretext argument offered on appeal. See Campbell

v. Dept. of Human Servs., 780 N.W.2d 586, 594 (Mich. Ct. App. 2009). His retaliation claim fails

as a matter of law.

        Sanders also charges several other errors on the district court’s part regarding its dismissal

of his retaliation claim. In our de novo determination that summary judgment was proper, we do not

rely on the absence of direct evidence that Sanders complained of discrimination, or on the absence

of any evidence that the committee findings were false or misleading, or on the “same actor

inference.” It is therefore not necessary for us to address these aspects of the district court’s opinion.

II.     Breach-of-contract claim

        Sanders has raised a genuine issue of material fact about whether his termination was in

violation of contractual provisions that he not be terminated without “just cause.” For Sanders to

survive summary judgment on his breach-of-contract claim, Michigan law required him to put forth

a prima facie case by (1) proving the existence of the contract; (2) producing testimony that he had

performed it up to the time of his discharge; and (3) providing proof of damages. Rasch v. City of

                                                   12
E. Jordan, 367 N.W.2d 856, 858 (Mich. Ct. App. 1985). The district court held that Sanders had not

performed his contract up to the time of discharge, and thus that he had not made out a prima facie

case. Because Sanders raised evidence supporting his contention that he in fact was performing his

contract up to the time of discharge, however, the question of whether Kettering terminated him for

“just cause” should have been submitted to the jury under Toussaint v. Blue Cross & Blue Shield of

Michigan, 292 N.W.2d 880 (Mich. 1980).

        There is no dispute that Sanders’ employment contract allowed him to be terminated only

for just cause. Kettering’s Faculty Handbook states that “[n]o faculty member may be disciplined

or dismissed during an appointment period without a finding of adequate cause.” There is also no

dispute that Kettering specified certain practices as constituting “adequate” or “just” cause for

termination, among them, “dishonesty in professional activities.” What Sanders does dispute is that

his actions counted as “dishonesty in professional activities” or any other Kettering-defined category

of “adequate” or “just” cause. As discussed in the context of his retaliation claim, Sanders submitted

what he considers a point-by-point refutation of Kettering’s stated reasons for his termination.

Sanders denies that he took certain actions Kettering charges him with, and for the actions he did

take he denies that he intended any fraud or misrepresentation by them.

       While Sanders’ evidence is not so compelling as to show a genuine issue of material fact on

whether Kettering’s stated termination reasons are pretextual in that they literally have “no basis in

fact”—so compelling as to demonstrate that Kettering could not have had an honestly held belief in

the stated reasons—the evidence is sufficient under Michigan law to raise factual questions on

whether just cause existed for Sanders’ termination. When a just-cause relationship is established

between the parties, it is generally the job of the trier of fact to decide whether there was cause for

                                                  13
termination. “[W]here an employer has agreed to discharge an employee for cause only, its

declaration that the employee was discharged for unsatisfactory work is subject to judicial review.

The jury as trier of facts decides whether the employee was, in fact, discharged for unsatisfactory

work.” Toussaint, 292 N.W.2d at 895. Specifically, “[w]here the employer claims that the employee

was discharged for . . . dishonesty . . . and the employee claims that he did not commit the

misconduct alleged, the question is one of fact for the jury: did the employee do what the employer

said he did?” Id. at 896. This is the very situation in Sanders’ case. Although there is no genuine

issue of material fact that Kettering held an honest belief that Sanders’ actions constituted “just

cause” under their employment contract, justifying his termination, a jury hearing Sanders’ evidence

may reach an honest belief opposite that of Kettering. Sanders made a prima facie case on his breach

of contract claim and summary judgment was not appropriate.

       Kettering argues that, notwithstanding whether Sanders made a prima facie case, Kettering

reserved full discretion under the employment contract to determine whether Sanders’ actions

constituted just cause for termination. Thus, says Kettering, Sanders’ termination is foreclosed

altogether from judicial review. This exception to a claimant’s right under Michigan law to have a

jury review his breach of contract/wrongful discharge action is set forth in Thomas v. John Deere

Corp., 517 N.W.2d 265 (Mich. Ct. App. 1994).4 In Thomas, the court explained that “the same

evidence relied on to demonstrate that defendant had limited its ability to terminate plaintiff’s

       4
         The Thomas exception has been reaffirmed by various Michigan cases. See, e.g., Merlino
v. MGM Grand Detroit, LLC, No. 247165, 2004 WL 2050305, at *4 (Mich. Ct. App. Sep. 14, 2004);
Bengel v. W.A. Foote Mem’l Hosp., No. 209604, 1999 WL 33438074, at *2 (Mich. Ct. App. Aug.
3, 1999); Stack v. K-Mart Corp., No. 175096, 1996 WL 33348776, at *2 (Mich. Ct. App. Nov. 8,
1996).

                                                14
employment also establishes that defendant reserved for itself sole authority to decide whether

termination was justified.” Id. at 267. Hence,

       [b]ecause the defendant had reserved for itself the authority to determine whether
       there was good and just cause, and because defendant had, in the manner provided
       by the alleged employment contract, determined that there was good and just cause
       for terminating plaintiff’s employment, terminating plaintiff’s employment was not
       a breach of that contract.

Id.5

           Kettering’s argument has no merit, however, since there is no evidence that the Thomas

exception applies to the instant case. The language of the employment contract in this case, unlike

that in Thomas, never states that Kettering reserves sole authority to determine whether its

employees’ conduct constitutes just cause for termination. Although the contract identifies particular

standards for dismissal, defines several categories of conduct that may constitute “adequate” or

“just” cause for dismissal, and sets forth disciplinary procedures Kettering and its employees must

follow, none of this appears to mean that Kettering reserved sole authority unto itself to determine

whether dismissal was justified and for just cause.

       Merlino v. MGM Grand Detroit, LLC, No. 247165, 2004 WL 2050305 (Mich. Ct. App. Sep.

14, 2004), provides a helpful comparison. In Merlino, the plaintiff alleged that he was wrongfully

terminated from his position as a pit manager at defendant’s casino after several of his female co-

workers complained that he had sexually harassed them. Id. at *1. The court upheld the jury’s

determination that the contract was one for just cause, and rejected the defendant’s argument that

       5
         “In rendering its decision, the Thomas court did not quote the exact language of the contract
that provided the basis for its finding that the defendant had ‘reserved for itself the authority to
determine whether there was good and just cause.’” Bengel v. W.A. Foote Mem’l Hosp., No. 209609,
1999 WL 33438074, at *2 (Mich. Ct. App. Aug. 3, 1999) (quoting Thomas, 517 N.W.2d at 267).

                                                 15
it had reserved sole authority to itself to determine just cause per Thomas. Id. at *3-5. The

defendant based its Thomas argument on several contractual provisions, but the court held that these

were not enough to reserve sole authority to determine the just cause of a termination.

         Specifically, defendant asserts that its policy manual defines just cause as “a valid
         business reason, including but not limited to situations where [an employee] . . .
         violates a policy or rule of conduct, or disrupts company operations,” and that
         plaintiff’s actions clearly violate defendant’s sexual harassment policy. However, the
         excerpts provided from defendant’s employee handbook and policy manual do not
         contain any provision reserving unto defendant the sole authority to decide whether
         an employee actually committed the misconduct alleged, that the alleged misconduct
         equated to sexual harassment as defined in defendant’s policy manual, or that
         termination of the employee is justified.

                  Indeed, the only reference in those materials to defendant’s ability to
         determine whether termination is justified states that employees may be immediately
         terminated for just cause for engaging in “Conduct which MGM Grand Detroit
         determines violates its policies against sexual harassment and/or other harassment
         in such a manner to warrant immediate discharge.” While this clause states that
         defendant may determine that an employee has engaged in conduct that violates its
         sexual harassment policy, thus providing just cause as defined in its policy manual
         for immediate termination, it does not state that defendant has reserved onto itself the
         sole authority to do so. Moreover, it does not state that defendant has reserved onto
         itself the sole authority to determine whether the employee did, in fact, engage in the
         alleged misconduct. Therefore, we conclude that defendant’s assertion that plaintiff
         is not entitled to have a jury review whether his termination was for just cause is
         without merit.

Id. at *4 (alterations in original).

         Kettering’s contract language is very similar to that in Merlino. It provides that “[n]o faculty

member may be disciplined or dismissed during an appointment period without a finding of adequate

cause.    Violations of the Standards of Professional Conduct (Section 7.2) or engaging in

Unacceptable Conduct (Section 7.3) constitute reasons, which are intended to be illustrative and not

all-inclusive, for discipline or discharge.” Both the Kettering and Merlino contracts set forth a non-

exhaustive list of general categories of misconduct that of themselves constitute “adequate” or “just”

                                                   16
cause meriting dismissal. However, neither contract actually employs language purporting to reserve

sole discretion to the employer to determine the just cause of an employee’s termination. As the

Thomas exception did not apply in Merlino, it logically should not apply here. Kettering argues that

the magnitude of its fact-finding procedure for employee termination distinguishes this case from

Merlino, but this is not accurate: the lack of unequivocal “sole discretion language” was the critical

reason in Merlino for why the Thomas exception did not apply, not the adequacy of the employer’s

fact-finding procedures. Kettering has not reserved sole authority to define just cause and to

determine whether Sanders’ termination was justified.6

       The parties agree that Sanders’ breach-of-contract claim is brought pursuant to supplemental

jurisdiction. However, neither the federal Title VII claim nor the similar Elliott-Larson claim

remains in this case. On remand, the district court may consider exercising its discretion to dismiss

       6
         Even if Kettering’s Faculty Handbook reserved to Kettering the sole authority to determine
whether it had just cause to terminate an employee, this fact would not insulate Sanders’ dismissal
from judicial review. In order to qualify for the exception articulated in Thomas, an employer’s
“determination that just cause existed [must be] made by the designated personnel . . . in the manner
provided by the alleged employment contract.” Thomas, 517 N.W.2d at 267. Kettering did not
follow the procedures outlined in its Faculty Handbook before terminating Sanders, so the decision
to dismiss Sanders was not made in accordance with the terms of his employment contract. Under
the formal procedures for investigating a complaint against a faculty member, “a summary of the
investigative findings of the complaint” should issue with the academic Department Head’s
recommendation of “what actions shall be taken to resolve the complaint” and the “justifications for
the Department Head’s decision.” The affected faculty member then has an opportunity to appeal
the proposed resolution of the complaint to an Appeal Board convened by the Provost, and then to
the President. Here, the Wicks Report did not contain any recommendation from Mark Wicks—the
acting Department Head in Sanders’ investigation—as to the resolution of the complaint against
Sanders, let alone a recommendation that Sanders should be terminated. Instead, Provost Simpson
made a unilateral decision to dismiss Sanders, without allowing Sanders the opportunity to challenge
his termination under the designated appeal procedures. Thus, even though, as discussed above, the
procedural irregularities in Sanders’ investigation did not undercut Kettering’s honest belief that it
had just cause to dismiss Sanders, Kettering’s failure to extend all of the procedural protections it
promised to Sanders before dismissing him subjects its just-cause determination to judicial review.

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this breach-of-contract claim without prejudice so that Sanders can instead raise it in state court.

“Generally, once a federal court has dismissed a plaintiff’s federal law claim, it should not reach

state law claims.” Experimental Holdings, Inc. v. Farris, 503 F.3d 514, 521 (6th Cir. 2007) (citing

United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966)). “Residual jurisdiction should be

exercised only in cases where the interests of judicial economy and the avoidance of multiplicity of

litigation outweigh our concern over needlessly deciding state law issues.” Moon v. Harrison Piping

Supply, 465 F.3d 719, 728 (6th Cir. 2006).

        Should the district court determine that the exercise of supplemental jurisdiction is not

warranted, the court would also have to determine whether the requirements of diversity jurisdiction

are met. When this question was raised at oral argument, neither counsel was able to state

unequivocally that Sanders was not a Michigan domiciliary at the time suit was brought. Such a

showing would appear to be necessary for diversity jurisdiction. See, e.g., Napletana v. Hillsdale

Coll., 385 F.2d 871, 872 (6th Cir. 1967) (stating that “District Court had jurisdiction over this action

if diversity of citizenship existed at the time the complaint was filed”); accord Goldsmith v. Mayor

& City Council of Baltimore, 845 F.2d 61, 62 n.1 (4th Cir. 1988) (explaining that diversity

jurisdiction was not acquired where plaintiff changed her domicile after complaint was filed).

Absent either supplemental jurisdiction or diversity jurisdiction, the contract claim should be

dismissed without prejudice for lack of jurisdiction.

        The judgment of the district court granting Kettering’s motion for summary judgment is

affirmed with respect to Sanders’ retaliation claim. The judgment is reversed with respect to

Sanders’ breach-of-contract claim, and the case is remanded for further proceedings consistent with

this opinion.

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