Bartel, Marsha v. NBC Universal Inc ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 07-3913
M ARSHA B ARTEL,
Plaintiff-Appellant,
v.
NBC U NIVERSAL, INC.,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 07 C 2925—John W. Darrah, Judge.
____________
A RGUED M AY 28, 2008—D ECIDED S EPTEMBER 11, 2008
____________
Before E ASTERBROOK, Chief Judge, and R IPPLE and
W OOD , Circuit Judges.
W OOD , Circuit Judge. Marsha Bartel lost her job at NBC
Universal, Inc., after she complained that the television
show for which she was responsible was not adhering to
NBC’s internal ethical standards. NBC first turned a deaf
ear to her complaints; Bartel then refused to continue
acting as producer for the show; and finally Bartel found
herself out the door. She sued NBC in federal court,
2 No. 07-3913
relying on diversity jurisdiction, for breach of contract. The
district court dismissed the complaint for failure to state
a claim, and we affirm.
I
The account of the facts that follows accepts Bartel’s
account as true, since this is an appeal from a dismissal
under F ED. R. C IV . P. 12(b)(6). Moranski v. GMC, 433 F.3d
537, 539 (7th Cir. 2005). If she has not stated a claim even
under this favorable approach, then it was correct to
terminate the litigation at its outset.
Bartel worked as a journalist for NBC Universal, Inc., for
21 years. She won awards for her work and was regarded
as one of the best investigative journalists on the NBC
news team. In August 2006, NBC assigned Bartel to be
the sole producer of a segment entitled “To Catch a
Predator,” which was part of NBC’s Dateline television
program. NBC worked with an organization called
“Perverted Justice,” which uses agents pretending to be
minors to lure adult men into chat rooms. The parties
make a date to meet, and the men are led to believe they
are arranging a sexual assignation with a minor. When
the man arrives at the meeting place, he is arrested, while
the confrontation scene is filmed. The sequence is later
televised on the Predator segment of Dateline.
As a journalist and producer for NBC, one of Bartel’s
main responsibilities was to ensure compliance with the
ethical standards of journalism and NBC’s internal guide-
lines. Bartel found numerous aspects of the Predator
No. 07-3913 3
segment production to be in violation of these standards
and guidelines. She believed, for example, that NBC was
providing compensation directly or indirectly to the law
enforcement officers participating in the stings. She
thought it wrong that “Perverted Justice” representatives
did not provide NBC with compete transcripts of their
conversations with the targets, and that they did not
identify all of their volunteers to NBC. She also ob-
jected that Dateline and Perverted Justice were staging the
arrests in a way that maximized the humiliation of the
target. Bartel informed her superiors at NBC of these
problems, but they took no steps to cure them. Bartel then
told her supervisors that she could not produce the
segment. On November 17, 2006, NBC informed Bartel
that her contract would be terminated effective Decem-
ber 25, 2006. NBC asserted that this action was part of a
program of lay-offs that it was making because of general
economic conditions.
Bartel did not believe this explanation, and so she
sued NBC for breach of contract. She asserted that the
termination was premature in light of the protection her
contract afforded her. In addition, she charged that the
reason given for her termination was pretextual; that the
real reason was her refusal to produce a segment that
violated ethical and company standards; and that her
contract included an implicit restriction against firing her
for this kind of reason, thus rendering NBC’s action a
breach of contract.
NBC moved to dismiss the complaint for failure to state
a claim. It argued that the contract Bartel attached to the
4 No. 07-3913
complaint was unambiguous and allowed it to end Bartel’s
employment when and why it did. The contract, NBC went
on, contained no restrictions on allowable reasons for
dismissal. NBC also argued that New York law, which
both parties agree governs this case, does not allow courts
to recognize the implicit restriction for which Bartel was
arguing. The district court granted NBC’s motion to
dismiss, and Bartel appeals.
II
We give de novo review to a district court’s dismissal
under Rule 12(b)(6) for failure to state a claim upon
which relief can be granted. Moranski, 433 F.3d at 539.
The question whether the language of a contract is am-
biguous is one of law, and so we also review that
de novo. Palmieri v. Allstate Ins. Co., 445 F.3d 179, 187 (2d
Cir. 2006).
Bartel first argues that NBC was not permitted under
the contract to end her employment when it did. In sup-
port of this position, she sought to introduce extrinsic
evidence about the parties’ understanding of the contrac-
tual arrangements, but the district court held that the
language of the contract was unambiguous and there-
fore denied her request.
The provision that directly addresses the time at which
NBC was entitled to terminate Bartel’s employment is
Paragraph 4(a) of the Letter Agreement between NBC and
Bartel:
No. 07-3913 5
The term of this Agreement shall commence on Decem-
ber 26, 2005 and shall continue, subject to suspension,
extension or termination as hereinafter provided, for
a period of two hundred and eight (208) consecutive
weeks thereafter. The term hereof shall be divided
into four (4) consecutive cycles of fifty-two (52) weeks
each. NBC shall have the right to terminate this Agree-
ment effective at the end of any cycle prior to the
last by giving Artist written notice not less than
twenty-eight (28) days prior to the end of any such
cycle. This Agreement shall automatically terminate
at the end of the last cycle without notice, unless
the parties agree otherwise.
The Letter Agreement was executed on March 31, 2006, but
was retroactively effective as of December 26, 2005.
Bartel argues that “term” and “cycle” are terms of art
that are not defined in the contract. But this is plainly not
so: the two words are defined right in the paragraph we
have just quoted. The “term of this Agreement” is 208
consecutive weeks, with a specified start-point and end-
point. That period is divided into four consecutive, equal
52-week sub-intervals, each of which is referred to as a
cycle. A reasonable person reading this paragraph
would not be confused about the meaning of the words
“term” or “cycle” as they are used in the agreement. A
definition does not have to read “noun X is defined
as . . . .”
Bartel buttresses her ambiguity argument by pointing to
Paragraph 5(a) of the Letter Agreement. This, she asserts,
demonstrates that Paragraph 4(a) is ambiguous because
5(a) also uses the word “term,” but in a different way:
6 No. 07-3913
In full payment for the services and/or materials
furnished by Artist and in consideration of the rights
granted by Artist to NBC and the faithful performance
of Artist’s obligations hereunder, NBC agrees to pay
Artist and Artist agrees to accept the guaranteed
annual rate of compensation below, payable bi-weekly.
The annual rate(s) of pay reflected herein may not
correspond exactly to the amount received in a calen-
dar year. Bi-weekly compensation is calculated by
dividing annual compensation by 26.08335.
Period of Term Annual Rate of Compensation
12/26/05-06/24/07 $175,000.00
06/25/07-12/21/08 $180,000.00
12/22/08-12/20/09 $185,000.00
(Emphasis added).
This paragraph also creates no ambiguity. The word
“term” is used consistently in Paragraphs 4(a) and 5(a); it
means the 208 weeks beginning on December 26, 2005,
and ending on December 20, 2009. Paragraph 5(a) intro-
duces the new word “Period,” which is a subdivision of
“Term” distinct and independent from the “cycle” subdivi-
sion defined in Paragraph 4(a). “Periods” refer to sub-
intervals of the Term in which Bartel is entitled to be
paid a particular and fixed salary (provided she is still
employed). “Cycles” refer to sub-intervals of the Term
that define three discrete opportunities at which NBC can
elect to terminate Bartel’s employment before the end of
the Term. Even if Bartel may be correct that the word
“Period” in Paragraph 5(a) could have been defined more
No. 07-3913 7
precisely, that does not help her case because Paragraph
5(a) does not discuss times for termination; Paragraph 4(a)
does that, and “Period” is not used in Paragraph 4(a).
We hold that the contract is unambiguous. Because
NBC gave Bartel written notice on November 17, 2006, that
it was terminating her contract effective December 25,
2006 (the end of the first cycle), NBC gave more than the
required amount of notice. Thus, it did not breach the
contract, assuming its action did not violate any implied-
in-law restrictions on reason for dismissal, the point
to which we next turn.
III
Even if NBC’s termination of Bartel’s contract was
permissible as a matter of timing, Bartel argues that NBC
nevertheless breached the agreement because of an
implicit restriction in it. Specifically, Bartel alleges that
NBC’s stated reason for firing her—lay-offs as a general
cost-saving measure—is a pretext; the real reason
was Bartel’s insistence that NBC live up to the ethical
standards recognized by the profession of journalism and
imposed by NBC’s internal guidelines. The latter reason,
she continues, is just as impermissible as something like
a racially discriminatory motive.
Until Wieder v. Skala, 80 N.Y.2d 628 (1992), the sole case
on which Bartel relies, was decided, New York declined to
recognize any judicially created exceptions to the common-
law understanding of at-will employment. Murphy v. Am.
Home Prods. Corp., 58 N.Y.2d 293, 305 (1983), was a typical
8 No. 07-3913
case. There, the court rejected the plaintiff’s invitation to
read an implied requirement of good faith into his em-
ployment contract, even though the plaintiff’s job required
him to disclose accounting improprieties and he was
discharged for doing so. It held that “under New York law
as it now stands, absent a constitutionally impermissible
purpose, a statutory proscription, or an express limitation
in the individual contract of employment, an employer’s
right at any time to terminate an employment at will
remains unimpaired.”
Bartel does not contend that the termination of her
employment contract violated the Constitution, a
statutory proscription, or an express limitation in the
contract (putting aside the timing argument that we have
rejected). Instead, she argues that Wieder recognizes an
exception not only to the rules for employment-at-will, but
also inserts an implied term into all employment con-
tracts. In Wieder, an attorney working as an associate at a
law firm was fired after demanding that the firm report
another associate’s misconduct to the state disciplinary
committee. The Court of Appeals of New York found that
“in any hiring of an attorney as an associate to practice
law with a firm there is implied an understanding so
fundamental to the relationship and essential to its pur-
pose as to require no expression: that both the associate
and the firm in conducting the practice will do so in
accordance with the ethical standards of the profession.”
80 N.Y.2d at 635-36. Bartel argues that the same rule
should apply to a journalist working for a news organiza-
tion such as NBC. But in Wieder itself the Court of Appeals
was careful to distinguish the situation of a lawyer from
No. 07-3913 9
that of others who might also have ethical duties, but for
whom it refused to recognize an implicit restriction on
termination. See Sabetay v. Sterling Drug, Inc., 69 N.Y.2d
329 (1987) (director of financial projects); Murphy, 58
N.Y.2d at 305 (accountant and assistant treasurer). See
Wieder, 80 N.Y.2d at 635. The Court has continued to
draw that line since Wieder: see Horn v. New York Times,
100 N.Y.2d 85 (2003) (physician employed by nonmedical
organization, where physician was seeking to enforce
patient confidentiality).
As we read Wieder, the court went to great lengths to
highlight the uniqueness of the legal profession and to
narrow its holding to that particular profession—perhaps
even to the particular disciplinary rule at issue in that case.
The opinion is riddled with limiting language, some of
which we highlight here:
[1] [Plaintiff’s] employment as a lawyer to render
professional services as an associate with a law firm
differs in several respects from the employments in
Murphy and Sabetay. . . . plaintiff’s performance of
professional services for the firm’s clients as a duly
admitted member of the Bar was at the very core and,
indeed, the only purpose of his association with
defendants. Associates are, to be sure, employees of
the firm but they remain independent officers of the
court responsible in a broader public sense for their
professional obligations.
Wieder, 80 N.Y.2d at 635 (emphasis added).
[2] It is in this distinctive relationship between a law
firm and a lawyer hired as an associate that plaintiff
10 No. 07-3913
finds the implied-in-law obligation on which he
founds his claim.
Id. at 635-36 (agreeing with plaintiff) (emphasis added).
[3] The particular rule of professional conduct impli-
cated here (DR 1-103[A]), it must be noted, is critical to
the unique function of self-regulation belonging to the
legal profession. . . . Moreover, as plaintiff points out,
failure to comply with the reporting requirement may
result in suspension or disbarment.
Id. at 636 (citation omitted) (emphasis added).
[4] We agree with plaintiff that these unique characteris-
tics of the legal profession in respect to this core Disci-
plinary Rule make the relationship of an associate to a
law firm intrinsically different from that of the finan-
cial managers to the corporate employers in Murphy
and Sabetay.
Id. at 637 (clarifying the narrowness of the Wieder holding
by noting that not every rule of professional responsibility
for lawyers is “deemed incorporated as an implied-in-law
term in every contractual relationship between or among
lawyers”) (emphasis added).
More telling even than the language in Wieder is the
language in Horn v. New York Times, supra. Postdating
Wieder by eleven years, Horn discusses that case and the
other relevant cases at length. It is the most recent pro-
nouncement by the Court of Appeals of New York on its
view of the law. Because we are sitting in diversity, we
must rule as we think the highest court of the state
No. 07-3913 11
would rule if it were deciding the case, even if we think
that another approach would be preferable.
In declining to expand the “narrow exception to the at-
will employment doctrine adopted in Wieder,” Horn
reaffirmed New York’s position that “such a significant
change in our law is best left to the Legislature.” 100
N.Y.2d at 92, 96-97 & n.4 (noting that “the Legislature
remains active in this area, just last year having enacted a
new Whistleblower Law to protect certain health care
workers”). Horn noted New York’s “strong disinclination
to alter the traditional rule of at-will employment.” Id. at
93. It then catalogued the “unique” aspects of the
legal profession that were critical to the recognition of
an exception in Wieder. Id. at 94-96. It pointed out that
the New York Legislature has delegated to the state
judiciary the task of overseeing attorney self-regulation,
and so the leave-it-to-the-Legislature argument had less
force for the situation in Wieder. Id. at 94. Recognizing
the importance of physician-patient confidentiality, the
court acknowledged that Plaintiff Horn “strikes a sympa-
thetic, and even a seductive, chord,” but she had none-
theless “failed to plead facts that place her claim for breach
of contract within the Wieder exception to the at-will
employment rule.” Id. at 95, 96.
Horn leaves us convinced that the Court of Appeals
of New York would decline to expand Wieder to include
journalists. We therefore find no breach of contract on
NBC’s part, even assuming that Bartel can prove that the
reason NBC offered for the lay-off was pretextual.
* * *
12 No. 07-3913
We A FFIRM the judgment of the district court.
9-11-08