THOMAS D. SCHROEDER, District Judge.
This case involves multiple claims by David Irwin arising from the termination of his employment by Defendant Federal Express Corporation ("FedEx"). Both parties have moved for summary judgment. Irwin seeks summary judgment on his claims for breach of contract and violations of the North Carolina Wage and Hour Act ("WHA"), N.C. Gen. Stat. § 95-25.1
The parties have submitted an extensive record. In short, it reflects the following:
In 1999, FedEx acquired an air freight forwarding company then renamed Caribbean Transportation Services ("CTS"). (Doc. 7, ¶ 5; Doc. 57-2 at 6.) Irwin was one of CTS's three officers and, after the acquisition, became its senior vice president. (Doc. 7, ¶ 5; Doc. 57-2 at 6.)
Around June 1, 2009, FedEx merged with CTS, turning CTS into a division of FedEx, now named FedEx Latin America. (Doc. 57-2 at 5-6. As a result of the merger, many positions were eliminated — including Irwin's. (Doc. 7, ¶ 6.) Irwin began negotiating a severance package with FedEx but stopped when the president of FedEx Latin America persuaded him to remain employed as managing director of Caribbean operations. (
In late 2012, FedEx sought to reduce costs and announced a voluntary buyout program — which it shorthanded as "VBO" — to be offered to selected employees. (Doc. 57-7 at 12; Doc. 57-8 at 1-3; Doc. 63-4 at 1-67.) As part of that program, in February 2013, FedEx offered, and Irwin signed, a "Confidential Severance Agreement General Release and Waiver" (the "Agreement"). (Doc. 63-4 at 61-67.) He signed this Agreement after his supervisor, Julio Columba, told him that FedEx "would likely be going through a restructuring process" and that Irwin's employment "may be in immediate jeopardy if the agreement was not signed." (Doc. 7, ¶ 8; Doc. 63-1 at 11-12.)
Under the Agreement, Irwin made several promises, including to continue working for FedEx until November 30, 2013, and not to compete against the company for one year following the end of his employment. (Doc. 63-4 at 61-66.) "[I]n return for [Irwin's] promises contained in this Agreement," FedEx agreed, among other things, to pay him "severance benefits" of approximately $275,000 (comprising a $199,041.23 lump sum severance benefit, a $25,000 health reimbursement account payment, an annual incentive compensation ("AIC") bonus of $10,486, and a $40,000 prorated long term incentive payment).
After the seven-day expiration period, FedEx Senior Vice President Connie Lewis Lensing sent Irwin a letter dated February 25, 2013, stating, "This confirms your signed Confidential Severance Agreement General Release and Waiver has been accepted. Your assigned departure date is November 30, 2013." (Doc. 63-4 at 68.)
Later, in the summer of 2013, FedEx invited Irwin to end his employment on August 31, 2013, rather than on November 30, 2013, as provided in the Agreement. (Doc. 63-6 at 7-8.) Irwin was told that this request came because of FedEx's desire "to get further savings from the VBO." (Doc. 58-5 at 4.) Irwin claims he was told that "if he accepted the offer, his Employment Agreement would be honored." (Doc. 7, ¶ 9.) Irwin declined the invitation, to ensure that the management transition "went smoothly." (Doc. 63-6 at 9.)
On October 31, 2013, Irwin's manager asked him to attend a meeting the next day, which Irwin thought could be for a retirement party. (Doc. 7, ¶ 10.) As it turned out, that next day Irwin was told that he was being suspended, but was not told why. (Doc. 57-1 at 6.) Roughly two weeks later, on November 14, Irwin was called into the office to meet with internal company auditors. (Doc. 7, ¶ 11; Doc. 57-3 at 7.) The auditors asked him about company operations occurring roughly five years earlier. (Doc. 7, ¶ 11.) Irwin explained that he was not involved in the matters they raised. (
Shortly thereafter, on November 27, 2013, FedEx informed Irwin that he would be terminated, effective November 29, 2013, and that the Agreement was "null and void in its entirety." (Doc. 57-4 at 49; Doc. 58-1 at 3; Doc. 63-6 at 25-26.) Irwin says that FedEx did not cite any "facts or evidence" for terminating him or for declaring the Agreement void (Doc. 7, ¶ 13), although he claims the company ultimately relied on the above-quoted section 13(n) of the Agreement (
Irwin sought to review the evidence supporting his alleged misconduct so that he could respond, because he had so far carried "an unblemished record, with no prior warnings or write-ups of any kind." (Doc. 7, ¶ 15.) FedEx refused, and Irwin filed internal appeals, which FedEx denied. (Doc. 57-4 at 54.) According to Irwin, had he worked one more day, he would have been entitled to $275,000 in severance compensation under the Agreement. (Doc. 7, ¶ 14.)
Irwin alleges that he has honored all of his obligations under the Agreement and that FedEx has wrongfully refused to honor its obligations. (
Summary judgment is appropriate where the pleadings, affidavits, and other proper discovery materials demonstrate that no genuine dispute as to any material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a);
In addition, the nonmoving party is entitled to have the "credibility of his evidence as forecast assumed, his version of all that is in dispute accepted, [and] all internal conflicts in it resolved favorably to him."
The parties dispute whether FedEx entered into a bilateral contract with Irwin or, alternatively, whether FedEx made a unilateral offer of payment to him in exchange for his performance of continued employment. In addition, even if either of the foregoing were to be proved, the parties dispute whether FedEx's termination of Irwin constituted a breach. The parties seem to agree, however, that in the absence of any contract between them, FedEx was free to terminate Irwin as an at-will employee.
Irwin argues that the Agreement is binding under alternative legal theories: as a unilateral contract that was accepted by his performance (Doc. 59 at 8), and as a bilateral contract that FedEx agreed to (Doc. 63 at 20). FedEx argues that the Agreement is a bilateral contract that is not binding because the company never executed it, and that Irwin's claims fail even under a unilateral contract theory because as the offeror, FedEx was free to withdraw the offer before its effective date. (Doc. 57 at 24-25.)
Because this case is based on the court's diversity jurisdiction, the choice of law rules of the forum state apply.
Here, the parties negotiated the Agreement in North Carolina, where Irwin signed it and where it was allegedly accepted either through confirmatory communications to Irwin (if a bilateral contract) or by his performance (if a unilateral contract). Thus, the court will apply North Carolina law, as have the parties.
For a valid contract to exist under North Carolina law, the three elements of offer, acceptance, and consideration must be present.
For the reasons that follow, it is apparent that irrespective of Irwin's legal theory, neither he nor FedEx is entitled to summary judgment on the contract claims.
The terms of the Agreement indicate that Irwin's consideration went well beyond his performance through continued employment and included several promises. For example, in sections 12 and 13, Irwin promised to waive any legal claims he could have asserted against FedEx as of the effective date of the Agreement; consented to various no-compete provisions; consented to confidentiality provisions; and agreed "not to do or say anything that reasonably may be expected to have the effect of disparaging FedEx." (Doc. 63-4 at 62-66.) Thus, the Agreement has hallmarks of a bilateral contract under North Carolina law.
Irwin clearly accepted the Agreement, indicating his intent to be bound by the promises therein, as he signed it in February 2013. (Doc. 63-4 at 67.) But to prove that the parties entered into a bilateral contract, he has to show that FedEx made promises in consideration for his obligations under the Agreement.
Irwin argues that even if FedEx did not sign the Agreement, it manifested assent through its conduct. He cites the letter to him from a FedEx vice president confirming that the Agreement had been "accepted" (Doc. 63-4 at 68); a FedEx PowerPoint slide explaining that severance buyout contracts would be "guaranteed" after they were "accepted" (Doc. 63-7 at 18 ("Nothing is guaranteed until the process is complete and we have accepted your agreement for a buyout.")); and an email from an employee in FedEx's human resources department that Irwin's Agreement had been "executed" (Doc. 63-7 at 13). Irwin also argues that FedEx's attempt to have him leave the company in August 2013, earlier than the Agreement's date of November 30, 2013, shows that a binding agreement existed. (Doc. 63 at 22.) In addition, Irwin points to the termination notice he received — in particular, its statement that his participation in the VBO program was "null and void in its entirety . . . [p]ursuant to the terms of the Voluntary Buyout," language that tracks that of section 13(n) of the Agreement — as evidence that FedEx understood that the contract's terms governed the parties' relationship. (Doc. 57-4 at 49-50; Doc. 59 at 12.) Irwin contends that the terms "execution" and "effective date" are ambiguous and can be interpreted through parol evidence, citing the foregoing materials as evidence of FedEx's assent to the Agreement. (Doc. 63 at 23-24.)
The evidence that Irwin offers — including letters, emails, presentations, and other communications — are sufficient to raise a genuine dispute as to whether FedEx agreed to be bound by the Agreement and therefore whether the parties entered into a bilateral contract. Irwin signed the Agreement; the seven-day revocation period expired; FedEx later asked Irwin if he would depart in August as opposed to November, indicating an understanding that the Agreement's terms applied; and FedEx cited the VBO program in its termination letter to Irwin. FedEx's internal communications also considered the Agreement "executed." (Doc. 63-7 at 13.) In advancing its argument that it is not bound by the Agreement, FedEx relies on its refusal to sign the Agreement and the Agreement's language that the severance payment will be made only when the Agreement "has been fully executed by both parties." Under North Carolina contract law, however, neither of these arguments is dispositive.
FedEx argues that because the Agreement plainly defined the "effective date" as Irwin's departure date, the court cannot consider extrinsic evidence to interpret the term. But this ignores North Carolina contract law, which allows a court to assess whether a contract term is ambiguous in the context used.
Alternatively, even if a factfinder were to determine that FedEx never assented to the Agreement — and therefore that no bilateral contract existed between the parties — Irwin could still claim relief under a unilateral contract theory.
FedEx, as the master of its offer, was free to offer the benefits in the VBO program on the terms it chose, including being employed until November 30, 2013.
FedEx's argument that it was free to withdraw the offer before full performance is mistaken. Under North Carolina law, once a unilateral offer of employment is accepted "by
Thus, if Irwin is correct that FedEx's actions and writings regarding the VBO program constituted a unilateral offer, at least two things are true. First, FedEx was not free to withdraw the offer without consequence once Irwin began performance, nor could FedEx rely on the fact that it terminated Irwin before the Agreement's "effective date." Second, Irwin will not be entitled to summary judgment if FedEx can proffer sufficient evidence to create a genuine dispute of material fact as to whether it terminated him for "good and sufficient cause."
No matter which theory applies to Irwin's contract claim, once Irwin proffers sufficient evidence that (1) the parties entered into a bilateral contract or a unilateral contract and (2) he met the terms of his employment, the burden rests with FedEx to establish grounds for the termination. Here, there are disputed issues of fact whether FedEx properly terminated Irwin's employment — whether pursuant to section 13(n) of the Agreement under a bilateral contract theory, or with "good and sufficient cause" under a unilateral contract theory.
Under a bilateral contract theory, the burden rests with FedEx to demonstrate that "after executing th[e] Agreement, but prior to the effective date," Irwin "engage[d] in conduct, or ha[d] performance deficiencies that would normally result in termination." (Doc. 63-4 at 66.) As noted, because these are claims on a contract that is supplemental to Irwin's employment, they are independent of FedEx's rights to terminate Irwin as an at-will employee. Under a unilateral contract theory, the burden rests with the employer to establish that it terminated the employee for "good and sufficient cause."
Under FedEx's leadership policy, which the parties agree applied to Irwin throughout his employment, Irwin could be terminated for "leadership failure," a broad concept that allowed for an employee's termination for failure to monitor and prevent misconduct by subordinates. (Doc. 57 at 3; Doc. 57-1 at 2-7; Doc. 57-2 at 4-5; Doc. 63 at 25; Doc. 63-6 at 76-89.) FedEx contends that Irwin committed leadership failure by not exercising proper supervision and oversight (1) to prevent subordinates from wrongfully billing customers for security fees and (2) to prevent subordinates from improperly allowing customers to access certain non-revenue FedEx accounts to fly the customers' shipments using non-approved routes. (Doc. 57 at 4-9; Doc. 57-12 at 14-15.) FedEx argues that Irwin was personally involved in these practices and that the infractions continued through 2013. (Doc. 57 at 13-15; Doc. 57-11 at 25.)
Irwin denies involvement in these practices and that he committed any leadership failure as defined by FedEx. (Doc. 58-8 at 3; Doc. 63 at 24-26.) According to Irwin, the employees involved in the practices were not under his supervision, the accounts and security fees were not under his responsibility, and FedEx encouraged its employees to continue charging security fees by incorporating, and thereby concealing, the fees into other charges. (Doc. 63 at 5-6, 24-26; Doc. 63-6 at 15-18.) He further contends that the accused conduct ended in 2010, years before he signed the Agreement, and thus did not occur within the timeframe of the Agreement's termination clause. (Doc. 63 at 15; Doc. 63-6 at 15.)
The parties have advanced significantly conflicting accounts of the facts underlying the claimed breach. For example, the parties disagree on Irwin's role in the security fee and non-revenue account practices. FedEx alleges that Irwin colluded with respect to the security fees and "was involved" in using the non-revenue account to move customers' freight (Doc. 61 at 7-8), while Irwin denies personal involvement in either practice (Doc. 63 at 5-6). The parties also disagree as to whether FedEx leadership, specifically Chief Financial Officer Cathy Ross, effectively communicated to subordinates to stop these practices. (Doc. 57 at 6-9; Doc. 63 at 6-10).
The parties further dispute Irwin's role and responsibilities, which may affect FedEx's ability to terminate him under its leadership policy. According to FedEx, Irwin was the "Chief Operations Officer," "the `head guy,'" and "general manager" of CTS who was "responsible for everything that went on in the business" (Doc. 57 at 5), whereas Irwin describes himself as a "managing director" (Doc. 63 at 12). The parties agree that Irwin was the highest-ranking employee with discretion over operations at CTS's Greensboro office. (Doc. 57 at 14; Doc. 61-2 at 11.) But they disagree on whether Irwin had responsibility over the specific practice of charging customers with security fees. (Doc. 57 at 14; Doc. 61-2 at 12; Doc. 63 at 5-6.) FedEx also argues that Irwin's subordinate, Tony Rouse, was the person who allowed customers to gain access to the non-revenue account. (Doc. 57 at 9, 14.)
Finally, the parties dispute when the security fee and non-revenue account practices occurred.
Thus, regardless of whether Irwin proceeds under a bilateral or unilateral contract theory, FedEx has proffered evidence from which a reasonable jury could conclude that the company terminated him within the provisions of section 13(n) of the Agreement (bilateral contract theory) or that it had "good and sufficient cause" to revoke its offer (unilateral contract theory).
For all these reasons, the parties' cross motions for summary judgment on the breach of contract claims (Counts 1 and 5) must be denied.
Irwin also advances two claims under the North Carolina WHA. (Doc. 7, ¶¶ 28-35 (Count 2), ¶¶ 61-71 (Count 6).) In sum, he alleges that FedEx violated the WHA by not paying him the $199,041.23 severance benefit set forth in section 3(a) of the Agreement (Doc. 7, ¶ 8; Doc. 63-4 at 61), the $10,486 AIC bonus set forth in section 6 (Doc. 7, ¶ 8; Doc. 63-4 at 61), the $25,000 health reimbursement payment set forth in section 3(b) (Doc. 7, ¶ 8; Doc. 63-4 at 61), and the $40,000 long term incentive cash pay-out set forth in section 8 (Doc. 7, ¶ 8; Doc. 63-4 at 62).
FedEx advances several arguments as to why it should be granted summary judgment on Irwin's claims. It contends that in December 2013 it paid Irwin all earnings and wages to which he was entitled.
The WHA prevents employers from denying their employees earned wages.
Outside a contractual recovery, Irwin was not eligible for the benefits he claims. Neither party disputes this. As for the AIC and long term incentive payments,
Therefore, Irwin's only claim to these and the other severance benefits arises under a contract recovery. That is to say, because it is clear that he did not actually perform the work necessary to earn those benefits — having been terminated before the November 30, 2013 effective date — his remedy lies with the Agreement or a unilateral contract, and his attempt to transform his contractual damages into wages makes his WHA claim "fatally deficient."
Consequently, because Irwin's remedy for the damages he seeks lies under his breach of contract claims, the court will deny Irwin's motion for summary judgment and grant FedEx's motion for summary judgment as to Irwin's WHA claims.
FedEx moves for summary judgment as to Count 4, which alleges that FedEx made false representations upon which Irwin relied "to induce him to remain a senior manager at a time of transition and to induce him to refrain from pursuing other job opportunities or competing against Defendant." (Doc. 7, ¶ 43.) Irwin argues that he was "persuaded to take early retirement by the threat that he might lose his job in a layoff, as well as by the inducement of severance." (Doc. 63 at 32.)
Irwin points to several facts indicating fraud, the most notable being the following: his claim that FedEx induced him to join the severance buyout program by threatening to terminate his position; the timing of his termination on November 27, 2013, to take effect only two days later and only one day before the Agreement's effective date when all benefits would be due; the fact that FedEx asked him to leave in August 2013 instead of November 2013; the fact that FedEx implemented the VBO program as a way to cut costs; and FedEx's admission that the steering committee responsible for the program "probably" would have discussed the fact that Irwin declined to take an early August departure. (
FedEx argues that Irwin has failed to proffer sufficient evidence to demonstrate fraud. It argues that Irwin was not induced into, but volunteered for, the severance buyout program. (Doc. 57 at 33-34.) It also contends that Irwin has failed to cite any fraudulent statement made to him or any evidence of FedEx's intent to deceive. (
To prove fraud under North Carolina law, a plaintiff must show (1) a false representation or concealment of a material fact that is (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, and (5) which results in damages to the injured party.
But this is the summary judgment stage. Even assuming that FedEx was intentionally deceptive in leading Irwin to believe it had executed the Agreement, the evidence proffered, when viewed in the light most favorable to Irwin, would not permit a jury to reasonably find that FedEx made the promises for severance with a specific intent not to comply.
In the end, Irwin's claim for promissory fraud rests on his disagreement with the merits of his termination and the timing of the announcement just before the severance payments would have been due. This has led to his suspicion that the company must have had another reason to fire him. (Doc. 57-3 at 24; Doc. 63 at 33.) Even if it was for mere cost savings, this is insufficient to support the further inference that FedEx never intended to comply at the outset, especially in light of the fact that severance buyout programs by their nature seek to facilitate cost savings and the record evidence of the company honoring all other agreements.
Because Irwin has failed to proffer sufficient evidence from which a reasonable jury could find in his favor on this claim,
Finally, the complaint alleges that FedEx violated North Carolina's UDTPA by "engag[ing] in misrepresentations, deception, fail[ing] to fairly and adequately investigate, and us[ing] wrongful accusations as a pretext to attempt to deny [him] compensation he was promised and is owed." (Doc. 7, ¶ 37.) Irwin contends that his termination was a ruse designed to allow FedEx to avoid paying the severance required under the Agreement. (Doc. 63 at 26-30.) He also argues that he was not given the opportunity to defend himself during FedEx's investigation and notes that other FedEx employees who were cited for "leadership failure" for the same conduct leading to his termination were not terminated. (
FedEx is correct that Irwin's claim falls outside the scope of the UDTPA. To establish a UDTPA claim, a plaintiff must show (1) that a defendant committed an unfair or deceptive act or practice (2) in or affecting commerce and (3) resulting in injury to the plaintiff.
Although the UDTPA broadly defines "commerce" to include "all business activities, however denominated," North Carolina courts have long held that the statute "is not intended to apply to all wrongs in a business setting."
Here, Irwin does not allege or proffer evidence of any factor affecting commerce outside his unique employment dispute with FedEx.
For the reasons set forth above,
IT IS THEREFORE ORDERED that Irwin's motion for partial summary judgment (Doc. 58) on his breach of contract and WHA claims is DENIED. FedEx's motion for summary judgment (Doc. 56) is GRANTED IN PART and DENIED IN PART, as follows: FedEx's motion is GRANTED with respect to Irwin's claims for common law fraud (count 4), violations of the WHA (counts 2 and 6), and violations of the UPTPA (count 3), and those claims are therefore DISMISSED; FedEx's motion is DENIED with respect to Irwin's breach of contract claims (counts 1 and 5), which shall proceed as the remaining claims for trial.