will, ordinarily otherwise permitted by New York law. See Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 514 N.Y.S.2d 209, 506 N.E.2d 919 (1987); Murphy v. American Home Products, 58 N.Y.2d 293, 301, 461 N.Y.S.2d 232, 448 N.E.2d 86 (1983).
McGrane pinpoints no oral promise which is quoted verbatim. He refers to no specific statements described in detail which might constitute a contract made by a specific person at a specific time and place or in the presence of other specified persons.
Printed or otherwise reproduced documents distributed by an employer to employees are likely to have been carefully prepared and the circumstances may indicate that they are or would be likely to be relied upon by employees in seeking or continuing employment. See generally Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 457 N.Y.S.2d 193, 443 N.E.2d 441 (1982); Pincus v. Pabst Brewing Co., 893 F.2d 1544, 1549 (7th Cir. 1990). Here, however, no written material distributed to McGrane appears to grant tenure.
Absent written or oral agreements or corporate documentation expected to be relied upon, New York law precludes inferring a tenure which would freeze job property rights for particular employees once hired.
My conclusion in this respect is in accord with a decision involving similar claims against the Digest in this court in O'Connor v. Readers Digest, 92 Civ. 7414 (S.D.N.Y. March 10, 1993) (Brieant, C.J.).
McGrane contends that a contract can be implied permitting him to perform duties as a Certified Internal Auditor and Certified Fraud Examiner, and as Chief Internal Auditor for the Digest. In support of this claim, McGrane's complaint cites various Digest documents describing the functions of such auditors as McGrane, and setting forth professional standards drawn from external sources. Citing Wieder v. Skala, 80 N.Y.2d 628, 593 N.Y.S.2d 752, 609 N.E.2d 105 (1992), McGrane asserts that these professional standards constitute the core of a binding contractual relationship between McGrane and the Digest implied by law. McGrane seeks to show violation of these standards through the device of a lengthy narrative describing extensive internal bureaucratic warfare - a narrative liberally peppered with negative characterizations and adjectives.
The New York Court of Appeals in Wieder v. Skala held that a New York law firm could not dismiss an associate for reporting or threatening to report a violation of the Code of Professional Responsibility, treating that Code as a core part of the professional relationship created within a law firm. In reaching this conclusion, the Court relied on DR 1-103, requiring a lawyer possessing knowledge of such an ethical violation to report such knowledge to a proper tribunal, subject to exceptions not relevant here.
The Code of Professional Responsibility was not a privately issued set of standards or rules, but rather was adopted by the respective Appellate Divisions of the New York Supreme Court on September 1, 1990 with amendments. McKinney's New York Judiciary Law, book 29 at 350 (1992). The judiciary, consisting of lawyers in fact though not by constitutional requirement, is also the chief guardian looked to by the public to seek to uphold the ethics of its own profession. See generally Stone, "The Public Influence of the Bar," 48 Harv. L. Rev. 1 (1934).
None of these factors which support an implication that a private employment contract incorporates certain external ethical standards applies to industry-developed standards for accountants. As privately promulgated guidelines, these are not inherently binding on the citizenry.
Delegation of powers of sovereign compulsion to private entities - no state or federal law has this effect in the matter before me - might well be constitutionally suspect.
In exercising diversity jurisdiction, I am directed to attempt to predict what the state's highest court would be likely to do if confronted with a similar question.
In doing so, I look to relevant statutes and other documents,
applicable decisions such as Wieder itself, and the purposes of state statutory and judicial decisions which can be inferred from their nature and background.
The Court in Wieder goes to substantial lengths to confine its reach primarily and possibly exclusively to cases involving legal ethics. Extending it beyond that terrain could effectively outflank Murphy, Sabetay, supra, and similar New York cases.
Even if Wieder is to be extended beyond cases involving disregard of legal ethics, the present complaint furnishes no grounds for doing so.
Wieder, of course, involved judicial imputation of terms to a contract not explicitly or perhaps intentionally agreed to by the parties, leading to remedies they quite possibly did not contemplate and might have rejected. The courts utilize this means for imposing obligations inherent in basic background principles of our legal system - e.g., that power implies responsibility, and that intervention is on occasion necessary to avoid abuse of that power. A leading example is the duty of fair representation on the part of labor organizations granted exclusive bargaining authority by statute (29 USC § 159), originally recognized in the landmark decision of Steele v. Louisville & Nashville R. Co., 323 U.S. 192,
89 L. Ed. 173, 65 S. Ct. 226 (1944). No duty to innocent third parties is implicated in the present case which might justify Steele-like or Wieder interpolation of nonconsensual provisions into contracts.
The "whistle blower" statute (N.Y. Labor Law § 740), relevant by analogy,
has not been interpreted as incorporating professional standards as grounds for permitting lawsuits not otherwise authorized by the statute. See Easterson v. Long Island Jewish Medical Center, 156 A.D.2d 636, 549 N.Y.S.2d 135 (2d Dept. 1989), leave to appeal denied 76 N.Y.2d 704, 559 N.E.2d 677, 559 N.Y.S.2d 983 (1990) (involving Education Law § 6509(9), 8 NYCRR 29.1(b)(8) relating to confidentiality of medical records).
Custom, industry practice and professional standards may be relevant for many purposes, including interpretation of otherwise vague documents. See Delbrueck & Co. v. Manufacturers Hanover Trust Co., 609 F.2d 1047, 1051 (2d Cir. 1979). Interpolation of such matters into a contract when pursuant to and not contrary to the inferable objective of the document, is often "necessary and proper"
to permit it to function. See Llewellyn, "Meet Negotiable Instruments," 44 Colum. L. Rev. 298, 322 (1944) (attempt to spell out all aspects of implementation of a document in advance will end with multi-volume encyclopedia of law and procedure "or else with plain exhaustion"). Otherwise, endless detail and sub-detail would become necessary in every document. See Manning, "Hyperlexis and the Law of Conservation of Ambiguity," 36 Tax Law. No. 1 at 9 (Fall 1982). Broad contractual language relating to the subject matter at issue might justify use of industry practice, perhaps evidenced by private professional pronouncements if applicable, to fill any gaps in the contract at issue. See Farnsworth, "Disputes Over Omissions in Contracts," 68 Colum. L. Rev. 860 (1968).
The fact that a document describing professional standards is distributed by a party does not, however, itself create a contractual commitment to follow those standards. To hold to the contrary would have a chilling effect on dissemination of information where no contractual intent can be inferred, and would run contrary to the "sanctity of contractual arrangements," Oreck Corp. v. Whirlpool Corp., 579 F.2d 126, 133 (2d Cir.) (en banc), cert. denied 439 U.S. 946, 58 L. Ed. 2d 338, 99 S. Ct. 340 (1978). Predictability vital to commercial usefulness of the contracting process would suffer without counterbalancing benefits. See Jones, "The Jurisprudence of Contracts," 44 U. Cinc. L. Rev. 43 (1975).
McGrane complains that the Digest would not permit him to make reports to everyone to whom he wished to report, or to fulfill all of the functions contained in internal and professional guidelines concerning the duties of his position. Descriptions of duties do not ordinarily constitute enforceable promises to employees that they are legally entitled to perform all functions described. See Watkins v. McConologue, 1992 U.S. Dist. LEXIS 7939, 1992 WL 131044 (S.D.N.Y. Apr. 13, 1992), aff'd 978 F.2d 706 (2d Cir. 1992).
An employer may ordinarily relieve an employee of duties without causing cognizable injury to the employee, so long as the employee is paid.
Were the contrary the law, internal bureaucratic arrangements would become frozen into fiefdoms protected by proprietary rights to turf
with obvious counterproductive consequences for the employer, and for the economy. It might indirectly have deleterious consequences for the viability of the enterprise itself, and its capacity to continue to make employment available.
Even were the law favorable to McGrane on this issue, the factual basis alleged for its application is inadequate: the only actual fraud set forth in any detail in the complaint relates to a matter arising in Italy where the perpetrators were dismissed during McGrane's tenure. Another incident relates to alleged conflicts of interest on the part of Digest employees having asserted connections with other companies, matters which the Digest could waive at its discretion and which are hardly of public interest. No coverup can be claimed in either situation.
McGrane's reliance on New York's "whistle blower" statute, N.Y. Labor Law § 740, must fail unless he can show that he reported or wished to report a substantial and specific danger to public health or safety. Financial improprieties within a corporation do not constitute threats to public health or safety under Labor Law § 740. See Remba v. Federation Employment & Guidance Service, 76 N.Y.2d 801, 559 N.Y.S.2d 961, 559 N.E.2d 655 (1990).
McGrane hints that information he possesses and that was somehow suppressed suggests risks involving food products arising from improper behavior on the part of the Digest. McGrane may supplement his pleadings with specific factual allegations (not legal conclusions) in this regard within the next 45 days.
McGrane may also wish to set forth in detail whether or not he reached, or attempted to reach, supervisors or outside authorities concerning any hazardous behavior he contends he had discovered at the Digest. If he did not do so, he may wish to set forth in detail what forms of restraint, if any, he alleges the Digest employed to prevent him from doing so. Such information should consist of documents or descriptions of what was said during specific conversations, including who participated, when and where. Such information might also shed light on whether or not there was an arrangement, agreement or condition which required McGrane to leave the Digest quietly without revealing to others facts known to him, and whether there are circumstances indicating the illegality of such arrangement, agreement or condition.
McGrane argues that the Digest coerced him to leave quietly, and he infers that he was deterred from reporting to proper authorities unspecified information suggesting ongoing wrongdoing within the Digest which had been covered up; he appears to indicate, without setting forth details, that he was forced to enter into a commitment to withhold from proper authorities information with respect to illegal activities within the Digest.
Any arrangement or agreement, formal or informal, designed to preclude a former employee from reporting wrongdoing by a former employer to proper authorities would be unenforceable by virtue of 18 USC §§ 3,4, and 1501-1517 as well as other statutory provisions, some of which are cited above, and because of the principles discussed in part II above, and their implications. Indeed, even judicially approved agreements calling for confidentiality may be modified where clearly called for by an overriding public interest. See generally Seattle Times v. Rhinehart, 467 U.S. 20, 81 L. Ed. 2d 17, 104 S. Ct. 2199 (1984); Meyer Goldberg, Inc. v. Fisher Foods, 823 F.2d 159 (6th Cir. 1987); In re Reporters Committee, 249 U.S. App. D.C. 119, 773 F.2d 1325 (D.C. Cir. 1985).
Restrictions on discussion of the outcome of litigation do not carry the same risks as restraints on freedom of expression regarding underlying wrongdoing, if any. While such matters as monetary amounts of settlements, or even their very existence, may be of little or no genuine public interest, the courts can hardly be called upon to enforce an employer-employee exit agreement for the covering up of wrongdoing which might violate criminal laws. See generally Shelley v. Kraemer, 334 U.S. 1, 92 L. Ed. 1161, 68 S. Ct. 836 (1948).
Disclosures of wrongdoing do not constitute revelations of trade secrets which can be prohibited by agreements binding on former employees. See generally Winston Research Corp. v. Minnesota Mining & Mfg. Co., 350 F.2d 134, 137-38 (9th Cir. 1965); Integrated Cash Management v. Digital Transactions, 920 F.2d 171, 173 (2d Cir. 1990), quoting Eagle Comtronics v. Pico, 89 A.D.2d 803, 803-04, 453 N.Y.S.2d 470, 472 (4th Dep't 1982), also quoting Restatement of Torts § 757, comment b; Licata & Co. v. Goldberg, 812 F. Supp. 403 (S.D.N.Y. 1993); Brown & Swanson, "Maintaining the Competitive Edge: Lawful Protection of Trade Secrets," 10 Employee Rel. L.J. 374 (Winter 1984-85).
I afford McGrane 45 days during which he may supplement the complaint by furnishing concrete, specific details concerning any reports concerning ongoing wrongdoing, if any, which he made or attempted to make, to whom, when, where and by what means and with what adverse consequences, if any.
McGrane asserts that his severance package was not furnished in full, but attaches no written agreements containing provisions violated, no specific quotations or descriptions of oral commitments including who made them, when, where and in whose presence, no numerical calculations of underpayments, and no other specific information which would permit me even to consider claims based on this assertion. McGrane may furnish such information if it exists during the 45 day period described.
The Digest relies on a release signed by McGrane. McGrane asserts that his assent was coerced, alleging that he had the document only a matter of days. McGrane may furnish during the 45 day period any information available to him which would show actual coercion. He may indicate whether he consulted counsel or had the opportunity to do so.
Dated: White Plains, New York
May 27, 1993
VINCENT L. BRODERICK, U.S.D.J.