Court Opinion

ID: 3002872
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:35:14.451252+00
Date Added: 2024-06-11T18:02:04.411831
License: Public Domain

In the

United States Court of Appeals
               For the Seventh Circuit

Nos. 08-1383, 08-1435, 08-2226 & 08-2596

R ONALD V ENDETTI,
                                                    Plaintiff-Appellee,
                                                     Cross-Appellant,
                                  v.

C OMPASS E NVIRONMENTAL, INC.,

                                               Defendant-Appellant,
                                                    Cross-Appellee.
                                 and

W ILLIAM J. B RODERICK,
                                                           Defendant,
                                                       Cross-Appellee.

            Appeals from the United States District Court
        for the Northern District of Illinois, Eastern Division.
               No. 06 C 3556—Marvin E. Aspen, Judge.

    A RGUED JANUARY 13, 2009—D ECIDED M ARCH 24, 2009

 Before B AUER, P OSNER, and R OVNER, Circuit Judges.
2                  Nos. 08-1383, 08-1435, 08-2226 & 08-2596

  P OSNER, Circuit Judge. Compass, the principal defendant
(the other defendant need not be discussed separately),
appeals from the grant of summary judgment to the
plaintiff, Vendetti, in a suit for breach of contract gov-
erned by Illinois law. On the view we take of the case,
there is no need to decide the plaintiff’s cross-appeal, in
which he seeks relief beyond what the district court
awarded him; so we dismiss it.
  The plaintiff, an accountant, was the comptroller for a
company in Stone Mountain, Georgia, that was acquired
by the defendant. Both companies were engaged in the
business of cleaning up contaminated sites. The defendant
had an office in Stone Mountain, but its headquarters
was in Chicago and the plaintiff, while willing to work
for the defendant, did not want to leave Stone Mountain.
So he negotiated for a provision in his employment con-
tract which stated that “Unless otherwise mutually
agreed to, Executive [i.e., the plaintiff] shall be located in
his current Company office location (the ‘Principal Loca-
tion’) during the Term [of the contract] or such other office
located within 45 miles of the Principal Location.” The
contract authorized the plaintiff to terminate it on 30 days’
written notice for “Good Reason,” defined as a material
breach of the contract. If he did that he would be entitled
to severance pay equal to a year’s salary, and likewise “in
the event [he] terminates this Agreement following the
Company’s request to move his place of employment
more than 45 miles from the Principal Location.” The
plaintiff could even, without being guilty of a breach of
contract, terminate the contract without having “Good
Reason” to do so. But in that event he would have to give
Nos. 08-1383, 08-1435, 08-2226 & 08-2596                                             3

the defendant 90 days’ written notice and he would not be
entitled to any severance pay. The district court ruled
that the plaintiff was entitled to the year’s severance
pay because the defendant had violated the location clause.
   Although such a clause is a common provision in an
employment contract (as is a clause allowing rather than
forbidding the employer to relocate the employee, as in
Gayheart v. Wilson UTC, Inc., 1999 WL 184167 (N.D. Ill.
Mar. 29, 1999), so that the employee cannot argue that
relocation is a constructive discharge), we have not
found an appellate decision interpreting such a clause,
though an oral relocation clause was at issue in Jones v.
Dunkirk Radiator Corp., 21 F.3d 18 (2d Cir. 1994). We give
a few examples of typical location clauses: “The Execu-
tive’s principal office shall be located in Central Ohio.”
h t t p : / /a g r e e m e n t s .r e a ld e a l d o c s .c o m / e m p l o y m e n t -
agreement/executive-employment-contract-1589748/. “The
principal location of Executive’s employment with the
Company shall be the present location in which the
Executive performs such services, although Executive
understands and agrees that Executive may also be re-
quired to travel from time to time for business reasons.”
http://contracts.onecle.com/fortress/edens-emp-2007-01-
17.shtml. “ ‘Involuntary termination’ shall mean . . . the
relocation of you to a facility or a location more than
50 miles from your then present location, without your
express written consent, except for a relocation to the
Southern California area within the 12 months following
the date of this Agreement.” http://contracts.onecle.com/
conor/shanley.emp.2002.04.15.shtml. “For purposes of this
Agreement, the Employee shall have ‘Good Reason’ to
4                 Nos. 08-1383, 08-1435, 08-2226 & 08-2596

terminate his employment during the term of this Agree-
ment if . . . the Company requires the Employee to relocate
outside the Metropolitan area of New York City and the
Employee declines to do so.” http://contracts.corporate.
findlaw.com/agreements/barr/zeiger.emp.1999.12.13.html.
“ ‘Constructive Termination without Cause’ shall mean a
termination of the executive’s employment at his initiative
as provided in this agreement following the occurrence,
without the executive’s prior written consent, of one or
more of the following events: . . . the relocation of com-
pany’s principal office, or the Executive’s own office
location as assigned to him by the company, to a location
more than 50 miles from the present location of the com-
pany’s principal office.” www.elinfonet.com/prov/41. (All
these web sites were visited on March 16, 2009.)
  Notice that these clauses sometimes refer to the em-
ployee and sometimes to his office, do not define “reloca-
tion,” and sometimes do and sometimes do not mention
travel. So they bristle with potential interpretive prob-
lems, as does the clause in this case, and to navigate
them successfully will require the aid of common busi-
ness sense. “All interpretation is contextual, and the
body of knowledge that goes by the name of ‘common
sense’ is part of the context of interpreting most docu-
ments, certainly most business documents.” McElroy v.
B.F. Goodrich Co., 73 F.3d 722, 726-27 (7th Cir. 1996).
  The district court read the clause to forbid the
defendant to send the plaintiff on a business trip more
than 45 miles from his office in Stone Mountain if the
plaintiff did not want to go. That is a deeply problematic
Nos. 08-1383, 08-1435, 08-2226 & 08-2596                      5

interpretation. The defendant’s headquarters was in
Chicago and the plaintiff’s boss—the defendant’s chief
financial officer—was located there. The plaintiff was an
accountant and it must have been obvious to him when he
signed the employment contract that the merger of his
former company into the defendant would present ac-
counting issues that would require trips to Chicago to
resolve. It is true that the contract says that the plaintiff
shall be located in Stone Mountain, rather than that the
plaintiff’s office shall be located there, but if we want to get
really literal, we would have to interpret the contract to
mean that he could not be sent beyond the 45-mile radius
even if he wanted to be—which would be ridiculous.
  Had the parties wanted to give the plaintiff a veto over
business travel, there were many clearer ways of doing so
than by the form of words they chose, which are most
naturally interpreted to mean that he could not be reas-
signed from Stone Mountain to Chicago. He could be sent
on a business trip; but if the company said to him for the
next year you will work out of the Chicago office, he could
terminate the contract and receive the agreed-on severance
even if the company told him that it was not relocating him
to Chicago, or changing his “principal location.” But those
are the polar cases and we must consider where the
present case lies in relation to them.
  Some months after acquiring the plaintiff’s former
employer, the defendant installed a software system to
integrate the accounting systems of the two companies and
placed the plaintiff in charge of the integration project. This
required occasional trips to Chicago, which he made
6                  Nos. 08-1383, 08-1435, 08-2226 & 08-2596

without protest. Later his duties were enlarged to include
accounting assignments for both companies and assisting
in the preparation of the end-of-the-month closing state-
ments for the books of account. This required monthly
trips of a few days’ duration to Chicago, which again he
made without protest.
  In March 2006 the defendant’s new chief financial
officer told the plaintiff that two accountants in the Stone
Mountain office were being discharged and the plaintiff
would have to train accountants in the Chicago head-
quarters in the duties of the discharged employees. The
chief financial officer also wanted the plaintiff to assist in
the year-end audit of the company’s books and in the
preparation of the monthly closing statements. In an
email on which the plaintiff heavily relies, the CFO told
him that beginning the following month “you need to
plan on being in the Chicago office the last two weeks
of each month to assist with the close and other ac-
counting work that needs to be done.” The email acknowl-
edged that the plaintiff opposed this arrangement but
concluded: “I have decided the most efficient means of
completing the close and working on other necessary
items and projects is to have you work out of the Chicago
office two weeks a month. Therefore, you need to plan
on being here the last two weeks each month for the
indefinite future.”
   After some attempts at negotiation, including the plain-
tiff’s offering to spend “2 to 3 days (maximum) in
Chicago each month,” he sent a written notice to the
defendant that he would terminate his employment in
Nos. 08-1383, 08-1435, 08-2226 & 08-2596                 7

30 days because the requirement that he work out of the
Chicago office for two weeks a month for the indefinite
future violated the location clause. The notice was sent
and received on April 21, 2006. He had previously agreed
to be in Chicago on April 24 to assist with the 2005 year-
end audit (which was not yet complete), the monthly
closing, and the training of the Chicago accountants, but
now he refused to go, on the ground that the demand
that he be in Chicago that day was “part and parcel” of the
two-week-a-month order. His termination became effec-
tive on May 21; and when the company refused to give
him severance pay, on the independent grounds that he
had been required to give 90 days’ notice in order to be
allowed to terminate his employment without fault, that
his refusal to come to Chicago on April 24 was insub-
ordination warranting termination for cause, and that
the two-week-a-month order was not a relocation order,
he brought this suit.
  If the plaintiff’s decision to resign was for “Good Rea-
son,” that is, because of a material breach of the employ-
ment contract, he did not have to give 90 days’ notice,
but only 30 days’. It might seem that the defendant’s
action in changing the plaintiff’s place of employment
more than 45 miles from the “Principal Location” (if that
is how the two-weeks-a-month order should be inter-
preted, a question we defer for the moment) would, by
violating the location clause, be a material breach of the
contract. But if so, why is there a separate provision that
entitled him to severance pay “in the event [that he]
terminates this Agreement following the Company’s
request to move his place of employment more than
8                 Nos. 08-1383, 08-1435, 08-2226 & 08-2596

45 miles from the Principal Location”? If such a request
were a “Good Reason” for him to resign, there would be
no need for the provision we just quoted. That provision
seems to treat relocation as an independent ground
for severance pay that does not, however, dispense with
the requirement of giving 90 days’ notice; only termina-
tion for “Good Reason” requires just 30 days’ notice.
  The district judge rejected this interpretation on the
ground that ordering the plaintiff to spend two weeks a
month in Chicago was a “demand” rather than a “request”
and therefore was not within the quoted provision. But
that would imply that if the company “requested” the
plaintiff to relocate to Chicago and when he refused the
company said, “Fine; it was only a request,” the plaintiff
could terminate the contract and collect a year’s pay
because the company had requested that he relocate
rather than ordering him to do so.
  Even if that were a correct interpretation, still, the
plaintiff’s refusal to show up in Chicago on April 24
was insubordinate and therefore grounds for discharge.
He had not resigned yet—he couldn’t, because even the
30 days’ notice that he incorrectly says was all that he
was required to give before resigning had not expired, for
remember that he had sent the notice only three days
earlier. The district court thought this irrelevant, because
as we said the court had interpreted the no-relocation
provision as a no-travel provision, an interpretation we
reject—and for the additional reason that for at least a
year the plaintiff had been making trips to the Chicago
headquarters without any intimation that he could veto
Nos. 08-1383, 08-1435, 08-2226 & 08-2596                    9

a travel order. The behavior of parties to a contract is a
good guide to interpretation. Cloud Corp. v. Hasbro, Inc.,
314 F.3d 289, 298 (7th Cir. 2002) (Illinois law). “The parties
to an agreement know best what they meant, and their
action under it is often the strongest evidence of their
meaning.” Restatement (Second) of Contracts, § 202, com-
ment g (1981).
  Anyway there was no violation of the location clause.
Relocation would mean assigning the plaintiff full time
to the Chicago office, so that he would have to move
his home from Stone Mountain to Chicago or a Chicago
suburb. The two-week-a-month stint would have
allowed the plaintiff to retain his home in Stone Moun-
tain, especially since the defendant would be paying for
both his living expenses in Chicago and his travel ex-
penses, including the expenses of traveling back to Stone
Mountain on the weekend between the two weeks of each
monthly stint. Of course there is a point at which a re-
quirement of frequent travel would amount to a de facto
relocation—suppose the defendant had told the plaintiff
he must spend three weeks a month in Chicago at his
own expense for the next two years. That would be an
extreme case, coupling an unreasonable amount of con-
tinuous absence from home with a refusal to pay living
expenses. “There will come a point in time when travel to
the same location from another city, day after day, be-
comes a de facto relocation. Weekly travel for parts of
five days for six weeks, however, will not establish ‘reloca-
tion’ as a matter of law . . . . Although a six- to eight-week
stay in a location over a thousand miles away might
reasonably be considered a ‘relocation,’ a requirement of
10                Nos. 08-1383, 08-1435, 08-2226 & 08-2596

weekly travel that begins on Monday and ends on Friday
morning can be distinguished.” Peach v. Ultramar Diamond
Shamrock, 229 F. Supp. 2d 759, 769 (E.D. Mich. 2002), aff’d,
109 Fed. Appx. 711 (6th Cir. 2004). Our case involves
fully reimbursed weekday-only travel. The fact that the
company was paying all living and travel expenses is
significant because these costs would make the company
think twice before trying to circumvent the location
clause by renaming relocation “business travel.”
  The plaintiff puts great weight on the fact that the two-
weeks-a-month stint would continue “for the indefinite
future.” But we read “indefinite” to mean that the com-
pany did not know how long it would need him to
spend two weeks a month in Chicago, not to mean “for-
ever.” The expenses incurred by the company would, as
we have pointed out, give the defendant an incentive to
end the travel program as soon as possible.
   The plaintiff presented evidence of bad blood between
him and the chief financial officer and suggests that
the latter was trying to force him to resign without the
company’s having to pay him severance pay. Such a
maneuver, motivated (if the plaintiff’s evidence is be-
lieved) by spite, would disserve the company, but organi-
zations cannot always prevent subordinates from
pursuing vendettas against their subordinates. If, how-
ever, we are right that the company did not violate the
location clause, the CFO’s motive in ordering the plaintiff
to travel more than the latter wanted to do is irrelevant.
  Ordinarily when summary judgment is reversed, the
case is set for trial. But the defendant has asked us to
Nos. 08-1383, 08-1435, 08-2226 & 08-2596              11

reverse the judge’s denial of its motion for summary
judgment, and the plaintiff has not stated or implied
that in the event we reverse the grant of summary judg-
ment in his favor he wants a trial. Nor has he identified
any triable issues. We therefore order the entry of sum-
mary judgment in the defendant’s favor and thus the
dismissal of the case.
                              R EVERSED WITH D IRECTIONS.

                          3-24-09