BRACCO v. MICHIGAN TECHNOLOGICAL UNIVERSITY
Case Details
- Citation
- 231 Mich. App. 578
- Judge(s)
- Before: Markman, P.J., and Griffin and Whitbeck, JJ.
- Procedural Posture — the stage the case had reached
- appeal
- State
- Michigan
- Circuit
- 6th Circuit
Related Laws
No specific laws identified for this ruling.
Claim Types
Outcome
The Court of Appeals reversed the trial court's finding that plaintiff had a just-cause employment contract, holding that employment was terminable at will. However, the court affirmed the trial court's finding that plaintiff was not deprived of a protected liberty interest in reputation. Case remanded for entry of judgment of no cause of action on the just-cause claim.
Excerpt
BRACCO v MICHIGAN TECHNOLOGICAL UNIVERSITY Docket No. 179661. Submitted May 19, 1998, at Sault Ste. Marie. Decided September 22, 1998, at 9:00 A.M. Leave to appeal sought. Kenneth C. and Beverly Braceo, following the termination by Michigan Technological University of Kenneth Bracco’s employment, brought an action against the university in the Houghton Circuit Court, alleging age discrimination in violation of the Civil Rights Act, MCL 37.2101 et seq.; MSA 3.548(101) et seq.\ deprivation, without due process, of a property interest in employment; and deprivation, without due process, of a liberty interest in reputation. The Braceos also brought an action against the university in the Court of Claims, alleging that employment was supposed to be terminable only for just cause and that the discharge was not supported by just cause. The actions were consolidated. A jury returned a verdict of no cause of action with regard to the age-discrimination claim. The remaining claims were tried before the bench. The court, Edward A. Quinnell, J., determined that employment was terminable only for just cause, that just cause existed for the discharge, that Kenneth Braceo was deprived of a property interest without due process, and that Kenneth Braceo was not deprived of a protectible liberty interest. The university appealed, and the Braceos cross appealed. The Court of Appeals held: 1. In the absence of a civil service scheme providing that public employees employed for an indefinite term may be discharged only for just cause, public employers and employees may nonetheless create an employment relationship that is terminable only for just cause by express contract or agreement or through the employees’ legitimate expectations from the employer’s policies or practices. An oral contract or agreement for discharge only for just cause must be supported by evidence of negotiations about job security, by clear and unequivocal statements of job security by the employer, and by mutual assent to discharge only for just cause. A legitimate expectation of discharge only for just cause must be supported by evidence of an employer’s promise that is reasonably capable of instilling in the employee a legitimate expectation that employment would be terminated only for just cause. In this case, there was no civil service scheme providing for discharge only for just cause, the purported oral contract or agreement for discharge only for just cause was not supported by evidence of negotiations over job security, by clear and unequivocal statements of job security, or by mutual assent to discharge only for just cause, and the payment by the university of a bonus to employees who voluntarily retire early, by itself, could not give rise to a legitimate expectation of employment that was terminable only for just cause. Accordingly, Kenneth Bracco’s employment was terminable at will, not terminable only for just cause, and he did not have a protectible property interest in continued employment. The trial court therefore erred in determining that employment was terminable for just cause only and that Kenneth Bracco was deprived of a property interest without due process. 2. The trial court did not clearly err in finding that the university did not damage Kenneth Bracco’s reputation such that he was deprived of a liberty interest in reputation. Affirmed in part, reversed in part, and remanded for entry of judgment of no cause of action. 1. Master and Servant — Public Employment — Discharge Only for Just Cause. A public employer and a public employee, in the absence of a civil service scheme providing for discharge only for just cause, may create an employment relationship that is terminable only for just cause by express contract or agreement or through the employee’s legitimate expectations from the employer’s policies or practices. 2. Master and Servant — Discharge Only for Just Cause — Oral Contracts or Agreements. An oral contract or agreement for employment discharge only for just cause must be supported by negotiations over job security, by clear and unequivocal statements by the employer of job security, and by mutual assent to discharge only for just cause. 3. Master and Servant — Discharge Only for Just Cause — Legitimate Expectations. An expectation by an employee of employment discharge only for just cause must be supported by a promise by the employer that is reasonably capable of instilling in the employee a legitimate expectation that employment will be terminated only for just cause. 4. Master and Servant — Discharge Only for Just Cause — Legitimate Expectations — Early Retirement Bonuses. An employer’s payment of a bonus for early employee retirement, by itself, cannot give rise to a legitimate expectation by an employee that employment is terminable only for just cause rather than terminable at will by either party for any reason. Hunter H. Watson, for the plaintiff. Vercruysse Metz & Murray (by Robert M. Vercruysse and Bernice McReynolds), for the defendant. Before: Markman, P.J., and Griffin and Whitbeck, JJ. Whitbeck, J. In 1987, defendant Michigan Technological University (mtu) terminated the employment of plaintiff Kenneth Braceo. Plaintiffs filed suit, alleging numerous counts, but, following pretrial proceedings, were left with claims of age discrimination, breach of a just-cause employment contract, and deprivation of constitutional rights with respect to Braceo and a derivative claim for loss of consortium with respect to plaintiff Beverly Braceo. A jury heard the evidence of alleged age discrimination and returned a verdict of no cause of action in favor of mtu. The parties tried the remaining contract and constitutional claims in a bench trial. The trial court found that Braceo had a “just cause” contract of employment, but that MTU had just cause for terminating Braceo. However, the trial court also found that MTU deprived Braceo of due process, to which he was entitled by virtue of his property interest in the contract of employment, and awarded plaintiffs damages, together with costs and attorney fees. The trial court found that Braceo was not deprived of a protected liberty interest in his reputation. Mtu now appeals, and plaintiffs cross appeal. The key issue on appeal is whether Braceo had a “just cause” contract of employment with MTU. We find that he did not, and we reverse with respect to this issue. However, we affirm the trial court’s finding that Braceo was not deprived of a protected liberty interest in his reputation. I. BASIC PACTS AND PROCEDURAL HISTORY In 1970, mtu hired Bracco as a security guard. Mtu terminated Bracco in 1987 after two other employees reported that he committed a theft. These employees reported that Bracco took a few packages of packaged snacks from the display rack at the cafeteria of the student union, put the packages into his pocket, and left the area. When his supervisor confronted him with the statements of the employees, Bracco gave his own statement. Although Bracco admitted that the employees’ statements were accurate and admitted the conduct, adding that it “indeed did not look good,” he did not specifically admit theft. Bracco’s supervisor then took the statements to an administrator. The administrator and supervisor reviewed the statements with the acting employee-relations director, Pat Vitton. Although the precise facts are unclear, it appears that these three agreed that if the statements were true, mtu should terminate Bracco’s employment. They further agreed that if termination were necessary, Bracco should be given the opportunity to resign. Vitton then met with Bracco but the testimony differs with regard to what transpired. Mtu contends that Vitton confronted Bracco with the employees’ statements and asked for his explanation, while Bracco contends that Vitton merely told him he could resign or be fired. It appears undisputed that Bracco responded with an apology for his conduct but provided no explanation or defense. Vitton then told Braceo he should take time to think about the decision whether to resign. Vitton testified that when Braceo returned later that same day, he agreed to resign; Braceo did not, however, submit a written resignation. To Vitton’s astonishment, Braceo arrived at her office the next morning, asserting that he was ready to go to work. The testimony again differs, but Braceo contends that he informed Vitton that he had done nothing wrong. Underlying Bracco’s position of innocence was testimony regarding a practice that took place at mtu. Braceo testified that security guards and other uniformed officers from the area could enjoy free food at the student union after hours. Mtu, however, elicited testimony that the practice ceased years before this incident. The learned trial court succinctly summarized the procedural history as follows: Plaintiff [Braceo] filed timely suit in the Houghton County Circuit Court and in the Court of Claims, and the matters were consolidated. The cases have experienced numerous discovery proceedings, an interlocutory trip to the Court of Appeals, the retirement of one judge and the disqualification of his successor. Three theories of potential liability survived. The Elliott-Larsen Civil Rights Act [MCL 37.2101 et seq.; MSA 3.548(101) et seq.] claim (age discrimination) was tried to a Houghton County jury in March of 1992, The jury found in favor of the defendant [mtu] as to that claim. The two remaining claims are a breach of oral contract claim (Toussaint [v Blue Cross & Blue Shield of Michigan, 408 Mich 579; 292 NW2d 880 (1980)]) in the Court of Claims and a Due Process claim (deprivation of property and deprivation of liberty) in the Houghton Circuit Court. Because of the potential relief available if a Due Process violation were found, both of these theories were presented to me sitting without a jury. The non-jury trial commenced on July 27,1992. By agreement, all evidence received during the jury trial was considered as admitted in the non-jury phase, to the extent relevant. Because of the length of time that had passed since the earlier trial and the voluminous exhibits, I directed the parties to file post-trial briefs in lieu of closing arguments, and the parties have done so. After the bench trial, the trial court issued detailed findings of fact and conclusions of law. Relying on Toussaint, the trial court concluded that “the evidence clearly and unequivocally demonstrates that plaintiff [Bracco] had a subjective expectation of job security, and that his subjective expectation was objectively reasonable and was intended by both parties.” The trial court therefore concluded that Bracco had “sustained his burden of proving that he could be discharged only for just cause.” The trial court further concluded that Bracco did not commit theft, stating that “he [Bracco] had a subjectively honest belief that he had a right to eat the food under the circumstances.” Nevertheless, the trial court went on to state: However, I also conclude that, based on the facts known to them at the time of the termination, the officials of mtu responsible for it were acting in good faith, were acting reasonably (subject to the Due Process discussion to follow), and that the perceived theft amounted to just cause for discharge under standards set by mtu. The trial court found that Bracco did not have a liberty interest in his employment, stating: The evidence is totally devoid of any conduct on the part of the university suggesting that the university did anything to create or enhance any stigma resulting from the termination of plaintiff’s employment. The termination was mentioned in a news story carried in the campus newspaper, but that occurred only in reporting the filing of the complaint; other news organizations carried a similar news story. However, the trial court went on to find that, given the existence of a “just cause” employment relationship between Braceo and MTU, “plaintiff’s [Bracco’s] entitlement is a property interest protected by the Due Process Clause, and therefore the government cannot deprive him of it without affording him appropriate due process rights.” The trial court then found that mtu denied Bracco’s “procedural Due Process protections in terminating him in the manner in which it did.” Accordingly, and after further briefing on damages, the trial court awarded the plaintiffs substantial damages and granted their motion for attorney fees, costs, and expenses. The trial court later entered a judgment in the amount of $373,395.06 against mtu. Mtu has appealed the trial court’s finding that Braceo had a just-cause contract and that mtu violated Bracco’s due process rights. Mtu has also appealed the trial court’s award of attorney fees and costs as well as the trial court’s calculation of damages. Plaintiffs cross appealed, asserting that the trial court erred in rejecting Bracco’s liberty interest claim, by reducing the amount of attorney fees awarded to plaintiffs, and by finding that mtu had just cause for terminating Braceo. H. STANDARD OF REVIEW We review a trial court’s findings of fact for clear error. “Findings of fact by the trial court may not be set aside unless clearly erroneous. In the application of this principle, regard shall be given to the special opportunity of the trial court to judge the credibility of the witnesses who appeared before it.” MCR 2.613(C). “A finding of fact is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been made.” In re Forfeiture of $19,250, 209 Mich App 20, 29; 530 NW2d 759 (1995). Whether those facts result in the creation of a contract is an issue of law, to be reviewed de novo. Cardinal Mooney High School v Michigan High School Athletic Ass’n, 437 Mich 75, 80; 467 NW2d 21 (1991). When a trial court incorrectly chooses, interprets, or applies the law, it commits legal error that the appellate court is bound to correct. Fletcher v Fletcher, 447 Mich 871, 881; 526 NW2d 889 (1994) (Brickley, J., joined by Cavanagh, C.J., and Boyle, J.). m. JUST-CAUSE EMPLOYMENT A. OVERVIEW This case stands or falls on a single proposition: that Bracco had a “just cause” contract or agreement of employment with MTU. If Bracco did not have such a contract or agreement, then we need not address the questions whether MTU discharged him for just cause or whether MTU deprived him of his property interests without the process to which he was due. Nonetheless, the reasoning in Cleveland Bd of Ed v Loudermill, 470 US 532; 105 S Ct 1487; 84 L Ed 2d 494 (1985), is—even though it is a due process case dealing with the property rights of public employees in their continued employment—particularly instructive. Loudermill recognizes one situation where a public employee is a “just cause” employee: when that employee is covered by a civil service scheme in which the governing law provides that such employees can be terminated only for cause. While we may have such schemes in Michigan, it is clear that Braceo is not covered by one. The threshold question is, therefore, whether in the absence of a civil service scheme in which the governing law provides that public employees may be terminated only for cause, public employers and public employees may create a just-cause employment relationship. In Engquist v Livingston Co, 139 Mich App 280, 285; 361 NW2d 794 (1984), citing Bd of Regents of State Colleges v Roth, 408 US 564; 92 S Ct 2701; 33 L Ed 2d 548 (1972), and Perry v Sindermann, 408 US 593; 92 S Ct 2694; 33 L Ed 2d 570 (1972), this Court held: A property right emanates from a contract or statute; public employment in and of itself is not a property interest automatically entitling an employee to procedural due process. [Emphasis supplied.] See also Johnson v Menominee, 173 Mich App 690, 695-696; 434 NW2d 211 (1988). In Meagher v Wayne State Univ, 222 Mich App 700, 720-721; 565 NW2d 401 (1997), this Court fleshed this issue out definitively when we said: A property right may come from contract or statute, but a public employee does not have a property right in continued employment when the position is held at the will of the employee’s superiors and the employee has not been promised termination only for just cause. Manning v Hazel Park, 202 Mich App 685, 694; 509 NW2d 874 (1993). A public employee may show a just-cause contract under ordinary contract principles (e.g., that an express agreement, oral or written, exists for just-cause employment) or under the “legitimate expectations” theory of Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579; 292 NW2d 880 (1980). See Manning [v Hazel Park, 202 Mich App 685; 509 NW2d 874 (1993)] and Thorin v Bloomfield Hills Bd of Ed, 203 Mich App 692; 513 NW2d 230 (1994). The latter theory, in its pure form, stemmed from the Supreme Court’s common-law authority to recognize enforceable obligations that arise outside the operation of normal contract principles. Rood v General Dynamics Corp, 444 Mich 107, 118; 507 NW2d 591 (1993). Liability is nevertheless still premised on the parties’ mutual assent to be bound. Parties are free to bind themselves to whatever termination provisions they wish. Thomas v John Deere Corp, 205 Mich App 91; 517 NW2d 265 (1994). However, the “implied contract” theory of Toussaint may not be relied upon in Michigan when there is an express contract covering the same subject matter. Scholz v Montgomery Ward & Co, Inc, 437 Mich 83, 93; 468 NW2d 845 (1991); Wallace v Recorder’s Court, 207 Mich App 443, 447; 525 NW2d 481 (1994). [Emphasis supplied.] Thus, although the Michigan Supreme Court has not spoken definitively on this subject, in this Court at least, it is clear that in the absence of a civil service scheme in which the governing law provides that public employees may be terminated only for cause, public employers and public employees may nonetheless create a just-cause employment relationship. Further, in this Court at least, it is also clear that public employers and public employees may create such relationships by ordinary contractual means (i.e., through an express contract or agreement that is either oral or written) or through the “legitimate expectations” theory of Toussaint (i.e., outside “normal” contractual means). B. TOUSSAINT AND ITS LIMITATIONS (1) THE FACTUAL BACKGROUND IN TOUSSAINT As stated by Justice Levin, writing for the majority in Toussaint: Charles Toussaint was employed in a middle management position with Blue Cross and Walter Ebling was similarly employed by Masco. After being employed five and two years, respectively, each was discharged. They commenced actions against their former employers, claiming that the discharges violated their employment agreements which permitted discharge only for cause. A verdict of $72,835.52 was rendered for Toussaint and a verdict of $300,000 for Ebling whose discharge left him ineligible to exercise a stock option. Different panels of the Court of Appeals reversed Toussaint and affirmed Ebling. These cases are not factually distinguishable. Both Toussaint and Ebling inquired regarding job security when they were hired. Toussaint testified that he was told he would be with the company “as long as I did my job”. Ebling testified that he was told that if he was “doing the job” he would not be discharged. Toussaint’s testimony, like Ebling’s, made submissible to the jury whether there was an agreement for a contract of employment terminable only for cause. Toussaint’s case is, if anything, stronger because he was handed a manual of Blue Cross personnel policies which reinforced the oral assurance of job security. It stated that the disciplinary procedures applied to all Blue Cross employees who had completed their probationary period and that it was the “policy” of the company to release employees “for just cause only”. [Toussaint, supra at 595, 597-598.] (2) THE CONTRA
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