Hybrid Employment Agreement Did Not Create A Property Interest

Posted on March 22, 2011 by Michael Rigney

COLE v. MILWAUKEE AREA TECHNICAL COLLEGE DISTRICT (February 24, 2011)

Milwaukee Area Technical College employed Darnell Cole as its president. His employment agreement, which ran through June of 2011, contained two termination provisions. Under one provision, the College could terminate his employment without cause by giving him 90 days notice and paying him all of this salary and vacation that he would have earned through the end of his contract term. Under another provision, the College could terminate his employment at the end of any month for performance or conduct "considered grounds for dismissal" by the College. In February of 2009, Cole was charged with driving under the influence of alcohol. In a February board meeting, the College decided to terminate Cole's employment effective February 28. Cole brought suit pursuant to § 1983 (the College is a creature of Wisconsin law), alleging a due process violation. Magistrate Judge Gorence (E.D. Wis.) granted the defendants' motion to dismiss. Cole appeals.

In their opinion, Circuit Judges Flaum and Wood and District Judge McCuskey affirmed. The threshold question in any due process case, stated the Court, relates to the existence of a property interest. If Cole has a property interest, it must come from his employment agreement and state law. Under Wisconsin law, due process attaches only when the employment agreement requires a "cause" for termination. The Court concluded that Cole’s employment agreement fell somewhere between an at-will employment agreement and a "cause" employment agreement. Although the College needed some reason to terminate Cole's employment without notice and without severance, their discretion to do so was not meaningfully restricted. The Court therefore concluded that Cole did not have a constitutionally protected property interest.

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Whistle-Blower is Not Entitled to Exception to Employment-At-Will Doctrine in Indiana

Posted on December 9, 2008 by Michael Rigney

BREGIN v. LIQUIDEBT SYSTEMS, INC. (November 19, 2008)

Donald Bregin was employed as an accounts receivable collector for North American Van Lines, Inc. (“NAVLI”) until the late 1990s. Later, he was a consultant for SIRVA , NAVLI’s parent. In this role, Bregin was involved in NAVLI’s efforts to outsource its collection services. In fact, Bregin took part in negotiations that resulted in a contract between NAVLI and Liquidebt Systems, Inc. (“LSI”), under which LSI would perform those collection services. Bregin was also instrumental in determining the standards under which LSI’s performance would be measured. The parties agreed that SIRVA would evaluate LSI’s performance on how quickly receivables were collected. LSI stood to gain or lose $150,000 depending on whether it was able to show a 10% increase compared to prior years.  LSI hired Bregin away from SIRVA to head up LSI’s delivery of services to NAVLI. Before Bregin left SIRVA, he authored a report that concluded that SIRVA’s accounts receivable were overstated because they included amounts that should be refunded to customers. LSI was not able to meet the agreed performance goal. Bregin believed that SIRVA’s accounting practices were to blame. He reported his concerns to LSI’s management. LSI’s president had Bregin’s complaints evaluated to determine their validity. He discovered that LSI was performing so poorly that it would be subject to the penalty even if SIRVA changed its accounting practices. Bregin was removed from the SIRVA account but initially kept on at LSI. He was eventually fired in December of 2003. Bregin brought suit under Indiana law against LSI and SIRVA, alleging that LSI fired him in retaliation for his reporting the SIRVA accounting practices and that SIRVA tortiously interfered with his employment. The district court granted summary judgment to LSI and SIRVA. Bregin appeals.

In their opinion, Judges Posner, Flaum, and Evans affirmed. The Court noted that the Indiana Supreme Court has recently affirmed its adherence to the employment-at-will doctrine. Under the employment-at-will doctrine, an employer and employee can each terminate an employment relationship for any (or no) reason. The Court observed that Indiana did recognize some narrow exceptions. Bregin relied on the McClanahan exception, based on a case in which the Indiana Supreme Court allowed a cause of action for a truck driver who was fired when he refused to haul an illegal load. The act would have subjected him to personal criminal liability. The Court concluded that Bregin’s claim did not fit the exception. Bregin did not identify any criminal act he was asked to perform. Bregin also asked the Court to recognize a new exception for “whistle-blowers.” The Court rejected his request, noting that an Indiana appellate court had rejected the exception in 1980 in a case in which a “vigorous dissent” raised the same argument for the exception.

With respect to Bregin’s allegation that SIRVA tortiously interfered with his employment, the Court was critical of Bregin’s vague articulation of his claim. The Court conceded that SIRVA complained to LSI about Bregin. It also noted, however, that LSI was not meeting its performance goals and was unresponsive to SIRVA’s requests for information. SIRVA’s complaints to LSI were therefore justified and did not support a claim of tortious interference. In addition, LSI’s president testified that he alone made the decisions to remove Bregin from the SIRVA account and to fire him. Bregin cannot make out a case of tortious interference.

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