Opinion
8:01CV647.
February 24, 2003
MEMORANDUM AND ORDER
This matter is before the court on plaintiff's motion for summary judgment pursuant to Fed.R.Civ.P. 56, Filing No. 28. Plaintiff contends that it is entitled to summary judgment as defendant can state no set of facts sufficient to submit to a jury in this case. Plaintiff has filed an amended complaint alleging that defendant left its employment and in doing so violated three separation agreements and, as a consequence, owes $227,485.99. Filing No. 8. Defendant contends that he was involuntarily terminated and thus owes nothing to plaintiff under the separation agreements. Further, defendant has counterclaimed alleging that he is entitled to recover benefits under plaintiff's management incentive plan, and plaintiff has moved for summary judgment on the counterclaim. I have carefully reviewed the record, briefs and the evidence submitted in conjunction with this motion. I conclude that although this is a close question, plaintiff's motion for summary judgment should be denied.
STANDARD FOR SUMMARY JUDGMENT
On a motion for summary judgment, the question before the court is whether the record, when viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(C); Mansker v. TMG Life Ins. Co., 54 F.3d 1322, 1326 (8th Cir. 1995). Where unresolved issues are primarily legal rather than factual, summary judgment is particularly appropriate. Id.
The burden of establishing the nonexistence of any genuine issue of material fact is on the moving party. Fed.R.Civ.P. 56(c); Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970). Therefore, if the moving party does not meet its initial burden with respect to an issue, summary judgment must be denied notwithstanding the absence of opposing affidavits or other evidence. Adickes, 398 U.S. at 159-60; Cambee's Furniture, Inc. v. Doughboy Recreational Inc., 825 F.2d 167, 173 (8th Cir. 1987).
Once the moving party meets its initial burden of showing there is no genuine issue of material fact, the nonmoving party may not rest upon the allegations of his or her pleadings but rather must set forth specific facts, by affidavit or other evidence, showing that a genuine issue of material fact exists. See Fed.R.Civ.P. 56(e); Chism v. W.R. Grace Co., 158 F.3d 988, 990 (8th Cir. 1998). The party opposing the motion must do more than simply show that there is some metaphysical doubt as to the material facts; he or she must show "there is sufficient evidence to support a jury verdict" in his or her favor. Id. Rule 56(c) "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
FACTS
ConAgra Foods, Inc., plaintiff, hired Larry Shipp, defendant, in 1992. In June 1999, defendant moved to the Omaha office and became Vice President of Integrated Logistics. Commencing in November 1999, defendant began reporting to Steve Tibey, who was hired at that time, as a Senior Vice President of Supply Chain. In early 2000, defendant was asked to move to Chicago. He was given a $100,000 moving bonus, paid $99,805.42 in moving expenses, and his salary was increased. He then relocated to Chicago. On September 28, 2001, defendant offered his resignation, effective October 12, 2001, and the letter of resignation thanked ConAgra for the opportunity to work there for the last 28 years. Ex. C(1). Defendant resigned and took a position with a competitor of ConAgra, Smithfield Foods, which is located in Virginia.
Defendant executed a number of employment agreements with plaintiff wherein he agreed to pay back certain benefits he received from the plaintiff in the event he voluntarily left his employment within a certain time period. The agreements can be divided into three areas:
A. Relocation Bonus Agreement
Defendant signed an agreement giving him a $100,000 relocation bonus in March 2000. The agreement provided that if defendant voluntarily terminated his employment prior to March 1, 2003, he would reimburse his employer 100% of the bonus money. Ex. A(1). Defendant accepted the bonus and moved to Chicago.
B. Employee Reimbursement Agreement
In July of 2000, defendant signed an agreement wherein plaintiff agreed to reimburse him for his relocation expenses incurred in the move from Omaha to Chicago. Ex. B(1). In return, defendant agreed to reimburse his employer 100% of paid expenses if he voluntarily left employment within the first twelve months of relocation, and 50% of paid expenses if he voluntarily left employment within the second twelve months of employment. Ex. B(1). Defendant received approximately $99,000 in relocation expenses for moving from Omaha to Chicago.
C. Stock Option Agreement
While employed by the plaintiff, defendant received numerous stock options and entered into agreements for options to purchase ConAgra shares of common stock. Under these agreements, if defendant voluntarily terminated his employment with plaintiff, he was required to forfeit any options exercised in the preceding one year of such termination. Ex. A(1)-A(6). Defendant exercised a number of options, one on September 25, 2001, and six on September 27, 2001, just days before he gave his notice of termination. In accordance with the stock option agreements, the appreciation or gain on the shares is calculated by determining the difference between the option price and the market price of the stock. Ex. A, ¶¶ 10-13. The total appreciation on these options, according to plaintiff, is $77,572.72.
DISCUSSION
Defendant argues that he was involuntarily terminated and, consequently, the agreements he entered into do not require him to repay any money to plaintiff. He offers no other defense to this case. Plaintiff argues that defendant never experienced any loss of job status or pay or benefits. Ex. C, ¶ 5. Plaintiff offers the following facts as evidence that defendant was not involuntarily terminated. Other than his boss, Steve Tibey, defendant was the highest compensated employee in the Logistics Group. Ex. C, ¶ 5. On May 22, 2000, he received a ten percent pay raise and he received outstanding performance appraisals. Ex. C(3). Again, in September 2001, he received a raise. Ex. C, ¶ 8. At the time he left his employment, defendant's salary had risen to $191,000. He received 300 shares of ConAgra common stock in August 2001 for "outstanding contributions" to the company. Ex. C(4). That was the highest amount given to employees in that division. His August 2001 appraisal gave him an overall rating of "exceeds expectations." Ex. C(5).
Further, plaintiff argues that defendant's responsibilities grew after the move to Illinois. For example, argues plaintiff, while in Omaha, defendant supervised six direct-line employees and sixteen staff. In Illinois, he supervised seven direct-line employees and forty-six staff. In addition, both parties agree that defendant, and in particular Steve Tibey, did not want defendant to leave the organization. The fact of the matter, urges plaintiff, is that defendant left his job to accept one with a competitor which provided him with compensation in the amount of $250,000, nearly $60,000 more than he made at ConAgra. He also received a $100,000 signing bonus at his new employment, relocation benefits, insurance, a car allowance, and stock options. Ex. D 93:23-98:13. Defendant agreed that the new position provided the leadership position he really wanted. Ex. D 106:5-18.
The following evidence and argument are offered by defendant in support of his allegations that he was involuntarily discharged. First, he argues that his name was left out of the annual report for two years. However, Steve Tibey testified that he had no input on which officers are identified in the annual report; that it was a marketing decision. Ex. E 67:24-69:24. Defendant also argues that the elimination of a vice-president who reported to him is evidence of lessening responsibilities and that certain other duties and responsibilities were reduced by the company. Further, he believes his responsibilities diminished in the areas of warehousing, supply chain technology, freight/audit, and integrated distribution.
The question in this case is whether defendant was involuntarily terminated from his employment. To prove constructive discharge one must show that "an employer deliberately renders an employee's working conditions intolerable, thus forcing him to quit his job." Sanders v. May Broadcasting Co., 336 N.W.2d 92, 95 (Neb. 1983); see also Jackson v. Arkansas Dept. of Ed., 272 F.3d 1020, 1026 (8th Cir. 2001); Tatom v. Georgia-Pacific, 228 F.3d 926, 931-32 (8th Cir. 2000). For a constructive discharge, the employer must force an employee to quit or foresee resignation as a consequence of its actions. Jackson, 272 F.3d at 1026. There must be a material change in the employees explicit responsibilities or duties or a reduction in rank to constitute a constructive discharge. Sanders, 336 N.W.2d at 758-60.
Although this is a close question, I find that the defendant has presented sufficient evidence for this case to be submitted to a jury. Defendant testified by deposition that he was to be the vice-president of logistics. He believes he was effectively squeezed out of his job with his responsibilities and duties substantially changed, thus forced to accept this demotion or to quit. "[W]hen an employee contracts to fill a particular position, any material change in duties or significant reduction in rank will constitute a constructive discharge which, if unjustified, is a breach of contract." Sanders, 336 N.W.2d 95, quoting, Brock v. Mutual Reports, Inc., 397 A.2d 149, 152 (D.C.App. 1979); see also Mair v. Southern Minnesota Broadcasting Co., 226 Minn. 137, 140, 32 N.W.2d 177, 179 (1948) (same).
COUNTERCLAIM
In his counterclaim, defendant argues that he is entitled to receive an award under the ConAgra Fiscal Year 2002 Corporate Incentive Plan. Defendant resigned on October 12, 2001. The completion of the fiscal year for the plaintiff is May 2002. If, under the Plan, employment is terminated "for any reason" before the end of a fiscal year, an employee is not entitled to receive such incentive payments. Ex. A(16). Defendant argues that I should apply Illinois law to this counterclaim. Under Illinois law, a party can receive earned bonuses regardless of a contractual clause to the contrary. See 56 IL. Admin. Code § 300.500. However, as plaintiff points out, this section does not apply unless there is mutual consent to allow the employee to leave or unless the employer terminates the employee. Id. If an employee chooses to leave, then he cannot recover a pro rata share of the bonus. Daberton v. HCR Manor Care, Inc., 177 F. Supp.2d 829, 858-59 (N.D.Ill. 2001), Tatom v. Ameritech Corp., 2000 WL 1648931 at 9 (N.D.Ill.). Because I have already concluded that there exists sufficient evidence to submit the issue of whether defendant voluntarily left his employment, I shall not dismiss the counterclaim until there is a determination as to whether defendant was constructively discharged.
THEREFORE, IT IS ORDERED, ADJUDGED AND DECREED that the plaintiff's motion for summary judgment, Filing No. 28, is hereby denied.