Carl E. Thomas v. Guardsmark , Inc .

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-1593
C ARL E. T HOMAS ,
Plaintiff-Appellant,
v.
G UARDSMARK , I NC .,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 02 C 8848óSuzanne B. Conlon, Judge.
____________
A RGUED N OVEMBER 3, 2003óD ECIDED A UGUST 27, 2004
____________
Before P OSNER , D IANE P. W OOD , and E VANS , Circuit
Judges.
D IANE P. W OOD , Circuit Judge. On November 16, 2001,
Guardsmark, Inc. indefinitely suspended its employee, secur-
ity officer Carl Thomas, after he suggested in a televised
interview that Guardsmark did not adequately screen its
employees for prior felony convictions. Almost a year later,
Thomas filed suit against Guardsmark, alleging retaliatory
discharge in violation of Illinois public policy. After remov-
ing to federal district court, Guardsmark successfully moved
for judgment on the pleadings pursuant to FED . R. C IV . P.
12(c). Guardsmark argued, and the district court agreed,
that Thomas was ìeffectively dischargedî at the time he was

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2 No. 03-1593
suspended, and thus his action was barred by a six-month
limitations period found in his Employment Agreement with
Guardsmark. For the reasons discussed below, we reverse
and remand to the district court for development of the record
regarding Thomasís employment status after Guardsmark
indefinitely suspended him in November 2001.
I
In September 1998, Guardsmark hired Thomas to work
as a security officer for a CITGO oil refinery in Lemont,
Illinois. As a condition of his employment, Thomas signed
an Employment Agreement, which detailed the terms and
conditions of his employment. The Agreement specified that
ì[e]xcept for charges or claims filed with the Equal
Employment Opportunity Commission or under any of the
statutes enforced by said agency, any legal action or pro-
ceeding related to or arising out of this Agreement or the
employment of Employee by Guardsmark must be brought
by Employee within six months of the date the cause of
action arose or it shall be time-barred.î It also provided that
Tennessee law would ìgovern the interpretation, validity,
and effect of this Agreement.î Thomas and a Guardsmark rep-
resentative signed the Agreement on September 21, 1998.
In November 2001, an investigative reporter for a local news
station contacted Thomas in connection with a story about
regulation of the security industry in Illinois. In an on-camera
interview, Thomas stated that a fellow Guardsmark security
officer at the CITGO refinery had bragged about his felony
record. Thomas also opined that convicted felons should not be
trusted to provide security at installations that are likely
terrorist targets, such as oil refineries. The story was broad-
cast on November 8, 2001, and eight days later, Edward
Healy, Vice President and Manager of Guardsmarkís
Chicago office, informed Thomas that his employment was
indefinitely suspended because of his unauthorized inter-

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No. 03-1593 3
view with the news station. Since then, Guardsmark has not
compensated Thomas or allowed him to perform services for
the company.
On October 31, 2002, Thomas filed a one-count complaint
against Guardsmark and Healy in the Circuit Court of Cook
County, alleging retaliatory discharge in violation of the
public policy of the State of Illinois. Guardsmark removed
to federal district court, arguing that Thomas, an Illinois
citizen, had improperly joined Healy, also an Illinois citizen,
and that full diversity would exist if the latter were dis-
missed. When Thomas filed suit, Guardsmark was a
Delaware corporation with its principal place of business in
Tennessee; by the time it filed its notice of removal, it had
converted into a limited liability corporation, with members
who are citizens of New York and Tennessee. See
Kanzelberger v. Kanzelberger, 782 F.2d 774, 776 (7th Cir.
1986) (providing that ìdiversity must exist both when the
suit is filedóas the statute itself makes clear, see 28 U.S.C.
ß 1441(a)óand when it is removedî). The court granted
Guardsmarkís motion to dismiss Healy and then denied
Thomasís motion to remand. After filing its answer, to which
it attached the Employment Agreement, Guardsmark
moved for a judgment on the pleadings pursuant to F ED . R.
CIV. P. 12(c). The court granted the motion, finding Thomasís
claim barred by the six-month limitations period provided
in the Agreement. This appeal followed.
II
As a preliminary matter, we briefly address Guardsmarkís
motion to strike, which asks that we disregard several pages
of Thomasís supplemental appendix that were not included
in the record before the district court. These materials docu-
ment his efforts to access his Guardsmark 401(k) retirement
plan following his indefinite suspension. We deny
Guardsmarkís motion, on the ground that Thomas provided

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4 No. 03-1593
these materials not for evidentiary, but rather for illustra-
tive purposesóthat is, not to establish the truth of their
contents, but to show that there might be a set of facts
consistent with his allegations in the complaint, such that
the Agreementís six-month limitations period would not bar
his claim. In any event, as the discussion that follows
makes clear, we have not taken these documents into ac-
count in holding that Guardsmark cannot prevail on its
motion for judgment on the pleadings.
We review de novo Rule 12(c) motions for judgment on the
pleadings. Midwest Gas Servs., Inc. v. Ind. Gas Co., 317 F.3d
703, 709 (7th Cir. 2003). Such a motion should be granted
ìonly if it appears beyond doubt that the plaintiff cannot
prove any facts that would support his claim for relief. In
evaluating the motion, we accept all well-pleaded allega-
tions in the complaint as true, drawing all reasonable in-
ferences in favor of the plaintiff.î Id. (internal citations and
quotation marks omitted); Forseth v. Vill. of Sussex, 199 F.3d
363, 368 (7th Cir. 2000) (ìA complaint may not be dismissed
unless it is impossible to prevail under any set of facts that
could be proved consistent with the allegations.î (internal
quotation marks omitted)).
Thomas presents three arguments in support of his posi-
tion that his retaliatory discharge claim is not barred by the
six-month limitations period provided in the Employment
Agreement. First, he contends that the Agreement does ìnot
constitute a binding and enforceable contract.î In order to
evaluate this point, we must determine what body of law
governs the validity of the Agreement. The Agreement itself
provides that Tennessee law ìgovern[s] the interpretation,
validity, and effect of this Agreement.î In a diversity case,
the federal court must apply the choice of law rules of the
forum state to determine applicable substantive law.
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496
(1941). Illinois respects a contractís choice-of-law clause as
long as the contract is valid and the law chosen is not contrary

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No. 03-1593 5
to Illinoisís fundamental public policy. Fulcrum Fin. Partners
v. Meridian Leasing Corp., 230 F.3d 1004, 1011 (7th Cir.
2000). As an abstract matter, we see nothing in Illinoisís
choice-of-law rules that would preclude recognizing the
selection of Tennessee law on the question of the validity of
the contract. (No one is disputing that the Agreement
exists, or that both parties signed it.) Nonetheless,
Guardsmark concedes in its brief that ì[u]ntil the district
court had determined that a valid contract containing a choice
of law clause existed, it was appropriate for the court to
apply Illinois law to the contract to determine the threshold
question of validity.î Appelleeís Brief at 9 n.4. This con-
cession makes it unnecessary for us to decide whether
Illinois or Tennessee law applies to this threshold issue, or
if those two laws differ in any material sense.
Thomas argues that the Agreement is unenforceable both
because Guardsmark did not review and approve the
Agreement, as required by the Agreement itself, and because
the Agreement ìcreate[d] no obligation on Guardsmark.î
Neither of these arguments is persuasive. The preamble of
the Agreement says that ì[t]he Agreement shall not become
binding upon Guardsmark until reviewed and approved by
the Compliance Control Officer in Guardsmarkís Executive
Offices in Memphis, Tennessee.î Thomas asserts that ì[t]here
is no evidence to show that Guardsmark ever fulfilled this
lone obligation,î but the record indicates otherwise.
Guardsmark attached to its answer to Thomasís complaint
a document entitled, ìGuardsmark: Personnel File Review,î
which lists Thomasís name and date of hire. This document is
initialed by a ìSelection Controllerî and has a check next to
the heading ìAPPROVED.î Thomas nonetheless insists that
Guardsmark cannot rely on this document because its
ìpurpose and authenticity . . . is completely unexplained.î
See N. Ind. Gun & Outdoor Shows, Inc. v. City of South
Bend, 163 F.3d 449, 456 (7th Cir. 1998) (holding that, for
purposes of Rule 12(c), courts need not accept as legitimate

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6 No. 03-1593
ìdocuments that do not by their nature imply some level of
credibilityî). We need not verify this documentís authenticity
or otherwise confirm Guardsmarkís approval of Thomasís
application, however, because ì[p]arties to a contract have
the power to waive provisions placed in the contract for
their benefit and such a waiver may be established by
conduct indicating that strict compliance with the contrac-
tual provisions will not be required.î In re Liquidation of
Inter-Am. Ins. Co. of Ill., 768 N.E.2d 182, 193 (Ill. App. Ct.
2002). As Guardsmarkís approval of Thomasís employment
application was exclusively for the companyís benefit,
Thomas cannot now use this term as a ground for invalidat-
ing the Agreement.
Thomas also argues that the Agreement is invalid be-
cause ì[t]here is simply nothing that Guardsmark agrees to
do in exchange for the many obligations it seeks to impose
on Mr. Thomas.î It is well-established that consideration
consists of some detriment to the offeror, some benefit to the
offeree, or some bargained-for exchange between them.
Doyle v. Holy Cross Hosp., 708 N.E.2d 1140, 1145 (Ill. 1999).
Under Illinois law, ì[c]ontinued employment for a substan-
tial period of time is sufficient consideration to support an
employment agreement.î Lawrence & Allen, Inc. v. Cambridge
Human Res. Group, Inc., 685 N.E.2d 434, 441 (Ill. App. Ct.
1997); see also Schoppert v. CCTC Int’l, Inc., 972 F. Supp.
444, 447 (N.D. Ill. 1997) (stating that, under Illinois law, ìcon-
tinued performance is seen as both acceptance and consider-
ationî for an at-will employment agreement). Thomasís
continued acceptance of the benefits of employment by
Guardsmark for three years after both parties signed the
Agreement constituted valid consideration for the legal de-
triment imposed by the terms of the Agreement.
Thomas next argues that, even if the Agreement is a valid
contract, his claim is not barred because the six-month lim-
itations period is unenforceable. Under the terms of the
Agreement, the enforceability of this provision is governed

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No. 03-1593 7
by Tennessee law. As we have already noted, Illinois courts
respect a contractual choice-of-law clause if the contract is
valid, and the law chosen is not contrary to Illinoisís fun-
damental public policy. Fulcrum, 230 F.3d at 1011. In
addition, consistent with R ESTATEMENT (S ECOND ) of C ON -
FLICT of LAWS ß 187 (1971), some Illinois courts have also re-
quired that ì ëthere be some relationship between the chosen
[law] and the parties or the transaction.í î See, e.g.,
Mastrobuono v. Shearson Lehman Hutton, Inc., 20 F.3d 713,
719 (7th Cir. 1994) (quoting Potomac Leasing Co. v. Chuck’s
Pub, Inc., 509 N.E.2d 751, 754 (Ill. App. Ct. 1987)), rev’d on
other grounds, 514 U.S. 52 (1995); Newell Co. v. Petersen,
758 N.E.2d 903, 922 (Ill. App. Ct. 2001); Int’l Surplus Lines
Ins. Co. v. Pioneer Life Ins. Co. of Ill., 568 N.E.2d 9, 14 (Ill.
App. Ct. 1990).
Neither Guardsmark nor Thomas suggests that Tennessee
law upholding contractual limitations periods is contrary to
Illinoisís public policy, as both states have routinely upheld
contractual provisions shortening a limitations period other-
wise provided by statute. See Taylor v. W. & S. Life Ins. Co.,
966 F.2d 1188, 1203 (7th Cir. 1992) (ì[C]ontractual limita-
tions of action are generally upheld under Illinois law.î);
United States v. Republic Ins. Co.,775 F.2d 156, 160 (6th
Cir. 1985) (ìIn Tennessee, limitation of action clauses have
long been upheld as long as a reasonable period of time is
provided [for bringing suit].î (internal quotation marks
omitted)). Furthermore, under Illinois law, the sufficient
relationship requirement is generally satisfied when the
contractual choice of law is that of the state in which one of
the parties is headquartered. See Mastrobuono, 20 F.3d at
719 (applying Illinois conflicts law, state of principal place
of business was reasonable for choice of law provision); Newell
Co., 758 N.E.2d at 922 (same). As Guardsmarkís principal
place of business is Tennessee, the sufficient relationship
requirement is satisfied, and Tennessee law therefore
governs the enforceability of the Agreementís limitations
period.

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8 No. 03-1593
In Tennessee, ìit is a well established general rule that in
the absence of a prohibitory statute, a contract provision is
valid which limits the time for bringing suit, if a reasonable
period of time is provided, and that the general statutes of
limitations are not prohibitory of such contractual provi-
sions as between private individuals or corporations.î State
v. Evans, 334 S.W.2d 337, 342 (Tenn. Ct. App. 1959); see
also Republic Ins. Co., 775 F.2d at 160 (same); Webb v. Ins.
Co. of N. Am., 581 F. Supp. 244, 250 (W.D. Tenn. 1984)
(same); Hill v. Home Ins. Co., 125 S.W.2d 189, 192 (Tenn.
Ct. App. 1938) (ìContractual limitations . . . are valid and
enforceable.î); cf. Irving Pulp & Paper, Ltd. v. Dunbar
Transfer & Storage Co., 732 F.2d 511, 514 (6th Cir. 1984)
(defendant equitably estopped from relying on contractual
limitations defense where it misled plaintiff by initially
admitting liability but later recanting, causing plaintiff to
file suit after limitations period expired). As Thomas points to
no statute prohibiting the Agreementís six-month limita-
tions period and does not suggest that this period was per
se unreasonable, we find the limitations period enforceable
under Tennessee law.
We turn, then, to Thomasís final argument: that his retal-
iatory discharge claim is not barred by the Agreementís
limitations period because his cause of action did not arise
more than six months before he filed suit. Illinois law
governs our analysis of this issue, because it relates to an
aspect of the statute of limitations not addressed in the
agreement. A federal court sitting in diversity must follow
the statute of limitations that the state in which it is sitting
would use. See Guaranty Trust Co. v. York, 326 U.S. 99, 110
(1945). Illinois considers statutes of limitations to be
procedural questions governed by the law of the forum. See
Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc.,
770 N.E.2d 177, 194 (Ill. 2002). We therefore turn to Illinois
law to decide when Thomasís claim accrued; we add compar-
isons to Tennessee law to illustrate the point that the same
result is likely no matter which stateís law is used.

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No. 03-1593 9
In general, Illinois courts hold that ìa limitations period
begins to run when facts exist that authorize one party to
maintain an action against another.î Feltmeier v. Feltmeier,
798 N.E.2d 75, 85 (Ill. 2003); see Ind. Ins. Co. v. Machon &
Machon, Inc., 753 N.E.2d 442, 445 (Ill. App. Ct. 2001).
According to Guardsmark, Thomas was in possession of
such facts on November 16, 2001, which it characterizes as
the effective date of his discharge. As of that date, Thomas
was indefinitely suspended without pay. If it is the relevant
date to use, then his claim is barred because he did not file
suit until almost a year later, on October 31, 2002. The
district court agreed with Guardsmarkís argument, citing
Vector-Springfield Properties, Ltd. v. Central Ill. Light Co.,
108 F.3d 806, 809 (7th Cir. 1997), for the proposition that
ìtort claims, like retaliatory discharge, accrue when the
plaintiff ëbecame possessed of sufficient information con-
cerning [his] injury to put a reasonable person on inquiry to
determine whether actionable conduct was involved.í î The
court found Thomasís claim untimely because he ìshould
have realized shortly after November 16, 2001 that
Guardsmark effectively terminated his employment.î
The problem with this position is that only an actual ter-
mination can support an employeeís retaliatory discharge
claim under Illinois law. In the closely related area of dis-
criminatory termination cases, the Tennessee Supreme
Court has held that a discriminatory discharge is complete
ìwhen the plaintiff is given unequivocal notice of the em-
ployerís termination decision, even if employment does not
cease until a designated date in the future.î Weber v. Moses,
938 S.W.2d 387, 391-92 (Tenn. 1996). In Illinois, a plaintiff
states a claim for retaliatory discharge ìonly if she alleges
that she was (1) discharged; (2) in retaliation for her activities;
and (3) that the discharge violates a clear mandate of public
policy.î Zimmerman v. Buchheit of Sparta, Inc., 645 N.E.2d
877, 880 (Ill. 1994) (internal quotation marks omitted).
ìDischarge in an employment context is commonly under-

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10 No. 03-1593
stood to mean the release, dismissal, or termination of an
employee.î Welsh v. Commonwealth Edison, 713 N.E.2d
679, 683 (Ill. App. Ct. 1999) (citing W EBSTER í S T HIRD N EW
I NTERNATIONAL D ICTIONARY 644 (1993); B LACK í S L AW
D ICTIONARY 463 (6th ed. 1990)).
The Illinois Supreme Court ìhas consistently sought to re-
strict the common law tort of retaliatory discharge.î Fisher v.
Lexington Health Care, Inc., 722 N.E.2d 1115, 1121 (Ill.
1999). In particular, the court ìhas thus far declined to
recognize a cause of action for retaliatory constructive dis-
charge.î Id.; see also Buckner v. Atl. Plant Maint., Inc., 694
N.E.2d 565, 569 (Ill. 1998) (noting the Illinois Supreme
Courtís ìpast precedent admonishing against the expansion of
this tortî); Zimmerman, 645 N.E.2d at 882 (ìIllinois courts
have refused to accept a ëconstructive dischargeí concept.î);
Graham v. Commonwealth Edison Co., 742 N.E.2d 858, 864
(Ill. App. Ct. 2000) (ìThe tort of retaliatory discharge does
not encompass any behavior other than actual termination
of employment.î). On this basis, Illinois courts have held
that an employeeís suspension does not qualify as a ìdis-
chargeî for purposes of a retaliatory discharge action and
has therefore rejected such claims. See, e.g., Melton v. Cent.
Ill. Pub. Serv. Co., 581 N.E.2d 423, 425-26 (Ill. App. Ct. 1991)
(denying plaintiffsí request that the court ìexpand the
notion of retaliatory discharge to cases . . . where the
employer takes disciplinary action short of discharge, such
as the suspension of one of the plaintiffs in this caseî).
While Tennessee has taken a somewhat more liberal view
of retaliatory constructive discharge, it has focused on the
situation in which conditions have become so intolerable for
the employee that the employeeís abandonment of the job is
equivalent to a discharge, not the situation in which the
employer gives ambiguous signals to the employee about the
continued status of his employment. See Crews v. Buckman
Laboratories Int’l, Inc., 78 S.W.3d 852, 865 (Tenn. 2002).
Compare Pa. State Police v. Suders, 124 S.Ct. 2342, 2354

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No. 03-1593 11
(2004) (constructive discharge plaintiff ìmust show working
conditions so intolerable that a reasonable person would
have felt compelled to resignî).
In light of these decisions, we decline to find Thomasís re-
taliatory discharge claim barred on the theory that
Guardsmarkís action in November 2001 was equivalent to
a discharge. Such a holding would contravene Illinois law,
see Prince v. Rescorp Realty, 940 F.2d 1104, 1107 (7th Cir.
1991), and it would disregard the requirement in Tennessee
law of an ìunequivocalî notice of a termination. It would
invite employers to manipulate their communications with
employees so as to avoid liability. Rather than fire employ-
ees and risk a retaliatory discharge action, employers would
have an incentive indefinitely to ìsuspendî them in the
hope that they will not realize that they have been dis-
charged until after the limitations period has expired. See
Hinthorn v. Roland’s of Bloomington, Inc., 519 N.E.2d 909,
912 (Ill. 1988) (emphasizing that ìan employer cannot
escape responsibility for an improper discharge simply
because he never uttered the words ëyouíre firedí î). We also
recognize, however, that substance should prevail over
form, and if Thomasís indefinite suspension was or became
an actual discharge, the contractual limitations period
would begin to run at that point. See id. (ìSo long as the
employerís message that the employee has been involun-
tarily terminated is clearly and unequivocally communi-
cated to the employee, there has been an actual discharge,
regardless of the form such discharge takes.î). Thomas must
therefore tread a thin line: On the one hand, he can avoid
the Agreementís limitations period only if his indefinite
suspension in November 2001 did not constitute an actual
discharge. On the other hand, he must establish that, at
some point prior to his filing suit in October 2002, his
suspension was converted into an actual discharge, such
that he can now state a retaliatory discharge claim.

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12 No. 03-1593
Because this case comes to us on a Rule 12(c) motion for
judgment on the pleadings, we lack sufficient information
to determine when, if ever, Thomasís indefinite suspension
became an actual discharge. Discovery might reveal more
about Guardsmarkís corporate practices with respect to
indefinite suspensions, including whether such a suspen-
sion is the equivalent of a discharge because no suspended
employee is in fact ever recalled. In addition, Guardsmarkís
employee and insurance records and information regarding
Thomasís access to the funds in his 401(k) retirement plan
might assist in clarifying Thomasís employment status
during the period between November 2001 and October
2002. While this case may ultimately prove appropriate for
summary judgment, Guardsmark cannot prevail as a mat-
ter of law at this stage in the proceedings, given that a dis-
puted question of fact remains as to whether Thomas was
discharged and, if so, when he was.
III
As it is not beyond doubt that Thomas will be unable to
prove any facts that would support his claim for relief, we
R EVERSE the district courtís judgment for Guardsmark and
R EMAND for proceedings consistent with this opinion.

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No. 03-1593 13
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072ó8-27-04

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