Bulman v. Safeway, Inc.

• Decision Date: 02 August 2001
• Docket Number: No. 68670-0.,68670-0.
• Citation: 144 Wash.2d 335,27 P.3d 1172
• Court: Washington Supreme Court
• Parties: Jim BULMAN, Respondent, v. SAFEWAY, INC., Petitioner.

27 P.3d 1172

144 Wash.2d 335

Jim BULMAN, Respondent, v. SAFEWAY, INC., Petitioner.

No. 68670-0.

Supreme Court of Washington, En Banc.

Argued October 24, 2000.

Decided August 2, 2001.

Jeffrey Lowell Needle, Seattle, WA, Patricia Sue Rose, Seattle, WA, amicus curiae on Behalf of Washington Employment Lawyers Association.

Bryan Patrick Harnetiaux, Spokane, Peterson, Bracelin, Young, Putra & Fletcher, Kelby Dahmer Fletcher, Seattle, Debra Leigh Stephens, Spokane, amicus curiae, on Behalf of Washington State Trial Lawyers Association.

Foster, Pepper & Shefelman, Marco Joseph Magnano, Jr., Robin Alyce Rosencrantz, Seattle, for petitioner.

Helsell, Fetterman, Martin, Todd & Hokanson, Andrew James Kinstler, Seattle, for respondent.

BRIDGE, J.

Safeway, Inc., fired Jim Bulman for initiating wage increases for his two sons while they were working for stores in the district under his management. Bulman sued Safeway for wrongful termination, arguing that the manner of his termination violated Safeway's written personnel policies. He prevailed in a jury trial in King County Superior Court and was awarded damages. Upon appeal, Safeway argued that Bulman was a terminable-at-will employee who had not provided substantial evidence of reliance upon the personnel policies he claimed prevented his termination. The Court of Appeals, Division One, affirmed the jury verdict. Safeway then petitioned for our review. We granted review, and now reverse.

FACTS

The following facts are undisputed. Jim Bulman was the Bellevue district manager for Safeway. He had worked for Safeway from 1962 until his termination in November 1995. He was an at-will employee. Bulman's two sons, both of whom lived with Bulman and contributed to his household expenses, worked for stores in his district as helper clerks. Jeffrey worked for a store in Overlake beginning in September 1992, and Travis for a store in Factoria beginning in March 1995. Shortly after their hires, Bulman personally initiated wage increases for his two sons, to the point where both eventually were being paid in excess of the top hourly rates for helper clerks under Safeway's collective bargaining agreement. Both were the highest paid helper clerks in their stores, and were tied for second highest paid among the 156 helper clerks in their father's district. Bulman admitted he had personally initiated exception rates for only two of these 156—his sons Jeffrey and Travis.

Bulman was investigated by Safeway's security personnel, suspended on November 20, 1995, and then fired on November 22, 1995. Following his termination, he filed a complaint in King County Superior Court alleging several related causes of action. On May 27, 1997, upon Safeway's motion for summary judgment, Judge Carol Schapira dismissed all claims except Bulman's claim for wrongful termination in violation of Safeway's personnel policies. The jury trial took place before then-Judge Faith Ireland, and Bulman prevailed—winning a total judgment of $906,757.50, including costs and attorney fees. Safeway appealed, and sought our direct review. We remanded to the Court of Appeals, Division One. Bulman cross-appealed, arguing that his claim of an implied employment contract was wrongly dismissed upon summary judgment by the trial court. The Court of Appeals affirmed, and thus did not reach Bulman's cross-appeal.¹ Safeway then petitioned for our review, which we granted. Leave has also been granted to two groups, the Washington State Trial Lawyers Association Foundation and the Washington Employment Lawyers Association, to file amicus briefs in support of Bulman.

ISSUES

(1) Did the Court of Appeals correctly state the standard for justifiable reliance upon an employer's promises of specific treatment in specific situations?

(2) Did Bulman prove justifiable reliance upon promises of specific treatment in specific situations that induced him to remain at Safeway and not seek other employment?

(3) Did either the employment of relatives policy or the personnel improvement plan form the basis of an implied contract?

ANALYSIS

I

The jury found that Bulman was wrongfully discharged, relying upon two Safeway personnel policies: Safeway's performance management program and its employment of relatives policy, both of which Bulman argued applied and did not allow his dismissal. For purposes of this review, Safeway concedes that these two policies contain certain promises of specific treatment in specific circumstances, but argues that Bulman did not establish that he was even aware of them so as to rely upon them. Moreover, Safeway argues that these policies are inapplicable to misconduct.

Generally, employment of indefinite duration may be terminated by either the employer or the employee at any time, with or without cause. Burnside v. Simpson Paper Co., 123 Wash.2d 93, 104, 864 P.2d 937 (1994) (citing Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 223, 685 P.2d 1081 (1984)). Our decision in Thompson v. St. Regis Paper Co. marked the first occasion in which we recognized an exception to the common law terminable-at-will relationship between employer and employee. 102 Wash.2d at 225, 685 P.2d 1081. There we found that this relationship could be contractually modified through an employee policy manual provided by an employer to employees, even where a formal written contract does not exist. Id. at 229, 685 P.2d 1081. We noted, "Once an employer announces a specific policy or practice, especially in light of the fact that he expects employees to abide by the same, the employer may not treat its promises as illusory." Id. at 230, 685 P.2d 1081.

At the threshold, we must address the Court of Appeals' treatment of arguably conflicting language from Thompson. In Thompson, we ruled that an employee seeking to enforce promises that an employer made in an employee handbook must prove: (1) whether any statements therein amounted to promises of specific treatment in specific situations; (2) if so, whether the employee justifiably relied on any of these promises; and, finally, (3) whether any promises of specific treatment were breached.²Id. at 233, 685 P.2d 1081. Safeway alleges that Bulman never proved the second prong of that test. We have written that "[a]n employer is bound only by promises upon which the employee justifiably relied."³Stewart v. Chevron Chem. Co., 111 Wash.2d 609, 614, 762 P.2d 1143 (1988) (emphasis added) (citing Thompson, 102 Wash.2d at 233,685 P.2d 1081). Thus, we have held that, as a matter of law, there is not an enforceable promise of specific treatment in specific circumstances "where the employee did not know about the `promise' until after he was discharged."⁴Swanson v. Liquid Air Corp., 118 Wash.2d 512, 522, 826 P.2d 664 (1992) (citing Stewart, 111 Wash.2d 609,762 P.2d 1143). Such a promise could not have been justifiably relied upon. Id.

Bulman, and the dissent, seek to reduce the Thompson test to generalities. They rely upon language in Thompson that is somewhat ambiguous. There we had written generally of employee manuals as follows: "We are persuaded that the principal, though not exclusive, reason employers issue such manuals is to create an atmosphere of fair treatment and job security for their employees." Thompson, 102 Wash.2d at 229, 685 P.2d 1081 (citing Parker v. United Airlines, Inc., 32 Wash.App. 722, 726-27, 649 P.2d 181 (1982)). Expanding upon this theme later in the opinion, we held, "[I]f an employer, for whatever reason, creates an atmosphere of job security and fair treatment with promises of specific treatment in specific situations and an employee is induced thereby to remain on the job and not actively seek other employment, those promises are enforceable components of the employment relationship." Id. at 230, 685 P.2d 1081. Unfortunately, this somewhat imprecise holding has created uncertainty in interpreting Thompson. The Court of Appeals in this case correctly noted that unanswered by Thompson was the question of how an employee must demonstrate reliance upon a specific promise. Bulman, 96 Wash.App. at 202, 978 P.2d 568.

The Court of Appeals then summarized varying interpretations of the reliance requirement in Thompson from five other decisions of divisions of the Court of Appeals. See id. at 202-04, 978 P.2d 568 (discussing Siekawitch v. Wash. Beef Producers, Inc., 58 Wash.App. 454, 793 P.2d 994 (1990); Klontz v. Puget Sound Power & Light Co., 90 Wash. App. 186, 951 P.2d 280 (1998); Shaw v. Housing Auth. of Walla Walla, 75 Wash. App. 755, 880 P.2d 1006 (1994); Bott v. Rockwell Int'l, 80 Wash.App. 326, 908 P.2d 909 (1996); Wlasiuk v. Whirlpool Corp., 81 Wash.App. 163, 914 P.2d 102 (1996)). It found that "[t]hese cases reveal no clear line of analysis as to the reliance requirement of Thompson." 96 Wash.App. at 204, 978 P.2d 568. The court then adopted its own test:

We hold ... that reliance may be shown by proof that the employee was aware of the specific promise allegedly breached, and the employer's handbook created an atmosphere of job security and fair treatment derived from the entire body of promises known to the employee, which atmosphere has induced the employee to remain on the job and not seek employment elsewhere.

Id. at 205, 978 P.2d 568 (emphasis added). Not only is this "atmospheric" test an overly broad interpretation of Thompson, it also clearly conflicts with a jury instruction in this case. This test is also incongruent with other language in the Court of Appeals' opinion, wherein it stated, "An employee must prove personal awareness of a specific policy.... The mere fact that a promise is enunciated will not suffice." Id. at 206, 978 P.2d 568 (emphasis added).

One must logically read the more general holding in Thompson in conjunction with the later three-part test in that opinion applying that holding. Otherwise, one might ask whether the employee's reliance is induced by the employer's promises or by the atmosphere of job security created by...