IN THE SUPREME COURT OF THE STATE OF MONTANA No. DA

Transcription

1 January IN THE SUPREME COURT OF THE STATE OF MONTANA No. DA LEONARD (DUKE) BROWN, Plaintiff and Appellant, V. YELLOWSTONE CLUB OPERATIONS, LLC, a Montana limited liability company, Defendant and Appellee. APPELLANT'S OPENING BRIEF ON APPEAL FROM MONTANA FIFTH JUDICIAL DISTRICT COURT, MADISON COUNTY APPEARANCES: JohniLTarlow Margaret C. Weamer TARLOW STONECIPHER & STEELE, PLLC 1705 West College St. Bozeman, MT Attorneys for Plaintiff and Appellant Steven J. Lehman Crowley Fleck PLLP 500 Transwestern Plaza II P.O. Box 2529 Billings, MT Attorney for Defendant and Appellee

2 TABLE OF CONTENTS STATEMENT OF THE ISSUE 1 STATEMENT OF THE CASE 1 STATEMENT OF FACTS 2 I. Factual Background 2 II. Procedural History 3 SUMMARY OF THE ARGUMENT STANDARD OF REVIEW.. 5 ARGUMENT 6 THE WDEA APPLIES FOR THE REASON THAT THE EMPLOYMENT AGREEMENT THAT THE YELLOWSTONE CLUB PROVIDED TO MR. BROWN DOES NOT CONSTITUTE A WRITTEN CONTRACT OF EMPLOYMENT FORA SPECIFIC TERM 6 I. Mr. Brown's Complaint Should Not Be Dismissed For. the Reason That the Exemption to the WDEA Found at Mont. Code Ann (2) Does Not Apply Under Well Settled Rules of Statutory Interpretation 8 IL While There is No Montana Law Providing Guidance on the Issue of "What is a Contract of Employment for a Specific Period of Time," Case Law from Other Jurisdictions Shows the Point is Well Settled in Favor of.mr. Brown's Position.8 III. IV. Logic Dictates that the Employment Agreement is Not for a Specific Term Because No Specific Term Can be Determined From the Language of the Contract Public Policy Dictates that this Court Should Not Apply the Exemption to the WDEA ii

3 V. The District Court Incorrectly Relied on the Tvedt Decision in Determining that the Exemption to the WDEA of a "Contract for a Specific Term" Should Apply Here. 12 CONCLUSION 15 TABLE OF AUTHORITIES Montana Cases Farris v. Hutchinson, 254 Mont. 334, 838 P.2d 374 (1992) 15 Hubner v. Cutthroat Communications, inc., 2003 MT333,318 Mont. 421, 80P.3d Langemo v. Montana Rail Link, Inc., 2001 MT 273, 307 Mont. 293, 38 P.3d....8 McKinnon Y. Western Sugar Co-Op. Corp., 2010 MT 24, 355 Mont. 120, 225 P.3d Norlund v. School Dist. No Mont. 402, 738 P.2d 1299 (1987)...15 Prout v. Sears, Roebuck and Co., 236 Mont. 152, 772P.2d288 (1989) Snetsinger v. Montana University System, 2004 MT 390, 325 Mont. 148, 104 P.3d Solle v. Western States Ins. Agency, Inc., 2000 MT 96, 229 Mont. 237, 999 P.2d Tvedt v. Farmers Ins. Group of Companies, 2004 MT 125, 321 Mont. 263, 91 P.3d 1 12, 13, 14 ifl

4 Other Courts Miranda v. Wesley Health System, LLC, 949 So.2d 63 (2006) Mississippi Court of Appeals 9 Carter v. Bradlee, 245 A.D. 49 (1935) New York Supreme Court...9, 10 Montana Rules Rule 12, (b)(6) M. R. Civ. P. 2, 3, 4, 5 Montana Code Annotated Mont. Code Ann , et seq.. 1,7 Mont. Code Ann Mont. Code Ann (2).. 8 Other Authorities Black's Law Dictionary 1406 (Bryan A. Garner ed, 7th ed., West 99) 11

5 STATEMENT OF THE ISSUE Whether an employment contract which is by its terms, terminable at any time, is a "contract of employment for a specific term" as defined by the Wrongful Discharge from Employment Act. STATEMENT OF THE CASE This case involves an employer attempting to prevent its employee from seeking relief for a wrongful termination pursuant to the Wrongful Discharge from Employment Act, Mont, Code Ann , et seq. (2009) (referred to in this Brief as the "WDEA") by requiring an employee to sign a contract for a specific term, and in that same document, rendering the specific term meaningless by permitting the employer to terminate the contract at any time, without cause. Plaintiff and Appellant, Leonard "Duke" Brown was employed by the Defendant and Appellee, Yellowstone Club Operations, LLC (referred to in this Brief as the "Yellowstone Club") as the director of retail sales and rentals of ski-related goods. The Yellowstone Club provided Mr. Brown with an employment agreement (referred to in this Brief as the "Employment Agreement") that purported to be for a term of three years. The Employment Agreement, however, also contained a provision permitting the Yellowstone Club to terminate Mr. Brown's employment at any time and without cause. Approximately six months into the term of the Employment 1

6 Agreement, the Yellowstone Club terminated Mr. Brown's employment without cause. On August 20, 2010, Mr. Brown filed his Complaint and sought damages pursuant to the WDEA on the grounds that the Yellowstone Club wrongfully terminated his employment. Mr. Brown asserts that the WDEA applies to the legal rights and obligations of the employer and the employee in this case. On September 2, 2010, the Yellowstone Club responded by filing a motion to dismiss pursuant to M. R. Civ. P. 12(b)(6), and argued that the Complaint should be dismissed based on the exclusion to the applicability of the WDEA where the employer and employee have entered into a contract for a specific term. On October 20, 2010, the District Court dismissed Mr. Brown's Complaint. Mr. Brown now appeals from that Order. STATEMENT OF FACTS I. Factual Background The key facts are not complex and are as follows: In October 2009, the Yellowstone Club hired Mr. Brown as the director of retail sales and rentals of ski-related goods in connection with the Yellowstone Club's exclusive ski resort. Employment Agreement, App. 1. At the time the Yellowstone Club hired Mr. Brown, it provided Mr. Brown with a document entitled "Employment 2

7 Agreement." The parties executed the Employment Agreement. Employment Agreement, App. 1. The Employment Agreement provided, at Paragraph 1, that the term of employment would be from October 28, 2009 to September 30, The Employment Agreement, however, in that same paragraph, provided that the term of employment applied, "unless sooner terminated as provided for in this Agreement." Employment Agreement, 11, App. 1. The Employment Agreement then provided, at Paragraph 5.1 the following relevant language: "During the term of this Agreement, Employee or the Company may, without cause, terminate this Agreement and the Employee's employment, effective thirty (30) days after delivery of written notice thereof." Employment Agreement, 5.1(a), App. 1. On April 22, 2010 the Yellowstone Club notified Mr. Brown in a letter that the Yellowstone Club was terminating his employment without cause. Termination Letter, App. 2. IL Procedural History On August 20, 2010, Mr. Brown filed his Complaint against the Yellowstone Club for wrongful discharge on the grounds that the Employment Agreement was not.a contract for a specific term and the Yellowstone Club discharged him without cause in violation of the WDBA. Pl.'s Compi. 16 (Aug. 20, 2010), App. 3. On September 2, 2010, the Yellowstone Club responded by filing a motion to dismiss pursuant to M. R. Civ. P. 12(b)(6). and brief in support arguing that the WDEA did not apply to Mr. Brown's termination because the Employment Agreement was for a specific term. Def.'s Mot. to Dismiss and Br. in Support (Sept. 2, 2010), App. 4. On September 17, 2010, Mr. Brown filed his response. P1.' s Response to Def.'s Mot. to Dismiss (Sept. 17, 2010), App. 5. tj

8 On September 30, 2010, the Yellowstone Club filed its reply. Def.'s Reply Br. (Sept. 30, 2010), App. 6. On October 20, 2010, the District Court issued its Order granting the Yellowstone Club's Motion to Dismiss pursuant to M. R. Civ. P. 12(b)(6), App. 7. Mr. Brown appeals from the District Court's Order dismissing his case. SUMMARY OF THE ARGUMENT The Yellowstone Club's Employment Agreement purported to provide Mr. Brown with employment for a specific term of three years, and in that same document, the Yellowstone Club rendered the specific term meaningless by reserving, by express language, the employer's right to terminate the Employment Agreement at any time. In essence, the term of three years provided by the Yellowstone Club was illusory. As a result, the Employment Agreement does not constitute "a written contract of employment for a specific term" and Mr. Brown is entitled.to the protections and remedies provided by the WDEA. For these reasons, the District Court incorrectly concluded that the WDEA does not apply. V.

9 STANDARD OF REVIEW A motion to dismiss under M. R. Civ. P. 12(b)(6), has the effect of admitting all well-pleaded allegations in the complaint. Snetsinger v. Montana University System, 2004 MT 390, 10, 325 Mont. 148, 104 P.3d 445. In considering a motion to dismiss, the complaint is construed in the light most favorable to the plaintiff and all allegations of fact contained therein are taken as true. Id. A complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff can prove no set of faôts in support of his claim that would entitle him to relief. McKinnon v. Western Sugar Co-Op. Corp., 2010 MT 24, 12, 355 Mont. 120, 225 P.3d The District Court's determination that Mr. Brown's Complaint failed to state a claim for which relief is available, is a conclusion of law. The appropriate standard of review is whether the District Court's conclusion of law is correct. Snetsinger, 10.

10 ARGUMENT THE WDEA APPLIES FOR THE REASON THAT THE EMPLOYMENT AGREEMENT THAT THE YELLOWSTONE CLUB PROVIDED TO MR. BROWN DOES NOT CONSITUTE A WRITTEN CONTRACT OF EMPLOYMENT FOR A SPECIFIC TERM. Mr. Brown's claim against the Yellowstone Club is based on an alleged violation of the WDEA. Specifically, that he was terminated without good cause. The District Court incorrectly concluded that the WDEA's exemption of "contract[s] for a specific term" applies in this case to a contract that, although it is for a term of years, may be terminated by the employer at any time. This section of the Brief will first highlight the relevant provisions of the Employment Agreement and then set forth five reasons why the WDEA applies in this case. Paragraph 1 of the Employment Agreement describes its term. That language is as follows: 1. Term. The term of this Agreement shall commence on October 28, 2009 and end at midnight on September 30, 2012, unless sooner terminated as provided for in this Agreement. The parties may by mutual written agreement extend or renew the term of this Agreement, although neither party has any obligation to do so and neither party is relying on any promises or representations concerning renewal or extension. If the parties agree to continue employment beyond the term of this Agreement, a successor agreement shall be entered into on such terms and conditions as are satisfactory to the parties.

11 Employment Agreement, 11, App. 1 (Emphasis added). The first sentence of paragraph 1, in combination with the express terms of paragraph 5.1 of the Employment Agreement, shows that the Employment Agreement is not a "written contract of employment for a specific term." This is apparent for the reason that subparagraph 5.1(a) provides: 5.1 (a) During the term of this Agreement, Employee or the Company may, without cause, terminate this Agreement and the Employee's employment, effective thirty (30) days after delivery of written notice thereof. Employment Agreement, 5. 1, App. 1 (Emphasis added). If the Employment Agreement can be terminated at any time by the employer, it cannot be said to be a "written contract of employment for a specific term." The District Court's conclusion that the WDEA did not apply in this case and the Court's resulting dismissal of Mr. Brown's Complaint was incorrect for the following five reasons: 7

12 I. Mr. Brown's Complaint Should Not Be Dismissed For the Reason That the Exemption to the WDEA Found at Mont. Code Ann (2) Does Not Apply Under Well Settled Rules of Statutory Interpretation. The statutory exemption to the WDEA relied upon by the Yellowstone Club provides in relevant part: Exemptions. This part does not apply to a discharge: (2) of an employee covered by a written collective bargaining agreement or a written contract of employment for a specific term. Mont. Code Ann (Emphasis added). Statutes should be given their clear meaning. Langemo v. Montana Rail Link, Inc., 2001 MT 273, 23, 307 :Mont. 293,38 P.3d 782. Here, the Employment Agreement can be terminated by the employer at any time. There is no specific term of employment. H. While There is No Montana Law Providing Guidance on the Issue of "What is a Contract of Employment for a Specific Period of Time," Case: Law from Other Jurisdictions Shows the Point is Well- Settled in Favor of Mr. Brown's Position. Although this Court has not defined the meaning of "specific term" in the context of the exemption to the WDEA found at Mont. Code Ann (2), other jurisdictions present compelling reasoning supporting the proposition that if a contract contains a provision permitting an employer to [I]

13 terminate an employee at any time, the contract can not be designated as a contract for a specific term. Consider the explanation provided by the Mississippi Court of Appeals in Miranda v. Wesley Health System, LLC, 949 So.2d 63 (2006): Miranda, 116. "definite term" self-evidently must be definite. contract for a stated term removes employment from the at-will doctrine only if there is an enforceable right for the employee to remain for that length of time. The period of time must be definite legally; it must be a promise and not just a goal. If what the contract gives in one provision for a set term is taken back in another for discharge at the sole discretion of the employer, there is a legally indefinite term of employment. The Supreme Court, Appellate Division, of New York also came to the same conclusion many years earlier in a case addressing an employment contract that purported to be for a term of two years, but contained a provision that the employer, "retain[ed] the right to terminate the Agreement and to discharge you [the employee] at any time, should we feel called upon to do so for any reason." Carter v. Bradlee, 245 A.D. 49 (1935). The New York Court in Carter stated that the employer could not have it both ways: a contract for specific term and a contract terminable at any point. The New York Court stated in relevant part:!sj

14 Carter, 245 A.D. at 50. Such a construction would make the contract merely one at the defendant's will, though by its terms it was for two years. A construction will not be given to a contract, if possible, that would place one of the parties at the mercy of the other. The reasoning set forth by these Courts in New York and Mississippi directly addresses the issue set forth in Mr. Brown's case. The Yellowstone Club's Employment Agreement with Mr. Brown does not fit the definition of a contract for a specific term because it contains a provision permitting the Yellowstone Club to terminate the Employment Agreement at any time. III. Logic Dictates That the Employment Agreement is Not for a Specific Term Because No Specific Term Can be Determined from the Language of the Contract. Although this point may be obvious, it is worth briefly noting that an ordinary reading of the Employment Agreement compels any reader, the parties, and this Court, to conclude that there is not a specific term Of employment according to the terms of the Employment Agreement. Consider, for example, either the employee or employer attempting to state the term of the employment. The answer would simply be: for the term purported by the contract or until the employer terminates the employee. Thus, the term could be for three years, three months, or three days - each conclusion is correct. 10

15 The term "specific" means "a particular or defined thing; explicit; conformable to special. requirements." Black's Law Dictionary 1406 (Bryan A. Gamer ed., 7th ed., West 1999). The term of employment under the Yellowstone Club's Employment Agreement is none of these. The Yellowstone Club's Employment Agreement is ambiguous as to the "specific term" of employment and therefore, this ambiguity should be construed against the Yellowstone Club as the drafter of the Employment Agreement. Hubner v. Cutthroat Communications, Inc., 2003 MT 333, 21, 318 Mont. 421, 80 P.3d IV. Public Policy Dictates That this Court Should Not Apply the Exemption to the WDEA. Consider the ramifications of the Yellowstone Club's position, that is: an employment contract for a period of time which is terminable at any time, exempts the employment relationship from the WDEA. If this proposition was the law, the result would be that many, employers will adopt this strategy, thus exempting potentially all employment relationships from the WDEA. Each employee would be offered a contract for a period of time, terminable at any time, and the employer would be free to terminate "at., will" any employee, at any time, and be exempt from the WDBA. This directly conflicts with the public policy of the state of Montana, which is one.11

16 of the few states to offer employees the protection of the legal redress of the V. The District Court Incorrectly Relied on the Tvedt Decision in Determining That the Exemption to the WDEA of a "Contract for a Specific Term" Should Apply here. The District Court's exclusive reliance on the case of Tvedt v. Farmers Ins. Group of Companies, 2004 MT 125, 321 Mont. 263, 91 P.3d 1, as the sole authority for its decision dismissing Mr. Brown's Complaint was incorrect for the reason that the Court in Tvedt expressly did not address Tvedt's WDEA claim, but rather, determined that genuine issues of fact existed regarding whether Tvedt was an employee of Farmers and remanded Tvedt' s WDEA claim to the district court for it to consider his employment status Specifically, the Court in Tvedt did not address how at-will termination clauses might affect whether an employment agreement constitutes a contract for a specific term and would therefore, be exempted from the application of the WDEA. The District Court in this case relied on the Tvedt decision for the proposition that at-will termination clauses are valid. The issue here is not the validity or invalidity of at-will termination clauses, but whether thepresence of an at-will termination clause invokes the protections of the WDEA by rendering the employment relationship at- 12

17 will as opposed to an employment relationship for a "specific term." The Tvedt decision does not answer this question. The Tvedt case presented very different factual and legal issues from those presented in Mr. Brown's WDEA claim. First, Tvedt did not involve a typical employer - employee relationship, as was the case with Mr. Brown. Tvedt worked as an insurance agent for Farmers Insurance in the late 1970's. In December, 1986, Farmers offered Tvedt the "District Manager" position and the parties entered into a contract called the "District Manager's Appointment Agreement (Manager's Agreement)." Id., 6. In February, 2000, Tvedt formed an insurance agency called L.L. Tvedt Insurance, Inc. Tvedt's insurance agency then entered into an agreement with Farmers called the "Corporate District Manager Appointment Agreement (Corporate Agreement)." Id., 18. The Corporate Agreement appointed Tvedt's insurance agency as the new District Manager and Tvedt, individually, as "Supervising District Manager." Id. Importantly, both the original Manager's Agreement and Corporate Agreements (collectively referred to as the "Agreements") provided that Tvedt was an independent contractor and that "nothing in the agreement was intended to create an employer-employee relationship." Id. In fact, this Court remanded the issue 13

18 of whether Tvedt was an employee back to the district court for consideration in connection with Tvedt's WDEA claim. Second, the contracts in Tvedt were not for a specific term. The Yellowstone Club even acknowledged in its Brief in Support of Motion to Dismiss: "In Tvedt, there was a written contract but there was no indication that it was for a specific term..." Def. 's Mot. To Dismiss and Br. in Support, 3-4, App. 4. Thus the issue of whether an employment contract is for a specific term - and thus excepted out of the WDEA -.was not considered in any manner by the Court in Tvedt. The two most important facts presented in Mr. Brown's case - the fact that he was an employee and the fact that the contract was supposedly for a specific term - were not before the Court in Tvedt. Even assuming, arguendo, that Tvedt stands for the proposition that an "at-will" termination clause may, in certain circumstances, not violate the covenant of good faith and fair dealing, this still leaves unanswered the question of whether the "atwill" clause renders a "specific term" illusory for the purposes of an employee's WDEA claim. As discussed in the previous four sections of this Brief, logic dictates the Employment Agreement is simply not for a specific term. 14

19 In its district court pleadings, the Yellowstone Club also cited Norlundv. School Dist. No. 14, 227 Mont. 402, 738 P.2d 1299 (1987), Farris v. Hutchinson, 254 Mont. 334,838 P.2d 374 (1992), Prout v. Sears, Roebuck and Co., 236 Mont. 152, 772 P.2d 288 (1989) and Solle v. Western States Ins. Agency, Inc., 2000 MT 96, 229 Mont. 237, 999 P.2d 328, for the proposition that employer is entitled to not renew an employment contract for a specific term without the need to show cause for the non-renewal. The issue of non-renewal, or the reasons for non-renewal, do not arise in Mr. Brown's case. Therefore, the Yellowstone Club's reliance on those cases is misplaced. CONCLUSION Through the enactment of the WDEA, Montana has abandoned the practice that an employer may terminate an employee absent good cause. The Yellowstone Club's Employment Agreement purported to provide Mr. Brown with employment for a specific term, and in that same document, the Yellowstone Club made that specific term meaningless by reserving the right to terminate the Employment Agreement at any point. Thus, the District Court incorrectly concluded that the WDEA does not apply to Mr. Brown's case. Mr. Brown respectfully requests this Court 15

20 to reverse the decision of the District Court and permit Mr. Brown to proceed with his WDEA claim. I-k Respectfully submitted this 2 '1 day of December, TARLOW STONECIPHER & STEELE, PLLC ariow for Duke Brown 16

21 CERTIFICATE OF COMPLIANCE I hereby certify that on thej day of December, 2010, the following applies to the foregoing Appellant's Opening Brief- 1. This Brief is double-spaced, with the exception of footnotes and quoted and indented material, which are single-spaced. 2. This Brief uses a proportionately-spaced typeface. 3. This Brief uses a typeface of 14 points or more, excluding footnotes. 4. The word count for the body of this Brief, including footnotes, is 3,367 as calculated by Microsoft Word 2007 for Windows. The cover page, Table of Contents, Table of Authorities, Certificate of Compliance, and Certificate of Service are not jnci!lded in this word count. Tarlow r for Duke Brown 17

22 CERTIFICATE OF SERVICE I hereby certir that on the day of December, 2010, a copy of the foregoing Appellant's Opening B ef was served upon the following by mail, hand-delivery, express mail or fax: Steven J. Lehman Crowley Fleck PLLP 500 Transwestern Plaza II P.O. Box 2529 Billings, MT XX U.S.Mail Fax Express Mail Hand-Delivery Federal Express Ii arlow I, 18

23 APPENDIX TABLE OF CONTENTS Appendix Tab # Date Description 1 October 28, 2009 Employment Agreement 2 April 22, 2010 Termination Letter 3 August 20, 2010 Plaintiff's Complaint 4 September 29, 2010 Defendant's Motion to Dismiss 5 September 17, 2010 Plaintiff's Response to Defendant's Motion to Dismiss 6 September 30, 2010 Defendant's Reply Brief in Support of Defendant's Motion to Dismiss 7 October 20, 2010 Order Granting Motion to Dismiss