Seventh Circuit Affirms Dismissal of Producer’s Breach of Contract Lawsuit Against NBC

The Seventh Circuit has affirmed the dismissal of a breach of contract lawsuit against NBC by a producer for the show To Catch a Predator. The plaintiff had asserted that the network failed to follow its own internal guidelines in producing the show and had complained to network brass. Later she lost her position.

As a journalist and producer for NBC, one of Bartel’s main responsibilities was to ensure compliance with the ethical standards of journalism and NBC’s internal guidelines. Bartel found numerous aspects of the Predator segment production to be in violation of these standards and guidelines. She believed, for example, that NBC was providing compensation directly or indirectly to the law enforcement officers participating in the stings. She thought it wrong that “Perverted Justice” representatives did not provide NBC with complete transcripts of their conversations with the targets, and that they did not identify all of their volunteers to NBC. She also objected that Dateline and Perverted Justice were staging the arrests in a way that maximized the humiliation of the target. Bartel informed her superiors at NBC of these problems, but they took no steps to cure them. Bartel then told her supervisors that she could not produce the segment. On November 17, 2006, NBC informed Bartel that her contract would be terminated effective December 25, 2006. NBC asserted that this action was part of a program of lay-offs that it was making because of general economic conditions.

Bartel did not believe this explanation, and so she sued NBC for breach of contract. She asserted that the termination was premature in light of the protection her contract afforded her. In addition, she charged that the reason given for her termination was pretextual; that the real reason was her refusal to produce a segment that violated ethical and company standards; and that her contract included an implicit restriction against firing her for this kind of reason, thus rendering NBC’s action a breach of contract.

NBC moved to dismiss the complaint for failure to state a claim. It argued that the contract Bartel attached to the complaint was unambiguous and allowed it to end Bartel’s employment when and why it did. The contract, NBC went on, contained no restrictions on allowable reasons for dismissal. NBC also argued that New York law, which both parties agree governs this case, does not allow courts to recognize the implicit restriction for which Bartel was arguing. The district court granted NBC’s motion to dismiss, and Bartel appeals.

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Bartel first argues that NBC was not permitted under the contract to end her employment when it did. In support of this position, she sought to introduce extrinsic evidence about the parties’ understanding of the contractual arrangements, but the district court held that the language of the contract was unambiguous and therefore denied her request.

The provision that directly addresses the time at which NBC was entitled to terminate Bartel’s employment is Paragraph 4(a) of the Letter Agreement between NBC and Bartel:

The term of this Agreement shall commence on December 26, 2005 and shall continue, subject to suspension, extension or termination as hereinafter provided, for a period of two hundred and eight (208) consecutive weeks thereafter. The term hereof shall be divided into four (4) consecutive cycles of fifty-two (52) weeks each. NBC shall have the right to terminate this Agreement effective at the end of any cycle prior to the last by giving Artist written notice not less than twenty-eight (28) days prior to the end of any such cycle. This Agreement shall automatically terminate at the end of the last cycle without notice, unless the parties agree otherwise.

The Letter Agreement was executed on March 31, 2006, but was retroactively effective as of December 26, 2005.

Bartel argues that “term” and “cycle” are terms of art that are not defined in the contract. But this is plainly not so: the two words are defined right in the paragraph we have just quoted. The “term of this Agreement” is 208 consecutive weeks, with a specified start-point and endpoint. That period is divided into four consecutive, equal 52-week sub-intervals, each of which is referred to as a cycle. A reasonable person reading this paragraph would not be confused about the meaning of the words “term” or “cycle” as they are used in the agreement.

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We hold that the contract is unambiguous. Because NBC gave Bartel written notice on November 17, 2006, that it was terminating her contract effective December 25, 2006 (the end of the first cycle), NBC gave more than the required amount of notice. Thus, it did not breach the contract, assuming its action did not violate any implied-in-law restrictions on reason for dismissal, the point to which we next turn.

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Even if NBC’s termination of Bartel’s contract was permissible as a matter of timing, Bartel argues that NBC nevertheless breached the agreement because of an implicit restriction in it. Specifically, Bartel alleges that NBC’s stated reason for firing her–lay-offs as a general cost-saving measure–is a pretext; the real reason was Bartel’s insistence that NBC live up to the ethical standards recognized by the profession of journalism and imposed by NBC’s internal guidelines. The latter reason, she continues, is just as impermissible as something like a racially discriminatory motive.

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Bartel does not contend that the termination of her employment contract violated the Constitution, a statutory proscription, or an express limitation in the contract (putting aside the timing argument that we have rejected). Instead, she argues that Wieder recognizes an exception not only to the rules for employment-at-will, but also inserts an implied term into all employment contracts. In Wieder, an attorney working as an associate at a law firm was fired after demanding that the firm report another associate’s misconduct to the state disciplinary committee. The Court of Appeals of New York found that “in any hiring of an attorney as an associate to practice law with a firm there is implied an understanding so fundamental to the relationship and essential to its purpose as to require no expression: that both the associate and the firm in conducting the practice will do so in accordance with the ethical standards of the profession.”

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As we read Wieder, the court went to great lengths to highlight the uniqueness of the legal profession and to narrow its holding to that particular profession–perhaps even to the particular disciplinary rule at issue in that case. The opinion is riddled with limiting language, some of which we highlight here:

[1] [Plaintiff’s] employment as a lawyer to render professional services as an associate with a law firm differs in several respects from the employments in Murphy and Sabetay. . . . plaintiff’s performance of professional services for the firm’s clients as a duly admitted member of the Bar was at the very core and, indeed, the only purpose of his association with defendants. Associates are, to be sure, employees of the firm but they remain independent officers of the court responsible in a broader public sense for their professional obligations.

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More telling even than the language in Wieder is the language in Horn v. New York Times, supra. Postdating Wieder by eleven years, Horn discusses that case and the other relevant cases at length. It is the most recent pronouncement by the Court of Appeals of New York on its view of the law. Because we are sitting in diversity, we must rule as we think the highest court of the state would rule if it were deciding the case, even if we think that another approach would be preferable.

In declining to expand the “narrow exception to the at-will employment doctrine adopted in Wieder,” Horn reaffirmed New York’s position that “such a significant change in our law is best left to the Legislature.”…Horn noted New York’s “strong disinclination to alter the traditional rule of at-will employment.”… It then catalogued the “unique” aspects of the legal profession that were critical to the recognition of an exception in Wieder…. It pointed out that the New York Legislature has delegated to the state judiciary the task of overseeing attorney self-regulation, and so the leave-it-to-the-Legislature argument had less force for the situation in Wieder…. Recognizing the importance of physician-patient confidentiality, the court acknowledged that Plaintiff Horn “strikes a sympathetic, and even a seductive, chord,” but she had nonetheless “failed to plead facts that place her claim for breach of contract within the Wieder exception to the at-will employment rule.”

Horn leaves us convinced that the Court of Appeals of New York would decline to expand Wieder to include journalists. We therefore find no breach of contract on NBC’s part, even assuming that Bartel can prove that the reason NBC offered for the lay-off was pretextual.

The case is Bartel v. NBC Universal, 2008 U.S. App. LEXIS 19347.