Hartnett v. Papa John's Pizza USA, Inc.

Citations: 912 F. Supp. 2d 1066; 2012 WL 6004178; 2012 U.S. Dist. LEXIS 170881Docket: No. CIV 10-1105 JB/CG

Court: District Court, D. New Mexico; October 29, 2012; Federal District Court

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Defendant Papa John’s filed a Motion for Summary Judgment on August 29, 2012, regarding Plaintiff Timothy Hartnett's breach of contract claim. The Court held a hearing on October 15, 2012, focusing on two main issues: whether Papa John’s modified Hartnett’s at-will employment contract to require termination only for cause and according to specific procedures, and whether an implied contract existed that altered the express terms of his employment. The Court found that genuine issues of material fact existed, supporting Hartnett's claims, and thus denied Papa John’s motion.

The Court noted that both the Management Agreement and the Corporate Restaurant Team Member Handbook stated Hartnett’s employment was at-will but did not explicitly rule out the possibility of modification through communication. Hartnett had attended training workshops detailing required procedures for employee termination, and a supervisor had assured him that as long as he adhered to company policies, his job was secure. Furthermore, a memorandum from a supervisor underscored mandatory policies for terminating management team members like Hartnett.

Given the context of Hartnett’s employment and the evidence presented, the Court concluded a reasonable jury could determine that Hartnett reasonably relied on Papa John’s representations regarding termination expectations. Additionally, there was evidence suggesting Papa John’s lacked just cause for termination and did not adhere to the implied procedures. Consequently, the Court denied the motion for summary judgment, allowing Hartnett’s claims to proceed. Hartnett had been employed since August 17, 1998, and was terminated on October 17, 2007, for allegedly falsifying company documents.

Hartnett's Management Agreement with Papa John’s stipulates that it does not establish any contractual rights regarding his employment or benefits, allowing either party to terminate the employment relationship at any time for any reason. Hartnett acknowledged the agreement as the basis for his employment consideration. The Papa John’s Corporate Restaurant Team Member Handbook clarifies that it does not constitute an employment contract and reinforces the at-will nature of employment, permitting team members to resign or be terminated at any time without notice. It supersedes prior handbooks and outlines corrective actions for violations of conduct, including separation of employment, while maintaining the at-will relationship.

During his tenure, Hartnett believed his employment would only be terminated for cause or underperformance, a belief influenced by a conversation with Regional Vice President Dan Braafhart. Braafhart assured Hartnett that as long as he performed well and adhered to company policies, he would have job security. This assurance led Hartnett to downplay concerns about a Confidentiality and Non-Competition Agreement he signed in 2003, which recognized his at-will employment and imposed an eighteen-month restriction on working in the pizza industry post-employment.

Hartnett believed he would only be terminated for cause or underperformance, based on Papa John’s internal program "Managing Within the Law," which is mandatory for managers and officers. He attended this workshop five times and received a participant’s guide. The workshops, led by human resources officers, indicated that terminations typically resulted from policy violations or poor performance without mentioning at-will employment. Hartnett was informed of three guidelines for due process: (i) acting fairly, which involves legitimate, non-discriminatory reasons, considering performance records, and external circumstances; (ii) acting consistently, ensuring uniform application of corrective actions without personal bias; and (iii) acting legally, which includes prompt documentation of infractions and fair corrective actions. The training emphasized that company guidelines apply equally to all employees and managers should not overlook infractions based on personal preferences. Before terminating an employee, specified actions must be taken, such as gathering facts, assessing consistency with other cases, and consulting human resources. The Training Guide outlines "Due Process" guidelines, which are not mandatory but encouraged for fairness, and includes suggested corrective actions without mandating specific responses to infractions.

The Training Guide outlines procedures for separating employees from the company due to policy violations or poor performance, emphasizing the need for adherence to specific guidelines for each scenario. For policy violations, three preliminary actions are recommended: gathering facts, assessing the appropriateness of separation, and seeking support resources. In contrast, five more detailed steps are provided for performance-related separations. The guide also includes directives for conducting separation meetings, highlighting essential practices like maintaining privacy, having a witness, and clearly stating the meeting's purpose. In a deposition, Smith, the human resources director for Papa John’s, characterized the "Managing Within the Law" program as a training workshop rather than a policy, affirming that terminations stem from poor performance and policy violations. Hartnett, who worked at Papa John’s for nine years, was expected to follow company policies on employee discipline and confirmed that the human resources department played a key role in ensuring just cause for terminations. He was aware that violations of the company’s code of ethics could lead to termination and believed that dismissals would occur only for valid reasons. The incident leading to Hartnett's termination involved his report of a work-related accident, which was mishandled by Vice President Thompson, culminating in an investigation that excluded Hartnett from participation and uncertain communication prior to his termination.

Employees were interviewed regarding Hartnett's presence at specific stores on September 22, 2007, approximately three to four weeks after the date in question. Store managers collected statements from their employees about Hartnett's visits, which was atypical as investigators usually conducted interviews directly. Thompson, who led the investigation, concluded that Hartnett had falsified mileage on his expense reports for September 2007. While Papa John's lacked a formal policy on mileage reimbursement forms, the company expected honesty from its employees. Hartnett was trained differently than other employees in filling out these forms. Jackson, a human resources expert, did not participate in the investigation, which deviated from company policy, and later acknowledged that some gathered statements were flawed. The human resources director who approved Hartnett’s termination was unaware of Hartnett's work-related injury and past integrity. Hartnett was terminated on October 17, 2007, at a Wendy’s restaurant. Afterward, he discovered a store inspection form that he had conducted on the disputed date, prompting further investigation by Thompson into his activities on September 22, including verifying his hotel stay. 

Procedurally, Hartnett filed a complaint on October 8, 2010, in state court, which was removed to federal court on November 19, 2010. He amended his complaint on March 9, 2011, alleging breach of implied contract, retaliatory discharge, defamation, and punitive damages. Hartnett moved for summary judgment on May 25, 2011, while Papa John's filed a cross-motion on June 14, 2011. The court partially granted Hartnett’s motion on October 7, 2011, preventing relitigation of good cause but leaving the breach of implied contract and defamation claims pending. Shortly thereafter, Papa John’s stipulated to dismiss the defamation claim and sought summary judgment on the breach of implied contract claim, arguing there were no genuine material facts in dispute entitling them to judgment as a matter of law.

Papa John’s maintains that, according to New Mexico law, employment is typically at-will unless an express contract states otherwise. The company acknowledges an exception exists for implied contracts that may limit termination authority, particularly when the employer suggests that termination will only occur for just cause or has established specific termination procedures. Determining the existence of an implied contract involves examining the totality of the parties' relationship and the clarity of the employer's representations, which can be written or oral, though oral statements must be explicit. Papa John’s argues that no implied contract exists in Hartnett’s case due to contradictions with his management contract and the employee Handbook, asserting that Hartnett’s long tenure does not constitute sufficient evidence for an implied contract. Additionally, statements made by Braafhart regarding Hartnett’s promotion and concerns are deemed irrelevant, as they did not constitute a contractual promise. Even if an implied contract were found, Papa John’s claims it had just cause to terminate Hartnett for falsifying company documents, specifically regarding his expense report. The investigation conducted by Thompson and Jackson confirmed the falsification, which Hartnett was aware could lead to termination. Ultimately, Papa John’s argues that it acted within its rights to terminate Hartnett based on the circumstances.

Hartnett asserts that New Mexico law allows for at-will employment unless an implied contract exists, which may arise from employer statements indicating termination will only be for cause or from procedural protections prior to termination. He claims that despite the Handbook’s disclaimers, the overall context of Papa John’s communications and actions should determine the presence of a contractual obligation. Hartnett argues that any employer statements could create an implied contract stipulating that employment is terminable only for cause. He references specific statements made during the signing of the CNC Agreement and the Managing Within the Law workshops as evidence of an agreement requiring termination only for valid reasons, such as company policy violations or poor performance. He also cites deposition statements from Jackson to support his claim of an implied contract against termination without cause.

Furthermore, Hartnett contends that there was an expectation to adhere to particular procedures when discharging him, which he believes were violated during his termination. He emphasizes that the Managing Within the Law workshops indicated investigations would be confidential, a principle he claims was disregarded by Papa John’s communication with other managers during his termination process. Hartnett maintains that the reasonableness of his termination is a matter for a jury to determine, as there are multiple factors suggesting that a reasonable person might not have terminated him.

In response, Papa John’s argues that even if Hartnett’s statements are accepted as true, he cannot legally demonstrate an objectively reasonable expectation that his employment could only be terminated for cause or following specific procedures. They assert that at-will employment is presumed in the absence of a definite term and that the court must assess whether a reasonable jury could find that Papa John’s communications and conduct support such an expectation among employees.

Papa John’s asserts that Hartnett’s employment was mutually at-will, supported by the Management Agreement he signed, which explicitly states that it does not confer any contractual rights regarding his employment and allows termination at any time for any reason. The company references its Employee Handbook, which reiterates the at-will nature of the employment, permitting employees to resign without notice and allowing the company to terminate employment freely. Papa John’s argues that Hartnett's at-will status was never modified and that his reliance on implied contract arguments, based on prior case law, fails because the contract's language is clear and unambiguous.

Furthermore, Papa John’s rejects Hartnett’s claims that statements made by Braafhart during the execution of the CNC Agreement could imply a contractual obligation, citing New Mexico Supreme Court precedent that diminishes the significance of such statements in creating an implied contract. The company also argues that Hartnett’s references to the Managing Within the Law workshops do not establish that he was led to believe he could only be terminated for good cause or after certain procedures were followed, emphasizing that the information provided did not restrict the company’s right to terminate at will. Lastly, Papa John’s points out that a history of terminating employees for specific reasons does not negate its at-will termination rights.

Papa John’s maintains that it did not breach any implied contract by terminating Hartnett’s employment. They assert that Hartnett violated company policy by falsifying mileage on his expense report, a violation that justifies termination, and claim Hartnett was aware this infraction could result in his dismissal. During a hearing on October 15, 2012, the Court questioned whether the facts were uncontested, noting that neither party disputed the other's facts in their filings. Papa John’s confirmed it did not contest the facts presented by Hartnett, arguing that they are deemed uncontested and would remain so at trial. They further stated that even if Hartnett's facts are accepted as true, they do not create a triable issue. Papa John’s emphasized that there was no evidence of any promise regarding the duration of employment, asserting that employment is presumed to be at-will. The Management Agreement cited by Hartnett was characterized by Papa John’s as an express contract that did not alter the at-will presumption. The Court inquired whether the summary judgment motion relied on statements from Braafhart, to which Papa John’s responded that the outcome would remain unchanged even if Braafhart’s statements were true. They argued that Hartnett must overcome the presumption of at-will employment and demonstrate that the express contract should be disregarded or modified. Additionally, Papa John’s pointed out that case law supporting implied contracts typically involved situations lacking an express at-will employment agreement, distinguishing Hartnett’s cited case, McGinnis v. Honeywell, Inc., on the grounds that it involved an express contract that included specific conditions for at-will employment.

The Court explored whether New Mexico law allows corporate actions and statements to amend an express contract, to which Papa John’s acknowledged such cases exist. However, Papa John’s argued that no precedent supports modifying an express contract with an implied contract under the circumstances presented by Hartnett. They emphasized the distinction between Hartnett’s situation and typical cases involving implied contracts modifying at-will employment, asserting that Hartnett had an express employment contract. Papa John’s claimed that the statement made by Braafhart, which Hartnett relied upon, was not promissory and lacked the context for a bargained-for exchange. They compared Hartnett's reliance on managerial training to prior cases (Hartbarger and Zarr), where similar claims were rejected by New Mexico courts as insufficient to establish implied contracts. 

The Court noted that Hartnett's case appeared stronger than those in Hartbarger and Zarr due to the combination of Braafhart’s statements and managerial training, expressing concern over the implications of Braafhart’s oral statements. The Court observed that multiple managerial training workshops indicated a possible standard of termination for cause, contrary to Papa John’s characterization of the training program. Papa John’s maintained that company handbooks do not constitute contractual promises and contended that the standard for determining breaches of an implied contract should focus on their belief regarding Hartnett's actions, rather than what a reasonable person might conclude.

Hartnett must provide evidence that decision-makers at Papa John’s could not reasonably believe he falsified an expense report, as he acknowledges that such falsification warrants termination. Papa John’s claims that New Mexico’s jury instruction supports a “reasonable belief” standard for termination, akin to standards in discrimination cases. The Court noted it was unfamiliar with this standard in the context of implied contracts. Hartnett argued that an implied contract existed based on statements from Braafhart that mirror those in a precedent case (Kestenbaum v. Pennzoil) recognized by the New Mexico Supreme Court. He pointed out that Papa John’s policies, communicated through mandatory Managing Within the Law workshops, indicated termination would only occur for performance issues or policy violations, without stating that employment is at will. The Court questioned whether Hartnett's case relied solely on these workshops, suggesting that observing progressive discipline does not sufficiently establish an implied contract. Hartnett maintained that human resources officers confirmed that the practices discussed in the workshops are company policies, and he referenced the Smith Deposition as evidence of this. Additionally, he claimed that an express Management Agreement was modified in 2003 based on Braafhart’s statements, which influenced his decision to sign the CNC Agreement. Both parties concurred that an express contract existed in 1998, which Hartnett emphasized was critical, arguing that no precedents support the modification of an express contract through oral agreements.

Hartnett acknowledged that while an express contract could theoretically be modified orally, there are no reported cases supporting this. Papa John’s argued that neither the "Managing Within the Law" nor Braafhart’s statements sufficiently established an implied contract or a modification of the express contract. They contended that Braafhart’s statements did not refer to the CNC Agreement and were merely opinions. Papa John’s further asserted that the CNC Agreement’s lack of reference to the Management Agreement indicated it was not a modification. Additionally, they claimed that discussions in the workshops did not include Hartnett’s express agreement, making it impossible for a jury to conclude that the express management agreement was modified based on the evidence presented. Papa John’s pointed out that Hartnett failed to demonstrate how "Managing Within the Law" differed from other cases where company policies did not support implied contracts.

Regarding summary judgment, Rule 56(a) of the Federal Rules of Civil Procedure allows the court to grant summary judgment if there is no genuine dispute over material facts and the movant is entitled to judgment as a matter of law. The movant must first show the absence of evidence supporting the non-moving party's case. Once this is established, the non-moving party must provide specific facts indicating a genuine issue for trial. Merely resting on pleadings is insufficient; the party must cite particular materials from the record to support their claims.

Once a motion for summary judgment is properly supported, the opposing party must present specific facts demonstrating a genuine issue for trial, rather than relying on mere allegations from their complaint. Parties cannot evade summary judgment through conclusory statements, unsupported allegations, or speculation. Genuine factual issues must exist that a finder of fact could resolve favorably for either party to deny a summary judgment motion. A mere "scintilla" of evidence is insufficient; there must be substantial evidence that could reasonably support a verdict for the non-moving party. If the evidence is only colorable or not significantly probative, summary judgment may be granted. The court's role is to determine whether a genuine issue of material fact exists without weighing the evidence. It must view all evidence in the light most favorable to the non-moving party and cannot make credibility determinations.

In contract interpretation cases, the court aims to effectuate the parties' intentions, focusing on the substance of the agreement rather than its form. The primary goal is to ascertain and enforce the parties' intent as reflected in the contract's content. The parol evidence rule limits the introduction of external evidence that contradicts or supplements the written agreement.

In New Mexico, the interpretation of contracts hinges on whether the language is ambiguous. If a contract is deemed ambiguous, extrinsic evidence may be introduced to clarify the parties’ intentions. Conversely, if a contract is clearly defined, surrounding circumstances cannot alter its terms. The determination of ambiguity is a legal question; an ambiguity arises when mutual assent is unclear. If evidence is unequivocal, the court may interpret the contract as a matter of law. However, if the contract can be reasonably interpreted in multiple ways, it is considered ambiguous, and resolving this ambiguity becomes a factual inquiry. Fact finders may then consider extrinsic evidence, including the parties' conduct and intentions.

Regarding employment contracts, the general principle in New Mexico is that such contracts are at-will, allowing either party to terminate the agreement at any time for any reason without liability. Exceptions arise if the employment contract includes additional consideration beyond standard duties and wages or contains explicit provisions to the contrary. Evidence of wrongful termination or implied contracts can challenge the presumption of at-will employment. Should an implied contract be established, courts will infer the necessary consideration to uphold it, meaning the existence of an implied promise to terminate only for just cause does not require proof of consideration.

An implied employment contract does not necessitate explicit mutual assent to its terms; rather, if there is sufficient proof of a promise, consideration supporting the implied contract can be inferred by the court. An employer's actions can indicate the existence of an implied contract if they are reasonably interpreted by the employee as such. When assessing the formation of an implied contract, courts should evaluate the totality of the relationship, circumstances, and objectives to determine if the employee's belief in an implied contract is objectively reasonable. The objective reasonableness of an employee's expectations is crucial when considering summary judgment; a jury must find that there are indications that employees would only be dismissed following specified procedures and reasons.

An employer can secure summary judgment if the employee's expectations are not objectively reasonable. Promises or offers that can support an implied contract may arise from written representations, oral statements, or the conduct of the parties. An implied contract can be established even if an employee handbook disclaims any contractual obligations, as the totality of the parties' actions and statements, including handbook contents, can still indicate the creation of such obligations. However, in cases where an express contract exists that stipulates at-will employment, oral representations from management may not suffice to modify the express agreement, as illustrated in a cited Tenth Circuit case involving an independent contractor.

The contractor's employment agreement allowed for termination at any time without notice and explicitly stated that it could not be modified by oral representations. Despite this, the contractor claimed that statements made by his supervisor and a managerial employee implied a modification of his contract. During an investigation for alleged document forgery, the contractor received assurances that he would not face repercussions if he did not engage in the misconduct. The investigation ultimately revealed that while the contractor did not forge documents, he failed to prevent an employee from doing so, leading to his termination. The Tenth Circuit ruled that the supervisor's and manager's statements were insufficient to establish a plausible claim for relief, as they were not definite or explicit enough to create a reasonable expectation of an implied contract. The court emphasized that the contractor's express agreement, which disavowed any oral modifications and confirmed at-will employment, negated the belief that vague reassurances could alter the contract's terms. Furthermore, the New Mexico Supreme Court noted that when an express contract exists, there is no need to establish an implied contract if the employer violates the express terms. The court highlighted that the focus of the dispute should have been on the express contract rather than the existence of an implied contract.

The Supreme Court of New Mexico ruled that if Honeywell communicated specific termination practices to an employee, such that termination was conditioned upon adherence to those practices, and then failed to follow them, it constituted a breach of an express employment contract. This holds true even if the employee is otherwise considered at-will. In the case of McGinnis, the court affirmed that she was entitled to the procedures outlined in the realignment guide distributed to employees. Conversely, in Hartbarger v. Frank Paxton Co., the court rejected Hartbarger's claim of an implied contract based on an employee handbook and informal statements from a supervisor. The handbook lacked explicit language indicating that termination would only occur for just cause, and the employer's long-term retention practice did not imply a contractual obligation against at-will termination. Furthermore, the supervisor's comments regarding job security in the context of a potential sale were deemed mere opinions and insufficient to create a reasonable expectation of guaranteed employment. The court emphasized that without clear statements of policy, such informal communications cannot transform at-will employment into a contractual obligation for just cause termination.

Hartbarger acknowledged a friendly relationship with his supervisor during an informal conversation, which he recognized as "off the record," and understood that the supervisor lacked authority to bind a new owner in the event of a sale. The informal nature of the conversation diminished the possibility of creating an implied contract. Under New Mexico law, the Tenth Circuit ruled in Sullivan v. American Online, Inc. that an employee, Seree Sullivan, who received four documents confirming her at-will employment, could not reasonably claim an implied contract based on a personnel manual, management training, or oral representations. Sullivan's documents explicitly stated her employment was at-will and modifiable only through signed written agreements. The Tenth Circuit noted that the employee handbook reiterated the at-will nature of employment and did not support the existence of an implied contract, despite Sullivan's claims that America Online breached such a contract by not following its own policies regarding employee termination. The court concluded that the handbook's disclaimers negated any reasonable expectation of an implied alteration of her at-will status.

Sullivan recognized that the policies in her employee handbook were not consistently applied and acknowledged instances where employees could be terminated immediately, which contradicted her belief in an implied contract stemming from the handbook. Statements made by her supervisor regarding terminations being rare and contingent only on attendance issues or incompetence were insufficient to establish an implied contract. The Tenth Circuit noted that these statements were made in a context that did not alter her at-will employment status, especially given the explicit written declarations of her at-will status, including one that precluded modifications to this status. 

The court referenced a precedent in Clayton v. Vanguard Car Rental, where general statements in an employee handbook about harassment reporting and anti-retaliation did not constitute an implied contract, as they lacked the specificity required to create enforceable expectations. Similarly, in Zarr v. Washington Tru Solutions, the court found no reasonable expectation of an implied contract despite the employee's claims, as she had been informed of her at-will status and the handbook clarified that its provisions did not constitute an employment contract. Overall, the courts concluded that vague or non-specific statements in handbooks do not create implied contracts for employment security.

The employee did not claim that anyone informed her that her position was not terminable at will, nor could she reference any specific employer policy restricting termination rights. Her belief stemmed from her supervisory experience in disciplining subordinates and discussions with human resources regarding disciplinary procedures, which she argued implied a contract negating the employer's at-will termination rights. However, the New Mexico Court of Appeals found that her reliance on these experiences did not create a reasonable expectation of an implied contract for termination only for cause. Consequently, the employee failed to demonstrate a genuine issue of material fact to counter the motion for summary judgment regarding her breach of implied contract claim. In contrast, the Supreme Court of New Mexico has recognized that oral statements made during employment negotiations can create an implied contract for termination only for cause, as demonstrated in the Kestenbaum case where the employee was assured of long-term employment contingent on job performance. Although Kestenbaum lacked a formal written agreement, the totality of circumstances indicated an implied contract existed, despite the absence of relevant statements in the company manuals. Furthermore, prior precedent suggests that policy statements alone are insufficient to alter an at-will employment relationship.

The Supreme Court of New Mexico upheld that substantial evidence exists for a jury's conclusion that an implied employment contract requiring discharge only for good cause was established, based on Kestenbaum’s testimony and statements from Pennzoil’s officers regarding their termination practices. A personnel manual can create an implied contract if it governs the employer-employee relationship and an employee reasonably expects adherence to its procedures. Relevant evidence includes the manual's language, the employer's conduct, and oral promises. In Garcia v. Middle Rio Grande Conservancy District, the court determined that an employer's written policy constituted an implied contract, with no contrary express agreement from the employer. The policy was deemed sufficiently comprehensive and specific to instill reasonable employee reliance. In Newberry v. Allied Stores, a policy manual given during training was recognized as an implied contract despite the absence of an express employment agreement. The court noted that employees believed they could only be terminated for valid reasons, supported by the manual's language regarding control over terminations. Additionally, the Lukoski case found that an employee handbook modified an oral one-year employment agreement.

In Lukoski v. Sandia Indian Mgmt. Co., despite the absence of a written employment agreement, an oral agreement was deemed binding. After the employee commenced work as a general manager, he and other employees received an employee handbook, which they were required to acknowledge and agree to adhere to. This handbook outlined disciplinary procedures for suspending and terminating employees who failed to conform to company policies, and notably lacked any disclaimers regarding reliance on its contents. The New Mexico Supreme Court found substantial evidence that the handbook modified the employment relationship and established procedures that were not followed in the employee's case.

New Mexico law, specifically N.M.R.A. Civ. UJI 13-2306, dictates that if an employer agrees an employee can only be terminated for cause, the employer may still discharge the employee without breaching this agreement if they reasonably believe sufficient cause exists for the termination. The court's adoption of uniform jury instructions is presumed to reflect correct legal standards. A New Mexico Court of Appeal clarified that the standard for evaluating compliance with such an implied contract is both subjective and objective, requiring consideration of the employer's actual belief in the justification for termination and the reasonableness of that belief. This objective assessment is crucial, as an employer's subjective belief alone may not suffice if it lacks objective reasonableness. The jury instructions further elucidate these standards and reflect the committee's comments regarding the application of N.M.R.A. Civ. UJI 13-2306.

An implied agreement that necessitates good cause for employee termination requires the employer to demonstrate "reasonable grounds" for believing that sufficient cause exists for the termination, adhering to an objective standard of reasonable belief. In Kestenbaum v. Pennzoil, Co., the New Mexico Supreme Court found that an employer failed to establish sufficient cause under such an implied contract, as the investigation into alleged sexual harassment lacked credibility and relied on unverified information. Conversely, in Newberry v. Allied Stores, Inc., the court upheld an employer's decision to terminate an employee for violating a clear policy outlined in the policy manual, noting prior warnings and the serious nature of the infraction, which constituted grounds for immediate dismissal. The current case involving Hartnett and Papa John’s presents genuine issues of material fact, preventing the court from granting summary judgment in favor of Papa John’s, as all evidence from Hartnett must be accepted as true, with favorable inferences drawn for the nonmoving party.

A reasonable jury could find that Papa John’s communicated to Hartnett that termination would occur only for cause and after specific procedures, thereby implying the existence of an implied contract. Implied contracts arise when an employer creates reasonable expectations, which are assessed based on the clarity of the representations or conduct involved. Evidence suggests that Papa John’s may have breached this implied contract by failing to adhere to established procedures and terminating Hartnett without cause, leading the Court to deny Papa John’s Motion for Summary Judgment (MSJ).

Hartnett and Papa John’s entered into an express at-will employment agreement on August 17, 1998, which both parties acknowledge is valid and binding. The Management Agreement explicitly states that it does not create any contractual rights regarding employment or benefits, allowing either party to terminate the employment relationship at any time for any reason. Hartnett affirmed the agreement's terms when he signed it.

There exists a genuine issue of material fact regarding whether Hartnett’s at-will employment status was modified by statements made by Braafhart during the execution of the CNC Agreement and by the management training Hartnett received. While Hartnett argues that these factors altered his at-will status, Papa John’s maintains that both the Management Agreement and the Team Member Handbook explicitly confirm his at-will employment. Additionally, Papa John’s contends that Braafhart’s statements and the content of the management workshops did not reasonably imply a modification of Hartnett’s at-will status.

Hartnett's employment status is analyzed through five categories of relevant evidence, which collectively raise a genuine issue of material fact regarding whether his at-will employment contract was altered. Although some evidence alone does not indicate a change, it suggests potential modification when viewed together. 

1. Hartnett was asked to sign a CNC Agreement on January 7, 2003, which imposed an 18-month restriction on working in the pizza industry but did not explicitly address his employment status. The agreement stated that signing it was a condition of employment. 

2. Hartnett expressed concerns about the restrictive nature of the CNC Agreement and sought more time to consider it. Braafhart, the Regional Vice President, reassured Hartnett, stating that as long as he performed well and adhered to company policies, he could expect to remain employed indefinitely. 

3. Hartnett interpreted Braafhart’s assurances as a guarantee of job security, believing he would not need to worry about the CNC Agreement and would not have signed it without those reassurances. 

4. If only the Management Agreement and Braafhart's statements were considered, they would likely be deemed insufficient to change Hartnett’s at-will employment status, as established in Cory v. Allstate Ins., where similar nonspecific promises from supervisors were also found inadequate. 

5. Braafhart's statements, while lacking a specific time frame, could be viewed as part of a negotiated exchange for employment terms, paralleling cases like Kestenbaum v. Pennzoil, Co., where such statements influenced the understanding of employment agreements. 

Overall, the statements by Braafhart, while not definitive, contribute to the argument that a modification to Hartnett's at-will employment may exist under the circumstances.

Hartnett contends he would not have signed the CNC Agreement if not for Braafhart’s assurances of continued employment with Papa John’s, alleviating his concerns about future job security. However, unlike the case of Kestenbaum v. Pennzoil, Co., Hartnett was under an express at-will employment contract with Papa John’s. Braafhart’s assurances are compared to insufficient promises made in Cory v. Allstate Ins., where such statements did not alter the at-will employment arrangement. The Team Member Handbook further undermines Hartnett’s belief in an implied contract, as it contains clear disclaimers stating it does not create any contractual rights or modify at-will employment. Despite its provision for evaluating infractions and corrective actions, the overall language of the Handbook, supported by three disclaimers, indicates that at-will employment remains unchanged. Additionally, Hartnett did not sign or acknowledge receipt of the Handbook, unlike employees in other cases such as Sullivan v. Am. Online, Inc., which impacted the courts' consideration of disclaimers and at-will status.

An employee's acknowledgment of receiving an employment manual supports the binding nature of its terms on employment status. Hartnett, who received a handbook, understood that falsifying expense reports or breaching company ethics could lead to termination. The "Managing Within the Law" workshop, mandatory for management, did not clarify at-will employment status and emphasized that terminations were primarily due to policy violations or poor performance. Hartnett was led to believe he would receive due process in investigations before termination. His training at these workshops could reasonably create the expectation that Papa John’s would adhere to the procedures taught. However, the workshop materials did not explicitly define the discussed procedures as "company policy," referring instead to them as "Guidelines" and other non-promissory terms, suggesting that the information provided was not sufficient to alter Hartnett's at-will employment status.

In Sanchez v. The New Mexican, the court determined that an employee manual lacked the specificity necessary to establish an implied employment contract. Conversely, the "Managing Within the Law" materials included definitive directives instructing attendees to adhere to specific procedures for employee termination due to policy violations, thus resembling the binding nature of guidance in Newberry v. Allied Stores, Inc. Unlike the ambiguous termination policy in Lukoski v. Sandia Indian Mgmt. Co., which was deemed to modify an oral employment agreement, the guidelines in "Managing Within the Law" explicitly required compliance, suggesting a potential for creating an implied contract. The New Mexico Supreme Court has previously ruled that a personnel manual can establish an implied contract if it governs the employer-employee relationship and an employee can expect compliance with its procedures. Unlike the Team Member Handbook, the "Managing Within the Law" training did not clarify Hartnett's at-will employment status or indicate that it did not alter his employment terms. While "Managing Within the Law" addressed disciplinary and termination matters, Hartnett had already entered into an express at-will employment agreement prior to attending the training.

New Mexico case law establishes that a policy manual can create an implied contract regarding employment procedures in the absence of an express employment agreement, as seen in Newberry v. Allied Stores. Similarly, in Garcia v. Middle Rio Grande Conservancy, a personnel policy modified an oral employment agreement that lacked an at-will provision. However, in Sullivan v. Am. Online, the court found that training related to employee discipline did not alter the at-will status of the employee. Hartnett’s Management Agreement did not explicitly exclude the possibility of oral modifications, unlike the application in Sullivan. 

New Mexico courts, as noted in Hartbarger v. Frank Paxton Co., are cautious in recognizing implied contracts based solely on an employer's practice of terminating employees only for cause. Hartnett's assertion that his understanding of HR practices implies a contract modifying his at-will status is not sufficiently supported, as past practices alone do not establish a contractual obligation. Nonetheless, if Hartnett’s overall relationship with Papa John’s suggests a reasonable expectation of adherence to specific termination procedures, then the company's practices regarding discipline and termination may be relevant in evaluating whether Papa John’s breached any implied promises of consistent treatment. Additionally, a memorandum from Rick Woods, Papa John’s Operations Vice President, dated February 15, 2005, may also contribute relevant context regarding company policies.

Hartnett, promoted to Director of Operations in 2003, likely received and read the Woods Memo, which was signed by Rick Thompson, the Director of Operations, who also investigated and approved Hartnett's termination. The Woods Memo serves as an official communication detailing procedures for handling terminations of all management team members and states that the policies take immediate effect. It contains specific sub-headings indicating that outlined procedures must be followed, emphasizing adherence to all relevant company policies during terminations. Unlike the broader Managing Within the Law manual, the Woods Memo applies to various employment matters, including demotions, terminations, promotions, and hiring, with clear procedural requirements delineated for each action. The specificity of the Woods Memo, including provisions for pay grades upon demotion and weekly schedules for Directors of Operations, suggests it is of a non-promissory nature, establishing potential implied contractual obligations. This memorandum may govern Hartnett's relationship with Papa John’s due to its mandatory language and comprehensive coverage of employment procedures, differentiating it from other policy manuals that do not impose similar obligations.

The Woods Memo does not caution the Director of Operations against relying on its outlined procedures, similar to the manual in Lukoski v. Sandia Indian Mgmt. Co., which failed to warn employees regarding their at-will status. Although Hartnett's management role at the time of his termination in 2007 is not disputed, Papa John’s contends that his Management Agreement, established in 2003, remained applicable. The Court must interpret the facts favorably for Hartnett, inferring that the Woods Memo's procedures were relevant to his employment. Unlike the voluntary training in Sullivan v. Am. Online, Inc., the Woods Memo contains mandatory language requiring adherence to specific procedures when terminating salaried managerial employees, which does not indicate a modification of Hartnett’s at-will status.

The Court must evaluate the overall circumstances of Hartnett’s employment with Papa John’s to determine if an implied contract was formed, suggesting that he could only be terminated for cause and after following designated procedures. Evidence exists to support both sides' claims regarding the potential existence of such an implied contract. The Management Agreement explicitly states at-will employment, distinguishing this case from other New Mexico court decisions that recognized implied contracts. Ultimately, the presence of the Management Agreement, despite its at-will clause, may not preclude a reasonable jury from finding an implied contract governing termination procedures.

The trial focused primarily on the existence of an implied contract of employment, overlooking the clear existence of an express contract. Unlike the case in McGinnis v. Honeywell, Hartnett's at-will employment under the Management Agreement is not conditioned on adherence to specific policies. The Management Agreement does not explicitly deny the potential for modification through oral representations, contrasting with Sullivan v. Am. Online, Inc. and Cory v. Allstate Ins., where such disclaimers were present in the employment applications. Although Hartnett's at-will status is acknowledged in both the Management Agreement and the Team Member Handbook, his training and certain communications, like the Woods Memo, indicate that Papa John’s may have established specific procedures for termination. The Woods Memo, which outlines three procedures for termination—communication with upper management, implementing a corrective action plan, and following company policies—could be interpreted as establishing procedural requirements that Hartnett was expected to follow. Given the circumstances, these procedures, along with Hartnett's training from Managing Within the Law, could suggest that a reasonable expectation of adherence to these protocols existed, despite the lack of a formal modification of his at-will status.

The Court finds that there is a genuine issue of material fact concerning whether an implied contract existed between Papa John’s and Hartnett that required specific procedures to be followed for his termination and mandated termination only for cause. While an express at-will employment contract is typically strong evidence against such an implication, the Management Agreement did not preclude modifications through written or oral representations. The Team Member Handbook indicates at-will employment, but this alone does not settle the matter; the Court must consider all of Papa John’s communications and actions. 

Hartnett was required to participate in five management workshops, during which he was informed that specific procedures must be adhered to before terminating an employee for policy violations. The Woods Memo, distributed by Hartnett’s supervisor, included mandatory language about following company policies in termination processes. This documentation, alongside Hartnett’s managerial training, may reasonably be interpreted as establishing binding procedures for his employment.

The Court also notes that an employer cannot issue policy statements and only selectively enforce them. Hartnett points to ambiguous statements made by Braafhart, which, while referencing company policies, do not clearly establish an implied contract. These statements were made in the context of Hartnett’s decision to sign the CNC Agreement with Papa John’s. Unlike informal statements that failed to create an implied contract in previous cases, Braafhart’s comments were part of a negotiated exchange, potentially supporting the belief that Papa John’s had restricted its ability to terminate employees.

Despite the explicit at-will provision in Hartnett’s Management Agreement, the training he received and the Woods Memo he acknowledged receiving suggest that specific procedures were expected to be followed prior to termination.

An employer's ability to terminate an employee without cause appears inconsistent with the requirement that terminations not be based on personal dislike or discriminatory factors. The procedures outlined, such as notifying the Operations Vice President and human resources before termination, suggest a limited ability to terminate employees at will. In the context of Hartnett's relationship with Papa John’s, Braafhart’s statements could indicate that the company’s practices constrained its termination rights. Although Braafhart claimed that terminations should only occur for performance issues or policy violations, this viewpoint is unsupported by the broader context of Hartnett’s employment or any definitive disclaimers from Papa John’s regarding termination criteria. 

The Training Guide identifies policy violations and underperformance as the main reasons for termination but does not restrict reasons exclusively to these factors. Additionally, the Team Member Handbook includes various infractions that could lead to separation, not all of which were mentioned by Braafhart. The Woods Memo also lacks specific references to acceptable grounds for termination. Consequently, Braafhart's statements do not substantiate a claim that Papa John’s restricted its termination rights to underperformance or policy violation scenarios.

Given the totality of circumstances—including company communications and procedures—a reasonable jury could conclude that Papa John’s impliedly modified Hartnett's at-will employment status, suggesting that he could expect certain procedures to be followed during termination. Thus, there remains a genuine issue of material fact regarding whether an implied contract existed, obliging Papa John’s to follow its own policies in Hartnett's termination and to only terminate for cause.

Papa John’s has failed to meet its burden in the motion for summary judgment regarding Hartnett's claim of breach of an implied covenant related to termination procedures. The Court finds that there is sufficient evidence suggesting that Papa John’s may not have adhered to its internal policies when terminating Hartnett. Specifically, the Court emphasizes that all reasonable inferences must be drawn in Hartnett’s favor, highlighting a genuine issue of material fact about whether Papa John’s followed the proper procedures in its investigation.

Papa John’s claims it had reasonable grounds for Hartnett’s termination, asserting that he was aware that falsifying mileage reports could lead to his dismissal. However, Hartnett disputes this, arguing that the investigation was flawed and lacked thoroughness, failing to include first-hand witness statements and adequate verification of his mileage reports. Evidence presented indicates that statements collected during the investigation were unreliable, and it was revealed that not all necessary statements had been obtained.

Hartnett further contends that there was no clear policy regarding mileage reimbursement forms, leading to inconsistencies in how different managers trained employees in filling them out. This raises questions about the reasonableness of his termination, which Hartnett argues should be determined by a jury, as there are several issues that could lead a reasonable person to question the decision to terminate his employment.

At the hearing, both parties debated the correct standard for determining whether there was a breach of an implied contract, with Papa John’s asserting that its reasonable belief in the falsification of reports sufficed, while Hartnett proposed a two-pronged test requiring both the reasonableness of the termination and sufficient cause for dismissal.

UJI 13-2306 outlines the legal standard for determining if an employee's termination was justified. The court must assess whether Papa John’s belief that it had cause to terminate Hartnett was objectively reasonable. Although Papa John’s claims to have investigated alleged falsifications in Hartnett's mileage reports, it does not dispute that employees received varying training on the reporting process, indicating a lack of clear policy enforcement. This inconsistency parallels the case of Newberry v. Allied Stores, where all employees understood the violation leading to termination. Hartnett contests the adequacy of the investigation, citing that not all relevant stores were reviewed and that some statements were deemed unusable. The precedent set in Kestenbaum v. Pennzoil emphasizes the necessity of credible, first-hand evidence in supporting a termination decision. The court finds that these factors create a genuine issue of material fact regarding whether Papa John’s had a reasonable belief for Hartnett’s termination.

Additionally, there is a question of whether Papa John’s breached an implied contract regarding termination procedures. Although Papa John’s defends the termination based on alleged falsified documents, Hartnett argues that the Managing Within the Law workshops imply that proper investigation protocols should be followed, specifically that statements should be taken directly from employees. Hartnett maintains that Papa John’s failure to adhere to these procedures constitutes a breach of the implied contract.

Hartnett claims that an implied contract existed between him and Papa John's, which required a confidential investigation prior to his termination. He argues this contract was violated when Thompson informed Trujillo of the possibility of Hartnett's termination and when Hartnett was terminated at a public Wendy's restaurant. Hartnett believed he would only be terminated after being allowed to respond to allegations, as indicated in Managing Within the Law, and asserts that a thorough investigation should have occurred beforehand. He was not interviewed prior to termination, and while the Training Guide does not mandate an interview, it emphasizes fairness and understanding of policy violations.

Papa John's acknowledges Hartnett's termination was due to a policy violation but fails to show evidence of determining whether Hartnett understood this violation before his termination. The Incident Report does not indicate that Thompson or Jackson sought to confirm Hartnett's understanding of the situation. Although Papa John's claims that an investigation was conducted by gathering statements from other employees, Hartnett disputes the sufficiency of this investigation. He maintains that different managers trained in varying methods for completing mileage reports contributed to his confusion regarding the violation.

Additionally, Hartnett alleges that conducting his termination meeting in a public setting and disclosing it to Trujillo breached company privacy policies, as the Training Guide stipulates that separation meetings should be held promptly and privately. The lack of clarity on what constitutes "privately" in the Training Guide further complicates the situation. Overall, genuine issues of material fact exist regarding whether Papa John's adhered to its policies and any implied contractual obligations during Hartnett's termination process.

Hartnett's termination at a public Wendy's restaurant raises genuine issues of material fact regarding the appropriateness of that decision, suggesting potential inconsistencies with Papa John’s internal policies. The communication of Hartnett's impending termination to Trujillo may violate confidentiality protocols, and if an implied contract existed, Papa John’s has not demonstrated that no evidence supports Hartnett's claim of breach. The Court refrains from defining any implied contract between the parties but notes that Papa John's actions appear inconsistent with the procedures outlined in Managing Within the Law workshops.

The Court finds that while Papa John’s may have believed it had sufficient cause for termination, this belief could be deemed not objectively reasonable by a jury. The investigation leading to Hartnett's termination relied on second-hand statements, lacked a comprehensive review of relevant stores, and involved a policy violation that may not have been clearly understood by employees. Additionally, Papa John’s failure to interview Hartnett prior to his termination and to conduct a thorough investigation before making the decision may indicate a breach of an implied contract.

The relationship between Hartnett and Papa John’s, along with Braafhart’s statements and the requirements in the Woods Memo, could lead a reasonable jury to conclude that Hartnett was assured termination would only occur for cause and after following specified procedures. Consequently, the Court denies Papa John’s Motion for Summary Judgment regarding Hartnett’s breach of contract claim, as genuine issues of material fact remain unresolved. Both parties agree on the facts presented in their motions, with sections labeled as "Uncontested" or "Undisputed."

Hartnett’s Response, Papa John's Motion for Summary Judgment (MSJ), and Papa John's Reply do not contest each other's factual assertions regarding the breach of contract claim. During the hearing on October 15, 2012, Papa John's acknowledged that it does not dispute the facts presented by Hartnett and anticipates those facts will remain uncontested at trial. While neither party claims as undisputed that Hartnett received the Team Member Handbook, Hartnett testified he is familiar with it but contends the version submitted differs from what he received, lacking the first two pages. Although Hartnett admits to receiving a handbook, he has not contested any other portions except for the first two pages. Local rules indicate that facts in the memorandum are deemed undisputed unless specifically contested, which leads the Court to accept the provisions of the Team Member Handbook as valid since Hartnett does not dispute having received a handbook. 

Papa John's argues that statements from Braafhart are hearsay and should be inadmissible at trial, yet does not contest Hartnett's deposition that includes those statements. As per local rules, Braafhart’s statements will be accepted as undisputed due to the lack of contestation. Additionally, Papa John's has filed a motion to exclude Braafhart's statements as hearsay but indicated during the hearing that excluding these statements is not necessary for their success on the MSJ.

Papa John’s requested the Court to prioritize ruling on its Motion for Summary Judgment (MSJ) before addressing the Braafhart Motion in Limine (MIL). Both parties agreed to this order during a court session. Hartnett did not provide specific details of the Training Guide in his Uncontested Facts but cited it generally. Since Papa John’s did not contest Hartnett's facts, the Court accepted the Training Guide's provisions as undisputed. The Court noted that all material facts presented in the Memorandum are deemed undisputed unless explicitly challenged. 

Although the Court must consider reasonable inferences in Hartnett's favor, it also factored in the uncontested evidence from both parties when ruling on the MSJ. Hartnett claimed that HR typically seeks legal opinions before terminating employees, citing Jackson's deposition; however, Jackson did not corroborate this as a standard practice. Smith, the HR director, indicated in his deposition that HR reviews termination decisions but does not ensure documentation for every case. Again, Papa John’s did not contest Hartnett’s assertions, allowing the Court to accept his facts regarding his experience with the HR department and to construe reasonable inferences in his favor.

The Court accepts Hartnett's undisputed facts regarding his experience with Papa John's human resources, granting him favorable inferences as the non-moving party. Hartnett contends that team member statements should be obtained through interviews followed by written statements, citing his own experience and Jackson's deposition. Jackson acknowledges that statements were sometimes collected but notes that employees have previously been terminated without the opportunity to present their side. Hartnett argues that terminations at Papa John's typically occur for good cause. Papa John's has not disputed Hartnett's claims, allowing the Court to deem his facts admitted. The Court emphasizes that all material facts presented will be treated as undisputed unless specifically challenged, and while favoring Hartnett’s arguments, it will also consider uncontested evidence he presents. Hartnett minimally references the Woods Memo, which he uses to support his claims about HR practices in termination investigations.

Hartnett, employed as a Director of Operations, did not explicitly claim to have received the Woods Memo, dated February 15, 2005. Despite this, he was in the role at the time the memo was issued. During his deposition, Hartnett expressed concerns about Papa John’s employment practices, suggesting they were inconsistent with at-will employment, indicating he expected continued employment barring underperformance or policy violations. In considering Papa John's motion for summary judgment, the Court is required to interpret all reasonable inferences in favor of Hartnett, the non-moving party. 

The Court notes that all uncontested facts are treated as admitted, as Papa John’s has not disputed any details of the Woods Memo. The memo was directed to "Star Papa Directors of Operations," and although the term "Star Papa" is not defined, the Court assumes the memo's terms applied to Hartnett, given it was signed by his supervisor, Rick Thompson, who oversaw Hartnett's termination. The Court deduces that "OVP" refers to Operations Vice President and "PSD" to People Services Director, based on information from an Incident Report listing Thompson and Laura Jackson in those roles.

The Woods Memo is considered applicable to Hartnett's employment and termination due to its relevance to management procedures. Although Hartnett did not specifically assert that he received the memo, the Court concludes that it would have been received by him while serving as a Senior Director of Operations. Hartnett's employment began in a managerial capacity, and he was still in a supervisory role at the time of termination, further supporting the applicability of the Woods Memo. The local rules state that all facts in the memorandum are deemed undisputed unless challenged, which Papa John’s has not done regarding Hartnett's referenced status.

All facts presented in the parties’ motions will be considered undisputed by the Court. Jackson claims expertise in investigating employee misconduct and information gathering. Papa John’s accepts Hartnett’s factual assertions as true for its motion for summary judgment (MSJ). Under local rules, all material facts in the Memorandum are deemed undisputed unless specifically contested. In diversity jurisdiction cases, federal courts must apply state law and follow recent decisions from the state’s highest court. If no controlling decision exists, federal courts predict state court outcomes, using guidance from lower court rulings and other relevant precedents. Unpublished opinions, like Sullivan v. Am. Online, Inc., are not binding but may be cited for their persuasive reasoning. No party has requested a Mark V hearing or presented extrinsic evidence to warrant one. According to New Mexico law, a district court may consider extrinsic evidence to assess contract ambiguity, but no such evidence is expected to emerge from a Mark V hearing. The Court infers that Hartnett received and read the Woods Memo, which outlines mandatory procedures relevant to his training and company policy. This memo is critical in establishing Hartnett's claim of an implied contract. Reliance is an important factor in New Mexico's evaluation of implied contracts, as noted by the Tenth Circuit.

An implied contract may be established by an employer through actions or policy statements that encourage employee reliance, as noted in Lukoski v. Sandia Indian Management Co. The Supreme Court of New Mexico emphasizes that, during a motion for summary judgment, all reasonable inferences must favor the non-moving party, here Hartnett. If Hartnett neither received nor relied on the Woods Memo regarding the belief in an implied contract, the Court would likely grant a directed verdict for Papa John's. Additionally, if the Woods Memo is deemed inapplicable to Hartnett, it cannot link Managing Within the Law to Braafhart’s statements, leading the Court to favor Papa John's similarly, as illustrated in Paca v. K-Mart Corp., where reliance on an employee handbook not provided to the employee was insufficient to modify the employment contract.