Brodie v. General Chemical Corp., 96-151

• Decision Date: 28 March 1997
• Docket Number: No. 96-151,96-151
• Citation: 934 P.2d 1263,1997 WL 139377
• Parties: 12 IER Cases 1276 James S. BRODIE, Larry A. Butcher and William A. Thompson, Appellants (Plaintiffs), v. GENERAL CHEMICAL CORPORATION, a Delaware corporation, Appellee (Defendant).
• Court: Wyoming Supreme Court

Page 1263

934 P.2d 1263

12 IER Cases 1276

James S. BRODIE, Larry A. Butcher and William A. Thompson, Appellants (Plaintiffs), v. GENERAL CHEMICAL CORPORATION, a Delaware corporation, Appellee (Defendant).

No. 96-151.

Supreme Court of Wyoming.

March 28, 1997.

Walter Urbigkit and George A. Zunker of Frontier Law Center, Cheyenne, for appellants.

Vincent A. Cino of Jackson, Lewis, Schnitzler & Krupman, Morristown, NJ; Alan B. Minier, Cheyenne, for appellee.

Before TAYLOR, C.J., and THOMAS, MACY, GOLDEN and LEHMAN, JJ.

GOLDEN, Justice.

Appellants James Brodie, Larry Butcher and William Thompson (Employees) brought suit in the United States District Court, District of Wyoming, against Appellee General Chemical Corporation (Employer) alleging that the termination of their employment constituted a breach of an implied contract formed by an employee handbook and a standard operating procedures manual. Before Employees were terminated, Employer had unilaterally revoked those documents and, at trial, Employees challenged the effectiveness of Employer's unilateral revocation. A panel of the United States Court of Appeals for the Tenth Circuit reversed a jury verdict in favor of Employer; however, that mandate was recalled by the court after another Tenth Circuit Court of Appeals panel issued an opinion in another case contradicting the opinion in this case. The United States Court of Appeals for the Tenth Circuit then submitted to this Court the following certified questions of Wyoming law:

1. Does the principle approved in Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211, 219 (Wyo.1994), that "a promise by an employer or an employee under a subsisting contract to do more or take less than that contract requires is invalid unless the other party gives or promises to give something capable of serving as consideration" apply in employee handbook contract cases?

2. If Wilder applies in employee handbook contract cases, what degree of consideration is necessary to satisfy the requirement, i.e., is nominal consideration sufficient?

FACTS

In 1986, when Employer took over the operations of Allied Chemical, the Employee Handbook and Standard Operating Procedures Manual (collectively the "handbooks"), which had been provided Employees earlier, were retained for plant operations. In May 1991, Employer revoked both handbooks to remove any contended employment rights beyond "at-will" contract status. In 1993, Employer eliminated Employees' positions as part of a reduction in force and they brought suit challenging the 1991 unilateral revocation and asserting breach of employment contract. The jury returned a verdict in favor of Employer with respect to the employment claims and Employees appealed.

Among other issues, Employees contended in the federal appeals court that the trial court had erroneously instructed the jury that an employer could validly modify or revoke an existing contract of employment without additional consideration. In its opinion, Brodie v. General Chemical Corp., 74 F.3d 1248 (10th Cir.1996), the Tenth Circuit held that Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211, 219 (Wyo.1994), required Employer to have provided additional consideration in order to validly revoke the employee handbook the jury had found to be a contract of employment. On this issue, the Tenth Circuit reversed the jury's verdict and judgment on the breach of contract claim and remanded for a new trial on the issue of whether there was or was not cause for Employees' termination under their employment contract. A few days later, the Tenth Circuit issued an opinion, McIlravy v. Kerr-McGee Corp., 74 F.3d 1017 (10th Cir.1996), which directly contradicted the appellate court's decision in Brodie. McIlravy held that our Wilder decision did not apply to handbook cases and additional consideration was not required to modify or revoke a handbook. Employer petitioned the Tenth Circuit for recall of its mandate, that request was granted, and the court certified two questions of law for resolution by this Court.

DISCUSSION

Wyoming Implied Employment Contract Law

In Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211 (Wyo.1994), we recognized that all employment occurs by either express contract or by some type of implied contract of employment. Wilder, 868 P.2d at 216. "There cannot be any serious dispute that there is a bargain of some kind; otherwise, the employee would not be working." 1 HENRY H. PERRITT, JR., EMPLOYEE DISMISSAL LAW AND PRACTICE § 4.32 at 326 (3d ed.1992). An implied contract of employment is a unilateral contract, meaning that the offeror's promise is accepted by performance, and does not involve mutuality of obligation between the parties. Wilder, 868 P.2d at 217, 1 PERRITT, supra, § 4.37. Wyoming presumes that an implied contract of employment for an indefinite period is a contract for at-will employment and the employer may discharge for any or no reason. Loghry v. Unicover Corp., 927 P.2d 706, 710 (Wyo.1996). This presumption can be modified by an express or implied agreement of the parties. Wilder, 868 P.2d at 218; Leithead v. American Colloid Co., 721 P.2d 1059, 1062-63 (Wyo.1986). When an employer's specific representations orally made or contained in provisions in an employee handbook amount to an offer of job security or discharge procedures, we will enforce such a promise as an implied contract modification of at-will status. ¹ Leithead, 721 P.2d at 1062-63.

To determine the contents of any particular implied contract of employment, we examine under an objective test whether the employer has intended, either by words or conduct, to include job security as part of the implied employment contract. McDonald v. Mobil Coal Producing, Inc., 820 P.2d 986, 990 (Wyo.1991) (McDonald II). If an offer of job security can be inferred from an employer's representations, unilateral contract principles require that the offer be accepted and consideration exchanged. Mobil Coal Producing, Inc. v. Parks, 704 P.2d 702, 706-07 (Wyo.1985). We have said that handbook provisions which promise job security create an expectation on the part of an employee, having the effect of inducing an employee to continue his employment. Parks, 704 P.2d at 707. Under unilateral contract principles, we have determined that an employee's continued employment is acceptance of and consideration for the new rights offered by the contract modification. The consideration which flows to the employer is the orderly, cooperative and loyal workforce which the employer hoped its promise would evoke. Id. Other courts have similarly acknowledged that because the most likely motive for an employer to make a promise of employment security to the workforce in general is that the promise will encourage employees to continue their employment, it is logical to view continued employment as acceptance of, and consideration for, such promise. 1 PERRITT, supra, § 4.37.

In Wyoming, an employer may, under certain conditions, amend an employee handbook promising job security if it had previously included language in its handbook reserving the right to unilaterally modify. Lincoln v. Wackenhut, 867 P.2d 701, 705 (Wyo.1994). The certified question presented in this case asks whether an employer may unilaterally modify when its employee handbook does not contain such a reservation. Employer contends that we have already implicitly answered this question in the affirmative but, should we disagree that is the case, Employer requests that we adopt the rule that an employer may unilaterally modify a handbook without additional consideration to the employee. As explained below, we have not implicitly recognized the rule advocated by Employer and today we decline to adopt such a rule.

McDonald II Did Not Implicitly Recognize Unilateral Modification

The notion that this Court had implicitly recognized that an employer could unilaterally modify handbook provisions and restore at-will employment arose in Durtsche v. American Colloid Co., 958 F.2d 1007, 1011 (10th Cir.1992). There, a Tenth Circuit Court of Appeals panel held that Wyoming courts would not apply traditional contract principles to prohibit an employer from unilaterally amending an employee handbook without the employee's express acceptance and additional consideration. It arrived at this conclusion after considering our decisions regarding the effect of one company's handbook in Mobil Coal Producing, Inc. v. Parks, 704 P.2d 702 (Wyo.1985); McDonald v. Mobil Coal Producing, Inc., 789 P.2d 866 (Wyo.1990) (McDonald I); and McDonald v. Mobil Coal Producing, Inc., 820 P.2d 986 (Wyo.1991) (McDonald II). The panel reasoned that were this not the law, the Wyoming Supreme Court in the McDonald cases would not have considered whether the disclaimer in issue was conspicuous. In other words, the Durtsche panel assumed mistakenly that the disclaimer was a modification of a handbook to which McDonald had been subject before the attempted modification. The question becomes then, whether McDonald had in fact been a Mobil Coal Producing employee before the employer amended the handbook. As we explain below, he became a Mobil Coal Producing employee after the Parks handbook had been amended. The issue in McDonald's cases was whether that amendatory language was conspicuous.

Mobil Coal Producing distributed a handbook to Parks in September 1982, six months after his hiring. The handbook created job security; it abolished Parks' at-will status. Parks, 704 P.2d at 706-07. In McDonald I, we noted that McDonald's employment period was August 1987 until June 1988. McDonald I, 789 P.2d at 867. McDonald received the handbook after he started working. Id. at 868. The handbook contained a disclaimer stating that his employment was at-will. We noted that after our Parks decision Mobil Coal Producing had revised its handbook to provide that employment with it was at-will. Id. at 869. In a plurality decision, two...