Mankin Media Systems, Inc. v. Timothy Corder

Citation: Not availableDocket: M2021-00830-COA-R3-CV

Court: Court of Appeals of Tennessee; June 30, 2022; Tennessee; State Appellate Court

Original Court Document: View Document

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The Court of Appeals of Tennessee reversed a trial court's decision that affirmed an arbitrator's award in a case involving Mankin Media Systems, Inc. and its former employee Timothy Corder. Mankin, an audio, video, and lighting systems integration company, had alleged that Corder breached contract provisions outlined in an employee handbook, which included an arbitration clause. However, the appellate court found that the handbook did not constitute an enforceable employment contract, thus invalidating the trial court's order to arbitrate the dispute. Corder had downloaded proprietary client information before leaving Mankin for a new job at One Diversified, LLC, and Mankin subsequently sued him for breach of contract, breach of fiduciary duty, intentional interference with business relationships, and conversion. Corder contested the binding nature of the handbook and maintained that his employment was at-will based on an oral agreement. The appellate court's ruling emphasized the lack of enforceability of the handbook, leading to the reversal and remand of the case.

Mr. Corder's counter-complaint alleges that Mankin breached their oral contract by withholding earned commissions prior to Corder's departure. The dispute went to arbitration, where on April 16, 2021, the arbitrator ruled that the employee Handbook was not a binding contract and dismissed Mankin's lawsuit. Corder was awarded $23,032.15 in damages and $3,058.19 in interest. Mankin subsequently filed a motion to vacate the arbitration award, claiming the arbitrator exceeded his authority by finding the Handbook unenforceable yet proceeding with arbitration under its clause. On May 24, 2021, Corder sought to affirm the award. The trial court heard both motions on June 14, 2021, and affirmed the arbitrator's decision on June 28, 2021. Mankin appealed, raising issues regarding the trial court's order to arbitrate based on the Handbook, its refusal to amend the prior order after the arbitrator's ruling, the confirmation of the award despite the arbitrator's findings, and the trial court's jurisdiction over the award without a valid arbitration agreement. The key legal question in the appeal is whether the Handbook constitutes a valid contract. If it does, the trial court's arbitration order stands; if not, the court erred in ordering arbitration instead of a trial. The existence of a contract is a legal question reviewed de novo, with Tennessee law requiring specific language in an employee handbook to demonstrate the employer's intent to be bound. Without such binding language, the handbook cannot form part of an employment contract, establishing a high standard for proving the employer's intent.

Determining whether an employee handbook constitutes an enforceable employment contract hinges on the specific language within the handbook. Courts utilize contract interpretation rules, focusing on the handbook's text and its ordinary meaning, while considering the entire agreement. The Handbook explicitly states in its "Foreword" that it is not an employment contract and does not confer any rights to continued employment. It further clarifies that all terms and conditions are subject to change and that at-will employment status can only be altered by a signed, written agreement, which is absent in this case. Courts will not interpret a handbook as containing enforceable obligations if it explicitly states it is not a contract or allows for unilateral changes by the employer. As the Handbook clearly indicates its non-contractual nature and the potential for unilateral modification, it cannot be considered a valid contract. Although the trial court found the Handbook to be non-enforceable, it incorrectly enforced the arbitration provision. Without a valid contract mandating arbitration, the trial court had no grounds to compel arbitration; thus, the case should proceed through litigation in court. The appellate court reversed the trial court's order affirming the arbitrator's award and remanded the case for further proceedings, with costs of the appeal split between the parties.