Civil No. 02-3562 (JRT/FLN)
March 5, 2004
Nancy J. Miller, MILLER O'BRIEN, Minneapolis, MN, for Plaintiff
Kathryn Mrkonich Wilson and Thomas R. Revnew, LITTLERMENDELSON, P.C., Minneapolis, for defendant
MEMORANDUM OPINION AND ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Plaintiff Charlie DiFazio ("DiFazio") was hired by defendant Exelon Services, Inc.("Exelon"), on an independent contractor basis, as a Project Manager. In its initial offer, which was confirmed in writing on September 21, 2001, Exelon offered DiFazio hourlycompensation, reimbursement for approved expenses, and a possible $5,000 bonus basedon performance. The proposed term of employment ran from October 3, 2001 through December 31, 2001. DiFazio responded that he was interested, but was looking for long-term, full-time employment. On October 3, 2001, Exelon supplemented the September 21 offer with an offer of full-time employment beginning January 1, 2002. After someminor negotiation, DiFazio accepted the supplemented offer.
DiFazio began work on October 8, 2001. His job duties primarily involvedmanaging a particular assigned project. According to DiFazio, in anticipation of hismove to full-time status earning commission, he also began making sales on behalf ofExelon.
While DiFazio was working as an independent contractor at Exelon, his supervisor, Dan Jaeger ("Jaeger"), received negative reports concerning DiFazio's relationship withother employees and with customers. Jaeger discussed these concerns with DiFazio, informing DiFazio that others found him argumentative and felt he had trouble takingdirection from others.
On December 19, 2001, DiFazio approached Jaeger about his upcoming transitionto full-time employee. Jaeger suggested delaying the transition for several weeks, ostensibly because of the busy holiday season. Jaeger also explained that he wished toconduct a review of DiFazio's substantive performance and of his working relationshipswith other employees and customers. He also suggested that DiFazio meet with someoneabout improving his work relationships. DiFazio understood Jaeger's response toindicate that he would not be hired as promised, and that in order to be hired at some laterdate he would be required to get psychiatric help for his "issues" related to beingargumentative and not taking direction. According to DiFazio, he expressed discomfortwith what he perceived to be an indefinite delay and new requirements. The issue of the transition to full-time employee did not, however, come up again until December 31, 2001.
DiFazio recalls Jaeger using the term psychiatrist. Jaeger believes he might have usedthe word psychological. Jaeger claims that the person referred to is neither a psychiatrist nor apsychologist, but a management consultant who does performance coaching based on testing.
On December 31 DiFazio sent Jaeger an e-mail expressing his displeasure at thedelay, and his disappointment that Exelon was reneging on their promise to transition himto full-time employee status. He also requested payment of a discretionary bonus and ofcommissions allegedly owed to him. The December 31 e-mail also documentedDiFazio's recollection of his December 19 conversation with Jaeger. DiFazio recalledthat Jaeger "wanted to extend [DiFazio's] contract employment for an indefinite period"and was "placing additional requirements on [the] permanent employment status offer."Additionally, DiFazio recalled that Jaeger "want[ed] to review [DiFazio's] performance"and "discussed the topic of [DiFazio] getting professional help, including seeing apsychiatrist."
Jaeger considered the e-mail a resignation, which he accepted in a letter datedJanuary 4, 2002. DiFazio responded, also by letter, on January 9, asserting that he hadnot resigned, but rather had finished out his independent contractor obligations anddeclined to continue as an independent contractor in lieu of the promised full-timeemployment.
DiFazio asserts four causes of action against Exelon: (1) violation of theAmericans with Disabilities Act ("ADA"); (2) breach of contract; (3) promissoryestoppel; and (4) unjust enrichment. Exelon requests summary judgment on all counts.For the reasons discussed below, the Court grants in part and denies in part defendant'smotion.
ANALYSISI. Standard of Review
Rule 56(c) of the Federal Rules of Civil Procedure provides that summaryjudgment "shall be rendered forthwith if the pleadings, depositions, answers tointerrogatories, and admissions on file, together with the affidavits, if any, show thatthere is no genuine issue as to any material fact and that the moving party is entitled to ajudgment as a matter of law." Only disputes over facts that might affect the outcome ofthe suit under the governing substantive law will properly preclude the entry of summaryjudgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summaryjudgment is not appropriate if the dispute about a material fact is genuine, that is, if theevidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. Summary judgment is to be granted only where the evidence is such that no reasonablejury could return a verdict for the nonmoving party. Id.
The moving party bears the burden of bringing forward sufficient evidence toestablish that there are no genuine issues of material fact and that the movant is entitled tojudgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Thenonmoving party is entitled to the benefit of all reasonable inferences to be drawn fromthe underlying facts in the record. Vette Co. v. Aetna Casualty Surety Co., 612 F.2d 1076, 1077 (8th Cir. 1980). However, the nonmoving party may not merely rest uponallegations or denials in its pleadings, but it must set forth specific facts by affidavits orotherwise showing that there is a genuine issue for trial. Forrest v. Kraft Foods, Inc., 285 F.3d 688, 691 (8th Cir. 2002).
II. Americans With Disabilities Act
Neither party contends that DiFazio is or ever was disabled. Rather, DiFazioclaims that Exelon violated 42 U.S.C. § 12112(d), a provision of the ADA, byconditioning his employment on a psychiatric examination. Exelon responds that thesuggested visit was to a management coach, not for a medical examination, was not acondition of employment, and caused DiFazio no injury. In the alternative, Exelonasserts that even if the suggested visit was for a medical examination, the requestedexamination was authorized because it was job-related and consistent with businessnecessity. The Court agrees with Exelon's position.
As an initial matter, the Court finds that Jaeger's request does not qualify as arequest for a medical examination. Although a psychiatrist is a medical doctor, apsychiatrist is also capable of conducting many activities that are not explicitly medical.Without any evidence of what task this alleged psychiatrist was expected to perform, itwould be impossible for a jury to conclude that it was a medical examination.
However, in the event the request was for a medical examination, the Court findsthat such a request was not unlawful. In order to establish a claim under § 12112(d), aplaintiff must establish that the defendant requested an unauthorized medicalexamination in violation of the ADA, and that this violation caused some sort of tangibleinjury. Cassette v. Minnesota Power Light, 188 F.3d 964, 960 (8th Cir. 1999) (emphasis added). Section 12112(d) permits an employer to request a medicalexamination or otherwise inquire into an applicant's or employee's possible or actualdisability under certain circumstances. These circumstances vary depending on whetherthe plaintiff is an applicant for employment, an applicant with an offer conditioned on theexamination, or a current employee. 42 U.S.C. § 12112(d)(2), (3), (4).
A plaintiff need not be disabled, or considered disabled, in order to establish a claim forunauthorized collection of confidential medical information in violation of § 12112(d). Cassettev. Minnesota Power Light, 188 F.3d 964, 970 (8th Cir. 1999).
DiFazio clearly was not merely an applicant for a position with Exelon. DiFaziourges that he be considered an applicant for a full-time position at Exelon with an offerconditioned on undergoing the alleged psychiatric test, arguing that independentcontractor status is not the same as employee status. Under § 12112(d)(3), an employermay require every successful job applicant to undergo medical examination, but may notsingle out a particular applicant. Section 12112(d)(4), in contrast, permits employers torequire medical examinations of specific current employees if doing so is job related andconsistent with business necessity.
The Court finds that, for purposes of this action, DeFazio is most appropriatelyconsidered an employee of Exelon. The instant situation is different from the typicalsituation involving an applicant with a conditional offer. An employer has only limitedknowledge of any applicant with an offer, and may legitimately need to rely on a medicalexamination to ensure that person can perform the essential functions of the job. Anemployer needing to examine one applicant with an offer should logically need the sameexamination of any and every applicant with an offer. In the case of a current employee, however, an employer has gained knowledge of that individual's abilities that mayindicate a legitimate need to verify that individual employee's ongoing ability to performhis job. See Conroy v. New York State Dept. of Correctional Services, 333 F.3d 88, 98(2nd Cir. 2003); Porter v. United States Alumoweld Co., 125 F.3d 243, 246 (4th Cir. 1997) see also Grenier v. Cyanamid Plastics, 70 F.3d 667, 678 (1st Cir. 1995) (relying in parton Brumley v. Pena, 62 F.3d 277 (8th Cir. 1995)). An employer is not required by theADA to overlook or ignore such experience and knowledge. Id.
At the time the alleged request for a psychiatric examination was made, DiFaziohad been working for Exelon as an independent contractor, under Jaeger's supervision, for at least two and one-half months. See Ault v. Brady, 37 Fed. Appx. 222 (8th Cir. 2002) (noting that distinction between `independent contractor' and employee is generallyunnecessary, and that relationship between principal and independent contractor is oftencharacterized as employment); Smith v. Helgaas, M.D., 763 F. Supp. 1020 (D. Minn.1991) (citing Wangen v. City of Fountain, 255 N.W.2d 813, 815 (Minn. 1977) (independent contractor considered employee for liability purposes if the employer hasthe right to control the means and manner of performance.). Jaeger was thus personallyfamiliar with DiFazio's work, and with any alleged disability, and made his request basedon that experience.
"Courts will readily find a business necessity if an employer can demonstrate thata medical examination or inquiry is necessary to determine . . . whether the employee canperform job-related duties when the employer can identify legitimate, non-discriminatoryreasons to doubt the employee's capacity to perform his or her duties." Conroy, 333 F.3d at 98. "Technical skills and experience are not the only essential requirements of a job." Grenier, 70 F.3d at 674-75; Pesterfield v. Tennessee Valley Auth., 941 F.2d 437, 441-42(6th Cir. 1991) ("at least the ability to get along with supervisors and co-workers" wasessential function of job as tool room attendant).
As an Exelon employee, DiFazio's responsibilities required interacting with hissupervisors, other employees, and clients. Jaeger testified that he had receivedcomplaints about DiFazio's interactions with clients and other employees. DiFaziotestified that Jaeger told him that he was concerned about DiFazio's argumentative styleand ability to take direction. This testimony establishes that Jaeger's request was relatedto his legitimate, non-discriminatory concern about DiFazio's ability to relate effectivelyto customers and coworkers and perform his job within the company structure. TheCourt finds that Jaeger's request, whatever it was, was "job-related" and "consistent withbusiness necessity," and thus authorized under § 12112(d)(4). The Court therefore grantsdefendant's motion for summary judgment on this claim.
III. Breach of Contract
DiFazio alleges that Jaeger's statement on December 19 that he did not want totransition DiFazio to full-time until he had conducted a performance review and untilafter the holidays constituted a breach of Exelon's agreement to hire DiFazio as a full-time employee in January 2002. According to Exelon, these claims must fail (a) becausethe agreement to hire was subject to the condition precedent of acceptable performance, and (b) because the contract was orally modified when DiFazio did not object to postponing the transition until December 31. In any event, Exelon argues, DiFazio quitbefore Exelon had the opportunity to offer or refuse to offer him a job.
In a breach of contract claim, the plaintiff must show (1) formation of a contract;(2) performance of the contract by the plaintiff; (3) a material breach of the contract bydefendant; and (4) harm to the plaintiff. Parkhill v. Minn. Mut. Life Ins. Co., 174 F. Supp.2d 951, 961 (D. Minn. 2000) (citing Briggs Trans. Co. v. Ranzeberger, 217N.W.2d 198, 200 (Minn. 1970). Formation of a contract requires an offer, an acceptance, and consideration. Pine River State Bank v. Mettille, 333 N.W.2d 622, 626 (Minn. 1983).No contract is established by an offer and acceptance of future employment where thatagreement is terminable at will by either side. Grouse v. Group Health Plan, 306N.W.2d 114, 116 (Minn. 1981); see also Friedman v. BRW, Inc., 40 F.3d 293, 296 (8th Cir. 1994) (employment is presumed to be at will, absent a contrary agreement by theparties). A condition precedent "is one which is to be performed before the agreement ofthe parties becomes operative." Lake Co. v. Molan, 131 N.W.2d 734, 740 (Minn. 1964).There can be no breach of contract until performance of any condition precedent. Nat'l Union Fire Ins., 446 N.W.2d at 412. A condition precedent may be explicit, or may beimplied where the general nature of the agreement indicates an intention to make a dutyconditional. Seman v. First National Bank of Eden Prarie, 394 N.W.2d 557, 560 (Minn.Ct.App. 1986).
The Court finds that a contract for full-time employment existed between Exelonand DiFazio. The October 3 letter explicitly offers DiFazio a permanent position atExelon beginning January 1 ("Beginning January 1, 2002 Exelon Technology will offer you full-time permanent employment status."). DiFazio accepted the offer. The contractdoes not indicate in any way that the contract for future employment was terminable atwill. There is also no indication that acceptable performance in the independentcontractor position was a condition precedent to the offer of permanent employment.That the contract's terms were neither terminable at will nor conditioned is supported bythe fact that Exelon extended the offer of permanent employment after DiFazio statedthat he would not accept the independent contractor employment without an offer forlater full-time employment. Exelon was well aware of DiFazio's position, and to read thecontract as permitting Exelon to back out at a later date is simply incompatible with thenegotiations between the parties.
However, questions of material fact remain as to whether Jaeger's statementsregarding postponing the transition constitute a material breach. See Cloverdale Foods ofMinn., Inc. v. Pioneer Snacks, 580 N.W.2d 46, 49-50 (Minn.Ct.App. 1998) (whether actconstitutes material breach is a question of fact). A jury could reasonably find that thecontract absolutely required DiFazio's full-time position to start on January 1, and anypostponement was thus a breach. A jury could also find that Jaeger's statements merelysuggested a minor alteration in the timing of the transition (until after the holidays, i.e. bymid-January) insufficient to constitute a material breach of the contract. A question ofmaterial fact also remains as to whether DiFazio, by failing to continue working afterDecember 31, was simply abi ding by the strict terms of the agreement or effectively quithis full-time job before giving it a chance to start, thus precluding any recovery. A finalquestion of material fact remains as to whether DiFazio's delay in documenting his objection to postponing the transition to full-time employment constituted an oralmodification of the contract. Pine River, 333 N.W.2d at 626-27 (at will employmentcontract may be modified orally); Wolpert v. Foster, 254 N.W.2d 348 (Minn. 1977); seealso Rosenberg v. Townsend, et. al., 376 N.W.2d 434, 437-38 (Minn.Ct.App. 1985) (accession to modification of a contract estops raising a breach of contract claim). Forthese reasons, summary judgment is not appropriate on this aspect of the breach ofcontract claim.
A. Bonus payment
DiFazio also asserts that the contract obligated Exelon to pay him a $5,000 bonus.Exelon asserts that payment of any bonus was entirely discretionary and performancedependent. The employment agreement provides: "Based on cost control of assignedprojects, a $5,000 bonus will be paid by January 15, 2002. Project goals to be defined byOctober 31, 2001." DiFazio says that project goals were never defined, but that theproject he took over did much better under him than it had previously. According toExelon, DiFazio did not adequately manage costs on one of his projects, justifyingwithholding the bonus. There is thus a clear question of fact as to whether DiFazioadequately managed costs on his projects so as to warrant payment of the bonus andsummary judgment is therefore not appropriate.
Exelon also claims that receipt of a bonus was conditioned on DiFazio still beingemployed by Exelon on January 15, 2002. The Court finds that this theory is not supported inany way by the language of the contract.
B. Unpaid expenses
The terms of the contract clearly required Exelon to reimburse DiFazio for actualapproved expenses and mileage. According to DiFazio, Exelon failed to reimburse him$433.24 for expenses incurred during December 2001. Exelon alleges that DiFazio wasoverpaid during the month of December 2001 by at least $800 because he was paid forworking on December 24. Such overpayment would have more than compensatedDiFazio for his December expenses. DiFazio responds that he was not overpaid, becausehe made up for December 24 by working on December 31 without pay. The Court doesnot have sufficient documentation upon which to determine what, if any, reimbursementis due DiFazio, and therefore will not grant summary judgment on this matter.
IV. Promissory Estoppel and Unjust Enrichment
DiFazio asserts that he relied, to his detriment, on Exelon's "promise of regularpermanent employment status" and that Exelon is therefore estopped from denyingdamages for failing to follow through with that promise. DiFazio further alleges thatExelon was unjustly enriched by failing to pay him commission on sales he made whileworking as an independent contractor.
Promissory estoppel, by its very nature, can only be based on a non-contractualagreement. Deli v. University of Minnesota, 578 N.W.2d 779, 781 (Minn.Ct.App. 1981).Thus, a promissory estoppel claim cannot be based on a promise contained in anenforceable contract. Banbury v. Omnitrition Int'l, Inc., 533 N.W.2d 876, 881 (Minn.Ct.App. 1995). Similarly, relief under the doctrine of unjust enrichment is generally not available when a valid contract exists. United States Fire Ins. Co. v. Minnesota State Zoological Bd., 307 N.W.2d 490, 497 (Minn. 1981).
The issues of full-time employment and of compensation during the independentcontractor period are explicitly covered by the terms of the contract between DiFazio andExelon. Thus, DiFazio's claims of promissory estoppel and unjust enrichment cannotstand. Summary judgment is therefore granted on these claims.
This case will be placed on the Court's next available trial calendar.
Based on the foregoing, all the records, files, and proceedings herein, IT ISHEREBY ORDERED that defendant's Motion for Summary Judgment [Docket No. 17]is GRANTED in part and DENIED in part as follows.
1. Summary judgment is GRANTED as to Count 2 (promissory estoppel), Count 3 (unjust enrichment), and Count 4 (Americans with Disabilities Act) in theSecond Amended Complaint [Docket No. 14], and each is accordingly DISMISSED with prejudice.
2. Summary judgment is DENIED as to Count 1 (breach of contract).