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January 20, 1993


The opinion of the court was delivered by: ROBERT L. ECHOLS

 This case arises out of the termination of Plaintiff's employment with the Defendant. Pending before the Court is the Magistrate Judge's Report and Recommendation ("R&R") (Docket Entry No. 50), Defendant's objections thereto (Docket Entry Nos. 51, 57, and 59), and Plaintiff's reply to Defendant's objections (Docket Entry Nos. 56 and 58). Having reviewed the entire record de novo pursuant to 28 U.S.C. § 636(b)(1)(B) and (C) and Rule 72(b), Fed. R. Civ. P., the Court REJECTS in part and ADOPTS in part the Magistrate Judge's recommendations and GRANTS Defendant's Motion for Summary Judgment on all of Plaintiff's claims.


 Plaintiff, Dennis K. Shelby, has brought suit against Defendant, Delta Air Lines, Inc. ("Delta"). Shelby has made four claims against Delta: (1) breach of employment contract; (2) breach of an implied covenant of good faith and fair dealing; (3) fraud and deceit; and (4) negligent misrepresentation. Pursuant to this Court's Order and the provisions of 28 U.S.C. § 636(b)(1)(A) and (B) and Rules 302 and 303, L.R.M.P., the case was referred to the Magistrate Judge for consideration of any pretrial matters. Subsequent thereto, Delta filed a Motion for Summary Judgment seeking dismissal of all of Shelby's claims against it. The Magistrate Judge has recommended that Shelby's fraud claim be dismissed, but that the remainder of Delta's motion be denied. Delta has filed objections to the Magistrate Judge's conclusions with this Court, each of which will be addressed herein.

 For the reasons more fully outlined in this Memorandum, the Magistrate Judge's R&R is hereby adopted in part and rejected in part, and this case is hereby dismissed.


 On May 21, 1974, Shelby was hired by Delta as a customer service agent ("CSA") in Paducah, Kentucky. During his employment with Delta, Shelby worked in various Delta stations. From 1983 until March of 1990 when he was terminated, Shelby worked in the Nashville station where his duties included ticketing, gate, and baggage functions.

 As part of the hiring process, Shelby signed an application which provided in pertinent part as follows:

If employed, in consideration thereof, and/or in consideration of the continuance thereof, and without further consideration, I do hereby agree:
. . . .
That should I be given employment either in the position applied for or any other, now or hereafter, such employment may be terminated at any time without notice or liability for wages or salary, except such earned at date of such termination, and without any other liability whatsoever. . .;
That all terms and conditions of my employment, except as inconsistent with this contract or any other valid contract between Company and me (or someone legally acting on my behalf) shall be determined and governed by Company's Standard Practice Manual, as same may be amended from time to time hereafter (a copy of which, together with all amendments shall at all times be available to me);
That this Agreement, including the foregoing application shall apply to all positions I may hereafter hold with Company; that upon my initial employment, and any subsequent change of my position by Company, I promptly will familiarize myself with all governmental and Company rules and regulations (including all parts of aforementioned Standard Practice Manual) applying to any positions to which I may be assigned; and it shall be sufficient cause for my discharge if I shall fail to familiarize myself with and to faithfully abide by all such rules and regulations, or by the decisions of Company or such instructions as may be given to me at any time;
. . . .
Give careful attention to all provisions of this application which, including all terms and conditions set forth herein, if accepted, constitutes a contract of employment between you and Company, all terms and conditions of employment, and all other questions arising relative to your employment, will be determined in accordance with its provisions.

 Delta's Standard Practice Manual, which is incorporated into and is a part of the Delta employment contract, provides in pertinent part as follows:

1000.1 Policy
Just as all personnel have the right to resign their employment with Delta at any time and for any reason they choose, Delta may terminate the employment relationship with any individual at any time and for any reason if Delta concludes in its sole judgment that such termination is appropriate. This right exists notwithstanding any examples of conduct or other statements contained in Standard Practice, any personnel handbooks or any other statements of Delta's general policies. No Delta supervisory or management personnel other than the Chairman of the Board and Chief Executive Officer and the President and Chief Operating Officer are authorized to amend or modify these terms of employment.
The guidelines set forth in this standard practice are intended to provide examples of some of Delta's expectations as to conduct and appearance of Delta employees. Any list of this nature obviously cannot be all inclusive, and personnel must use their good judgment at all times. Personnel should also seek the advice of supervisors if they have any questions about particular conduct.
NOTE: For purposes of employment at Delta Air Lines, Inc., the term "permanent employee" means that the employee is filling a position deemed by Delta to be permanent. The term "permanent employee" does not mean that the individual is bound to a permanent position for his/her entire Delta career or that the employee and Delta have agreed to be parties to an employment relationship until the employee's retirement. As stated earlier, and individual may resign his/her employment with Delta at any time and for any reason he/she may deem appropriate, and Delta may terminate the employment relationship at any time if Delta concludes in its sole judgment that an individual is not meeting Delta standards.
1000.6 Use of Drugs
Possession or use of cocaine, heroine, marijuana, or any hallucinogenic or illegal drug, whether or not on duty, will result in disciplinary action, including possible termination.

 In 1989, pursuant to regulations promulgated under the Drug Free Workplace Act, 41, U.S.C. §§ 701-707 (1988), Delta instituted a new Anti-Drug Program. As a part of its Anti-Drug Program, Delta decided to review its longstanding policy to terminate employees involved in any way with illegal drugs. Delta's evaluation of this policy began in early 1989 and culminated with the issuance, on September 15, 1989, by Delta's Senior Vice-President of Personnel, R. H. Heil, of a two-page written memorandum to all Delta personnel concerning Delta's "Anti-Drug Program." The memorandum was posted on the employee bulletin board where Shelby worked and a copy was distributed to all Delta employees, including Shelby. The memorandum provided in pertinent part as follows:

On March 17, 1989, we advised you that the FAA had recently set forth regulations requiring all certificated air carriers, such as Delta, to develop and implement programs to eliminate the effects of illegal drug use in the workplace. A major component of the FAA regulations involves the testing, by urinalysis, of certain groups of our personnel in the United States for the presence of illegal drugs. The FAA required drug testing must be started by all carriers no later than December 18, 1989. The purpose of this memo is to inform you about the details of Delta's substance-abuse policy, provide you with general information about the FAA requirements, and explain the steps we have taken to insure the integrity of the anti-drug program.
Delta's Policy
Historically, Delta has maintained an unwavering commitment to maintaining the very highest standards of safety in the airline industry. We have never tolerated the use of illegal drugs by our personnel, and given that drug abuse presents a discernible threat to safety, we must be committed to the prevention of illegal drug use at Delta Air Lines.
Realistically, it is recognized that there may be some current personnel who have developed drug dependency or patterns of casual drug use which may not be easy to change. Therefore, as a prelude to implementation of the FAA mandated drug testing program, those individuals will be given a fair opportunity to correct their problems.
Commencing September 18, 1989, and concluding on December 17, 1989, we will observe a 90-day amnesty period during which time any employee with a drug problem can voluntarily come forward and receive rehabilitation, counseling, or other professional assistance with the understanding that he will be returned to his present job upon successful completion of the program (and upon recertification where necessary). Individuals who come forward under this Amnesty Program will be permitted to use sick leave in order to undergo treatment and will not be subject to disciplinary action for drug usage. Individuals who choose to come forward may either contact their supervisor or our newly created Personal Assistance Programs Office . . . . Please note that the Amnesty Program does not alter in any way Delta's long-standing, absolute prohibition against the use of illegal drugs. The Amnesty Program applies only to those who voluntarily come forward to seek help during the 90-day period.
The Amnesty Program will conclude on December 17, 1989. It is expected that no later than that date, any Delta employee who is an illegal drug user will have taken the necessary steps to receive medical help or other assistance and will have ceased all use of illegal drugs. Commencing with our drug testing on December 18, 1989, there can be absolutely no tolerance for the use of unlawful substances by Delta personnel. Thus, at the conclusion of the Amnesty Program, any employee who is found to be using illegal drugs will be terminated.

  Two weeks after the issuance of this memorandum, Shelby was arrested at his apartment in Nashville. Shelby testified in his deposition that the arresting officer told him he was under arrest for a prior sale of cocaine he had made to an undercover informant in Clarksville, Montgomery County, Tennessee. He was then transferred to authorities in Montgomery County. On the morning following his arrest, Sunday, October 1, 1989, Shelby was scheduled to work the day shift. His wife, Tammy Shelby, called the home of one of Delta's lead agents *fn1" in Nashville, Ted Hackett, who was also a good friend of Shelby. She left a message on his answering machine for him to call her. Hackett testified in his deposition that he called Tammy Shelby back at about 10:30 a.m., and she told him that her husband had been arrested and was in the Montgomery County Jail. After speaking with Mrs. Shelby, Hackett testified he called the Montgomery County Sheriff's Department and was informed that Shelby had been released on bail and that he had been arrested for the possession and sale of cocaine. Later Shelby called Hackett at his home. *fn2" The parties dispute what was said during this phone conversation between Shelby and Hackett. Shelby testified in his deposition that he told Hackett he had a drug problem and of his arrest the previous night. Shelby claims he then asked Hackett about what his feelings were on the Delta Amnesty Program. Shelby asserts Hackett told him that because of the Amnesty Program outlined in the Anti-Drug Memo, he felt there would be no disciplinary action taken against him if he came forward voluntarily. Shelby testified that Hackett then told him he wanted to contact another lead agent and friend of Shelby's, Danny Sheehan, to discuss the situation. Shelby testified that he then proceeded to work his full shift that Sunday.

 After he got home from work, Shelby testified that Hackett called and stated that he had talked with Sheehan, they both agreed that Shelby would get help through the Amnesty Program, and he would not be terminated. According to Hackett, however, Shelby never asked, nor did Hackett give him any opinion or any advice concerning Delta's Anti-Drug Program during either of their two phone conversations. Hackett also testified that Shelby had called in sick that Sunday and therefore did not work. Shelby and Hackett both testified that Shelby asked Hackett what he should do, and Hackett told him that he should report the situation to the Stations Manager, Jim Britton.

 On the day after Shelby was bailed out of jail, October 2, 1989, he went to see his Stations Manager, Jim Britton. During that meeting, Shelby testified in his deposition that he informed Britton about his drug problem and his arrest. Shelby further testified he told Britton he desired to enter the Amnesty Program. Shelby testified that Britton then told him to go back to work, and Britton would call Atlanta to find out what he needed to do. Before walking out, Shelby testified that he once again stated his understanding that an Amnesty Program was in effect and of his desire to enter the program. Britton testified that he then spoke with the System Manager in Atlanta, Al Olmstead, and told him that Shelby had advised him that he had been arrested for the possession and sale of cocaine. Britton further testified that Olmstead told him to immediately suspend Shelby pending further review. In his deposition testimony, Britton denied that Shelby made any amnesty requests during either of their conversations on that day. Britton testified that Shelby also told him he had sold drugs twice, his arrest stemmed from these sales, he now had his life together after his marriage, and he was no longer using drugs. Shelby testified that about an hour after their initial conversation, Britton asked him to come into his office. Shelby testified Britton then told him that Delta personnel in Atlanta (corporate headquarters) had instructed him to place Shelby on immediate suspension.

 On that same day, Britton sent a memo to his boss in Atlanta, E. R. Andersen, Regional Manager-Stations, advising him that Shelby had informed him that he had been indicted for possession and sale of cocaine. The memo stated further that Shelby was placed on indefinite suspension with the concurrence of System Manager, Al Olmstead. Britton concluded his memo by noting that he had notified the Corporate Security Representative, Griffin Roberts, and the Director of Equal Opportunity, Richard Ealey, of the situation, and would make him aware of further details as they became known.

 On November 7, 1989, Britton sent another memo to Andersen advising him that Shelby had told him he had been indicted for possession and sale of a controlled substance and of Shelby's subsequent suspension. In the letter, Britton stated that Shelby admitted to him that he had purchased cocaine and delivered it to an acquaintance on two occasions as a favor and not for profit. Britton also stated Shelby had told him his lawyer was trying to work out a pretrial diversion program. Britton stated further that Shelby had been with Delta for over fifteen years, and he was an above-standard employee. Britton ended this letter by noting the seriousness of the situation and requesting guidance in the matter.

 Following the suspension, the case was then reviewed by management in the Corporate Stations Department and by Delta's Equal Opportunity Office. On November 14, 1989, Ealey decided to terminate Shelby immediately. However, the decision to terminate Shelby apparently was not properly communicated to the Regional Manager in Stations, E. R. Andersen. As a result, instead of advising the Nashville Station Manager to terminate Shelby, Anderson proceeded on the assumption that Delta would wait until the disposition of the Tennessee criminal proceedings before making a final employment decision on Shelby. Consequently, Shelby was left on suspension.

 On December 19, 1989, while he was on suspension, Shelby sent a letter to Delta requesting reinstatement. The letter, however, made no reference to Delta's Anti-Drug Program. On March 16, 1990, Shelby sent Britton a copy of the memorandum of understanding which he had entered into with the prosecuting authorities in Montgomery County, Tennessee. Britton forwarded the document to Mark Baxter of Delta's Equal Employment Opportunity office. The memorandum provided that Shelby would be subjected to a pretrial diversion program. Specifically, the memorandum provided that the charges against Shelby would be dismissed upon his compliance with the conditions of the agreement. At this point, the earlier communications breakdown was discovered. On March 21, 1990, Britton was expressly advised by Andersen to terminate Shelby. Britton then called Shelby and asked him to come in, but Shelby requested that Britton inform him of the decision by phone. Britton testified that he first requested that Shelby resign, but Shelby refused. Shelby refused to resign his position. At that point, Britton terminated Shelby.

 On March 27, 1990, Shelby wrote to R. H. Heil, author of the Anti-Drug Memo. Shelby specifically stated in this letter that the Amnesty Program was the deciding factor in his decision to advise Delta of his drug problem, and his suspension was contrary to the Amnesty Program as described in the memorandum. *fn3" In response to Shelby's letter, Heil advised Shelby that the reason for his termination was due to the fact that he had been convicted and fired for the possession of a controlled substance. Heil advised Shelby that Delta's policy was to immediately terminate any Delta employee arrested or convicted of possessing a controlled substance. Heil further advised Shelby that these employees were not eligible for the Amnesty Program. Shelby responded by letter stating that he had not been convicted or fined of possessing a controlled substance, and therefore was entitled to participate in the Amnesty Program. By letter, Heil informed Shelby that, regardless of whether he had technically been convicted, it was clear that he had been found in possession of an illegal substance which constituted conduct unbecoming of a Delta employee rendering him ineligible for the Amnesty Program. Shelby filed this suit shortly thereafter.


 Federal Rules of Civil Procedure 56(c) provides that summary judgment "shall be rendered . . . if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The party seeking summary judgment bears the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). In responding to a motion for summary judgment, the nonmoving party cannot rest on its pleadings, but must present some specific facts showing that there is a genuine issue for trial. See Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 324.

 A dispute about a material fact is "genuine" within the meaning of Rule 56(c) only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The mere existence of a scintilla of evidence in support of the nonmoving party's position is insufficient. Id. at 251. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Id. at 249-50. Of course, the Court must construe the evidence and all inferences to be drawn from it in the light most favorable to the nonmoving party. ...

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