Opinion
NO. 2014-CA-000167-MR
03-20-2015
AMY WHITLEY APPELLANT v. RITE AID OF KENTUCKY, INC. APPELLEE
BRIEF FOR APPELLANT: Bradley Guthrie Harrodsburg, Kentucky BRIEF FOR APPELLEE: George J. Miller Lexington, Kentucky
NOT TO BE PUBLISHED APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE PAMELA R. GOODWINE, JUDGE
ACTION NO. 11-CI-05593
OPINION
AFFIRMING
BEFORE: J. LAMBERT, STUMBO AND TAYLOR, JUDGES. STUMBO, JUDGE: Amy Whitley appeals from an Opinion and Order of the Fayette Circuit Court dismissing her Amended Complaint alleging that Rite Aid of Kentucky, Inc. breached her employment contract. Whitley contends that the court improperly concluded that the document, titled Memo of Understanding Upon Employment, was not a valid contract and therefore could not support a claim of breach of contract. We find no error, and AFFIRM the Opinion and Order on appeal.
Whitley graduated from the University of Kentucky College of Pharmacy in 2000. Following her graduation, she applied for the position of Graduate Intern and Pharmacist with Rite Aid of Kentucky, Inc. As part of the application process, Whitley had one or more conversations with Larry Hadley in which Hadley explained that Whitley would be paid $26 per hour as a Graduate Intern and $45 per hour after she became a fully licensed Pharmacist. Whitley would later deny that this portion of the conversation occurred. Rite Aid's Pharmacy District Manager, Kevin Lamping, was also involved in the process.
Hadley met with Whitley on May 3, 2000, to finalize the terms of her employment and sign the necessary paperwork. At the meeting, Hadley produced the Memo of Understanding Upon Employment, and made several handwritten changes to the document. These amendments included changes to Whitley's vacation as well as the addition of two weeks of paid time off prior to Whitley taking the pharmacy licensing examination. This memo would later form the basis of Whitley's breach of contract claim against Rite Aid.
Whitley subsequently was hired and began her employment as a Graduate Intern. After passing the licensing examination, she was promoted to the position of Staff Pharmacist. Whitley was later moved from store to store as needed, and then was promoted to the position of Pharmacy Manager in early 2002. At this time she began working exclusively at the Rite Aid store No. 3931 in Lexington, Kentucky. Whitley continued to work at this location until her employment ended on November 5, 2010. Rite Aid would later contend that Whitley resigned, and Whitley would testify that her employment was terminated by Rite Aid.
Whitley subsequently filed a Complaint and Amended Complaint against Rite Aid in Fayette Circuit Court setting forth claims of breach of contract, fraud and retaliation. After Whitley dropped the retaliation claim, and the fraud claim having been dismissed by way of an Order rendered on April 3, 2012, the remaining claim of breach of contract proceeded to a bench trial conducted on September 19, 2013. Whitley's claim centered on her assertion that during the course of her employment, Rite Aid unilaterally and improperly modified the alleged contract salary of $1800 per week to an amount equal to $22.50/hour and then $26.00 for four pay periods. Whitley also alleged that in the years that followed, and at varying intervals, Rite Aid would "dock" her salary for hours or improperly take her vacation pay to supplement days that she worked less than a full day. In her written argument, Whitley contends that the "total of losses for conduct in violation of their contract amounted to $17,113.78." Whitley also argued that she was entitled to protection under the Fair Labor Standards Act ("FLSA") and that state and federal wage and hour laws must be incorporated into her breach of contract claim. Rite Aid defended the action by arguing that the Memo of Understanding Upon Employment ("the memo") was not an enforceable employment contract and that Whitley was an at-will employee
After conducting the bench trial, the trial court rendered an Opinion and Order on January 6, 2014, dismissing Whitley's breach of contract claim. As a basis for the Order, the court determined that 1) the memo was not a valid employment contract, 2) Whitley did not file a wage and hour claim, and 3) even if she had filed such a claim, she would be exempt from its provisions as a professional employee. The court rejected Whitley's claim that Rite Aid improperly withheld pay in violation of the FLSA upon finding that a FLSA claim (i.e., a "wage and hour" claim) was a separate cause of action which had not been alleged in the complaint and could not be incorporated into or bootstrapped onto a breach of contract claim. This appeal followed.
Whitley now argues that the Fayette Circuit Court erred in concluding that the memo was not a valid and enforceable contract. Specifically, she contends that the court improperly determined that the memo was not a contract upon finding that it did not set forth terms defining the period of employment, including the obligation of the employee to render services for a fixed period and the reciprocal obligation of the employer to retain the employee's services. Directing our attention to Shah v. American Synthetic Rubber Corp., 655 S.W.2d 489 (Ky. 1983), Whitley maintains that "[t]he duration of an employment contract must be determined by the circumstances of each particular case, depending upon the understanding of the parties as ascertained by inference from their written or oral negotiations" and other circumstances surrounding the transaction. Id. at 490. The focus of her argument is her contention that parties may enter into a contract for employment to continue until terminated at the will of either party, and that the trial court erred in holding that the memo was not a contract because it did not contain essential terms.
The dispositive question for our consideration is whether the Fayette Circuit Court properly determined that the memo is not an enforceable employment contract, and therefore does not provide a legal basis for the underlying claim. In an action alleging breach of an employment contract, "[i]t should be shown that such contract was entered into for a definite period of time; and likewise should show obligation on the part of the employee to render service for a fixed period and reciprocal obligation on the employer's part to retain the employee's services." Clark v. Cincinnati N.O. & T.P.R.Y. Co., 258 Ky. 197, 79 S.W.2d 704, 706 (1935); see also Gambrel v. United Mine Workers of America, 249 S.W.2d 158, 159 (Ky. 1952). In the absence of a specific employment contract, an employee is considered "at will." See Firestone Textile Co. Div., Firestone Tire and Rubber Co. v. Meadows, 666 S.W.2d 730 (Ky. 1983). Ordinarily, "an employer may discharge his at-will employee for good cause, for no cause, or for a cause that some might view as morally indefensible." Id. at 731 (citation omitted). See also Grzyb v. Evans, 700 S.W.2d 399 (Ky. 1985); Shah, supra; and Nork v. Fetter Printing Co., 738 S.W.2d 824 (Ky. App. 1987).
In the matter before us, the Fayette Circuit Court determined that the memo lacks several key terms necessary to constitute a valid employment contract, including the position for which Whitley was hired, what services she was to perform, and the duration of her employment. This conclusion is supported by the record, as was the court's finding that the only term discussed was the amount of compensation. The memo does state at Paragraph 13 that Whitley's employment could be terminated at any time by either Whitley or Rite Aid, and either with or without cause.
Additionally, the trial court noted that Whitley's own actions throughout the course of her employment revealed that she never believed she had an enforceable employment contract with Rite Aid. On three occasions in 2007 and 2008, Whitley signed a Notification of Change in Base Salary. The first such notification, for example, reduced her bi-weekly salary from $4,220 per 80 hours to $3,798 per 72 hours. The form instructed Whitley as follows: "If you believe you have some different written agreement regarding compensation you must provide it within five (5) business days." Lamping testified that Whitley never provided any such agreement. We find as persuasive the Fayette Circuit Court determination that Whitley's own inaction after she signed each of these Notifications of Change in Base Salary evinced her belief that she did not have a written contract with Rite Aid concerning her compensation.
Whitley seeks to overcome the absence of specific, enforceable contractual elements by directing our attention to Shah, supra. She contends that Shah stands for the proposition that the duration of employment may be determined by the circumstances of each particular case, depending upon the understanding of the parties as determined by inference from their written and oral negotiations and other circumstances surrounding the transaction. As applied herein, Whitley appears to argue that the trial court improperly failed to consider extrinsic evidence to determine the scope and duration of the purported contract.
In Shah, however, extrinsic evidence was considered only for establishing the duration of the employment, and not for considering the purpose or position for which the memo was entered into. In Shah, the circumstances of the particular case, including inferences from written and oral negotiations, were considered only after it was determined that the parties had otherwise entered into a binding contract. In the matter at bar, the memo did not contain essential elements required to establish a contract, and no Shah analysis was therefore required.
Whitley goes on to argue that the trial court erred in failing to analyze her breach of contract claim under state and federal "wage and hour" provisions, including the federal Fair Labor Standards Act of 1938, 29 U.S.C. 201 et seq. (the "FLSA"). She maintains that the trial court improperly concluded that 1) Whitley did not plead any wage and hour or FLSA claim in her Complaint or Amended Complaint, and 2) that even if she had so pled, the FLSA does not apply to professional, salaried employees. She also contends that "Rite Aid Form 188," which was presented to her by Rite Aid when the purported contract was executed, mentions the FLSA and should therefore be incorporated into her breach of contract claim. She seeks an Order reversing the Opinion and Order on this issue, and remanding the matter for consideration of her breach of contract claim under any applicable state wage and hour standards and/or the FLSA.
In disposing of this issue below, the Fayette Circuit Court stated as follows:
The Court finds and concludes that the May 3, 2000 Memo of Understanding does NOT constitute a valid written contract. As a result, Whitley's breach of contract claim fails as a matter of law because if there is no contract, there can be no breach. That finding and conclusion disposes of this matter in its entirety despite the fact that Whitley continued to argue that her claim was supported by either the state or federal wage and hour laws. Whitley initially asserted three separate causes of action in her initial Complaint: (1) breach of contract (2) fraud; and (3) retaliation.
Following Rite Aid's Motion to Dismiss, Whitley chose to omit her retaliation claim from her Amended Complaint and the Court dismissed her fraud claim in an April 3, 2013 Order. Whitley never asserted a state or federal wage and hour claim . In fact, her attorney stated on the record that she has no intention of alleging a statutory wage and hour claim, yet she kept stating reliance on 29 CFR 541.602 to support her contract claim. Such reliance is misplaced.
Having found no valid written contract, further discussion of whether Rite Aid breached the "contract" by violating 29 CFR 541.602 is pointless. Whitley did not file a cause of action under the Fair Labor Standards Act nor did she allege a statutory wage and hour claim. Causes of action alleging violations such as Whitley's are usually brought under state or federal wage and hour statutes.
The Court found one such case almost identical to Whitley's which was brought under the Fair Labor Standards Act by a pharmacist alleging compensation discrepancies and failure to pay overtime. Amani v. CVS
RX Services, Inc., 788 F.Supp. 2d 55 (E.D. New York 2011). In Amani the court for the Eastern District of New York held that the pharmacist was paid on a salary basis and pharmacist was a highly compensated professional employee exempt from the overtime requirements of the FLSA.
If Whitley had properly filed this action under the FLSA or the Kentucky Wage and Hour Act and had those causes of action survived a statute of limitations argument, they likely would have been dismissed as a matter of law as well given her classification as pharmacist, which is deemed to be a highly compensated professional employee and exempt from the overtime requirements. (Emphasis added).
The record supports the Fayette Circuit Court's finding that Whitley did not plead a state or federal wage and hour claim, and that her counsel stated on the record that she did not intend to assert such a claim. We cannot conclude that Rite Aid's reference to the FLSA in Rite Aid Form 188, which was presented to Whitley in the year 2000, now operates to incorporate an FLSA claim into her Amended Complaint. We find no error on this issue.
Lastly, Whitley contends that the trial court erred in dismissing her fraud claim. As set out in her Amended Complaint, Whitley's fraud claim centered on her assertion that Rite Aid knowingly misrepresented her as having resigned when she contends that she was fired. She argues that on a Motion to Dismiss under CR 12, the facts must be taken in a light most favorable to her as non-movant, and that the trial court erred in sustaining Rite Aid's Motion to Dismiss Whitley's claim of fraud.
According to Whitley, on November 5, 2010, she met with Rite Aid agent Andrew Heuer. At that meeting, Whitley stated to Heuer that she was not happy with Rite Aid and that she had submitted applications to other potential employers. According to Whitley, after learning that she had applied for other employment, Rite Aid falsely stated that she had resigned, then demanded her keys and escorted her out of the premises. Whitley represents these events as an improper and fraudulent termination of her employment. Conversely, Rite Aid characterizes her act of applying for other employment as an express or tacit resignation.
Both parties direct our attention to United Parcel Service Co. v. Rickert, 996 S.W.2d 464 (Ky. 1999), which sets out the elements of a claim of fraud. Such a claim requires proof of 1) a material representation; 2) which is false or known to be false or made recklessly; 3) made with the inducement to be acted upon; 4) which was acted in reliance thereon; and 5) which caused injury. Id. at 468. When asserting a claim of fraud, "the circumstances constituting fraud . . . shall be stated with particularity." CR 9.02.
The April 3, 2012 Order granting Rite Aid's Motion to Dismiss Plaintiff's Fraud Claim for Failure to State a Claim does not reveal the basis for the relief granted. We may sustain an action by the trial court, however, for any reason supported by the record. Old Republic Ins. Co. v. Ashley, 722 S.W.2d 55, 58 (Ky. App. 1986) (citation omitted). In addition to the other elements set out in United Parcel Service Co., Whitley must demonstrate that Rite Aid 1) made a false, material representation for the purpose of inducing her to act, and 2) that she acted upon the false representation. These elements are not supported by the record. Whitley contends that Rite Aid improperly characterized her act of applying for other employment as an express or tacit resignation from her employment with Rite Aid. Even if true, these facts cannot reasonably be construed as Rite Aid inducing Whitley to act, nor can they be characterized as Whitley relying on a false representation. Having concluded that Whitley could not prevail on a claim of fraud, we find no error on this issue.
For the foregoing reasons, we AFFIRM the January 6, 2013 Opinion and Order of the Fayette Circuit Court.
ALL CONCUR. BRIEF FOR APPELLANT: Bradley Guthrie
Harrodsburg, Kentucky
BRIEF FOR APPELLEE: George J. Miller
Lexington, Kentucky