                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


2-24-2004

Mele v. Fed Rsrv Bank NY
Precedential or Non-Precedential: Precedential

Docket No. 03-1556




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Recommended Citation
"Mele v. Fed Rsrv Bank NY" (2004). 2004 Decisions. Paper 941.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/941


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                        PRECEDENTIAL         Yoon Hi Greene (Argued)
                                             Federal Reserve Bank of New York
        UNITED STATES                        33 Liberty Street
       COURT OF APPEALS                      New York, NY 10045
     FOR THE THIRD CIRCUIT
                                             Shari Leventhal
                                             Federal Reserve Bank of New York
                                             33 Liberty Street
             No. 03-1556                     New York, NY 10045

                                                    Counsel for Appellee
          MICHAEL MELE,

                    Appellant
                                                             OPINION
                   v.

    FEDERAL RESERVE BANK                     CHERTOFF, Circuit Judge.
        OF NEW YORK
                                                    Appellant Michael Mele alleges his
                                             employment was terminated in violation of
           On Appeal from the                the Federal Reserve Bank of New York’s
  United States District Court for the       (“the Bank”) Management Guide to
          District of New Jersey             Personnel Policies (“Guide”). The District
       (Dist. Ct. No. 02-cv-01216)           Court granted the Bank’s motion to
District Judge: Hon. Anne E. Thompson        dismiss all counts on the pleadings
                                             pursuant to Fed. R. Civ. P. 12(c). 1 For the

      Argued: November 18, 2003
                                                    1
                                                      Rule 12(c) provides: “After the
   Before: RENDELL, BARRY, and               pleadings are closed but within such time
     CHERTOFF, Circuit Judges                as not to delay the trial, any party may
                                             move for judgment on the pleadings. If,
       (Filed: February 24, 2004)            on a motion for judgment on the
                                             pleadings, matters outside the pleadings
Brian E. Fleisig (Argued)                    are presented to and not excluded by the
Pearce & Massler                             court, the motion shall be treated as one
25 Main Street                               for summary judgment and disposed of as
Court Plaza North                            provided in Rule 56, and all parties shall
Hackensack, NJ 07601-7025                    be given reasonable opportunity to present
       Counsel for Appellant                 all material made pertinent to such a

                                         1
reasons stated below, we will affirm the           became verbally and physically abusive,
District Court’s dismissal.                        and physically escorted Mele out of his
                                                   office. Mele immediately reported the
                      I.                           incident to the Bank’s Human Resources
        Jurisdiction in this Court is proper       Department. As a result of these events,
because the judgment is a final order under        Mele was suspended with pay, and later
28 U.S.C. § 1291. This Court’s review of           was terminated for what was deemed
a Rule 12(c) motion to dismiss is plenary.         “misconduct.”
Leamer v. Fauver, 288 F.3d 532, 535 (3d                    On January 13, 2002, Mele filed a
Cir. 2002). As with a Rule 12(b)(6)                four-count complaint against the Bank in
motion, this Court “view[s] the facts              the Superior Court of New Jersey. Count
alleged in the pleadings and the inferences        One alleged breach of contract based on
to be drawn from those facts in the light          the Bank’s failure to adhere to the Guide’s
most favorable to the plaintiff.” Id. That         warning procedures or graduated
is, the motion should not be granted               discipline measures in terminating Mele.
“unless the moving party has established           Count Two claimed wrongful termination
that there is no material issue of fact to         on the ground that Mele’s purported
resolve, and that it is entitled to judgment       “misconduct” did not fall into one of the
in its favor as a matter of law.” Id.              four categories of employee misconduct
        Mele was employed as a facilities          set forth in the Guide. Count Three pled
engineer at the East Rutherford Operations         breach of the implied covenant of good
Center (“EROC”) of the Bank in Bergen              faith and fair dealing, and Count Four
County, New Jersey, from July 1995 to              alleged wrongful interference with Mele’s
January 2000. Mele claims that, in early           prospective economic advantage in
January 2000, he was denied access to a            continued employment. Mele does not
particular area of EROC on the ground that         advance any authority other than the Guide
he was required to be armed or                     to support any of these claims.
accompanied by an armed individual,                        On March 19, 2002, the Bank filed
despite the fact that he had previously            a notice of removal, pursuant to 12 U.S.C.
enjoyed unhampered access to that area.            §632.2 On January 23, 2003, the District
Thereafter, Mele reported to his supervisor        Court granted the Bank’s motion to
Terrence McCorry, who, he alleges,                 dismiss all counts on the pleadings
denied his request for a written copy of the       pursuant to Fed. R. Civ. P. 12(c). The
Bank’s policy regarding access to the area,
                                                          2
                                                              This section provides, in pertinent
motion by Rule 56.” As the District Court          part: “[A]ny Federal Reserve bank which
noted, because the Bank had already filed          is a defendant in any such suit may, at any
an answer in the action, the motion is for a       time before the trial thereof, remove such
judgment on the pleadings pursuant to              suit from a State court into the district
Rule 12(c).                                        court of the United States.”

                                               2
District Court explained that Mele’s claims              Third. To make contracts.
rested on the premise that he had an                     ...
employment contract with the Bank, a
conclusion undermined by both the                        Fifth. To appoint by its board of
language of the Federal Reserve Act, 12                  directors a president, vice
U.S.C. § 341, Note 3, and case law                       presidents, and such officers and
interpreting the Act to restrict the Bank’s              employees as are not otherwise
power to enter into employment contracts.                provided for in this chapter, to
The District Court, however, opted not to                define their duties, require bonds
address the open question of the Bank’s                  for them and fix the penalty
power to contract, concluding that even                  thereof, and to dismiss at pleasure
“assuming in arguendo that the Federal                   such officers or employees. . . .
Reserve Bank could enter into an
employment contract, nothing inside the           12 U.S.C. § 341 (emphasis added). The
Guide prevents the Federal Reserve Bank           Bank asserts that the language of
from terminating an employee in                   paragraph five confers an indefeasible
plaintiff’s position, in view of the              power to terminate employees at will.
disclaimer found on the front cover.”                     Mele argues that paragraph five’s
Notice of appeal was timely filed on              “dismiss[al] at pleasure” provision should
February 24, 2003.                                be read in conjunction with paragraph
                                                  three, so that it is not treated as a limitation
                   II.                            on the Bank’s authority to enter into
       The Bank contends we should                contracts, including employment contracts.
affirm the dismissal of Mele’s claim               Mele tries to reconcile these provisions by
because the Federal Reserve Act, 12               suggesting that binding the Bank to
U.S.C. § 341, Note 3, restricts the Bank’s        employment contracts is consistent with
authority to enter into employment                the reserved power to dismiss employees
contracts, so that any implied contract           at will because “any party to any contract
created by the Guide is unenforceable.            can breach its duties provided only that it
The statute enumerates the general powers         pay damages ensuing from the breach.”
of the Federal Reserve Bank:                      (Appellant Br. at 8).
       Upon the filing of the organization                We reject such a strained
       certificate with the Comptroller of        interpretation of the statute. Mele’s
       the Currency a Federal Reserve             position would rewrite Congress’s specific
       bank shall become a body                   instruction that the Bank retain the power
       corporate and as such, and in the          to dismiss at pleasure into a statutory
       name designated in such                    damages clause. The better reading
       organization certificate, shall have       recognizes that paragraph three generally
       power—                                     refers to “contracts,” and that the more
       ...                                        specific reference in paragraph five to

                                              3
employment should be read as a limitation          to create such rights by reference to
on the general power to enter into                 independent sources are violative of the
contracts.    “[A] recognized tenet of             statute and void thereunder.” Bollow, 650
statutory interpretation directs that a            F.2d at 1098. M oreover, the cases have
specific provision in an enactment prevails        specifically rejected claims, similar to
over a seemingly irreconcilable general            those of Mele, that an employee is
one.” LaVallee Northside Civic Ass'n v.            contractually protected by personnel
Virgin Islands, 866 F.2d 616, 621 (3d Cir.         policies and practices, including written
1989) (citing 2A A. Sutherland, Statutes           policies of progressive discipline. See
and Statutory Construction § 51.05, at 499         Little, 601 F. Supp. at 1376; Armano, 468
(N. Singer 4th ed. 1984)).                         F. Supp. at 675-76; Obradovich, 569 F.
       While this Court has not previously         Supp. at 790. Rather, “[a]ny implied
addressed this particular statute, “[c]ourts       contract based upon the Federal Reserve’s
uniformly hold that [the Federal Reserve           personnel rules would exceed the Federal
Act] precludes the enforcement of any              Reserv e’s autho rity, and be
employment contract against a Federal              unenforceable.” Id. at 790.        Such a
Reserve Bank and prevents the                      contractual obligation would undermine
development of any reasonable                      the Congressional intent to protect Federal
expectation of continued employment.”              Reserve Banks from restrictions in
Jaffee v. Federal Reserve Bank of                  carrying out their duties. See Armano, 468
Chicago, 586 F. Supp. 106, 107-08 (N.D.            F. Supp. at 676.
Ill. 1984) (citing cases); see Magel v.                     Mele points to no authority to the
Federal Reserve Bank of Philadelphia, 776          contrary.    We now explicitly join the
F. Supp. 200, 205 (E.D. Pa. 1991), aff’d 5         approach uniformly adopted by other
F.3d 1490 (3d Cir. 1993); Bollow v.                courts considering this issue. We hold that
Federal Reserve Bank of San Francisco,             the Federal Reserve Act precludes
650 F.2d 1093, 1097-98 (9th Cir. 1981);            enforcement against a Federal Reserve
Little v. Federal Reserve Bank of                  Bank of an employment contract that
Cleveland, 601 F. Supp. 1372, 1375-77              would compromise its statutory power to
(N.D. Ohio 1985); Obradovich v. Federal            dismiss at pleasure, and prevents the
Reserve Bank of New York, 569 F. Supp.             development of a reasonable expectation
785, 790 (S.D.N.Y. 1983); Armano v.                of continued employment. As a result,
Federal Reserve Bank of Boston, 468 F.             Mele’s argument that he was terminated in
Supp. 674, 675-76 (D. Mass. 1979); see             contravention of the Guide’s policies is
also Inglis v. Fienerman, 701 F.2d 97 (9th         without merit.
Cir. 1983) (analyzing similar language
under the Federal Home Loan Bank Act).                                III.
       These courts have noted that “no                    Mele contends that even if the Bank
process or tenure rights are conferred on          has the power to dismiss employees at
reserve bank employees . . . [and] attempts        will, the Guide relinquishes this right in


                                               4
order to retain those employees, and the                  This guide provides a description
Bank should not be allowed to disavow                     of certain Bank policies,
this supposed quid pro quo. Mele,                         procedures and benefits. This
however, cites no authority to support the                guide is not intended to be a
proposition that the Bank is authorized to                contract of employment, nor does it
waive or relinquish the right to terminate                supersede or modify the Bank’s
employees at will.3 We need not decide                    Operating Bulletins and Circulars,
whether it is ever possible for a Federal                 the specific contracts and
Reserve Bank to relinquish this right                     documents covering Bank-provided
because in this case it is clear that it did              benefits, or the Bank’s right, under
not do so.                                                federal law, to terminate any
        The Guide actually disclaims any                  employee at will.5
limitation on the Bank’s statutory power to
dismiss at pleasure. The Guide contains
the following statement on the cover in            cannot now complain that it is somehow
italicized font:4                                  “unfair” or “unjust” for the Bank to
                                                   “disavow” the Guide.
                                                          5
       3
         At argument, even Mele concedes                    Mele argues that the District Court
that there is no case supporting the               erroneously relied on the disclaimer in
proposition that the Bank has the authority        ruling on the Rule 12(c) motion. The
to waive the dismiss at pleasure provision.        general rule is that a “district court ruling
Mele merely directs this Court’s attention         on a motion to dismiss may not consider
to a general line of estoppel cases. See,          matters extraneous to the pleadings.” In re
e.g., Heckler v. Cmty. Health Servs. of            Burlington Coat Factory Sec. Lit., 114
Crawford County, Inc., 467 U.S. 51, 59             F.3d 1410, 1426 (3d Cir. 1997).
(1984).      None of the cases deal                However, an exception to this general rule
specifically with the authority of the Bank        provides that a “‘document integral to or
to relinquish an explicit statutory grant of       explicitly relied upon in the complaint’
power to dismiss at pleasure.                      may be considered ‘without converting the
                                                   motion [to dismiss into one for summary
       4
         Mele contended at argument that           judgment.’” Id. (quoting Shaw v. Digital
the disclaimer is not actually on the cover        Equip. Corp., 82 F.3d 1194, 1220 (1st Cir.
since the Guide was placed in a binder.            1996)) (emphasis added in In re
Even if the binder cover had to be opened          Burlington). Here, consideration of the
before the text of the disclaimer was              disclaimer in the Guide clearly falls within
revealed, this does not undermine the              this exception for documents “integral to
claim that the Bank specifically indicated         or explicitly relied upon in the complaint.”
it was not relinquishing its power to              The Guide forms the heart of Mele’s
dismiss at pleasure, and that the disclaimer       complaint. Thus, the disclaimer is just the
was conspicuously placed such that Mele            kind of evidence that the “integral”

                                               5
This disclaimer specifically emphasizes           not allege the termination was invalid
the Bank’s federal right to terminate any         because it was not authorized by the Board
employee at will, and rejects any notion          of Directors or its valid delegate. What he
that the Guide is intended to be a                alleged—and what we have rejected—was
relinquishment of this power.                     that his termination was forbidden by the
       The District Court concluded that in       Guide. Mele first raised the suggestion
light of the disclaimer, nothing in the           that the termination was unauthorized in a
Guide prevents the Bank from terminating          letter submitted after a status conference in
employees. Because we conclude above              which the District Court provided Mele
that the Federal Reserve Act precludes            with a final opportunity to submit case law
enforcement of an employment contract             in support of his opposition to the 12(c)
that would compromise the Bank’s                  motion.
statutory power to dismiss at pleasure, we                “‘It is black-letter law that [a]
need not reach the issue of whether the           motion to dismiss for failure to state a
disclaimer is sufficient under ordinary           claim . . . is to be evaluated only on the
employment contract law principles. But           pleadings.’” A.D. Bedell Wholesale Co.,
the disclaimer certainly rebuts Mele’s            Inc. v. Philip Morris, Inc., 263 F.3d 239,
contention that the Bank intentionally            266 (3d Cir. 2001) (quoting Mahone v.
relinquished the power to dismiss at              Addicks Utility Dist., 836 F.2d 921, 935
pleasure (assuming it could do so).               (5th Cir. 1988)) (other internal quotations
                                                  omitted). An entirely new claim for relief
                  IV.                             presented in a letter brief does not
      Mele suggests on appeal that the            constitute an amendment to the pleadings.
Bank cannot claim the protection of the           In deciding a Rule 12(c) motion, the court
employment at will provision because the          does not consider matters outside the
termination was not undertaken by the             pleadings.6 Here, viewing the complaint
Board of Directors, as required by 12             “in the light most favorable to the
U.S.C. § 341. In his complaint, Mele did          plaintiff,” the Bank has established that
                                                  “there is no material issue of fact to
                                                  resolve, and that it is entitled to judgment
documents exception was intended to               in its favor as a matter of law.” Leamer,
encompass, so that plaintiff cannot               288 F.3d at 534.
maintain a claim “by extracting an isolated
statement from a document and placing it
in the complaint, even though if the
                                                         6
statement were examined in the full                       Mele’s own brief concedes that “a
context of the document, it would be clear        Court may only consider the Complaint
that the statement [did not support the           and the reasonable inferences therefrom”
claim].” In re Burlington Coat Factory,           in deciding a Rule 12(c) motion.
114 F.3d at 1426.                                 (Appellant Br. at 27, n.5).


                                              6
                   V.
       For the foregoing reasons, we
affirm the District Court’s grant of the
motion to dismiss pursuant to Fed. R. Civ.
P. 12(c).




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