King v. Recreational Equipment, Inc.

Filing 37

ORDER denying 12 Motion for Partial Summary Judgment. Signed by Chief Judge Dana L. Christensen on 12/6/2016. (dle)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
MISSOULA DIVISION
KELLY KING,

CV 16–27–M–DLC
Plaintiff,

vs.

ORDER

RECREATIONAL EQUIPMENT,
INC.,
Defendant.
Defendant Recreational Equipment Inc., (“REI”) moves for partial summary
judgment in the above-captioned matter. Plaintiff Kelly King (“King”) opposes
this motion. For the reasons described below, the Court will deny REI’s motion.
FACTUAL BACKGROUND
This factual background serves to provide an introduction to the issues
presented. The Court will add additional facts in later sections as necessary to
explain its reasoning.
King was an employee at REI from 2010 until her termination in July of
2015. She began her employment as a seasonal employee and was eventually
promoted through the ranks to Retail Sales Manager. King began her position as
Retail Sales Manager in June of 2015 at REI’s store in Missoula, Montana. On
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July 17, 2015, King was asked to speak with Asset Protection investigator Andy
Panfil (“Panfil”). This conversation was conducted over the phone. King’s direct
supervisor, Missoula Store Manager Sean Kissane (“Kissane”), was present when
this conversation took place. Panfil asked King about two t-shirts she had
purchased on May 22, 2015, where she received a 50% “ProDeal” discount as a
store employee. King stated that she had purchased these t-shirts as gifts for her
father and her father’s dentist. However, under REI’s discount policy, certain
items purchased by employees that are intended to be gifts, such as t-shirts, are
only eligible for a 30% discount.
When confronted with these facts, King states she immediately recognized
that the purchase violated REI’s discount policy. King vehemently maintains that
use of the ProDeal discount was an error and not intentional. King alleges that she
simply forgot to check her receipt and would never intentionally jeopardize her
career over a couple of t-shirts.
Later, during a follow-up call, Panfil asked King if she knew anyone in
Minnesota and mentioned two additional shirts that were returned to a store in
Maple Grove, Minnesota. King maintains that she initially answered that she did
not know anyone in Minnesota, despite the fact that she had lived there for several
years and knew multiple people there. King states that she immediately corrected
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herself and only answered in the negative because she was confused, anxious, and
felt like the room was spinning. King states that Panfil then asked her whom she
would have given her receipt or employee number to, and asked if she knew
anyone who worked at the Maple Grove store. King asserts that she was unable to
answer his questions because, at this point, she was embarrassed, scared, and
could not remember giving out her employee number or a receipt. King then got
off the phone with Panfil and began making a written statement about the
purchase.
While making her written statement, REI’s Regional Asset Protection
Manager, John Mulheran (“Mulheran”), called King and asked if she knew anyone
named “Lindesmith” in Minnesota. (Doc. 16-1 at 45.) King states that she did not
immediately recognize the name and told Mulheran that her father’s dentist is
named Dr. Lind. Mulheran eventually clarified the name to be “Lisa Lindesmith”
and King remembered she had given two shirts to her former veterinarian, who she
knew as “Dr. Lisa.” (Id.) King told Mulheran that she believed she had given the
shirts to Dr. Lisa and her partner in January or February of 2015.
However, REI’s records show that two shirts were purchased by King on
April 20, 2015, and subsequently returned by Dr. Lisa to the Maple Grove store on
July 5, 2015. REI’s records also show that these shirts were purchased using the
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50% ProDeal discount. King admits that this was a second violation of REI
policy, but maintains that she never asked for the 50% discount. Nonetheless,
Mulheran determined that King was lying.
A few days later, King met with Retail Director Julie Lochner (“Lochner”)
and Human Resources Business Partner Kelly Troyner (“Troyner”). King again
could not remember in detail when she gave the shirts away but steadfastly
maintained that she did not intentionally violate the discount policy. King was
subsequently terminated by REI for these violations.
King filed suit in Montana's Fourth Judicial District Court, Missoula
County, alleging causes of action for wrongful discharge and breach of contract.
REI removed to this Court alleging diversity jurisdiction. REI now seeks partial
summary judgment on King’s claim of wrongful discharge. REI asserts that
King’s discharge was lawful and puts forth three arguments in support of its
motion: (1) the company followed its personnel policies in terminating King’s
employment; (2) King’s termination was for good cause due to her discount policy
violations and her inability to provide a satisfactory explanation; and (3) King
cannot prove she was damaged by her termination.
LEGAL STANDARD
Summary judgment is required when the “movant shows that there is no
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genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the initial burden of
showing that no genuine dispute exists. The burden then shifts to the non-moving
party to present affirmative evidence showing the existence of a genuine issue of
material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).
Summary judgment is warranted when the documentary evidence produced
by the parties permits only one conclusion. Id. at 251. Only disputes over facts
that might affect the outcome of the lawsuit will preclude entry of summary
judgment; factual disputes that are irrelevant or unnecessary to the outcome are
not considered. Id. at 248. In ruling on a motion for summary judgment, a court
must view the evidence “in the light most favorable to the opposing party.” Tolan
v. Cotton, 134 S. Ct. 1861, 1866 (2014) (quoting Adickes v. S.H. Kress & Co., 398
U.S. 144, 157 (1970)). “[T]he evidence of the nonmovant is to be believed, and
all justifiable inferences are to be drawn in his favor.” Id. at 1863 (quoting
Anderson, 477 U.S. at 255).
ANALYSIS
I. REI’s Personnel Policies
King maintains she was wrongfully discharged under Montana’s Wrongful
Discharge from Employment Act (“WDEA”). Mont. Code Ann. §§ 39–2–901 to
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39–2–915 (2015). It is undisputed that Kings was not a probationary employee.
Under the WDEA, an employer’s discharge of a non-probationary employee is
lawful if: (1) the employer did not retaliate against the employee for protected
activities; (2) the employer had good cause to terminate the employee; and (3) the
termination did not violate the express provisions of the employer’s personnel
policies. Mont. Code Ann. § 39–2–904.
Here, King asserts that summary judgment is precluded because REI
discharged her in violation of its express personnel polices. In support of her
argument, King cites to the document entitled “Employee Discount and ProDeal
Violations.” (Doc. 14-12 at 1.) This document states that “[a]ll infractions or
suspected infractions of REI’s discount and ProDeal programs will be investigated
to determine . . . if the infraction was intentionally committed, or occurred through
a good faith mistake.” (Id.) The “policy” continues to state that when REI
determines that an “employee . . . has committed a discount or ProDeal violation
mistakenly without conscious intent . . . [t]he employee will be placed on Written
Notice using the performance improvement process.” (Id. at 2.)
King argues that there is substantial evidence that REI violated this alleged
policy when she was terminated. Primarily, King contends that REI failed to
establish that her violations of the discount policy were intentional, and not merely
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carelessness or a mistake. In support, King highlights the testimony of the people
involved in her termination, including Mulheran, Kissane, Lochner, and Troyner,
After reviewing their testimony, the Court agrees with King that, viewing the
evidence in a light most favorable to the non-moving party, there is a genuine
dispute of fact as to whether REI determined that King’s violations were
intentional before terminating her.
First, the Court agrees that it is undisputed that Mulheran believed that
King’s violations were intentional. However, Mulheran was not the sole person
responsible for her termination. Kissane, the Missoula Store Manager, testified
that “it’s not [REI’s] burden to prove intent in every instance.” (Doc. 16-8 at 19.)
He also stated that he could not “say for certain” that King’s violations were
intentional. (Doc. 16-8 at 20.) Additionally, Lochner, REI’s Retail Director,
appears to have initially told another REI employee that King’s violations were
not intentional before testifying that they were. (Doc. 16-9 at 2.) This fact creates
a credibility issue for the jury. Lastly, Troyner, REI’s Human Resources official,
described King’s actions as “carelessness,” as opposed to a willful violation of the
policy. (Doc. 16-12 at 7.) Troyner also disputed the fact that REI had to prove
that King’s “conduct was intentional.” (Id.) The Court finds that this testimony
creates a genuine dispute of material fact as to whether REI determined that
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King’s actions were intentional.
Despite this testimony, REI asserts that the “policy” cited by King was not
an actual REI personnel policy and, instead, was merely a human resources’
guideline. REI also points to other personnel policies that state a violation of
REI’s discount policies “may result in disciplinary action up to and including
termination of your employment.” (Doc. 14-6 at 1.) However, these arguments
merely highlight that there is a disputed issue of fact as to which policy was, in
fact, REI’s actual controlling personnel policy. This argument is supported by
Mulheran’s testimony were he stated that he had no knowledge of whether the
policy cited by King was in fact an actual REI personnel policy or a human
resources’ guideline. The Court thus finds that there is a dispute of fact as to
whether the document entitled “Employee Discount and ProDeal Violations”
(Doc. 14-12) was an express personnel policy of REI or if it was simply a human
resources’ guideline, or whether, in fact, it makes any difference.
II. Good Cause
In addition to the issue of REI’s personnel policies, the Court also finds that
there is a disputed issue of fact as to whether King was terminated for “good
cause.” Under the WDEA, a termination is wrongful if it lacked good cause.
Mont. Code Ann. § 39–2–904(1)(b). “‘Good cause’ means reasonable job-related
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grounds for dismissal based on a failure to satisfactorily perform job duties,
disruption of the employer’s operation, or other legitimate business reason.”
Mont. Code Ann. § 39–2–903(5). A legitimate business reason is “neither false,
whimsical, arbitrary or capricious, and it must have some logical relationship to
the needs of the business.” Buck v. Billings Mont. Chevrolet, Inc., 811 P.2d 537,
540 (Mont. 1991).
However, a court may not substitute its judgment for an employer’s
discretion in employment matters. McConkey v. Flathead Elec. Coop., 125 P.3d
1121, 1126 (Mont. 2005) (“It is inappropriate for courts to become involved in the
day-to-day employment decisions of a business.”). An employer’s discretion is
greatest “where the employee occupies a ‘sensitive’ managerial position exercising
‘broad discretion[.]’” Id. (quoting Buck, 811 P.2d at 541). Deference to an
employer’s business judgment is particularly great when the employer must place
substantial trust in the employee’s decision-making. Id. at 1128.
Here, King asserts that REI arbitrarily terminated her for violating the
discount policy. In support, King states that other employees have been found in
violation of the discount policy and have not been terminated. Further, when these
employees were investigated, REI made specific determinations as to whether
their violations were intentional. During these investigations King asserts REI
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applied the same policy it now maintains is a guideline. The Court agrees with
King that this creates an issue of fact as to whether REI applies its policies
arbitrarily.
Regardless, REI maintains that King was a manager and, thus, had the
utmost discretion as to whether she should have been terminated. However, King
maintains that her duties did not require the exercise of broad discretion and REI
did not have the unfettered authority to terminate her. For example, as noted in
REI’s reply brief, King had only been promoted to Retail Sales Manager less than
seven weeks before she was terminated. She was also one of three Retail Sales
Managers at the Missoula store who all worked under one Store Manager.
Further, at the time of her termination, King had yet to begin the process of Retail
Sales Manager training. REI states that this process would have taken anywhere
from nine to twelve months to complete. Finally, King asserts that as a Retail
Sales Manager she lacked any discretion to make major decisions that would
significantly affect REI, including purchasing, pricing, and marketing. The Court
thus finds that there are disputed issues of fact as to whether King occupied a
sensitive managerial position which “require[d] the exercise of broad discretion.”
Buck, 811 P.2d at 541.

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III. Damages
Lastly, REI contends that King cannot prove she was damaged as a result of
her termination. REI points to the fact that, shortly following her discharge, King
was able to secure employment in another company that paid more than she was
making at REI. King disputes REI’s argument and states that her Complaint
alleged damages for future lost wages. Further, King argues, given the trajectory
of her career based upon her past performance, it was reasonably ceratin that she
would have been eventually promoted to a Store Manager position and would have
been making more money than she does currently. REI argues in response that it
is pure speculation that King would have been promoted, especially given the fact
that she had violated the store discount policy multiple times. Despite this
argument, the Court finds that this is a factual question best left to the jury. The
Court will permit King to present evidence that she would have eventually been
promoted and allow the jury to determine the appropriate amount of damages.1
Accordingly, IT IS ORDERED that REI’s Motion for Partial Summary
Judgment (Doc. 12) is DENIED.
1

The Court also notes that REI’s argument appears to run counter to its assertion that the
Court has jurisdiction over this matter. When REI removed the case to this Court, it claimed that
the jurisdictional amount for diversity jurisdiction was satisfied. (Doc. 1 at 2.) If the Court were
to now accept REI’s argument concerning damages, the Court would be required to remand this
case to Montana’s Fourth Judicial District Court. The Court declines to do so because, as stated
above, the question of the proper amount of damages is a question for the jury.
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Dated this 6th day of December, 2016.

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