Moore v. Alstom Power Turbomachines LLC

Filing 33

MEMORANDUM with order to follow;Signed by District Judge Curtis L Collier on 3/7/2013. (AWH, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT CHATTANOOGA
JOSHUA T. MOORE,
Plaintiff,
v.
ALSTOM POWER TURBOMACHINES,
LLC,
Defendant.

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1:12-CV-292

Judge Curtis L. Collier

MEMORANDUM
Before the Court is Defendant Alston Power Turbomachines, LLC’s (“Defendant”) motion
to dismiss for failure to state a claim (Court File No. 21). Plaintiff Joshua Moore (“Plaintiff”)
responded to Defendant’s motion (Court File No. 23) and Defendant replied to his response (Court
File No. 24). For the following reasons, the Court will GRANT IN PART and will DENY IN
PART Defendant’s motion to dismiss (Court File No. 21).
After Defendant filed the instant motion, Plaintiff filed a motion requesting the Court refer
the parties to mediation pursuant to Local Rule 16.4 (Court File No. 30). Defendant responded in
opposition, noting mediation would not be productive pending the Court’s ruling on its motion to
dismiss (Court File No. 31). The Court will DENY Plaintiff’s motion to refer the case to mediation
with leave to refile in light of this memorandum and its accompanying order.
I.

RELEVANT FACTS
The following facts are alleged in the complaint. The Court assumes the veracity of

Plaintiff’s factual allegation on a Rule 12(b)(6) motion to dismiss. Thurman v. Pfizer, Inc., 484
F.3d 855, 859 (6th Cir. 2007). Plaintiff was employed as a Rotor Handling Assistant by Defendant
for approximately three years at Defendant’s premises in Hamilton County, Tennessee. He

performed such duties as crane operation, rigging, and forklift operation. Plaintiff was given
permission by Scott Lambeth, Defendant’s Environmental Health and Safety Manager, to remove
scrap materials from work sites during the course of his employment. Plaintiff alleges Lambeth had
“both actual and apparent authority” to bind Defendant to these agreements.
He has attached three of the agreements to his complaint, one of which states the following:
Subject: Scrap Metal
Objective: Josh Moore has permission to remove one truckload of scrap metal from
the site, per direction of EHS.
Regards, Scott Lambeth
EHS Manager
(Court File No. 17-1, Ex. A). The above agreement was dated November 17, 2011. Another
agreement, which is substantially similar to the contract above, permits Plaintiff to remove seven
truckloads of scrap metal and is dated May 10, 2012 (Court File No. 17-3, Ex. C). Finally, Plaintiff
attached an agreement to his complaint dated February 17, 2012, which permits Plaintiff to remove
one truckload of “Non-ALSTOM Wood” from the site (Court File No. 17-2, Ex. B). The subject
of the contract is “Wire Rope Removal.”
After Plaintiff removed the materials, Lambeth’s supervisors became aware of these
agreements. The supervisors suspended Plaintiff after discovering these agreements and requested
he return the money he made from sale of the scrap materials after deducting Plaintiff’s expenses.
They promised him he would suffer no adverse action as an employee. Plaintiff returned the profit
he had remaining, which was $16,443.00. After returning these funds, Defendant terminated
Plaintiff’s employment. The decision to terminate Plaintiff’s employment was made after it was
discovered he made a profit from selling the scrap materials.

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Shortly after his employment was terminated, Plaintiff filed suit in Hamilton County Circuit
Court. Defendant removed to this court on August 30, 2012. On the same day, Plaintiff amended
his complaint. After Defendant filed a preanswer motion to dismiss, Plaintiff filed a second
amended complaint. In his second amended complaint, Plaintiff claims (1) the May 10, 2012
agreement constituted a contract separate from his employment and Defendant acted in bad faith by
inducing him to return his scrap material profits on the understanding his employment would not be
adversely affected, and subsequently terminating his employment; (2) Defendant contracted with
Plaintiff for return of the profits in exchange for not terminating his employment, which Defendant
breached; (3) Defendant negligently misrepresented to Plaintiff, through Lambeth, performance of
the May 10, 2012 agreement would not affect Plaintiff’s employment; and (4) Defendant “ruined”
Plaintiff’s reputation by defaming him to other employees of Defendant. Plaintiff seeks back wages
and future wages, compensation for severe mental and emotional injury, compensation for damage
to his reputation, and punitive damages. Defendant moved to dismiss this complaint for failure to
state a claim on which relief could be granted.
II.

STANDARD OF REVIEW
A Rule 12(b)(6) motion should be granted when it appears “beyond doubt that the plaintiff

can prove no set of facts in support of his claim which would entitle him to relief.” Lewis v. ACB
Bus. Servs., Inc., 135 F.3d 389, 405 (6th Cir. 1998). For purposes of this determination, the Court
construes the complaint in the light most favorable to the plaintiff and assumes the veracity of all
well-pleaded factual allegations in the complaint. Thurman, 484 F.3d at 859. The same deference
does not extend to bare assertions of legal conclusions, however, and the court is “not bound to
accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265,

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286 (1986).
The Court next considers whether the factual allegations, if true, would support a claim
entitling the plaintiff to relief. Thurman, 484 F.3d at 859. Although a complaint need only contain
a “short and plain statement of the claim showing that the pleader is entitled to relief,” Ashcroft v.
Iqbal, 556 U.S. 662, 677-78 (2009) (quoting Fed. R. Civ. P. 8(a)(2)), this statement must
nevertheless contain “factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. at 678. “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Plausibility as explained by the Court “is not akin to a ‘probability requirement,’ but it asks for more
than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (quoting
Twombly, 550 U.S. at 556). “[W]here the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that
the pleader is entitled to relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
III.

DISCUSSION
Plaintiff makes four claims: (1) Defendant acted in bad faith pursuant to the May 10, 2012

contract; (2) Defendant breached a different contract when it terminated Plaintiff’s employment after
he returned his scrap material profits; (3) Defendant negligently misrepresented performance of the
May 10, 2012 contract would not affect his employment; and (4) Defendant defamed Plaintiff when
it informed a number of its employees Plaintiff stole the scrap materials. The Court will consider the
two contract claims together and will consider the negligent misrepresentation claim and defamation
claim separately. For the reasons discussed below, the Court concludes Plaintiff’s claim Defendant

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breached its contract not to terminate his employment after he returned his scrap-material profits
survives Defendant’s motion. Plaintiff’s other claims, however, will be dismissed.
A. Contract Claims
In Tennessee, “[t]he doctrine of employment-at-will is a long standing rule . . . which
recognizes the concomitant right of either the employer or the employee to terminate the
employment relationship at any time, for good cause, bad cause, or no cause at all, without being
guilty of a legal wrong.” Stein v. Davidson Hotel Co., 945 S.W.2d 714, 716 (Tenn. 1997).
Accordingly, an employer cannot be liable for breach of contract when it terminates an employee,
if the employment relationship was at will. See Forrester v. Stockstill, 869 S.W.2d 328, 330 (Tenn.
1994) (holding a procurement of a breach of contract claim failed because “[i]n Tennessee, unless
there is a contract of employment for a definite term, a discharged employee may not recover against
an employer for breach of contract because there is no contractual right to continued employment.”).
When a plaintiff does not state in his complaint whether he was employed at will or pursuant to a
contract, Tennessee courts presume an at-will relationship. See Crews v. Buckman Labs. Intern.,
Inc., 78 S.W.3d 852, 864 (Tenn. 2002) (“Although we are unable to determine from the complaint
whether this employment relationship is alleged to have been at-will or based upon an employment
contract, we will presume that the plaintiff intended to allege an at-will employment relationship.”).

Defendant reads Plaintiff’s complaint to allege the breach of two separate contracts: (1) the
May 2010 agreement to remove scrap materials, which Plaintiff claims imposed a duty of good faith
and fair dealing on Defendant; and (2) the agreement Defendant made not to take adverse action
against Plaintiff if he returned his scrap-material profits. Plaintiff’s response to Defendant’s motion

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claims Defendant misreads his complaint, but Plaintiff merely argues he properly pleaded a violation
of the duty of good faith. Plaintiff does not respond to Defendant’s argument the second contract
claim fails, except to state he is to be given all reasonable inferences in a motion to dismiss and to
argue generally he does not assert a breach of the underlying employment contract but of separate
contracts.
With respect to Defendant’s alleged duty of good faith,“‘[t]he implied obligation of good
faith and fair dealing does not . . . create new contractual rights or obligations, nor can it be used to
circumvent or alter the specific terms of the parties’ agreement..’” Lamar Adver. Co. v. By-Pass
Partners, 313 S.W.3d 779, 791 (Tenn. Ct. App. 2009) (quoting Barnes & Robinson Co., Inc. v.
OneSource Facility Servs., Inc., 195 S.W.3d 637, 642-43 (Tenn. Ct. App. 2006)). Accordingly,
Tennessee courts have held, assuming a good-faith obligation exists in employment relationships,
“the covenant of good faith and fair dealing does not, ipso facto, negate the at-will employment
relationship.” Sudberry v. Royal & Sun Alliance, 344 S.W.3d 904, 915 (Tenn. Ct. App. 2008) (citing
Goot v. Metro. Gov’t of Nashville & Davidson Cnty., No. M2003-02013-COA-R3-CV, 2005 WL
3031638, at *8 (Tenn. Ct. App. Nov. 9, 2005)) (“[T]he implied duty of good faith and fair dealing
cannot modify the employment-at-will doctrine and, therefore, . . . an employer does not breach its
implied duty of good faith and fair dealing when it discharges an at-will employee for any reason.”).
The May 10, 2012 agreement did not itself reference Plaintiff’s employment or impose any
restrictions or obligations on Defendant regarding Plaintiff’s employment. Defendant was not
obligated by any duty of good faith to retain Plaintiff or only to terminate Plaintiff’s employment
for good cause, because the duty of good faith does not create new rights and obligations.
Therefore, its decision to terminate Plaintiff’s employment breached no alleged duty of good faith

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arising from the May 10, 2012 contract. Accordingly, Plaintiff’s good faith claim fails.
However, Plaintiff’s second contract claim survives Defendant’s motion. Plaintiff claims
he provided Defendant his profits obtained from selling the scrap materials in exchange for
Defendant’s agreement not to terminate his employment. Plaintiff’s complaint alleges “[Defendant]
requested that he return the money he made from the sale of the scrap metal after deduction of
Plaintiff’s expenses, all the while promising him that no adverse action would be taken against him
as an employee.” Plaintiff later restates he “accepted the offer of the Defendant that, in exchange
for the return [of his profits], he would suffer no adverse consequence to his employment
relationship with the Defendant.” Defendant argues Plaintiff’s claim must be dismissed because he
does not allege Defendant agreed to alter the term of his employment, which necessarily means his
employment was still at will. See Plumley Rubber Co. v. Alexander, 1989 WL 105631, at *2 (Tenn.
Ct. App. Sept. 12, 1989) (“[A] contract for employment for an indefinite term is a contract at will
and may be terminated by either party at any time without cause.”). Similarly, Defendant argues
Plaintiff fails to plead compensable damages because he did not have an interest in continued
employment. Defendant also argues Plaintiff does not specify the provisions of the agreement
sufficient to establish an enforceable contract.
The Court concludes dismissal is inappropriate at this stage. Plaintiff alleges he exchanged
separate consideration for an agreement not to terminate his employment. The contours of this
agreement are unknown to the Court at this time, but on a motion to dismiss the Court must construe
Plaintiff’s allegations in his favor. Plaintiff’s allegation of an agreement not to terminate his
employment could, under certain circumstances, create an interest in continued employment. See
Baldwin v. Pirelli Armstrong Tire Corp., 3 S.W.3d 1, 5 (Tenn. Ct. App. 1999) (holding complaint’s

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allegation they were hired on the understanding they would not be fired to make room for returning
strikers was “more than a vague promise of ‘permanent’ employment which creates no more than
an employment at will”); Plumley Rubber, 1989 WL 105631, at *2-3 (“‘A contract for permanent
employment where the consideration is paid wholly or partly in advance, as by the relinquishment
of a claim for personal injuries, or which is supported by a consideration other than the promise to
render services, is not such an indefinite contract as to come within the rule [of at-will
employment].’”) (quoting Combs v. Standard Oil Co., 59 S.W.2d 525, 526 (Tenn. 1933)); see also
Copeland v. Ferro Corp., 145 F.3d 1330, 1998 WL 152948, at *2 (6th Cir. 1998) (unpublished) (“It
was clear in Price [v. Mercury Supply Co., Inc., 682 S.W.2d 924 (Tenn. Ct. App. 1984)] that the
employee had furnished no consideration other than the services required in the agreement. Here,
Copeland could argue–but does not–that his agreement to relocate from Ohio to Tennessee
amounted to new consideration, and that the alleged contract was therefore not terminable at will.”).
Although Defendant is correct that employment for an indefinite term renders an employment
relationship at will, here Plaintiff alleges he exchanged over $16,000 for a promise not to terminate
his employment. Whether that promise contained terms that prevented application of the at-will
doctrine is a question the Court will provide Plaintiff the opportunity to answer with evidence.
Further, construing the complaint in Plaintiff’s favor, the Court concludes he has alleged
sufficient facts to survive Defendant’s motion. In Tennessee, a plaintiff “must prove [1] the
existence of a valid and enforceable contract, [2] a deficiency in the performance amounting to a
breach, and [3] damages caused by the breach.” Melville Capital, LLC v. Tenn. Commerce Bank,
No. 3:11–CV–00888, 2011 WL 6888476, at *4 (M.D. Tenn. Dec. 29, 2011) (quoting Fed. Ins. Co.
v. Winters, 354 S.W.3d 287, 291 (Tenn. 2011). “[A]n oral contract will be considered ‘valid and

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binding so long as the terms are definite and certain.’” Id. (quoting Thompson v. Creswell Indus.
Supply, Inc., 936 S.W.2d 955, 957 (Tenn. Ct. App. 1996)). First, with respect to the first prong, the
Court has already concluded the agreement as alleged, under certain circumstances, could constitute
a valid contract. Second, were the contract enforceable, termination of Plaintiff under the facts
alleged would be a clear breach. Finally, when an employment contract is breached, “the proper
measure of damages is the salary that would have been earned had the contract not been breached,
less any amount the employee earned or should have earned in the exercise of reasonable diligence
in some other employment during the unexpired contract term.” Cantrell v. Knox Cnty. Bd. of Educ.,
53 S.W.3d 659, 662 (Tenn. 2001). Plaintiff seeks lost wages consistent with the measure of
damages in breach of contract claims. Given the Court must construe the complaint’s allegations
in Plaintiff’s favor, the Court will deny Defendant’s motion to dismiss on this claim.
The Court will GRANT IN PART and DENY IN PART Defendant’s motion with respect
to Plaintiff’s breach of contract claims. Plaintiff’s claim Defendant breached its duty of good faith
and fair dealing pursuant to its May 10, 2012 contract will be dismissed. However, Plaintiff’s claim
Defendant breached its contract not to terminate his employment in exchange for his scrap-material
profits will survive Defendant’s motion.
B. Negligent Misrepresentation
Plaintiff’s negligent misrepresentation claim is apparently made as a result of Lambeth’s
representation Plaintiff’s employment would not be adversely affected by execution of the scrap
material agreements. Defendant argues Plaintiff has improperly pleaded this claim, in that Lambeth
did not have authority to act on Defendant’s behalf and Plaintiff has not pleaded the circumstances
with particularity as required by Rule 9(b) of the Federal Rules of Civil Procedure.

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However, the Court concludes, although not discussed by the parties, negligent
misrepresentation is unavailable to plaintiffs in the employer–employee context. In Shelby v. Delta
Air Lines, Incorporated, 842 F. Supp. 999, 1015 (M.D. Tenn. 1993), aff’d, 19 F.3d 1434, 1994 WL
102995 (6th Cir. 1994), the court concluded, because Tennessee had adopted the negligent
misrepresentation definition in Restatement of Torts (Second) § 552, the tort of negligent
misrepresentation was inapplicable in the employment context. The court noted the only Tennessee
cases it located considered negligent misrepresentation in the context of commercial transactions
and that none of the examples in § 552 involved employers and employees. Moreover, the Court
concluded,
allowing a claim for negligent misrepresentation in this particular context would be
inconsistent with Tennessee’s employment-at-will rule since it would allow a
discharged at-will employee to attack through an action sounding in tort, what he/she
is unable to challenge by an action for breach of contract. The Court believes that
any such inroad on Tennessee’s employment-at-will rule should be decided by the
Tennessee Supreme Court or the Tennessee General Assembly.
Id. at 1015-16. Some subsequent cases, however, considered negligent misrepresentation in this
context without addressing whether it is applicable. See Jackson v. Alstom Power, Inc., No.
1:04-CV-107, 2005 WL 2030715, at *5-6 (E.D. Tenn. Aug. 23, 2005) (granting summary judgment
for defendant on plaintiffs-employees’ negligent misrepresentation claim without considering
whether it applies in the employer–employee context); Shatford v. smallbusiness.com, No.
M2003-02315-COA-R3-CV, 2005 WL 1390092, at *5 (Tenn. Ct. App. June 13, 2005) (reversing
a trial court’s grant of summary judgment in favor of defendant–employer on plaintiff–employee’s
negligent representation claim); Brock v. Provident Life & Accident Ins. Co., NO.
03A01-9509-CV-00297, 1996 WL 134943, at *6 (Tenn. Ct. App. Mar. 27, 1996) (affirming grant
of summary judgment in favor of defendant–employer on a negligent misrepresentation claim
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without considering whether it applies).
However, the Tennessee Supreme Court cited Shelby with approval when it noted “in the
non-lawyer cases involving application of Section 552, recovery has been allowed only when the
advice or information negligently supplied was given in the course of a commercial or business
transaction for guidance of others in their business transactions.” Robinson v. Omer, 952 S.W.2d
423, 427-28 (Tenn. 1997) (emphasis in original) (citing Shelby, 842 F. Supp. at 1015). More
recently, the Tennessee Supreme Court stated it “has consistently limited liability for negligent
misrepresentations to ‘business or professional persons who negligently supply false information
for the guidance of others in their business transactions.’” Hodge v. Craig, 382 S.W.3d 325, 345
(Tenn. 2012) (quoting John Martin Co., Inc. v. Morse/Diesel, Inc., 819 S.W.2d 428, 433 (Tenn.
1991)). In discussing Robinson, the court noted “we characterized the requirement that the
misrepresentation be made to guide others ‘in their business transactions’ as an ‘essential element’
of a negligent misrepresentation claim under the Restatement (Second) of Torts § 552.” Id.
(quoting Robinson, 952 S.W.2d at 428).
Accordingly, the Court concludes negligent misrepresentation is unavailable to plaintiffs in
the employer–employee context. The Tennessee Supreme Court has “consistently limited” the tort
to instances where business or professional persons have provided false information in guidance of
business transactions. Additionally, the Tennessee Supreme Court cited with approval a case from
the Middle District of Tennessee specifically concluding negligent misrepresentation was
unavailable in the employer–employee context.

The Court concludes Plaintiff’s negligent

misrepresentation claim fails, and will GRANT Defendant’s motion to dismiss this claim.
C. Defamation

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Plaintiff asserts a defamation claim against Defendant, alleging Defendant “ruined his
reputation” by making untrue oral communications to its employees that suggested Plaintiff stole
property or otherwise acted dishonestly in his removal of the scrap materials. Plaintiff alleges this
“resulted in injury to [his] reputation.” Defendant argues Plaintiff’s complaint is insufficiently
vague, does not properly allege publication, and fails to allege Defendant published a statement with
knowledge or reckless disregard of its truth. Plaintiff does not refute this, but responds “Defendant
is correct that Plaintiff’s allegation of defamation as pled is general and not specific at this time as
to what exact statements were made, the names of who made them, or what day and time they were
made.” Plaintiff argues he hopes to obtain this information through discovery.
In Tennessee, a plaintiff establishes a prima facie case of defamation if he establishes “1) a
party published a statement; 2) with knowledge that the statement is false and defaming to the other;
or 3) with reckless disregard for the truth of the statement or with negligence in failing to ascertain
the truth of the statement.” Sullivan v. Baptist Mem’l Hosp., 995 S.W.2d 569, 571 (Tenn. 1999).
“‘Publication’ is a term of art meaning the communication of defamatory matter to a third person.”
Id. at 571-72 (quoting Quality Auto Parts Co. v. Bluff City Buick Co., 876 S.W.2d 818, 821 (Tenn.
1994)). However, “‘[c]ommunication between officers and agents of a corporation . . . is not
publication.’” Chaves v. AT&T, No. 3:12–CV–80, 2012 WL 2887559, at *4 (E.D. Tenn. July 13,
2012) (quoting Siegfried v. The Grand Krewe of Sphinx, No. W2002–02246–COA–R3–CV, 2003
WL 22888908, at *2 (Tenn. Ct. App. Dec. 2, 2003)). “The rationale behind such a rule is that
publication requires ‘the communication of a defamatory matter to a third person’ and
‘communication among agents of the same corporation . . . are not to be considered as statements
communicated or publicized to third persons.’” Siegfried, 2003 WL 22888908, at *2 (quoting

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Sullivan, 995 S.W.2d at 572; Woods v. Helmi, M.D.A., 758 S.W.2d 219, 223 (Tenn. Ct. App. 1988)).
In Chaves, the court dismissed a plaintiff’s defamation claim because the plaintiff’s
complaint stated only fellow employees of the defendant “were privy to plaintiff’s employee
statement,” which the plaintiff argued contained defamatory statements. Because only plaintiff’s
fellow employees were informed of the contents of the plaintiff’s employee statement, the
“statement was merely ‘communication among agents of the same corporation,’ rather than ‘the
communication of a defamatory matter to a third person,’” and the court dismissed plaintiff’s claim
for failing properly to plead publication. Chaves, 2012 WL 2887559, at *4 (quoting Siegfried, 2003
WL 22888908, at *2); see also Woods, 758 S.W.2d at 223 (“[E]very Tennessee case dealing with
this subject has involved communications between employees of the same corporation.”).
The Court must dismiss Plaintiff’s defamation claim for the same reason. Although Plaintiff
seeks further discovery regarding the contents of the defamatory statement as well as to whom the
communication was made, one of the few clear allegations in his complaint is that Defendant made
“defamatory oral communications to various employees of Defendant.” Accordingly, as in Chaves,
Plaintiff has failed to plead publication. Therefore, the Court will GRANT Defendant’s motion to
dismiss on Plaintiff’s defamation claim.
D.

Mediation

Plaintiff seeks an order referring the parties to mediation pursuant to Local Rul 16.4.
Defendant opposes this motion, stating it seeks dismissal of all Plaintiff’s claims with prejudice and
mediation would be unproductive pending the Court’s ruling on its motion. Considering the Court’s
decision announced today, the parties views may change regarding mediation. Accordingly, the
Court will DENY Plaintiff’s motion with leave to refile it after consideration of this memorandum

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and its accompanying order.
IV.

CONCLUSION
For the foregoing reasons, the Court will GRANT IN PART and will DENY IN PART

Defendant’s motion to dismiss (Court File No. 21). This case will proceed narrowly on Plaintiff’s
claim Defendant breached a contract when it fired Plaintiff after Plaintiff returned his scrap-material
profits in exchange for a promise he would not be terminated.
The Court will DENY Plaintiff’s motion to refer the case to mediation (Court File No. 30)
with leave to refile in light of this memorandum and its accompanying order.
An order shall enter.
/s/
CURTIS L. COLLIER
UNITED STATES DISTRICT JUDGE

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