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dismissing a claim for false representation on summary judgment where the plaintiff's evidence failed to support a claim of false representations
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Civ. No. 03-3248 (RHK/JSM)
May 18, 2004
Steve G. Heikens, Minneapolis, Minnesota, for Plaintiff
David J. Duddleston and Thomas E. Marshall, Jackson Lewis, Minneapolis, Minnesota, for Defendant
MEMORANDUM OPINION AND ORDER
Introduction
Plaintiff Kay Anderson worked for Defendant Alorica, Inc. ("Alorica") from September 16, 2002 to October 21, 2002. Anderson alleges that Alorica made fraudulent misrepresentations about its business that induced her to work for it. Before the Court is Alorica's Motion for Summary Judgment. For the reasons set forth below, the Court will grant Alorica's motion.
Background
Alorica is a customer management software and service company that provides technical support, repairs, replacement parts for electronics, and parts inventory. (Troudy Dep. Tr. at 9-10; Luke Dep. Tr. at 8; Compl. ¶ 2.) In its business, Alorica charges a license fee to companies to use software called "Helix" to manage the company's customer service operations. (Luke Dep. Tr. at 12, 34-35, 80; see Anderson Dep. Tr. 75-76.) In 2002, Alorica proposed providing its services to Best Buy, an electronics retailer (Troudy Dep. Tr. at 29-30), where Best Buy would outsource to Alorica its customer service functions, such as repair calls and parts inventory, and use Helix to track customer calls.Needing someone to head this project, on August 7, 2002, Alorica's recruiter, Tim Byrd, contacted Anderson. (Anderson Dep. Tr. at 64-65, Ex. 4; Troudy Dep. Tr. at 25, 28-29; Compl. ¶ 1.) Byrd's email stated, in pertinent part:
My name is Tim Byrd I am the Manager of Corporate Recruiting for Alorica software. Please take a look at our website www.alorica.com. I would like to do some networking with you to find out who you may know for a position that I am looking to fill within our company. Our company has been in business for almost 3 years. . . . We have four major clients right now and they are US Robotics, Emachines, NEC, and American Express. We have a fortune 500 customer that we are about ready to land a very large deal with. We are looking to start our professional services organization. We are looking for someone with a strong background in professional services. . . . Please let me know if you know of anyone that might be a good fit for this position. . . .
Job Description
Professional Services Managing Director . . .
Direct responsibility in leading, executing and scaling medium to large-size implementation projects. Strong work experience in professional services management for an enterprise software or operations consulting company. Ability to work under pressure and meet strict deadlines is imperative.
(Anderson Dep. Ex. 4.)
Anderson, who had been laid off from her previous employer in July 2002, sent Alorica her resume and searched the Internet for more information about Alorica. (Id. at 29, 65-70, Ex. 5.) On Alorica's webpage, Anderson viewed a section entitled "In the News" where there was a link that stated, "HELIX by ALORICA Software Earns `TMC's Customer Relationship Management Excellence' 2002 Award." (Id. at 73-74, Ex. 5.)
After speaking with Byrd, Anderson interviewed in Minnesota with Alorica's Vice President of Sales, Bob Luke, its Human Resources Director, Don Troudy, and an independent contractor working for Alorica, Chad Humme. (Id. at 66, 84-87.) Luke, Troudy, and Humme told Anderson that they wanted to hire someone who had experience implementing large projects, managing budgets, and implementing vendor software. (Id. at 87-88.) At this interview, they discussed implementing the Best Buy project, although Best Buy was not mentioned by name. (Id. at 88; Troudy Dep. Tr. at 31.) Anderson was told that the position would have "total responsibility" for the project, including "budgets, hiring, basically full implementation project management responsibility." (Anderson Dep. Tr. at 94.) On August 30, 2002, Anderson flew to California for a second interview. ( Id. at 103.) At the interview, she was told that Helix was a web-based program in which the client signs on the Internet and accesses the information that Helix tracks. (Id. at 110-12.) The parties also discussed the progress on the Best Buy project and Alorica's operations. (Id. at 153.)
After her interviews, Anderson was offered the position. Although she rejected Alorica's initial offer, she negotiated a base salary of $120,000, with a potential $80,000 bonus, and had the position's title changed to Vice President of Professional Services. (Id. at 146; Troudy Dep. Tr. at 37-38, 41-42, 73.) Anderson accepted her position as an "at-will" employee on September 10, 2002 and began her employment on September 16, 2002. (Anderson Dep. Ex. 11.)
Prior to accepting the position at Alorica, Anderson pursued positions at three other computer software-related companies: Firepond, Rytek, and Choridant. (Id. at 40-41.) Although she interviewed with each, none offered her a job and Anderson stopped pursuing them after she joined Alorica. (See id. at 41-50.)
On October 17, 2002, as Anderson began interviewing candidates to work with her on the Best Buy project (id. at 219), Luke called Anderson and "wanted [her] to put together a . . . proposal, which included cost, budget, and a timeline for Best Buy" (id at 222). Anderson, however, was concerned that she did not have enough information to complete such a proposal because she had not spoken with Best Buy. (Id.) She states that Luke had previously told her not to go to Best Buy. (Id. at 218.) Anderson then spoke with Humme, who tried to convince her that the project could be done in a matter of months. (Id. at 223.) She disagreed because "the product hadn't begun to be coded. There were no design standards. There was no training. There was no methodology. There was nothing in place to implement." (Id. at 224.)
The next morning, while still interviewing people to work with her, Anderson spoke again with Luke about her concerns over the short time frame in which he expected the Best Buy project to be completed. (Id. at 234.) She told him that she "will not create these things because they can't be done." (Id. at 219.) Anderson and Luke "went back and forth and [Luke] kept telling [Anderson] that we could do it in a short timeframe." (Id. at 234.) But Anderson "kept telling [Luke] that — I could not tell him that it would be successful" and that she could not "tell [Luke] that that can be done in that time frame." (Id. at 234-35.) Luke asked Anderson if she still thought she was the right person for the job and Anderson responded that she could "definitely do this job, but not in the time period" he was demanding. (Id. at 240.)
Luke told her not to continue with the interviews until this issue was resolved, but because one interviewee had been waiting twenty minutes, Anderson began that interview. (Li at 240-41.) In the middle of the interview, Humme joined her. (Id. at 241.) Understanding that she was not to do any more interviews, Anderson left to go work at her home office. (Id. at 241-42.) On October 21, 2002, Alorica ended Anderson's employment. This suit followed.
Standard of Review
Summary judgment is proper if, drawing all reasonable inferences favorable to the non-moving party, there is no genuine issue as to any 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); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). The moving party bears the burden of showing that the material facts in the case are undisputed. See Celotex, 477 U.S. at 322; Mems v. City of St. Paul, Dep't of Fire Safety Servs., 224 F.3d 735, 738 (8th Cir. 2000). The court must view the evidence, and the inferences that may be reasonably drawn from it, in the light most favorable to the nonmoving party. See Graves v. Arkansas Dep't of Fin. Admin., 229 F.3d 721, 723 (8th Cir. 2000); Calvit v. Minneapolis Pub. Schs., 122 F.3d 1112, 1116 (8th Cir. 1997). The nonmoving party may not rest on mere allegations or denials, but must show through the presentation of admissible evidence that specific facts exist creating a genuine issue for trial. See Anderson, 477 U.S. at 256; Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995).Analysis
In general, Anderson alleges that Alorica induced her to accept employment by misrepresenting that it had software ready for implementation, when in actuality it was a software service provider. (Pl.'s Mem. in Opp'n at 1, 17, 27.) Specifically, Anderson makes five related claims: (1) making false statements as inducement to entering employment in violation of Minn. Stat. §§ 181.64, 181.65 (Compl. ¶ 60-66); (2) fraud-in-the-inducement (id. ¶¶ 67-80); (3) intentional misrepresentation (id. ¶¶ 81-91); (4) negligent misrepresentation (id. ¶¶ 92-105); and (5) breach of the implied covenant of good faith and fair dealing (id. ¶¶ 106-113). The Court begins with Anderson's statutory claim.
I. Statutory Claim
Anderson claims that Alorica made false representations in violation of Minn. Stat. §§ 181.64 and 181.65. (Pl.'s Mem. in Opp'n at 33-35.) Under § 181.64, it is unlawful for any person or company "to induce, influence, persuade, or engage any person to change from one place to another in this state . . . to work in any branch of labor through or by means of knowingly false representations . . . concerning the kind or character of such work." Minn. Stat. § 181.64. An individual who was induced, influenced, or persuaded "to enter or change employment . . . through or by means of any of the things prohibited in section 181.64" is entitled to recover damages sustained as a result of the false representations. Minn. Stat. § 181.65; see Ferris v. Bodycote Lindberg Corp., Civ. No. 01-1689, 2003 WL 21517362, at *5 (D. Minn. June 30, 2003) (Frank, J.).
Anderson contends that "[Alorica] lied about the existence of software, which conveyed the existence of baseline . . ." (Pl.'s Mem. in Opp'n at 17.) According to Anderson, the lack of a "baseline," which she describes as the "basic foundation (or basic functionality) of software used by a customer," "had a huge consequence. It did not merely extend the time needed to perform her duties, it also required her to develop and effectively invent a baseline for software that could then be implemented." (Id.) Thus, she allegedly "was led to believe that Alorica had software, a baseline that was ready to be modified, adapted or tailored to particular customers. Instead, she later learned that she would have to start from scratch. Before she could begin implementing, she would have to spend months creating the foundation called a baseline." (Id. at 21.)
To substantiate her claim that no baseline existed, Anderson points to a document that appears to be either the agenda of or notes from an October 9-10, 2002 "Strategic Meeting" in which there is the following notation: "Helix No baseline product." (Heikens Certification of Discovery Ex. 4.)
To support her claim that she was induced to believe that Alorica had a baseline to implement, Anderson relies on representations made (1) in Byrd's August 7, 2002 email, (2) on Alorica's webpage, and (3) during her interviews. (Pl.'s Mem. in Opp'n at 7; see Pl.'s Mem. in Opp'n at 14, 16.)
Anderson "limit[s] her list of representations to statements made prior to accepting the offer of employment." (Pl.'s Mem. in Opp'n at 20.)
With respect to the email, Anderson inferred from Byrd's reference to "Alorica software" and to its "clients" that Alorica was a software vendor and that its customers were software clients. (Anderson Dep. Tr. at 71-72.) She testified as follows:
Q. Now. Right now today, what's false or misleading about [Byrd's email] that you're representing induced you to take this position at that time?
A. Recruiting for Alorica software. He is implying they're a software vendor.
Q. So the implication that they're a software vendor is what you're saying is misleading about this. Anything else? . . .
A. It implies that US Robotics, Emachines, and — these are software clients.
Q. Where does it say they're software clients?
A. It's implied. . . .
Q. Please tell me how it's implied. How would I looking at that see that's implied they're a software client?
A. The first sentence says we're recruiting for Alorica software. I believed that implies software vendor. Then it goes on to say they have clients. That says those are software clients.
Q. Where does it say they're software clients?
A. It's implied because they're a software company. . . .
Q. Anything else that you see that you consider to be misleading or false?
A. At this time I do not see anything.
(Id. at 70-72.)
With respect to the webpage, Anderson contends that its link under the "In the News" section entitled "HELIX by ALORICA Software Earns `TMC's Customer Relationship Management Excellence' 2002 Award" was misleading. (Id. Ex. 5.) When asked what was misleading, Anderson testified, "If you take the words in the whole connotation of the rest of the things in the web site, it was — if you look down in the — in the news, it says Helix by Alorica Software. It again talks about them being a software company, that they had professional services." (Id. at 74.)
Anderson produced computer printouts of Alorica's website dated November 5, 2002. (Anderson Dep. Tr. at 73-74; see Anderson Dep. Ex. 5.)
The website also referred to "multiple call centers" (Id. Ex. 5), while Anderson contends it only had one (Id. at 78). The number of call centers, however, has no relation to the "kind or character" of Anderson's work at Alorica.
Finally, with respect to the interviews, Anderson asserts that Alorica representatives told her that Alorica was a software vendor. (Pl.'s Mem. in Opp'n at 7.) She testified, "In my first interview, they also were very specific that they were a software vendor." (Anderson Dep. Tr. at 82; see id. 91-92, 163.)
No reasonable factfinder could find that Byrd's email, Alorica's website, or the alleged statements made during the interview contained "false representations . . . concerning the kind or character" of Anderson's work. It cannot reasonably be inferred from Byrd's reference to "Alorica software," the website's reference to "HELIX by ALORICA Software," or the interviewer's comment that Alorica was a "software vendor" that Alorica made a "knowingly false representation" that it had a "baseline" ready for Anderson to implement. These statements are not actionable under the statutes and Anderson's argument seems to rest on "an irrelevant and disingenuous interpretation of semantics." Ferris, 2003 WL 21517363, at *5. Going into the job, Anderson knew that her position would have "full implementation project management responsibility." (Anderson Dep. Tr. at 94.) It falls on her shoulders — not Alorica's — that she believed there was a baseline ready to be implemented. To grant Anderson relief in this case would be tantamount to granting relief to a coal miner persuaded to work for Minnesota Mining and Manufacturing ("3M"), only to find out that 3M has no coal mines. Surely, the Minnesota Legislature did not intend such an absurd result. Accordingly, the Court will grant Alorica's motion for summary judgment on the statutory claims.
II. Fraud and Misrepresentation Claims
Anderson also claims fraud-in-the-inducement, intentional misrepresentation, and negligent misrepresentation. (Pl.'s Mem. in Opp'n at 12-24.) To succeed on a claim for fraud or misrepresentation, Anderson must show a false representation. Martens v. Minnesota Mining and Mfg. Co., 616 N.W.2d 732, 747 (Minn. 2000) (fraud); M.H. v. Caritas Family Servs., 488 N.W.2d 282, 289 (Minn. 1992) (intentional misrepresentation); Florenzano v. Olson, 387 N.W.2d 168, 174 n. 3 (Minn. 1986) (negligent misrepresentation). A false representation may be made either "(1) by an affirmative statement that is itself false or (2) by concealing or not disclosing certain facts that render the facts that are disclosed misleading." Caritas Family Servs., 488 N.W.2d at 289. Statements that are "general and indefinite" are not representations of fact. Martens, 616 N.W.2d at 747.
Anderson has not demonstrated that Alorica made any false representations about a baseline. As Alorica correctly observes, Anderson does not identify anyone who told her that there was a baseline to implement. (Def.'s Mem. in Supp. at 7.) Instead, Anderson relies on the representations made in Byrd's email, on Alorica's website, and during her interviews to support her claim. (See Pl.'s Mem. in Opp'n at 17, 21.) For Alorica to refer to itself as "Alorica software" or to call itself a "software vendor," however, is not an "affirmative statement that is itself false." Caritas Family Servs., 488 N.W.2d at 289. To the contrary, Alorica licenses Helix software to its customers. (Luke Dep. Tr. at 12, 34-35, 80; see Anderson Dep. Tr. at 74-76, 110-12.) Even Anderson must concede "the reality that [Alorica] is a service-provider-vendor or has-provides services to clients." (Pl.'s Mem. in Opp'n at 15.) Anderson does not argue that she would not have joined Alorica because it licenses software; rather she asserts that she would not have joined had she known that there was no baseline to implement. But the circuitous and unreasonable route in which her argument takes — inferring the existence of a baseline from "Alorica software" and "software vendor" — does not establish that anyone at Alorica falsely represented to her that such a baseline existed. In any event, Alorica's alleged statements are too "vague and indefinite" to support a fraud or misrepresentation claim. See Martens, 616 N.W.2d at 747; Evertz v. Aspen Medical Group, 169 F. Supp.2d 1027, 1031-32 (D. Minn. 2001) (Tunheim, J.); see also Swedeen v. Swedeen, 134 N.W.2d 871, 875 (Minn. 1965) (stating that general and indefinite representations are insufficient to demonstrate actual misrepresentation).
In addition, to succeed on her claims, Anderson must show reliance.Martens, 616 N.W.2d at 747; Caritas Family Servs., 488 N.W.2d at 289;Florenzano, 387 N.W.2d at 174 n. 3. "It is well-established that an at-will employee who merely continues to work and does not demonstrate to have turned down other offers of employment based on an employer's representation is legally insufficient to show reliance." Evertz, 169 F. Supp.2d at 1031 (citing cases); see Piekarski v. Home Owners Sav. Bank, F.S.B., 956 F.2d 1484, 1494 (8th Cir. 1992) (applying Minnesota law and finding no reliance where plaintiff "did not decline pending job offers or pass up a concrete opportunity to look for other jobs").
Anderson, who was an at-will employee, has not demonstrated that she turned down any other offers of employment or concrete opportunities. Anderson points to her discussions with Firepond, Rytek, and Choridant as evidence of her reliance. (Pl.'s Mem. in Opp'n at 5 (citing Anderson Dep. Tr. at 40-41, 48).) Although she interviewed with these companies before joining Alorica, she has not shown that any of them offered her a job or that any opportunity was "concrete." As to Firepond, Anderson testified:
Q. . . . Did you actually receive offers from Firepond, Rytek or Choridant?
A. I was in negotiations with Firepond.
Q. Had they actually made you an offer?
A. I was in negotiation. We had not come to an offer yet.
(Anderson Dep. Tr. at 41.) As to Rytek, while a salary was discussed, she testified: "Q. So [Rytek] didn't make you an offer in that amount? A. When I took Alorica's offer I stopped pursuing this opportunity." (Id. at 48.) Finally, as to Choridant: "Q. . . . Choridant never actually offered you a job? A. I stopped pursuing Choridant." (Id. at 50.) After accepting the Alorica position, Anderson never talked to any of these three companies again. (Id. at 48, 50.) It is Anderson's burden on summary judgment to present admissible evidence showing specific facts that create a genuine issue for trial, Anderson, 477 U.S. at 256, but this evidence is "legally insufficient to show reliance," Evertz, 169 F. Supp.2d at 1031.
Rytek's records show that the position Anderson was interviewing for was cancelled in August 2002 — a month before she joined Alorica. (Esch Aff. Ex. B.)
Although Anderson relies heavily on Hanks v. Hubbard Broad., Inc., 493 N.W.2d 302 (Minn.Ct.App. 1992), both in her memorandum (Pl.'s Mem. in Opp'n at 15, 25, 27) and at oral argument, Hanks is distinguishable. First, the Hanks court found that the defendant had made a false representation of fact. Hanks, 493 N.W.2d at 309. Second, the court held that the plaintiff established reliance by "[giving] up a written contractual right to leave her job before the expiration of [her] employment contract." Id. Anderson, in contrast, has not shown a false representation, nor has she shown that she gave up any contractual rights.
Accordingly, because Anderson has failed to show a false representation or reliance, the Court will grant Alorica's motion for summary judgment on the fraud and misrepresentation claims. III. Implied Covenant of Good Faith and Fair Dealing
After oral argument, the undersigned received a letter from Anderson's counsel in which he wrote to (1) "correct my error in asserting that a motion was not required for punitive damages," and (2) identify "where in the record was the evidence of misrepresentation . . . about Alorica using Best Buy to transition from service to [s]oftware." (Letter from Heikens to the undersigned of 5/6/04.) While the letter is an unsolicited memorandum of law in violation of the Local Rules, see Local Rule 7.1(f) ("Except with the permission of the Court, no memoranda of law will be allowed except as provided in these rules."), its content does not affect the outcome of this matter.
Finally, Anderson asserts that Alorica's alleged misrepresentations violated the implied covenant of good faith and fair dealing. (Pl.'s Mem. in Opp'n at 28-33.) Specifically, she "seeks to apply this contract theory to the initial negotiations for an employment relationship." (Id. at 28 (emphasis original); see id at 30 ("We seek to apply [the implied covenant] to the pre-hire offer.").)
"Under Minnesota law, every contract includes an implied covenant of good faith and fair dealing requiring that one party not `unjustifiably hinder' the other party's performance of the contract." In re Hennepin County 1986 Recycling Bond Lit., 540 N.W.2d 494, 502 (Minn. 1995) (citations omitted). This covenant, however, "does not extend to actions beyond the scope of the underlying contract." Id. at 503. In addition, "Minnesota law does not recognize a cause of action for breach of the implied covenant of good faith and fair dealing separate from the underlying breach of contract claim." Medtronic, Inc. v. ConvaCare, Inc., 17 F.3d 252, 256 (8th Cir. 1994) (applying Minnesota law); see Orthomet, Inc. v. A.B. Medical, Inc., 990 F.2d 387, 392 (8th Cir. 1993) ("[Under Minnesota law] a cause of action for good faith and fair dealing cannot exist independent of the underlying breach of contract claim."); Semanko v. Minnesota Mut. Life Ins. Co., 168 F. Supp.2d 997, 1002 (D. Minn. 2000) (Doty, J.) (same).
Anderson's claim fails as a matter of law for at least two reasons. First, when it applies at all, the implied covenant of good faith and fair dealing applies only to the "performance of the contract"-not offers-and "does not extend to actions beyond the scope of the underlying contract." Recycling Bond Lit., 540 N.W.2d at 502. Second, while this cause of action does not exist independently of a breach of contract claim, Medtronic. 17 F.3d at 256; Orthomet, 990 F.2d at 392, Anderson does not make a separate, independent claim for breach of contract. Moreover, Anderson has not cited any case in which a Minnesota court has applied the implied covenant of good faith and fair dealing to job offers or to initial negotiations for employment, and this Court declines to do so here. Accordingly, the Court will grant Alorica summary judgment on this claim.
Anderson's reliance on Breen v. Norwest Bank Minnesota, N.A., 865 F. Supp. 574 (D. Minn. 1994). Poff v. Western Nat'l Mut. Ins. Co., 13 F.3d 1189, 1191 (8th Cir. 1994), Huffman v. Premis Corp., No. C9-97-2239, 1998 WL 373065, at *1 (Minn.Ct.App. July 7, 1998) (unpublished), and CRI. Inc. v. Watson, 608 F.2d 1137 (8th Cir. 1979) is misplaced. (See Pl.'s Mem. in Opp'n at 28, 30-31.) None of these cases applies the implied covenant of good faith and fair dealing to offers.
Conclusion
Based on the foregoing, and all of the files, records, and proceedings herein, IT IS ORDERED that Defendant Alorica, Inc.'s Motion for Summary Judgment (Doc. No. 31) is GRANTED. Plaintiff Kay Anderson's Complaint (Doc. No. 1) is DISMISSED WITH PREJUDICE.