Theo Yeitrakis v. Schering-Plough Corporation, Walter Gough, and Frank Markovich

Citations: 51 F.3d 287; 1995 U.S. App. LEXIS 18177; 1995 WL 151799Docket: 93-2187

Court: Court of Appeals for the Tenth Circuit; April 6, 1995; Federal Appellate Court

Combined Opinion SummaryCombined Opinion Original

EnglishEspañolSimplified EnglishEspañol Fácil

Unpublished opinions can now be cited if they provide persuasive value on a material issue, provided a copy is attached or shared during oral arguments, as per the General Order of November 29, 1993. In the case of Theo Yeitrakis v. Schering-Plough Corporation, the appeal involves Yeitrakis's dismissal from his position with the company, under jurisdiction based on diversity of citizenship. Yeitrakis initially asserted five claims, including breach of implied employment contract and defamation, but the district court dismissed all except the breach claim and a negligent misrepresentation claim, which Yeitrakis chose not to pursue.

After a trial on the remaining claim, the district court ruled in favor of Schering-Plough, concluding that while an implied employment contract existed, the company had reasonable grounds for termination due to policy violations. Yeitrakis appealed the judgment regarding the breach of contract and the summary judgment on the defamation claim. Schering-Plough argued that the district court erred by finding an implied contract necessitating a "for cause" discharge.

The appellate court reviews legal conclusions and summary judgments de novo, while deferring to the trial court's factual findings unless clearly erroneous. The case applies New Mexico's substantive law due to its diversity nature. Yeitrakis had expressed a desire for long-term, non-terminable employment during his interview process, supported by assurances from Schering-Plough's management, despite an employment letter indicating that either party could terminate the agreement at any time. He began employment in May 1983.

In July 1989, Frank Markovich observed discrepancies in Appellant's field activity reports and sales performance, leading to an investigation with Walter Gough. The investigation, concluded in August 1989, revealed that although the Appellant's reports suggested extensive travel, he was primarily in Albuquerque and at home during work hours. Additionally, several doctors denied signing the physician call reports submitted by Appellant. His expense reports also indicated false hotel stays and excessive travel mileage. As a result, Appellant was terminated on September 11, 1989, for falsifying records and failing to report to work, as outlined in Schering's employee handbook.

The court considered whether there was just cause for Appellant's termination. Schering-Plough contended that an implied employment agreement requiring cause for termination did not exist, arguing for "at will" employment, which allows dismissal for any reason under New Mexico law. However, if sufficient cause for dismissal was established, the nature of the employment agreement would be irrelevant. The investigation revealed serious infractions, including falsifying signatures and misusing expense accounts, justifying the termination.

On appeal, Appellant argued that Schering-Plough improperly changed its defense by alleging additional reasons for discharge not known at the time of termination, citing New Mexico law that requires a specified cause for wrongful termination. However, the court found that Appellant was adequately informed of the investigation's findings and that these findings were integral to the trial's outcome, concluding that Schering-Plough's actions complied with New Mexico law.

Appellant argues that the evidence does not support a reasonable belief that he intentionally falsified documents or acted fraudulently. He contends Markovich's investigation failed to confirm actual physician calls and asserts he never falsified signatures, claiming Schering-Plough did not specify which signatures were in question for verification. Appellant emphasizes that work hours were flexible, countering that Markovich's observations at his home do not substantiate claims of deceptive sales activity. He admits to mistakenly switching days in his field activity and mileage reports but asserts he was not allowed to explain these errors or his motel stay expenses. Furthermore, he notes that the employee handbook allowing for discharge due to falsification was adopted after he began employment. 

In assessing whether Schering-Plough had just cause for Appellant's discharge, the court indicates that it must only show reasonable grounds for its actions. The record supports the district court's finding of such grounds, deeming Appellant's dismissal appropriate even under a strict standard. Additionally, Appellant's defamation claim based on compelled self-publication was dismissed, with the court noting a lack of authority in New Mexico to support such a claim. The court's analysis aligns with established precedents for new legal theories in state law. The district court's judgments are affirmed, with the ruling noted as non-binding precedent except under specific legal doctrines.