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not binding precedent, except under the doctrines of law of the case, res judicata,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
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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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