Cases–Third Party Beneficiaries–Employees

A public school teacher is not a third party beneficiary of a state-mandated job preservation agreement entered into by her former and present employers, according to the Tennessee Court of Appeals.

In the case, the city of Chattanooga decided to stop running its school system, and turned operations over to Hamilton County.  The County school board and the city entered into a “Personnel Plan” which stated that the rights of existing Chattanooga teachers would not be “impaired, interrupted, or diminished.”  Nevertheless, when plaintiff began work for the County she found herself in a lower paid job and sued.

Tennessee has recognized that employees may sometimes be third-party beneficiaries of their employers’ agreements, said the court, but not here.  The agreement itself stated that the employee would be covered by the County contract, so the plaintiff had no remedy.

Barker v. Hamilton County Board of Education, No. E2003-02645-COA-R3-CV (Tenn. Ct. App. Feb. 2, 2005).