ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Wednesday, September 14, 2005

Cases: Cutting duties isn't constructive discharge

Ohio_flag_4 An employee whose contract provided that he would keep his job title and benefits following a merger had no cause of action for constructive discharge after his authority was cut back, according to a recent decision by the Ohio Court of Appeals.

Joseph Usaj was V.P. of Human Resources at Marconi Medical Systems.  Philips Medical Systems bought out Marconi in 2001.  Philips entered into an employment contract with Usaj stating that he would retain his title for two years with Philips.  The contract also provided that if Usaj voluntarily left before the two years, he would not be paid any severance pay or bonus.  A year after the takeover, Usaj gave his letter of resignation.  When Philips refused to pay him severance money, Usaj sued for breach of contract.  Summary judgment was granted for Philips; Usaj appealed.

Usaj argued that his new position at Philips was inferior to his previous position at Marconi.  Those who had been his subordinates were now, for all practical purposes, his supervisors.  This, he argued, was a breach of contract that justified his resignation.  It also amount to a constructive discharge, which meant that his departure was not “voluntary” within the terms of the agreement.

The court disagreed.  The contract protected his job title with the company; there were no representations about duties or responsibility.  His constructive discharge claim failed because he was unable to show that his work environment was so difficult that a reasonable person in the same position would have felt compelled to leave.  He never felt humiliation or emotional stress, and he never complained during that year.  The court noted that he was throughout this period pursuing alternate employment.  Thus summary judgment for Philips was appropriate.  Usaj v. Philips Medical Systems, 2005 Ohio 4132,  2005 Ohio App. LEXIS 3780 (8th Dist. Aug. 11, 2005).

[Frank Snyder]

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