Date: 07-29-2015

Case Style: Thomas R. Mason v. Telefunken Semiconductors America, LLC

Case Number: 14-1962

Judge: Selya

Court: United States Court of Appeals for the First Circuit on appeal from the District of New Hampshire (Merrimack County)

Plaintiff's Attorney: Kenneth J. Barnes, with whom Law Office of Kenneth J. Barnes,
Anne M. Rice, and Rice Law Office PLLC were on brief, for
appellant.

Defendant's Attorney: Irvin D. Gordon, with whom Sulloway & Hollis, P.L.L.C. was on
brief, for appellee.

Description: Concord, NH - First Circuit reverses district court's grant of summary judgment meaning of "termination" in employment contract

This case involves a series of
shifting employment arrangements. Plaintiff-appellant Thomas R.
Mason asserts that defendant-appellee TSI Semiconductors America,
LLC (TSA), formerly known as Telefunken Semiconductors America,
LLC, abridged his contractual rights with respect to no fewer than
three of these arrangements. At the summary judgment stage, the
district court concluded that Mason had failed to make out a
genuine issue of material fact sufficient to sustain any of his
claims. After careful consideration, we reverse in part, affirm
in part, and remand for further proceedings.
I. BACKGROUND
In 2009, Mason began work in a senior engineering
position for Tejas Silicon, Inc. (Tejas), a California-based
corporation with an office in New Hampshire. The terms of Mason's
employment were delineated in a written agreement (the Agreement)
that took effect on April 1, 2009. The Agreement contained a
section entitled "Consequences of Termination of Employment."
Part of this section permitted Tejas to terminate Mason's
employment without cause upon 60 days' written notice, in which
event Mason would be entitled to continued salary payments and
benefits for one year. If, however, the termination was "due to
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the acquisition, merger, or buyout by another entity," then Mason's
severance pay and benefits would continue for two years.2
The Agreement stipulated that Mason's employment was for
a fixed term (one year), which would renew automatically on each
anniversary of the Agreement's effective date unless either party
elected not to renew. An election not to renew could be made by
providing written notice no fewer than 30 days prior to the
anniversary date.
Mason's employment with Tejas continued uneventfully for
two years, and the Agreement renewed automatically on April 1,
2010 and April 1, 2011. The landscape changed, though, in December
of 2011 when Mason learned of an impending corporate
restructuring.3 As Mason understood it, Tejas would terminate his
employment and TSA would offer him new employment. Soon
thereafter, TSA wrote to Mason and offered him employment in his
then-current position at his then-current salary, beginning
January 1, 2012 (the Offer Letter).
2 The Agreement entitled Mason, in certain circumstances, to
immediate vesting of stock options as part of a severance package.
Because this appeal is not concerned with the quantum of damages
(if any) to which Mason may be entitled, we make no further
reference to the stock option provisions.
3 The parties dispute the nature of the corporate event that
ultimately transpired. TSA maintains that Tejas continues to exist
as a separate and independent entity; Mason maintains that Tejas
was merged into TSA. Our disposition of this appeal does not
require us to resolve this dispute, and we shall refer to this
event neutrally as the "2011 reorganization."
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Mason decided to accept employment with TSA and, in
December of 2011, signed four documents: a document entitled
"Amendment to Employment Agreement" (the Amendment); the Offer
Letter; a document entitled "Employment, Confidential Information
and Invention Assignment Agreement" (the New Agreement); and a
document entitled "Employee Transfer Agreement and General
Release" (the Release). By its terms, the Amendment was to take
effect on January 1, 2012. Mason, Tejas, and TSA all signed it,
thus memorializing their mutual intent to amend the Agreement.
The Amendment went on to state that, "effective as of
January 1, 2012," each reference to Tejas in the Agreement would
be replaced by a reference to TSA; that Tejas would "transfer and
assign to [TSA] the Agreement and all of its rights, duties and
obligations thereunder"; and that TSA would assume those rights,
duties, and obligations. It also provided that "the Agreement
shall continue under [Mason's] employment relationship with
[TSA]."
The Offer Letter, though, provided that Mason's
employment with TSA would be "for no specified period of time" and
would be "an at-will employment relationship," under which either
Mason or TSA could "terminate the relationship at any time, for
any reason, with or without cause." Apparently in response to
this language, Mason wrote (in the signature block of the Offer
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Letter) the words "As Amended (Attached)" and annexed a copy of
the Amendment.
The New Agreement contained, in capital letters, Mason's
acknowledgment "that, except as set forth in any other written
agreement between me and the company, my employment with the
company constitutes 'at-will' employment." Mason executed this
document without any qualification.
To complete the picture, the Release provided that, in
exchange for $1000 and the offer of new employment by TSA, Mason
would "ABSOLUTELY AND IRREVOCABLY AND UNCONDITIONALLY" release TSA
from "any and all claims" against TSA or its "[r]elated [p]arties,"
including claims arising "as a result of [his] employment with and
separation from employment" as of December 31, 2011. Here again,
Mason added a holographic coda, stating cryptically "EXCEPT AS
AMENDED IN 'AMENDMENT TO EMPLOYMENT AGREEMENT.'"
In January of 2012, Mason began toiling for TSA. Two
months later — on February 29 — TSA sent him an e-mail announcing
that the Agreement "will not be extended for an additional oneyear
period and will automatically expire April 1, 2012." The email
proposed that, should the parties "agree to continue the
employment relationship on and after April 1, 2012, then the
employment relationship shall be in accordance with" the Offer
Letter and the New Agreement.
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Mason sought to clarify whether his employment with TSA
was being terminated as of April 1. In an e-mail sent on March
31, TSA responded that it was not terminating Mason's employment
but, rather, was simply declining to renew the Agreement. It went
on to state that Mason's subsequent employment would be governed
by the documents signed in December of 2011 (including specifically
the Offer Letter and the New Agreement). Mason continued to work
for TSA until May 17, 2012, when TSA furloughed him as part of a
company-wide reduction in force.
Mason did not go quietly into this bleak night. He
repaired to a California state court and sued TSA for breach of
contract, breach of the implied covenant of good faith and fair
dealing, and violation of section 203 of the California Labor Code.
Citing diversity of citizenship and the existence of a controversy
in the requisite amount, TSA removed the case to federal district
court. See 28 U.S.C. §§ 1332(a), 1441. It thereafter successfully
moved to transfer venue to the District of New Hampshire. See id.
§ 1404(a).
After the close of discovery, the parties cross-moved
for summary judgment. Mason resisted summary judgment on his
breach of contract claims, asserting that there were genuine issues
of material fact as to whether any of three separate events — the
December 2011 reorganization, the February 2012 non-renewal, and
the May 2012 layoff — constituted a termination without cause that
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triggered the duty to pay severance. The district court entered
summary judgment in favor of TSA upon concluding that on a plain
reading of the relevant contractual provisions, none of these
events constituted a termination under the Agreement. See Mason
v. Telefunken Semiconductors Am., LLC, No. 12-507, 2014 WL 3962470,
at *8 (D.N.H. Aug. 13, 2014). This timely appeal followed.
II. ANALYSIS
We review a decision to grant or deny summary judgment
de novo. See Bisbano v. Strine Printing Co., 737 F.3d 104, 107
(1st Cir. 2013); Avery v. Hughes, 661 F.3d 690, 693 (1st Cir.
2011). In this instance, Mason appeals only the district court's
entry of summary judgment in favor of TSA, not the court's denial
of his own motion for summary judgment. Hence, we take the facts
and the reasonable inferences extractable therefrom in the light
most favorable to Mason. See Torres Vargas v. Santiago Cummings,
149 F.3d 29, 30 (1st Cir. 1998). We will affirm only if we are
satisfied that there is no genuine issue of material fact and TSA
is entitled to judgment as a matter of law. See Vineberg v.
Bissonnette, 548 F.3d 50, 55 (1st Cir. 2008). Such an affirmance
may rest on any ground made manifest by the record. See Houlton
Citizens' Coal. v. Town of Houlton, 175 F.3d 178, 184 (1st Cir.
1999).
Since this is a diversity case, we look to federal law
for the summary judgment framework and to state law for the
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substantive rules of decision. See Hanna v. Plumer, 380 U.S. 460,
473 (1965); Artuso v. Vertex Pharm., Inc., 637 F.3d 1, 5 (1st Cir.
2011). The parties have stipulated that California is the
wellspring of the relevant state law, and that stipulation jibes
with the choice-of-law provisions contained in the Agreement and
the Amendment. Consequently, we accept this stipulation at face
value without performing a full-blown choice-of-law analysis. See
Butler v. Balolia, 736 F.3d 609, 612 (1st Cir. 2013); Artuso, 637
F.3d at 5.
This appeal necessarily rises or falls with the breach
of contract claims. In contract disputes, the court may construe
clear and unambiguous contract terms as a matter of law. See
Torres Vargas, 149 F.3d at 33. If, however, ambiguity lurks, an
examination of extrinsic evidence "becomes essential." Id.
California follows the familiar rule that an ambiguity
arises if, when viewed in context, a contract term is equally
susceptible to more than one reasonable meaning. See Dore v.
Arnold Worldwide, Inc., 139 P.3d 56, 60 (Cal. 2006); Transamerica
Ins. Co. v. Superior Court, 35 Cal. Rptr. 2d 259, 264 (Cal. Ct.
App. 1994). Whether a contract term is ambiguous is itself a
question of law. See Blackie v. Maine, 75 F.3d 716, 721 (1st Cir.
1996); Allen v. Adage, Inc., 967 F.2d 695, 698 (1st Cir. 1992).
Against this backdrop, a series of questions must be
asked concerning each of Mason's breach of contract claims. To
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begin, an inquiring court must ask whether the dispositive contract
language is susceptible to more than one reasonable
interpretation. See Torres Vargas, 149 F.3d at 33. If not, the
court may proceed to construe the language and dispose of the
summary judgment motion accordingly. See Newport Plaza Assocs. v.
Durfee Attleboro Bank (In re Newport Plaza Assocs.), 985 F.2d 640,
644 (1st Cir. 1993). But if there is more than one reasonable
interpretation, the court must then ask whether the extrinsic
evidence reveals a genuine issue of material fact regarding the
meaning of the ambiguous language. See Allen, 967 F.2d at 698.
If the extrinsic evidence is "so one-sided that no reasonable
person could decide the contrary," the meaning of the language
becomes evident and the erstwhile ambiguity will not preclude
summary judgment. Bos. Five Cents Sav. Bank v. Sec'y of Dep't of
HUD, 768 F.2d 5, 8 (1st Cir. 1985). But if the extrinsic evidence
bearing on the meaning of the relevant language is "contested or
contradictory," summary judgment will not lie. Allen, 967 F.2d at
698 n.3.

With this framework in place, we turn to Mason's breach
of contract claims. We address the purported termination events
sequentially.
A. The December 2011 Reorganization.
Mason's flagship claim is that the district court erred
in granting summary judgment on his breach of contract claim
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arising out of the 2011 reorganization and the concomitant
cessation of his employment with Tejas. He argues that the
relevant contractual provisions are ambiguous and that a genuine
issue of material fact exists regarding the contracting parties'
understanding of the Agreement's termination clause.
Termination is not defined in the Agreement, and the
drafters obviously used the word in more than one sense. At
various places, the termination clause refers to termination "of
employment" generally, termination of "[the employee's]
employment" specifically, and termination of "employment with the
Company." Mason insists that one reasonable interpretation of the
Agreement is that the parties intended for termination to have the
relatively narrow meaning of termination of employment with Tejas.
He suggests that construing a termination clause to require
severance payments regardless of new employment comports with the
norm for companies in Tejas's industry and with other surrounding
language in the Agreement.
TSA demurs. It argues that the plain meaning of
"terminate" is to "discontinue" or "sever," and that Mason's
employment was neither discontinued nor severed but, rather,
transferred seamlessly from Tejas to TSA. Thus, Mason's employment
could not have "terminated" because he was never without a job.4
4 There is some inherent tension in TSA's position. On the
one hand, it argues that it is not a successor entity to Tejas and
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"[W]ords are like chameleons; they frequently have
different shades of meaning depending upon the circumstances."
United States v. Romain, 393 F.3d 63, 74 (1st Cir. 2004). This
adage is relevant because the termination clause in the Agreement
is imprecise and, as such, is susceptible to either of the
competing interpretations urged by the litigants. After all, the
Agreement uses the word "termination" loosely, in reference to
"termination of employment," termination of "[the employee's]
employment," and termination of employment "with the Company."
Then, too, with respect to the continuation of benefits, the
contracting parties appear to have contemplated the possibility of
new employment following termination, yet they did not make clear
how that new employment would relate to severance benefits.
Finally, the Agreement contemplates the possibility of termination
due to "acquisition, merger, or buyout" but does not expressly
preclude severance payments even in the event of employment by the
successor entity.
In our estimation, TSA's invocation of dictionary
definitions does not assist its cause. Even if we assume that
the language of the Release (which TSA drafted) indicates that it
sought to hire Tejas employees free and clear of obligations owed
by Tejas. On the other hand, TSA argues that Mason's employment
with Tejas transferred seamlessly from Tejas to TSA without any
termination of Mason's employment. "Having one's cake and eating
it, too, is not in fashion in this circuit," United States v.
Tierney, 760 F.2d 382, 388 (1st Cir. 1985), and we are skeptical
that TSA can have it both ways.
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"terminate" means "discontinue" or "sever," as TSA insists,
Mason's employment with Tejas could reasonably be found to have
been discontinued or severed regardless of any "transfer" to TSA.
Moreover, our doubts about the meaning of "terminate" must be
weighed in light of a legal regime prescribing that "unemployment
is not a prerequisite to the right to separation pay." Chapin v.
Fairchild Camera & Instrum. Corp., 107 Cal. Rptr. 111, 115 (Cal.
Ct. App. 1973). Rather, such a right "may, and frequently does,
exist where there is no interruption whatever in the continuity of
employment." Id.
The upshot is that the Agreement fails to make clear
whether the contracting parties intended that a termination
sufficient to trigger the payment of severance benefits could occur
even in the event of immediate reemployment by another entity as
part of a company-to-company transaction. Consequently, the
termination clause is ambiguous as a matter of law.
The question, then, reduces to whether the extrinsic
evidence relating to the meaning of the clause is so conclusive
that it dispels the ambiguity. See Torres Vargas, 149 F.3d at 33;
Bos. Five Cents, 768 F.2d at 8. In ascertaining the meaning of a
contract term, evidence of the contracting parties' intent at the
time of contract formation is most significant. See People ex
rel. Lockyer v. R.J. Reynolds Tobacco Co., 132 Cal. Rptr. 2d 151,
158 (Cal. Ct. App. 2003). This principle applies even where, as
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here, one of the litigants was not a signatory to the Agreement:
under California law, a successor in interest to a contract who
has not renegotiated the terms of the contract is bound by the
meaning assigned to its terms by the original parties. See Applera
Corp. v. MP Biomeds., LLC, 93 Cal. Rptr. 3d 178, 196 (Cal. Ct.
App. 2009); Spector v. Nat'l Pictures Corp., 20 Cal. Rptr. 307,
312 (Cal. Ct. App. 1962). TSA is therefore bound by the shared
intent of the contracting parties to the Agreement (Mason and
Tejas).5 See Spector, 20 Cal. Rptr. at 312. Of course, postformation,
pre-dispute conduct also may bear on the meaning of a
contract's terms. Under California law, evidence of such conduct
may be relevant in ascertaining the contracting parties' shared
understanding of a contract's original meaning. See Oceanside 84,
Ltd. v. Fid. Fed. Bank, 66 Cal. Rptr. 2d 487, 492-93 (Cal. Ct.
App. 1997).
Here the record is largely devoid of any extrinsic
evidence showing a shared understanding between Mason and Tejas
about the meaning of "termination" as that term is used in the
Agreement. What extrinsic evidence exists is not so one-sided as
to cure the ambiguity and compel a finding against Mason. For
5 We note that the Amendment did not alter any of the
substantive terms of the Agreement. It merely memorialized the
parties' understanding that TSA would assume Tejas's rights and
duties under the Agreement and effectuated that assumption by
substituting TSA for Tejas in the Agreement's text.
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example, there is conflicting evidence anent the nature of the
2011 reorganization and whether the contracting parties thought at
the time of the reorganization that Mason's employment with Tejas
was being terminated without cause.
The post-formation evidence on which TSA relies
(principally, Mason's failure to seek severance payments during
the first two months of his employment with TSA) is subject to
varying interpretations. Furthermore, one of Mason's sworn
statements avers that he and Tejas's president (who signed the
Agreement on Tejas's behalf) understood the 2011 reorganization to
constitute a termination under the Agreement, regardless of
whether Mason decided to cast his lot with the successor firm.6
As post-formation, pre-dispute evidence, the Amendment
itself (although signed by Mason, Tejas, and TSA) tells us very
little. Its preamble states that "as part of [a] corporate
consolidation and reorganization, Tejas will be merged into and
with [TSA] or will be dissolved as a corporate entity after January
1, 2012, and [Mason] will become employed by [TSA] as of January
1, 2012." Withal, the Amendment is totally silent as to the
6 We note that Mason also relies upon the sworn statement of
the former Tejas president as evidence that Tejas terminated
Mason's employment within the meaning of the Agreement. As the
admissibility of this affidavit was controverted in the court
below, we give it no weight in our analysis. Similarly, we leave
open the relevance of a document composed by TSA as part of the
2011 reorganization (colloquially known as "Exhibit A").
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mechanics of how Mason would cease to work for Tejas and start to
work for TSA. It is equally silent as to the implications of those
actions, including whether Mason was entitled to severance
benefits as a result.
The short of it is that ascertaining the meaning of the
termination clause in the context of the 2011 reorganization hinges
largely on the credibility of Mason's claims as to the contracting
parties' shared intent and the inferences to be drawn from the
circumstances surrounding the signing of the Amendment and the
parties' conduct. Such matters are open to reasonable dispute
and, therefore, are not the stuff of summary judgment. Rather,
they are squarely within the province of the factfinder. See,
e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986);
Mandel v. Bos. Phoenix, Inc., 456 F.3d 198, 206 (1st Cir. 2006).
TSA has a fallback position. It argues that even if
Mason's employment with Tejas was terminated in December of 2011,
the Release operated to absolve TSA of any liability for severance
benefits owed to Mason. This argument lacks force.
By its terms, the Release discharged TSA from "any and
all claims" that Mason may have had, including any claims resulting
from his separation from employment effective December 31, 2011.
TSA posits that this instrument extinguished any claim that Mason
may have had against TSA for severance benefits as a result of the
termination of his Tejas employment. Although this argument has
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a certain superficial appeal, it fails to take into account Mason's
handwritten coda to the Release, which stated "EXCEPT AS AMENDED
IN 'AMENDMENT TO EMPLOYMENT AGREEMENT.'" According to one of
Mason's sworn statements, this coda was intended to exempt from
the Release any severance obligations Tejas owed to him under the
Agreement — and its wording is reasonably susceptible to that
interpretation. And if those obligations were exempted from the
Release — a matter on which we take no view — TSA might have
assumed them by operation of the Amendment.
To sum up, the handwritten coda, though not compelling
Mason's construction, renders the Release susceptible to more than
one reasonable interpretation. Extrinsic evidence in the record
does not relieve this uncertainty. It follows that the Release
does not, as a matter of law, bar Mason's claim for severance
benefits arising out of the 2011 reorganization. See Torres
Vargas, 149 F.3d at 33; Allen, 967 F.2d at 698 n.3.
That ends this aspect of the matter. Because genuine
issues of material fact permeate the record, the district court
should not have granted TSA's motion for summary judgment on
Mason's claim for severance benefits arising out of the 2011
reorganization.
B. The February 2012 Non-Renewal.
Mason next claims that TSA terminated his employment
without cause when it notified him in February of 2012 that it
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would not renew the Agreement but would let it expire on March 31,
2012. The district court rejected this claim, granting summary
judgment in favor of TSA on the basis that non-renewal was not
tantamount to termination. See Mason, 2014 WL 3962470, at *8.
As said, the effective date of the Agreement was April
1, 2009. Its non-renewal clause explains that Tejas (and by
substitution, TSA) agreed to employ Mason "for a period commencing
on the Effective Date and ending on the first anniversary of the
Effective Date (the 'Term')." The "Term" would be extended for
additional one-year periods unless either party gave written
notice of its exercise of the non-renewal option "at least thirty
(30) days prior to the applicable anniversary of the Effective
Date."
Mason first asserts that the non-renewal clause is
ambiguous as to whether the exercise of the right of non-renewal
had the effect of ending his employment with TSA or simply ending
the protections provided by the Agreement. In his view, employment
under the Agreement was not merely "labor for wage" but, rather,
"a specific relationship with a specific employer . . . for
particular and agreed upon terms and conditions." When employment
under those terms and conditions ended, his thesis runs, the
employment itself was necessarily terminated and the duty to pay
severance benefits was kindled.
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Words are not infinitely malleable, see, e.g.,
Levinsky's, Inc. v. Wal-Mart Stores, Inc., 127 F.3d 122, 129 (1st
Cir. 1997), and a contract term is not ambiguous simply because an
imaginative party conjures up an alternate interpretation, see
F.D.I.C. v. Singh, 977 F.2d 18, 22 (1st Cir. 1992); Lockyer, 132
Cal. Rptr. 2d at 158. Read naturally, the non-renewal clause is
not susceptible to Mason's proffered interpretation. After all,
a contract term should not be construed in isolation; rather, it
should be construed in light of the contract as a whole. See,
e.g., Powerine Oil Co. v. Superior Court, 118 P.3d 589, 598 (Cal.
2005). By the same token, a court should construe a contract to
give effect to each material term and not to render any term
meaningless. See Lueras v. BAC Home Loans Servicing, LP, 163 Cal.
Rptr. 3d 804, 823 (Cal. Ct. App. 2013). These tenets help to
explain why Mason's claim fails.
"Non-renewal" and "termination" are distinct terms
having different meanings.7 Here, moreover, the structure of the
7 "Termination" is typically defined as the "act of bringing
to an end or concluding," Webster's Third New International
Dictionary 2359 (2002), or a "conclusion or discontinuance,"
Black's Law Dictionary 1700 (10th ed. 2014). By contrast,
"nonrenewal" means "a failure to renew," see id. at 1220, where
"renew" typically means to "make or do again," Webster's Third New
International Dictionary 1922 (2002), or to "restor[e] or
reestablish[]," Black's Law Dictionary 1488 (10th ed. 2014). This
difference in meaning is all the more clear where, as here, the
words refer to different objects: as to termination, the Agreement
speaks to various kinds of termination of employment, but as to
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Agreement makes it nose-on-the-face plain that the contracting
parties never intended to use those distinct terms synonymously.
First, the non-renewal clause appears in section two of the
Agreement under the heading "Term," whereas the termination clause
appears in section six under the heading "Consequences of
Termination of Employment." See, e.g., Alameda Cnty. Flood Control
v. Dep't of Water Res., 152 Cal. Rptr. 3d 845, 862 (Cal. Ct. App.
2013) (applying rule that "[w]here the same word or phrase might
have been used . . . in different portions of a [contract] but a
different word or phrase having different meaning is used instead,
the construction employing that different meaning is to be favored"
(internal quotation marks omitted)). Second, the contracting
parties' intent to define different meanings is well-illustrated
by comparing the 30-day notice requirement in the non-renewal
clause with the 60-day notice requirement in the "without cause"
portion of the termination clause. If the parties had intended
non-renewal to constitute termination under the Agreement, there
would have been no need for disparate notice periods. Indeed,
such disparate periods would make no sense.
In an effort to blunt the force of this reasoning, Mason
argues that the disparate notice periods do not foreclose the
possibility that non-renewal is a form of termination. He suggests
non-renewal, the Agreement speaks to non-renewal of the term of
the contract.
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that a jury reasonably could conclude that the contracting parties
agreed to a shorter notice period for non-renewal because they
anticipated the possibility that a decision not to renew might
occur closer to the anniversary date. But common sense
defenestrates this suggestion. For one thing, Mason's
interpretation would hollow out the bargained-for 60-day notice
requirement for termination without cause. For another thing,
there is a common-sense explanation for the disparate notice
periods: that termination would end employment with TSA altogether
whereas non-renewal would only eliminate certain protections under
the Agreement. Mason's suggested reading completely overlooks
this explanation.
The marketplace rationale for such a common-sense
reading is apparent. The severance provisions for termination
without cause are generous (but perhaps more ephemeral than Mason
would have liked), and the contracting parties may well have wanted
to ensure that either side could revisit those provisions
periodically. The non-renewal clause offered the parties just
such a vehicle.
To say more about this claim would be supererogatory.
We hold that the non-renewal clause is not ambiguous in the context
of the Agreement as a whole. See Dore, 139 P.3d at 60. Giving
the contract language its plain meaning, see id., TSA's exercise
of the non-renewal option did not work a termination of employment
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within the meaning of the Agreement and, thus, did not trigger an
entitlement to severance payments. Accordingly, the district
court did not err in granting summary judgment on this claim.
C. The May 2012 Layoff.
In the court below, Mason contended that TSA's
termination of his employment as part of a company-wide reduction
in force on May 17, 2012 constituted termination without cause
within the purview of the Agreement and, thus, triggered an
entitlement to severance payments. Because Mason did not renew
this contention in his opening brief on appeal, he waived it. See
DeCaro v. Hasbro, Inc., 580 F.3d 55, 64 (1st Cir. 2009). And while
Mason did attempt to resurrect this contention in his reply brief,
that was too late. See Cipes v. Mikasa, Inc., 439 F.3d 52, 55
(1st Cir. 2006); Sandstrom v. ChemLawn Corp., 904 F.2d 83, 87 (1st
Cir. 1990).
We add that even if this contention had been preserved
on appeal, it would fail in light of our holding that TSA's timely
exercise of its right of non-renewal terminated the Agreement
without terminating Mason's employment. See supra Part II.B. We
explain briefly.
To begin, TSA validly exercised its right of non-renewal
effective March 31, 2012. Consequently, Mason's subsequent
employment was not covered by the Agreement but, instead, was for
"no specified term." Cal. Lab. Code § 2922. Under California
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law, employment without a fixed term is presumed to be at will.
See id.; Guz v. Bechtel Nat'l, Inc., 8 P.3d 1089, 1100 (Cal. 2000).
Mason attempts to overcome this presumption. He
suggests that since he continued to work for TSA after the
expiration of the Agreement, performing the same tasks under the
same job title for the same salary and benefits as he previously
had received, an implied-in-fact contract arose between April 1
and May 17. In his view, this implied contract amounted to a
continuation of the Agreement, so that he enjoyed the same
severance protections on May 17 as he had when the Agreement was
in force.
This is little more than wishful thinking. Under
California law, a court cannot imply a contract in fact containing
terms that directly contradict terms of an express at-will
agreement. See Tomlinson v. Qualcomm, Inc., 118 Cal. Rptr. 2d
822, 830 (Cal. Ct. App. 2002); Halvorsen v. Aramark Unif. Servs.,
Inc., 77 Cal. Rptr. 2d 383, 385 (Cal. Ct. App. 1998). This is
especially true where the written agreement was signed by the
employee and expressly limits the manner in which the at-will
provisions may be altered. See, e.g., Starzynski v. Capital Pub.
Radio, Inc., 105 Cal. Rptr. 2d 525, 529 (Cal. Ct. App. 2001).
Here, Mason signed two documents in December of 2011 — the Offer
Letter and the New Agreement — which explicitly acknowledged that,
absent the Agreement, his employment with TSA would be at will.
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What is more, each document stipulated that the at-will provisions
could not be altered except by a writing signed both by Mason and
TSA's president. In the face of these unmodified documents, Mason
cannot overcome the presumption that his employment on May 17 was
at will. See id. Therefore, his layoff did not entitle him to
the prophylaxis of the Agreement (which had by then expired). See
Halvorsen, 77 Cal. Rptr. 2d at 385.
In an effort to change the trajectory of the debate,
Mason argued below that even if his implied contract argument
failed, the non-renewal of the Agreement did not take effect on
April 1 because the Amendment (which had an effective date of
January 1) by some mysterious alchemy caused the Agreement's
effective date to migrate from April 1 to January 1. By this
logic, the non-renewal could not have been effective before
December 31, 2012 — and Mason would have still been covered by the
Agreement (and its severance protections) when he was laid off in
May.
This argument is jejune. The Amendment makes pellucid
that the only aspect of the Agreement that it altered was to
substitute TSA for Tejas. It provided that this substitution would
take effect on January 1, 2012, but it did not provide that either
the term of the Agreement or its effective date would in any way
be revised.
- 24 -
That is game, set, and match. We hold that Mason's claim
for severance benefits stemming from his layoff on May 17, 2012
has been waived; and that, in all events, summary judgment on that
claim was appropriate.

* * *

So Ordered.
8 Our decision today does not deal with Mason's claim for
breach of the implied covenant of good faith and fair dealing.
Even though the district court did not address this claim in any
meaningful way, it granted judgment on the case as a whole, and
Mason took pains to preserve this particular claim on appeal.
Given this sequence of events, we deem it prudent to refrain from
addressing the matter here and, instead, leave it open on remand.
Cf. United States v. Ticchiarelli, 171 F.3d 24, 29 (1st Cir. 1999).
In contrast, Mason did not preserve on appeal his claim for a
violation of the California Labor Code. Thus, we deem that claim
foreclosed on remand. See, e.g., United States v. Connell, 6 F.3d
27, 30 (1st Cir. 1993).

Outcome: We need go no further.8 For the reasons elucidated
above, we reverse the district court's summary judgment ruling in
part, affirm that ruling in part, and remand for further
proceedings consistent with this opinion. No costs shall be taxed
on appeal.

Plaintiff's Experts:

Defendant's Experts:

Comments: