Butterfield v. Citibank of South Dakota, N.A.

• Decision Date: 02 September 1988
• Docket Number: No. 16067,16067
• Citation: 113 Lab.Cas.P 56,437 N.W.2d 857
• Parties: 113 Lab.Cas. P 56,133, 4 Indiv.Empl.Rts.Cas. 304 Ronald W. BUTTERFIELD, Plaintiff and Appellant, v. CITIBANK OF SOUTH DAKOTA, N.A., Defendant and Appellee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 857

437 N.W.2d 857

113 Lab.Cas. P 56,133, 4 Indiv.Empl.Rts.Cas.

304

Ronald W. BUTTERFIELD, Plaintiff and Appellant, v. CITIBANK OF SOUTH DAKOTA, N.A., Defendant and Appellee.

No. 16067.

Supreme Court of South Dakota.

Considered on Briefs Sept. 2, 1988.

Decided March 15, 1989.

John E. Burke and Donald N. Srstka, Sioux Falls, for plaintiff and appellant.

Ronald W. Banks of Banks, Johnson, Johnson Colbath & Huffman, P.C., Rapid City, for defendant and appellee.

MORGAN, Justice.

ACTION

Ronald Butterfield (Butterfield) appeals a summary judgment granted in favor of Citibank of South Dakota (Citibank) in Butterfield's wrongful discharge action against Citibank. We affirm.

FACTS

Butterfield began employment with Citibank in 1982. There was no fixed term of employment other than general assurances that he would be employed as long as he met Citibank's expectations. Butterfield did receive an employee handbook entitled "Working Together" which set forth Citibank's personnel policies, benefits and work philosophies. Included in this handbook was a section termed "Corrective Action" described as a guide to help supervisors deal with employee performance or disciplinary problems. It outlined a four step approach: discussions; formal warnings; final warnings; and, suspension. An opportunity for review was to be provided at each step of the procedure. In its memorandum decision, the trial court stated:

For the purposes of this motion, the parties agreed that the manual prepared by defendant and distributed to its employees, Working Together, [constituted] the contract agreement between the parties as it relates to this employment relationship.

During the course of his employment, Butterfield received a copy of a memorandum concerning employee/media contacts. The memorandum directed that all employee contacts with the media were to be cleared with Citibank's Public Affairs Office. Failing to comply with this memorandum by obtaining the requisite clearance, Butterfield initiated a contact with a local newspaper. Butterfield sought to gain publicity regarding his hobby of researching and investing in the stock market. Butterfield hoped that this publicity would assist in establishing his credentials as a stock market analyst so that he could eventually publish his own investment newsletter.

The news article on Butterfield and his hobby was published in early 1986. The only reference in the article to Citibank identified it as Butterfield's place of employment and gave his job description. The same day that the article was published, Butterfield was called to meet with his supervisor and a senior vice president for Citibank. The two expressed their displeasure over the news article and the fact that Butterfield had not cleared the article with the Public Affairs Office. Butterfield was then presented with a prepared resignation which he signed.

Subsequently, Butterfield filed a wrongful discharge complaint against Citibank raising six causes of action. Butterfield's claims included one for breach of express or implied contract, one for breach of implied covenants of good faith and fair dealing and additional tort claims. Citibank moved for summary judgment on all of Butterfield's claims and the motion was ultimately granted.

ISSUE

Did the trial court err in granting Citibank's motion for summary judgment?

DECISION

The parties having agreed, and the trial court having adopted such agreement that the handbook "Working Together" created a contract of employment, the real issue appears to be whether Citibank violated the terms of the contract. Butterfield contends that it did so by failing to follow the "Corrective Action" provisions of the handbook. Citibank's response is that by its terms the handbook delimits the procedure by stating, "[h]owever, in appropriate instances, failure to meet the Bank's standards can result in release without notice or severance pay." Butterfield, in turn, contends that this provision is ambiguous in that the handbook does not specifically define these "appropriate instances." Therefore, Butterfield argues that the question of whether his violation of the directive on media contacts was an "appropriate instance" requiring his immediate release was a material question of fact for a jury to decide.

A summary judgment will be affirmed only if there are no genuine issues of material fact and the legal questions have been correctly decided. Bego v. Gordon, 407 N.W.2d 801 (S.D.1987). Where a provision of a contract is ambiguous, evidence must be introduced to determine what the intentions of the parties were and such evidence creates a question of fact which must be resolved by a jury. North River Ins. Co. v. Golden Rule Const., 296 N.W.2d 910 (S.D.1980); Delzer Const. Co. v. South Dakota State Bd., 275 N.W.2d 352 (S.D.1979). However, whether ambiguity exists in a contract is a question of law for the court. North River Ins. Co., supra. This court is free to review a contract in the first instance and to make its own determination concerning ambiguity without any presumption in favor of the trial court's determination. Id.

Based upon our review of Citibank's employee handbook, we find the provision permitting Citibank to discharge employees without notice in "appropriate instances" to be unambiguous. Like the trial court, we find that the employee handbook does not contain a "for cause only" agreement by Citibank for discharge of its employees. Absent such an agreement, Citibank employees are terminable at will. Osterkamp v. Alkota Mfg., Inc., 332 N.W.2d 275 (S.D.1983); Cutter v. Lincoln Nat. Life Ins. Co., 794 F.2d 352 (8th Cir.1986); SDCL 60-4-4. Thus, the language of the handbook permitting Citibank to discharge employees without notice in "appropriate instances" merely reflects the terminable at will status of its employees. No definition of "appropriate instances" is necessary because Citibank reserves the right to discharge its employees whenever it determines such action is appropriate.

As this court has recently observed, "[d]espite numerous challenges, the employment-at-will doctrine is still the law in South Dakota." Larson v. Kreiser's Inc., 427 N.W.2d 833, 834 (S.D.1988). The doctrine is codified at SDCL 60-4-4 which provides in pertinent part: "[a]n employment having no specified term may be terminated at the will of either party...." However, in Osterkamp, supra, a narrow, contract-based exception to the employment at will doctrine was recognized where an employer specifically agrees in an employee handbook to discharge employees, "for cause only." Where such an agreement is contained in a handbook and an employer fails to abide by its terms in discharging an employee, a cause of action will lie on behalf of the employee against the employer for breach of the agreement. Id.

A review of Osterkamp, supra, indicates two possible ways that language in an employee handbook can be construed as creating a discharge "for cause only" agreement. Id; Cutter, supra. First, such an agreement may be found where the handbook explicitly provides, in the same or comparable language, that discharge can occur "for cause only." Id. Second, a "for cause only" agreement may be implied where the handbook contains a detailed list of exclusive grounds for employee discipline or discharge and, a mandatory and specific procedure which the employer agrees to follow prior to any employee's termination. Id. In short, the handbook must contain language indicating a clear intention on the employer's part to surrender its statutory power to terminate its employees at will (SDCL 60-4-4). As the Supreme Court of Oregon has stated, "[i]n the absence of any evidence of express or implied agreement whereby the employer contracted away its ... prerogative [to determine whether facts constituting cause for termination exist] to some other arbiter, we shall not infer it." Simpson v. Western Graphics Corp., 293 Or. 96, 643 P.2d 1276, 1279 (1982).

Upon review of Citibank's employee handbook, we find no explicit agreement by Citibank to discharge employees "for cause only." Nor do we find sufficient language from which to imply an agreement to discharge employees "for cause only." In this regard we set forth the following pertinent handbook language:

Corrective Action

Good working relationships require everyone to meet their responsibilities to the Bank, themselves, and the people with whom they work.

At all times staff members are expected to meet the Bank's standards for work performance and business conduct, and to follow the policies and procedures covered in Working Together.

This is where the corrective action process comes into play. Through it, staff members are given a chance to improve when their performance doesn't meet Bank standards. However, in appropriate instances, failure to meet the Bank's standards can result in release without notice or severance pay.

* * * * * *

The corrective action procedure is a guide to help supervisors deal with performance or disciplinary problems. Working within the framework of this procedure, the supervisor applies his or her own judgment as to how a problem can best be handled.

Depending on the situation, and the staff member's degree of improvement, the supervisor may repeat, bypass, or shorten the time span between any of the steps listed below. (emphasis added).

It is apparent from the language emphasized above that Citibank has expressed no clear indication, of the sort contemplated in Osterkamp, supra, of an intention to surrender its statutory power to terminate employees at will (SDCL 60-4-4). Although the handbook does contain several specific grounds for employee discipline, the provisions above caution that employees are expected to meet standards for performance and conduct in addition to, "the policies and procedures covered in Working Together." Further, the above provisions indicate that "Corrective Action" is not a mandatory process but...