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Gilman v. Marsh & McLennan Cos. - 826 F.3d 69 (2d Cir. 2016)

Rule:

Under Delaware law, cause for termination includes the refusal to obey a direct, unequivocal, reasonable order of the employer.

Facts:

Faced with the prospect of criminal indictment premised on the actions of two employees, defendant Marsh & McLennan Cos. (Marsh) demanded that these employees, plaintiffs Gilman and McNenny, explain themselves under the threat of termination. The employees refused, so Marsh fired them, and consequently, the employees lost their valuable employment benefits. Gilman and McNenney sued Marsh to obtain the lost employment benefits, alleging violations of ERISA, breach of contract, and breach of the implied covenant of good faith and fair dealing. The district court granted summary judgment in favor of Marsh, concluding that the interview were reasonable, that the employees' refusal to sit for interviews gave Marsh cause for termination, that Marsh did in fact fire them for cause (and did not breach the implied covenant of good faith and fair dealing), and that Gilman's purported retirement was ineffective. Gilman and McNenney appealed.

Issue:

Were the employees terminated for cause, thereby, the grant of summary judgment in favor of Marsh was proper?

Answer:

Yes.

Conclusion:

The Court noted that under Delaware law, which governed Marsh’s employment contracts with Gilman and McNenney, “cause” for termination would include the refusal to “obey a direct, unequivocal, reasonable order of the employer." When Gilman and McNenney were named as co-conspirators in a criminal bid-rigging scheme for their conduct as Marsh employees, it was obvious that the Attorney General (AG) intended to prosecute them criminally. As such, Marsh was presumptively entitled to seek information from its own employees about suspicions of on-the-job criminal conduct. Marsh could take measures to protect its standing with investors, clients, employees, and regulators. Marsh also had a duty to its shareholders to investigate any potentially criminal conduct by its employees that could harm the company. As corporate officers, Gilman and McNenney had a duty to Marsh to disclose information they had about the AG's allegations. Given the circumstances, the Court concluded that Marsh's demand that Gilman and McNenney explain themselves in an interview under the penalty of termination was unassailable, even routine. Marsh's interview demands were reasonable and it had cause to fire Gilman and McNenney for refusing to comply.

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