Michael Mele v. FEDERAL RESERVE BANK OF NEW YORK On Appeal from the United States District Court for…

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PRECEDENTIAL
UNITED STATES
COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-1556
MICHAEL MELE,
Appellant
v.
FEDERAL RESERVE BANK
OF NEW YORK
On Appeal from the
United States District Court for the
District of New Jersey
(Dist. Ct. No. 02-cv-01216)
District Judge: Hon. Anne E. Thompson
Argued: November 18, 2003
Before: RENDELL, BARRY, and
CHERTOFF, Circuit Judges
(Filed: February 24, 2004)
Brian E. Fleisig (Argued)
Pearce & Massler
25 Main Street
Court Plaza North
Hackensack, NJ 07601-7025
Counsel for Appellant
Yoon Hi Greene (Argued)
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Shari Leventhal
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Counsel for Appellee
OPINION
CHERTOFF, Circuit Judge.
Appellant Michael Mele alleges his
employment was terminated in violation of
the Federal Reserve Bank of New York’s
(“the Bank”) Management Guide to
Personnel Policies (“Guide”). The District
Court granted the Bank’s motion to
dismiss all counts on the pleadings
pursuant to Fed. R. Civ. P. 12(c).1 For the
1 Rule 12(c) provides: “After the
pleadings are closed but within such time
as not to delay the trial, any party may
move for judgment on the pleadings. If,
on a motion for judgment on the
pleadings, matters outside the pleadings
are presented to and not excluded by the
court, the motion shall be treated as one
for summary judgment and disposed of as
provided in Rule 56, and all parties shall
be given reasonable opportunity to present
all material made pertinent to such a

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

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

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

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

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

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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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