Casey v. St. Mary's Bank

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
William Casey
v. 	Case No. 22-cv-252-PB
Opinion No. 2023 DNH 063
St. Mary’s Bank
MEMORANDUM AND ORDER
The plaintiff, William Casey, sued his former employer, St. Mary’s
Bank (SMB), for breach of contract based on SMB’s alleged failure to abide by
various policies in its employee manual. SMB moves to dismiss Casey’s
claims, arguing that the policies at issue do not give rise to a contract. I
agree, and therefore dismiss Casey’s breach of contract claims.
I. 	BACKGROUND
Casey is a member of the Massachusetts National Guard who began
working at SMB as a sales and service representative in December 2019. Doc.
1 at 2. That same month, Casey was provided with an “Employee Electronic
Manual” (Manual). Doc. 8-1 at 10. The Manual included an acknowledgement
form, signed by Casey, which stated:
I understand that neither this Manual nor any other SMB policy or
procedure is intended to provide any contractual obligations related to
continued employment, compensation or employment contract . . . Since
the information and policies described herein are subject to change at
any time, I acknowledge that revisions to the manual may occur . . . My
signature below indicates that I have read and agree to abide by the
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electronic Employee Manual and any revisions, am bound by the
provision contained within and am responsible for knowing and
understanding its contents.
Id.; see also Doc. 9 at 3.
The Manual included various policies, two of which are relevant here.
The “Anti-Discrimination and Harassment Prevention Policy” (EEO Policy)
provides:
It is the policy of St. Mary’s Bank to promote a positive and productive
work environment. St. Mary’s Bank does not tolerate discrimination or
harassment on the basis of race, religion, color, gender, age, marital
status, national origin, sexual orientation, veteran status, disability, or
any other protected status.
Doc. 9-1 at 2. The Manual also includes a “Military Policy,” which contains
two provisions concerning pay for employees on military-related leave. Doc. 9-
2 at 2. The first provision (Training Provision) states:
Regular employees serving in the Military Reserves or National Guard
will be granted military leave to enable them to attend training as
reservists or guard members. In this case, eligible employees will be
paid the difference between their military pay and their regular
straight-time pay for up to ten days of training leave each calendar
year (assuming their military pay is less than their regular pay from
the Credit Union).
Id. The second provision (Active Duty Provision) states:
Regular employees who are military reservists or National Guard
members and who are called to active duty, will be paid the difference
between their military pay and their regular straight-time pay for up to
12 months (assuming that their military pay is less than their regular
pay from the Credit Union).
Id.
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About six months into his employment with SMB, Casey was called to
active duty for a one-year period to respond to the then-emerging COVID-19
pandemic. Doc. 1 at 2-3. Following his return from active duty, Casey was
required to attend periodic training with the Guard. Id. at 5. SMB did not pay
Casey the difference between his military pay and regular pay while he was
at training or on active duty. Id. at 8.
Moreover, towards the end of his tenure at SMB, Casey was subjected
to unfavorable treatment because of his military service. For example,
Casey’s colleagues made “snide comments about his military service” and
supervisors would “openly favor[] other employees when assigning loans[.]”
Id. at 5. Additionally, Casey’s supervisors did not prorate his sales goals to
account for the time he was out on military leave, which negatively impacted
his ability to obtain promotions and pay increases. Id. at 4-5. Finding the
working conditions intolerable, Casey resigned in December 2021. Id. at 7.
Casey filed suit in this court, asserting three claims for breach of
contract based on SMB’s alleged failure to comply with the policies outlined
in its Manual.1 Id. at 12-14. Two of the claims are based on the Military
1 	Casey also asserted claims for various violations of the Uniformed
Services Employment and Reemployment Rights Act, 38 U.S.C. § 4301 et
seq., and constructive discharge. Doc. 1 at 8-12, 14. Those claims are not
subject to the present motion.
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Policy. Id. at 13-14. Casey claims that, by failing to pay him the difference
between his military pay and his regular pay while he was on active duty and
participating in mandatory training, SMB breached both the Active Duty
Provision and the Training Provision. Id. The remaining claim is based on the
EEO Policy, which Casey claims SMB breached by discriminating against
him on the basis of his military service. Id. at 12. SMB moves to dismiss all
three breach of contract claims, arguing that Casey fails to state a claim
because the Manual did not create any contractual obligations. Doc. 8-1 at 4.
II. 	STANDARD OF REVIEW
To survive a motion to dismiss for failure to state a claim, a plaintiff
must allege facts sufficient to “state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible if it pleads
“factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Id. On a motion to
dismiss, I consider only the allegations in the complaint and any documents
incorporated therein, including “the relevant entirety of a document integral
to or explicitly relied upon in the complaint, even though not attached to the
complaint[.]” See Clorox Co. P.R. v. Proctor & Gamble Commercial Co., 228
F.3d 24, 32 (1st Cir. 2000) (quoting Shaw v. Dig. Equip. Corp., 82 F.3d 1194,
1220 (1st Cir. 1996)).
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In testing a complaint’s sufficiency, I employ a two-step approach. See
Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011). First, I
screen the complaint for statements that “merely offer legal conclusions
couched as fact or threadbare recitals of the elements of a cause of action.” Id.
(cleaned up). A claim consisting of little more than “allegations that merely
parrot the elements of the cause of action” may be dismissed. Id. Second, I
credit as true all of the plaintiff’s non-conclusory factual allegations and the
reasonable inferences drawn from those allegations, and then determine if
the claim is plausible. Id. The plausibility requirement “simply calls for
enough fact to raise a reasonable expectation that discovery will reveal
evidence” of illegal conduct. Twombly, 550 U.S. at 556. The “make-or-break
standard” is that those allegations and inferences, “taken as true, must state
a plausible, not a merely conceivable, case for relief.” Sepúlveda-Villarini v.
Dep’t of Educ. of P.R., 628 F.3d 25, 29 (1st Cir. 2010).
III. 	ANALYSIS
SMB argues that all three contract claims must be dismissed because
the Manual’s acknowledgment form effectively disclaimed any contractual
obligations, thereby preventing the creation of a contract. SMB further
argues that the claim based on the EEO Policy must be dismissed because
the EEO Policy is too vague to constitute a contract. Casey asserts that the
acknowledgement form only indicates that the Manual does not alter the at-
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will status of his employment, and therefore does not adequately disclaim the
policies at issue here.
The New Hampshire Supreme Court has recognized that a company’s
policies may be constitute a unilateral contract if the standard elements of
contract formation—offer, acceptance, and consideration—are satisfied. See
Panto v. Moore Bus. Forms, Inc., 130 N.H. 730, 737 (1988). Thus, policies
“may be treated as an offer subject to an employee’s acceptance, to be
expressed by the continued performance of his duties, upon which an
enforceable unilateral contract term will be formed.” Id. at 735.
Nonetheless, “[a]n employer who seeks to avoid creating an
employment contract can do so via a written disclaimer in the handbook or
policy that indicates that the document will not create contractual
obligations.” Balsamo v. Univ. Sys. of N.H., 2012 DNH 048, 2012 WL 683491,
at *8 (D.N.H. Mar. 2, 2012). But a certain level of specificity is required in
order for a disclaimer to preclude the creation of a contract based on explicit
policies in the handbook. See Butler v. Walker Power, Inc., 137 N.H. 432, 436
(1993). A general disclaimer that merely “indicat[es] that a handbook is not a
‘contract of employment’” will effectively disclaim “the employer’s intent to
create a tenured employment relationship,” but not the concomitant incidents
of employment contained in the handbook. See Riesgo v. Heidelberg Harris,
Inc., 36 F. Supp.2d 53, 60 (D.N.H. 1997). “[T]o disclaim an intent to be bound
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by policies included in a handbook that are not related to the fact or duration
of employment, an employer must specifically state such an intent.” Id. I
apply these principles first to the Military Policy, and then to the EEO Policy.
A. 	Military Policy
SMB argues that the acknowledgement form effectively precludes the
creation of a contract based on the Military Policy by specifically disclaiming
all contractual obligations related to “compensation.” I agree.
Unlike the cases relied on by Casey, the acknowledgement form here
does not merely disclaim the creation of a “contract of employment,” but
rather specifically disclaims “any contractual obligations related to . . .
compensation.” Doc. 8-1 at 10. In doing so, the acknowledgement form makes
clear that the Manual’s compensation policies cannot form the basis of a
contract.
The New Hampshire Supreme Court has interpreted “compensation” in
other contexts to refer to both salary and “any other benefits that are an
integral part of the employee’s contemplated compensation,” including
“annual leave, sick leave, insurance, retirement, [and] death benefits.” See
Jeannont v. N.H. Pers. Comm’n, 118 N.H. 597, 602 (1978); see also Cloutier v.
State, 163 N.H. 445, 452 (2012); Gilman v. Cheshire Cty., 126 N.H. 445, 448-
449 (1985). The Military Policy deals exclusively with leave benefits, and
thus falls squarely within the meaning of “compensation.”
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Casey does not appear to dispute that the Military Policy deals with
“compensation,” but rather argues that the Policy creates contractual rights
notwithstanding the disclaimer because “no New Hampshire court has
specifically held that compensation terms may be disclaimed.” Doc. 9 at 6.
While this may be true, the New Hampshire Supreme Court has consistently
stated that specific policies may be disclaimed without carving out any
specific types of policies that may not be disclaimed. See Panto, 130 N.H. at
742 (noting that a company can avoid contract liability “by announcing in the
written policy itself that it was not an offer, or a policy enforceable as a
contractual obligation”); Butler, 137 N.H. at 436 (stating that a company can
“avoid[] contractual liability by clearly stating its intent not to be
contractually bound by the terms of the promulgated policy”); see also
Balsamo, 2012 WL 683491 at *8 (noting that a policy may “create binding
contractual obligations regarding the incidents of employment—such as
compensation and fringe benefits—to the extent that the incidents
themselves are not disclaimed”) (emphasis added). Indeed, Casey has not
cited a single decision from any court that holds that compensation terms
may not be disclaimed, and I have located none. To the contrary, several
courts have explicitly held that compensation terms may be disclaimed. See,
e.g., Hall v. City of Plainview, 954 N.W.2d 254, 268 (Minn. 2021) (“well-
drafted, specific, disclaimers can prevent the formation of contractual rights
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stemming from employee handbook provisions, including provisions
concerning [paid time off]”); City of Denton v. Rushing, 570 S.W.3d 708, 711-
712 (Tex. 2019) (holding that a handbook disclaimer effectively precluded the
creation of contractual rights based on a manual’s pay schedule for time
spent on-call); Furtula v. Univ. of Ky., 438 S.W.3d 303, 309-310 (Ky. 2014)
(concluding that a disclaimer precluded any contractual obligations related to
“long term disability and salary continuation programs”); Rudolph v. IBM
Corp., No. 09 C 428, 2009 WL 2632195, at *3 (N.D. Ill. Aug. 21, 2009)
(“Courts [in Illinois] have consistently held as a matter of law that a
compensation plan does not create an enforceable contract if the language of
the plan explicitly provides an employer the right to modify or terminate the
plan at any time.”).
While there may be policy reasons to impose such a limitation, the New
Hampshire Supreme Court has not yet done so, and I decline to break new
ground here. See Doe v. Tr. of Bos. Coll., 942 F.3d 527, 535 (1st Cir. 2019) (“A
litigant who chooses federal court over state court cannot expect this court to
blaze new and unprecedented jurisprudential trails as to state law. Rather,
this court must take state law as it finds it: not as it might conceivably be,
some day; nor even as it should be.”) (cleaned up). Accordingly, because the
acknowledgement form disclaims the creation of a contract based on the
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Military Policy, the breach of contract claims based on that policy must be
dismissed.2
B. 	EEO Policy
SMB argues that the EEO Policy is effectively disclaimed by the
acknowledgement form and, in any event, is too indefinite to form the basis of
a contract. Although Casey argues that the acknowledgement form does not
disclaim the EEO Policy with sufficient specificity, he does not address SMB’s
alternative argument. I conclude that the EEO Policy does not constitute an
offer sufficient to create a contract, and therefore do not consider the impact
of the disclaimer.
2 	Casey also argues that he is entitled to the pay promised in the
Military Policy, even though the acknowledgment form states that the
Manual’s policies are subject to change, because the Military Policy was in
place at all relevant times. Doc. 9 at 6. I need not consider Casey’s argument
because my conclusion rests on the language in the disclaimer that disavows
contractual obligations related to “compensation,” and not the portion of the
disclaimer reserving the right to alter the policies. That the policies were in
place throughout Casey’s military leave is irrelevant to his contract claims
given that the acknowledgement form prevented the policies from creating a
contract in the first instance. To the extent Casey is arguing that he is
entitled to the pay provided in the Military Policy even in the absence of a
contract, he has not advanced any such claim in his complaint. I express no
opinion as to whether Casey is entitled to compensation under any of the
other theories of liability hinted at in his objection, such as promissory
estoppel, negligent misrepresentation, or the New Hampshire Wage Act, N.H.
Rev. Stat. Ann. § 275:42 et seq.
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As I explained, under New Hampshire law, an employer’s policies only
create a contract if they conform to the customary principles of contract
formation. See Panto, 130 N.H. at 735; see also Brodeur v. Claremont Sch.
Dist., 626 F. Supp.2d 195, 216 (D.N.H. 2009) (“New Hampshire does not take
a ‘liberal position’ as to treating employee handbooks as contracts: when they
satisfy the principles of contract formation, they are contracts, and when they
do not, they are not.”). Thus, before a policy can confer contractual rights, it
must constitute an offer that the employee accepted through his continued
employment. See Panto, 130 N.H. at 735. “An offer is the manifestation of
willingness to enter into a bargain.” IBM Corp. v. Khoury, 170 N.H. 492, 501
(2017) (quoting Restatement (Second) of Contracts § 24 (1981)). In order to
form the basis of a contract, an “offer must be so definite as to its material
terms or require such definite terms in the acceptance that the promises and
performances to be rendered by each party are reasonably certain.” Chasan v.
Vill. Dist. of Eastman, 128 N.H. 807, 815 (1986) (quoting Restatement (First)
of Contracts § 32 (1932)).
The EEO Policy fails to satisfy the basic requirements of contract
formation for at least two reasons. First, the Policy cannot be understood as
an offer because it only states SMB’s intent to abide by state and federal
law—something that SMB is already obligated to do. Thus, the statement
cannot reasonably be understood as manifesting a willingness to enter into a
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bargain about Casey’s right to be free from unlawful discrimination, as this is
plainly not a bargaining chip that SMB holds. See Tourtellotte v. Eli Lilly &
Co., 636 F. App’x 831, 841 (3d Cir. 2016) (noting that anti-discrimination
policies cannot form a contract because they do not indicate an intent “to
create a legally binding obligation beyond the anti-discrimination laws
already in place”); Byra-Grzegorczyk v. Bristol-Myers Squibb Co., 572 F.
Supp.2d 233, 254 (D. Conn. 2008) (“The anti-discrimination policy does not
indicate that [the defendant] is undertaking any contractual obligations
towards [the plaintiff]; rather it obliges [the defendant] to comply with
federal and state-antidiscrimination laws[.]”) (cleaned up).
Second, the statement that SMB “does not tolerate discrimination or
harassment” based on an employee’s “protected status” is too indefinite to
form the basis of a contract. See McKenzie v. Lunds, Inc., 63 F. Supp.2d 986,
1003 (D. Minn. 1999) (collecting cases and noting that anti-discrimination
policies “are, as a matter of law, too indefinite to form an enforceable contract
between an employer and its employee”). Because it is not clear what it
means to “not tolerate discrimination,” it would be nearly impossible to
discern whether SMB breached the alleged contract. See Panto, 130 N.H. at
735 (finding that a policy could form the basis of a contract where the
provisions were “sufficiently certain to allow claims of breach to be resolved
readily”); Restatement (Second) of Contracts § 33 (“The terms of a contract
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are reasonably certain if they provide a basis for determining the existence of
a breach and for giving an appropriate remedy.”); accord 30 C.J.S.
Employer—Employee § 31 (2023) (“The only binding statements of policy in
an employment manual are those that promise specific treatment in specific
situations.”).
Relying on similar rationale, courts in other jurisdictions have rejected
the argument that general anti-discrimination policies can form the basis of a
contract. See, e.g., Monaco v. Am. Gen. Assurance Co., 359 F.3d 296, 309 (3d
Cir. 2004); Elliot v. Montgomery Ward & Co., 967 F.2d 1258, 1263-1264 (8th
Cir. 1992); Davis v. Oyster Bay-East, No. 03-cv-1372 (SJF) (JO), 2006 WL
657038, at *15 (E.D.N.Y. Mar. 9, 2006); Peralta v. Cendant Corp., 123 F.
Supp.2d 65, 83-84 (D. Conn. 2000). Indeed, Casey does not cite to, and I have
not located, any cases sustaining a breach of contract claim based on an anti-
discrimination policy. Cf. Clayton v. Vanguard Car Rental U.S.A., Inc., 761 F.
Supp.2d 1210, 1279 (D.N.M. 2010) (“The Court has found no case that has
found an implied contract based solely on an anti-discrimination policy[.]”).
Like the other courts to have considered the issue, I conclude that the EEO
Policy here does not meet the basic requirements of contract formation, and
therefore dismiss Casey’s breach of contract claim based on the Policy.
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IV. 	CONCLUSION
For the foregoing reasons, the defendant’s motion to dismiss (Doc. 8) is
granted.
SO ORDERED.
/s/ Paul J. Barbadoro
Paul J. Barbadoro
United States District Judge
May 16, 2023
cc: Counsel of record
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