FSM SUPREME COURT TRIAL DIVISION
Cite as Solomon v. Bacalando, 24 FSM R. 513 (Pon. 2024)
ROBERT SOLOMON,
Plaintiff,
vs.
LEONITO BACALANDO, JR., as Acting Attorney
General of the Federated States of Micronesia,
ROSE NAKANAGA, as Secretary of Finance, and the
FEDERATED STATES OF MICRONESIA,
Defendants.
CIVIL ACTION NO. 2022-028
ORDER GRANTING PARTIAL SUMMARY JUDGMENT
Larry Wentworth
Associate Justice
Hearing: February 12, 2024
Submitted: April 4, 2024
Decided: June 26, 2024
APPEARANCES:
For the Plaintiff:
Salomon M. Saimon, Esq.
P.O. Box 911
Kolonia, Pohnpei FM 96941
For the Defendant:
Jeffrey S. Tilfas, Esq.
Assistant Attorney General
FSM Department of Justice
P.O. Box PS-105
Palikir, Pohnpei FM 96941
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A series of successive employment contracts do not entitle an employee to a due process hearing before being terminated when his contract does not require it and when the employee did not continue to receive work assignments after his employment contract expired because he was terminated before the contract's end. Solomon v. Bacalando, 24 FSM R. 513, 517 (Pon. 2024).
A contract employee does not have a property interest in his continued employment as an independent contractor-consultant because his continued employment rights, and his compensation rights, are governed by his employment contract and its terms. Solomon v. Bacalando, 24 FSM R. 513, 517 (Pon. 2024).
When an employment contract has a provision for termination without cause but does not have for termination-for-cause provision, the contract's termination-without-cause provisions control and the parties' remaining rights depend on the contract's provisions. Solomon v. Bacalando, 24 FSM R. 513, 517 (Pon. 2024).
Termination with cause means termination for a legally sufficient reason. Termination without cause is termination for any reason or no reason. When someone is terminated without cause, the reason does not need to be explained, although it can be, and it does not have to be a legally sufficient reason. It can be any reason so long as the reason is not illegal or unconstitutional. Solomon v. Bacalando, 24 FSM R. 513, 518 (Pon. 2024).
When authorized by contract, termination without cause means that the employee is not entitled to be given a reason, or to be given a legally sufficient reason, for the termination or entitled to be given a due process hearing. Solomon v. Bacalando, 24 FSM R. 513, 518 (Pon. 2024).
When the FSM could, under the employment contract, terminate the employee without giving him any reason for the termination, no due process hearing is needed because the employee and the FSM agreed to 30 days' written notice in the contract. The fact that the FSM gave him a reason does not alter its contractual right to terminate him, as agreed, on 30 days' written notice without cause. As agreed to, 30 days' written notice was all the process due the terminated party. Solomon v. Bacalando, 24 FSM R. 513, 518 (Pon. 2024).
Reinstatement is not an option when the employee's termination was not wrongful. Solomon v. Bacalando, 24 FSM R. 513, 518 (Pon. 2024).
The general principle is that a notice to terminate an employment contract, although allowing the noticed party a shorter period of time than that stipulated in the contract, is not wholly inoperative, but serves to terminate after the expiration of the stipulated time. Solomon v. Bacalando, 24 FSM R. 513, 518 (Pon. 2024).
When the employment contract has no provision for immediate termination under any circumstances but required 30 days' written notice, a March 11, 2021 notice of immediate termination was not inoperative, but served to terminate the contract employee on April 10, 2021 because the December 16, 2021 notice of suspension cannot serve as the termination notice since the 30 days must run from the date of actual notice of termination. Solomon v. Bacalando, 24 FSM R. 513, 518-19 & n.6 (Pon. 2024).
The summary discharge of an employee entitled under the employment contract to a specified period of notice ordinarily permits him to recover his compensation for the notice period only and not for the entire balance of the contract period. There are two well-defined exceptions to this general rule. One arises where some unrealized but already existing right over and above normal compensation for the stipulated notice period would be forfeited by the noticed party if the defective notification were enforced; and the other is where the contract affords the noticed party the right, during the stipulated notice period, to perform certain acts or bring into existence certain conditions which will nullify or negate his adversary's right to give the notice. Solomon v. Bacalando, 24 FSM R. 513, 519 (Pon. 2024).
A terminated employee's contractual right to be paid whatever he would have earned during the 30 days following the receipt of his notice of termination controls because that would put the terminated employee in the position he would have expected to have been in if the FSM had not failed to give him the contractually required 30 days' notice. Solomon v. Bacalando, 24 FSM R. 513, 519 (Pon. 2024).
When a contract employee's termination was not wrongful, his compensation (back pay) will be determined by the contract provision entitling him to 30 days' pay upon written notice of early termination. This is a breach-of-contract, not a civil rights cause of action. A governmental entity's breach of contract, without more, does not constitute a due process or a civil rights violation. Solomon v. Bacalando, 24 FSM R. 513, 520 (Pon. 2024).
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LARRY WENTWORTH, Associate Justice:
On February 12, 2024, the court heard the plaintiff's Motion for Summary Judgment, filed on November 22, 2023, and the defendants' Opposition to Plaintiff's Motion for Summary Judgment, filed on December 8. 2023. At the hearing's end, the court asked the parties to brief: 1) whether the government's contractual ability to terminate Robert Solomon's employment without cause under section 2B. of Solomon's employment contract superseded any termination for cause; and, 2) if the termination-without-cause clause applies, does that mean that 30 days' pay is the terminated employee's damages and limit damages to that amount. Solomon filed his Brief on Damages Calculations on March 20, 2024, and the defendants filed Defendants' Response to Plaintiff's Brief on Damages Calculations on April 4, 2024. The motion was then deemed submitted to the court for decision. The court, as explained below, grants partial summary judgment.
A. The Contract
Robert Solomon was hired by the FSM national government as a consultant to provide the government with sound economic and financial policy advice and assist in and provide advice and support in various other governmental financial matters. Starting in October 2015, Solomon had a series of contracts, of varying lengths, to provide these services to the national government as a non-employee independent contractor consultant. The last of these contracts was for a two-year period, starting October 1, 2020, and ending September 30, 2022.
Under this contract, Solomon was to be paid $750 a day (on a biweekly basis), Contract pt. 3A., up to a total of $200,000 for services rendered, Id. pt. 3E., for "intermittent" performance during the entire contract period, Id. pt. 2A. In addition, Solomon was also to be paid for two international travel excursions to his home country of New Zealand, and other advanced or reimbursed expenses as deemed necessary and appropriate. Id. pt. 3C. The contract also required Solomon to comply with all applicable laws in the FSM. Id. pt. 5.
The FSM could terminate the contact immediately without liability for any damages if funding was not appropriated for it, Id. pt. 4, but it is undisputed that funds were appropriated to cover the entire contract. Either party could terminate the contract early and without cause on 30 days' written notice. Id. pt. 2B. The contract also gave either party the right, if the other party breached the contract, to recover damages, including the prevailing party's attorney's fees if an action was brought to enforce the contract provisions. Id. pt. 8.
B. Subsequent Events
On December 16, 2021, Secretary of Finance Eugene Amor, by written "NOTICE OF SUSPENSION/PENDING TERMINATION" suspended Solomon's employment, effective immediately, because he had been charged in Pohnpei Supreme Court with serious crimes, including trafficking in persons, sexual servitude of a minor, criminal solicitation, prostitution, sexual abuse, and kidnaping. The notice recognized that Solomon was innocent until proven guilty, the gravity and moral turpitude of the charges, and the Secretary's expectation that all FSM employees would comply with all laws in the FSM and with the Department's ethical code. The notice also gave Solomon until December 29, 2021, to return all government assets and remove all his personal belongings.
On March 11, 2022, Secretary Amor, by letter, terminated Solomon's employment because he had recently been arrested on further charges involving younger females. This notice stated that the Department's intent to temporarily reinstate Solomon was to help with a remedial process and to safely repatriate him but that it had become clear that the Department was unable to help with Solomon's remedial needs and that the unethical nature of the charges against Solomon was damaging to the Department's and its leadership's reputation. The Secretary therefore "fully terminate[d]" Solomon's contract and again asked that Solomon return all government assets.
On March 17, 2022, FSM Attorney General Joses Gallen wrote to Secretary Amor recommending that Solomon be terminated (possibly unaware of the Secretary's March 11, 2022 termination letter) and noting that further charges might be filed against him in the FSM court. (The charges that were later filed against him in the FSM Supreme Court were subsequently dismissed for lack of national jurisdiction over the crimes as factually alleged, and Solomon was convicted of one trafficking charge in the Pohnpei state court, which is under appeal.)
C. This Suit
On November 18, 2022, Solomon filed this lawsuit against the FSM government and its Attorney General, and its Secretary of Finance, alleging 1) civil conspiracy to deprive Solomon of his employment by filing criminal charges against him; 2) wrongful termination of employment without a due process hearing; 3) "involuntary servitude" by not compensating Solomon for work performed during December 2021 and related travel expenses; 4) wrongful termination in breach of contract; and 5) violation of the Vienna Convention on Consular Relations.1
The defendants answered, denying any liability and raising the affirmative defenses of 1) failure to state a claim; 2) lack of standing; 3) failure to exhaust administrative remedies; 4) prosecutorial immunity in initiating criminal prosecutions; 5) laches; 6) unclean hands; and 7) lack of subject-matter jurisdiction because Solomon did not appeal his termination and because the Vienna Convention was not binding since it was not self-executing and the FSM Congress had not passed laws to implement it.
Solomon has now, with his own supporting affidavit, moved for summary judgment on his breach of contract and due process claims. He seeks back pay, reinstatement, and attorney's fees as his remedies. The defendants oppose.
Solomon moves for summary judgment on his wrongful termination and civil rights claims. He contends that he is entitled to the full amount of his contract pay (about $150,000) as his expectation damages, reinstatement in his position as an Economist Consultant, and his attorney's fees.
A. Successive Contracts' Effect
Relying on Linter v. FSM, 20 FSM R. 553 (Pon. 2016), Solomon argues that his series of successive employment contracts entitled him to a due process hearing before being terminated even if his contract did not. Solomon's reliance on Linter is misplaced. In Linter, the plaintiffs, although contract employees held positions that were generally civil service positions. They had a series of contracts, but often, when their employment contracts expired, they continued working and continued being paid, before new contracts were executed. Linter, 20 FSM R. at 558.
The Linter plaintiffs had due process rights not only to notice and an opportunity to be heard but also for back pay for work performed and not paid for because no one had ever notified them that they had to stop working in their respective positions or that they would not be paid for the work done from October 2014 to April 2015; because the government continued to assign them projects and retained the benefits conferred by their work, but did not compensate them for the work; because the government never notified them that their contracts had not or would not be renewed although the plaintiffs eventually became aware that the Project Control Documents that controlled their contracts were unsigned; because the government's consistent delay in renewing the contracts and disbursing wages was a common occurrence during the plaintiffs' previous years' contracts; and because the government continued to accept, approve, sign, and maintain the plaintiffs' submitted time sheets thereby implying assurances of forthcoming wages, the evidence. Id. This, when viewed in its entirety, presented a situation whereby the Linter plaintiffs had a reasonable justified expectation to continued employment and to payment for those services rendered to the government's benefit between October 2014 and April 2015. Id.
Solomon's situation does not resemble the Linter plaintiffs'. Solomon did not continue receiving work assignments after his employment contract expired. He was terminated before the contract's end. Linter does not apply to this case.
This is a breach-of-contract case. As a matter of law, Solomon did not have a property interest in his continued employment as an independent contractor-consultant. His continued employment rights, and his compensation rights, were governed by his employment contract and its terms.
B. Contractual Termination Provisions
Solomon's employment contract provided that either party could terminate the contract early and without cause on 30 days' written notice. This made Solomon's contract an at-will employment contract (either party could terminate the contract at any time for any or no reason) with the added protection of 30 days' notice. This 30 days' notice was a sensible provision. If Solomon wished to terminate the contract early because he found a better job elsewhere, the FSM could retain his services for 30 days while it looked for someone else who could provide those services. And, if the FSM terminated the contract early, Solomon would be assured of an income for 30 days while he sought other employment.
Solomon's contract did not provide for termination for cause or name any grounds as a cause for termination. Solomon contends that the 30-day-notice-without-cause provision is inapplicable because the FSM terminated him for cause. When an employment or agency contract has a provision for termination without cause but does not have for termination-for-cause provision, the contract's termination-without-cause provisions control and the parties' remaining rights depend on the contract's provisions. See, e.g., Matthew v. American Family Mut. Ins. Co., 195 N.W.2d 611, 613-14 (Wis. 1972); Goff v. Massachusetts Protective Ass'n, Inc., 176 N.W.2d 576, 578-79 (Wis. 1970); Buska v. Central Life Assurance Co., 145 N.W.2d 721, 723-24 (Wis. 1966) ("a discharge without good cause is not wrongful if expressly authorized by the contract"); cf. Hauk v. Board of Dirs., 11 FSM R. 236, 242 (Chk. S. Ct. Tr. 2002) (when only contract provision about employee's termination required 60 days' notice, that provision will be applied to a termination for cause).
Termination with cause means termination for a legally sufficient reason. BLACK'S LAW DICTIONARY 537 (9th ed. 2009).2 Termination without cause is termination for any reason or no reason. But there is always a reason someone is terminated even when it is without cause. When someone is terminated without cause, the reason does not need to be explained, although it can be, and it does not have to be a legally sufficient reason. It can be any reason so long as the reason is not illegal3 or unconstitutional.4 Regardless, termination without cause means that the employee is not entitled to be given a reason, or to be given a legally sufficient reason, for the termination or entitled to be given a due process hearing.5
It cannot be more difficult to terminate someone for cause than to terminate that same person without cause when termination without cause is not only permitted but also agreed to by the parties. Or, put another way, it cannot be easier to terminate someone without cause than to terminate that same person for cause for the same reason.
The FSM could terminate Solomon without giving him any reason for the termination. No due process hearing was needed because Solomon and the FSM agreed to 30 days' written notice in Contract part 2B. The fact that the FSM gave him a reason does not alter its contractual right to terminate him, as agreed, on 30 days' written notice without cause. As Solomon agreed to, 30 days' written notice was all the process due Solomon. Reinstatement is not an option because Solomon's termination was not wrongful.
C. Solomon's Termination
The FSM gave Solomon written notice of his termination, but did not give him 30 days' notice. It shortened the time period to immediate termination. Solomon did not receive his 30 days' notice as stipulated in his contract. "The cases are fairly harmonious in recognizing as a general principle that a notice to terminate an . . . employment contract, although allowing the noticed party a shorter period of time than that stipulated in the contract, is not wholly inoperative, but serves to terminate after the expiration of the stipulated time." W.C. Crais III, Annotation, Effect of Attempt to Terminate Employment or Agency Contract upon Shorter Notice than That Stipulated in the Contract, 96 A.L.R.2d 272, 274 (1964).
"The summary discharge of an employee entitled under the employment contract to a specified period of notice ordinarily permits him to recover his compensation for the notice period only and not for the entire balance of the contract period." Id. at 277. And, when an employment contract has no provision for immediate termination under any circumstances but requires 60 days' notice, even a discharge for misappropriating the employer's property requires compensation of 60 days' pay by the employer to the employee, minus the misappropriation. Hauk, 11 FSM R. at 242. The March 11, 2021 notice therefore was not inoperative, but served to terminate Solomon on April 10, 2021.6
The cases, however, reveal two well-defined exceptions to this general rule. Annotation, 96 A.L.R.2d 272, 274. One "arises in the situation where some unrealized but already existing right over and above normal compensation for the stipulated notice period would be forfeited by the noticed party if the defective notification were enforced." Id. at 274-75. In such cases, the preexisting right is also enforced. Solomon has not identified any such preexisting right.
The second exception is "where the contract affords the noticed party the right, during the stipulated notice period, to perform certain acts or bring into existence certain conditions which will nullify or negate his adversary's right to give the notice." Id. at 275. The contract did not grant Solomon such a right to cure.
D. Termination Compensation
Solomon claims that he has the contractual right to be paid up through the end of his contract. As explained above, Solomon's contractual right is to be paid whatever he would have earned during the 30 days following the receipt of his notice of termination. That would put Solomon in the position he would have expected to have been in if the FSM had not failed to give him his 30 days' notice.
Solomon pled that he had not been paid for work done in December 2021. The defendants assert that Solomon was paid up until the date he was terminated, but not afterward. The defendants' assertion could mean that Solomon was paid through March 11, 2022. It might mean that Solomon was only paid up through (the date he was "suspended"). Or conceivably, it could mean that he was paid up through April 11, 2022. The date through which Solomon was paid in full is, if not in dispute, not clear.
If Solomon was not paid for March 12, through April 11, 2022, his pay for that period would, because he was paid $750 a day for "intermittent" work, be based on the similar number of days he worked in that same time frame the year before – March 12, 2021 through April 11, 2021. This would be a factual finding. The court has no way of knowing whether that is a busy time of year for economic consulting (budget preparation?) when Solomon would be working virtually full-time or whether it is a slow time where Solomon's services would be needed only a few days during the time period. Further evidence is needed on this before the court can determine what amounts the defendants may be liable for.
Further evidence, other than counsel's mere assertion and Solomon's bare pleading, is needed to determine whether Solomon is also owed any reimbursement for expenses and what those expenses were and whether they are reimbursable.
E. Matters Addressed and Not Addressed
This order addresses and effectively disposes of the defendants' liability for Solomon's allegation of a civil conspiracy to deprive him of his employment by filing criminal charges against him and his allegation that he was wrongfully terminated without a due process hearing because, as explained above, the FSM did not need any such justification to terminate Solomon's employment and did not need to afford him a due process hearing. Solomon's allegation of "involuntary servitude" for not compensating him for work performed during December 2021 and for related travel expenses is actually a breach-of-contract claim – failure to be compensated as provided for in the contract. This is thus addressed as part of Solomon's breach-of-contract claim because the court has determined that Solomon can only be compensated as provided for in his contract.
Solomon's claim for wrongful termination in breach of contract is addressed, and the court concludes that, since Solomon's termination was not wrongful, his compensation (back pay) will be determined by the contract provision entitling him to 30 days' pay upon written notice of early termination. This is a breach-of-contract, not a civil rights cause of action. A governmental entity's breach of contract, without more, does not constitute a due process or a civil rights violation. Sonden v. Pohnpei, 22 FSM R. 465, 467 (Pon. 2020); Stephen v. Chuuk, 18 FSM R. 22, 25 (Chk. 2011); FSM v. GMP Hawaii, Inc., 16 FSM R. 479, 484 (Pon. 2009); Island Dev. Co. v. Yap, 9 FSM R. 18, 20 (Yap 1999). Not addressed is whether the FSM is liable to Solomon for reasonable attorney's fees under Contract part 8.
Nothing in this ruling addresses the alleged violation of the Vienna Convention on Consular Relations because that claim apparently derives from the circumstance of Solomon's arrest, not from his termination.
Accordingly, Solomon is granted summary judgment that the FSM is liable to pay him what he would reasonably have been paid March 12, 2022 through April 11, 2022, based on prior year(s) earnings for that time frame. An evidentiary hearing may be needed to determine whether Solomon has been paid up to April 11, 2022, and, if he was not, what is the proper amount that he should be paid because his termination was not wrongful and, pursuant to the contract's terms, took effect that date. An evidentiary hearing may also be needed to determine whether Solomon is also owed any reimbursement for expenses and what those expenses were and whether they are reimbursable.
A status conference to explore these points is hereby set for July 29, 2024, at 11:00 a.m.
_______________________________Footnotes:
1 Apparently the victim of autocorrect, Solomon's complaint refers to this treaty as the Vienna Convention on Insular Relations. Interestingly, the defendants copied this typographical error in their answer.
2 "dismissal for cause. (1877) A dismissal of a contract employee for a reason that the law or public policy has recognized as sufficient to warrant the employee's removal." BLACK'S LAW DICTIONARY 537 (9th ed. 2009).
3 For example, the employee voted for someone the employer did not like.
4 For example, in violation of equal protection of the laws because termination was on account of sex, race, ancestry, national origin, language, or social status.
5 See, e.g., House v. Jefferson State Cmty. Coll., 907 So. 2d 424, 426 (Ala. 2005); Davis v. J.F. Drake State Technical Coll., 854 So. 2d 1151, 1156 (Ala. Civ. App. 2002).
6 The December 16, 2021 notice of suspension cannot serve as the termination notice. See Hauk, 11 FSM R. at 242 (30 days' suspension on administrative leave not included in 60-day notice period, which must run from the date of actual notice of termination).
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