Brooks v. Hilton Casinos Inc.

Page 757

959 F.2d 757

58 Fair Empl.Prac.Cas. (BNA) 590,

58 Empl. Prac. Dec. P 41,415,

121 Lab.Cas. P 56,892, 22 Fed.R.Serv.3d 465,

7 IER Cases 507

John L. BROOKS, et al., Plaintiff-Appellant, v. HILTON CASINOS INCORPORATED, et al., Defendant-Appellee.

John L. BROOKS, Plaintiff-Appellee, v. HILTON CASINOS INCORPORATED, d/b/a Las Vegas Hilton, a

Nevada Corporation, et al., Defendant-Appellant.

John L. BROOKS, Frederick Amie, Norman V. Ballard, Jack A.

Bosarge, Robert A. Dawson, Douglas S. Delling,

Alan Kirk Drake, Roger H. Dudley, et

al., Plaintiffs, and Equal Employment Opportunity Commission, Plaintiff-Intervenor-Appellant, v. HILTON CASINOS INCORPORATED, d/b/a Las Vegas Hilton, a

Nevada Corporation, Hilton Hotel Corporation,

Defendant-Appellee.

Nos. 90-15424, 90-15460 and 90-15623.

United States Court of Appeals Ninth Circuit.

Argued and Submitted April 2, 1991.

Decided March 12, 1992.

Larry L. Simms, Gibson, Dunn & Crutcher, Washington, D.C., and M. Kristina Pickering, Lionel Sawyer & Collins, Reno, Nev., for appellants-cross-appellees.

John C. McCarthy, Mary F. Richardson and James P. Stoneman II, John C. McCarthy and Associates, Claremont, Cal., and Brian Berman, Las Vegas, Nev., for appellees-cross-appellants.

John F. Suhre, E.E.O.C., Washington, D.C., for cross-appellant EEOC.

Appeal from the United States District Court for the District of Nevada.

Before: BOOCHEVER, KOZINSKI and O'SCANNLAIN, Circuit Judges.

KOZINSKI, Circuit Judge.

Plaintiffs, 37 dealers at Hilton's Las Vegas casino, were terminated as they came off their shifts on September 2 and 3, 1983. They sued and obtained jury verdicts on several state and federal law claims. Hilton challenges plaintiffs' recovery on a variety of grounds, but because of the way we resolve the state law issues we need not discuss the difficult federal and constitutional issues raised by Hilton in its appeal.

I. Breach of Contract and Bad Faith Discharge

Hilton challenges the damages awarded for breach of contract and bad faith discharge on the ground that plaintiffs were employed at will. We review the district court's determination of state law de novo. Salve Regina College v. Russell, --- U.S. ----, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991). By allowing the jury to consider whether these employees were covered by an implied contract, the district court implicitly held that the jury could reasonably have found such a contract. This was error. The damages award cannot stand because plaintiffs were at-will employees as a matter of Nevada law; the jury should never have been presented with the issue. Cf. Smoot v. Boise Cascade Corp., 942 F.2d 1408 (9th Cir.1991) (finding error under Washington law of district court's submitting similar claim to jury).

Plaintiffs were not employed under a written employment contract. Under Nevada law, the absence of a written contract gives rise to the presumption that employment is at will. See Vancheri v. GNLV Corp., 105 Nev. 417, 777 P.2d 366, 368 (1989) (per curiam). Plaintiffs had the burden of rebutting this presumption by establishing that they were employed under a contract terminable only for just cause. Plaintiffs' evidence fell into four broad categories: (1) plaintiffs' longstanding satisfactory employment with Hilton; (2) inducements extended by Hilton to retain plaintiffs, including employee benefits and a retirement plan that were among the best in the industry; (3) a progressive disciplinary system, and a past practice of terminating employees only in accordance with this system; and (4) assurances and representations by Hilton's management that plaintiffs were part of the "Hilton family" and would have their jobs as long as they performed them satisfactorily.

The Nevada Supreme Court has rejected claims of contractual employment based on very similar evidence. In Vancheri, the plaintiff was not employed under a written contract, but was told by management when he came to work that "he would have a long and successful association with the GNLV family." 777 P.2d at 367. GNLV had also established a progressive discipline system. The court rejected Vancheri's argument that these circumstances could rebut the at-will presumption. As to the first factor, it said:

Vancheri was never told that his employment would be terminated only for cause or that he would have employment for life or a specified period of time. General expressions of long term employment or job advancement do not convert an at-will employment contract to a termination only for cause contract.

Id. at 369. As to the second factor, it said:

Standardized disciplinary procedures are generally positive additions to a business. They provide employers a method of cautioning employees, and afford employees an opportunity to improve job performance in order to retain employment. They also create a general consistency and security in the work place. If we were to hold that the establishment of standard disciplinary procedures for employees is, in and of itself, sufficient to convert an at-will employee to an employee who can be fired only for cause, employers would be reluctant to continue to establish them.

Id. at 369-70. The court concluded that these two circumstances were, as a matter of law, insufficient to rebut the presumption of at-will employment. Id. at 370.

In Bally's Grand Employees' Federal Credit Union v. Wallen, 105 Nev. 553, 779 P.2d 956 (1989), the court rejected similar claims by a worker who argued that she had understood she would have her job as long as she performed her duties. She testified that she had indicated to the employer at the time of the application that she was seeking permanent employment and that she had entered into all of the employer's long-term employee benefit programs. Id., 779 P.2d at 957-58. The court held that this evidence "established nothing more than Wallen's subjective expectations of continued employment, and ... is legally insufficient to rebut the presumption of at-will employment." Id. at 958.

Like the plaintiffs in Vancheri and Bally's, plaintiffs here only offered evidence of their unilateral expectations, based on common employment policies that are compatible with either at-will or dismissal-for-cause-only employment. Generous benefit packages, disciplinary procedures and general expressions of encouragement by management are all generic features of many employment relationships. ¹ These factors are insufficient as a matter of Nevada law to rebut the presumption of at-will employment. ²

Thus, the only factor which the jury properly could consider in deciding the employment contract question is whether Hilton management agreed to terminate the plaintiffs only for failure to perform satisfactorily. ³ In American Bank Stationery v. Farmer, 106 Nev. 698, 799 P.2d 1100, 1102 (1990), the Nevada Supreme Court held that an employee may rebut the at-will presumption "by proving by a preponderance of the evidence that there was an express or implied contract between his employer and himself that his employer would fire him only for cause." We hold that the evidence was insufficient as a matter of law to establish such a contract, and thus that it was error for the jury to consider the question. Its finding of an implied contract must be reversed.

Plaintiffs place great reliance on the fact that pit boss Art Castle testified that he told every dealer he hired "They'd have to get so far out of line that there would be no cause for action other than to terminate them." RT VI 140 (paraphrasing shift boss Bud Haines's purported policy). Read in context, however, this testimony does not support the plaintiffs' case. Castle testified that "[e]very time a dealer was hired in the place, I gave them this spiel, more or less. I called it a 'spiel'--that they were part of the Hilton family and that the only way they could be terminated was to terminate themselves." RT VI 139-40 (emphasis added). But every one of the plaintiffs was employed at the casino (then the International) before Hilton took over in 1972. See RT V 3. Thus Castle's statement doesn't help plaintiffs; there is no evidence that he gave them "this spiel."

Indeed, there is evidence from the plaintiffs' testimony that they were not told they would have a job as long as they performed satisfactorily. The following excerpts from the trial are typical: ⁴

[Q:] "Do you know what Mr. Haines' policy was [regarding termination]?"

. . . . .

[A:] "You'd pretty much have to terminate yourself."

. . . . .

[Q:] "Did Mr. Haines ever directly tell you anything along those lines?"

[A:] "He never directly told, but I was very confident."

RT XII(A) 12 (Kustudia direct).

. . . . .

[A:] "It was the understanding that if you were to be terminated, you'd--if you were terminated, you'd terminate yourself.... That was just a feeling."

RT XII(A) 117 (Kustudia cross).

* * * * * *

[Q:] "Okay. At the time you were hired, you had no conversation with Mr. Haines about how long you would be employed. Is that true?"

[A:] "That's true."

[Q:] "And you had no discussions about the reasons for which you might be terminated. Is that true?"

[A:] "No, we had no discussions about--he gave me the list of rules. I assumed that if I followed all the rules and did my job properly, that I'd be okay."

RT XX 2-3 (Stanford cross).

* * * * * *

[Q:] "In other words he didn't say that you're going to work for Hilton until you drop dead or anything like that?"

[A:] "He didn't say that. You had that impression--as long as you done your job, you always had a job."

[Q:] "Now, that phrase gets used a lot in these depositions. Did he say that to you?"

[A:] "I don't recall if he said it, it was like his policy."

[Q:] "Written?"

[A:] "I never seen it written."

[Q:] "Did you ever hear him say it?"

[A:] "Personally, no."

RT XXIII 153-54 (Neill deposition).

A generalized understanding of job security based on satisfactory performance cannot create an implied contract of...