Chavez v. Manville Products Corp.

• Decision Date: 05 July 1989
• Docket Number: No. 17596,17596
• Citation: 1989 NMSC 50,777 P.2d 371,108 N.M. 643
• Parties: , 58 USLW 2084, 122 Lab.Cas. P 56,927, 4 Indiv.Empl.Rts.Cas. (BNA) 833 Severo A. CHAVEZ, Plaintiff-Appellant, v. MANVILLE PRODUCTS CORPORATION and Manville Sales Corporation, Defendants-Appellees,
• Court: New Mexico Supreme Court

Page 371

777 P.2d 371

108 N.M. 643, 58 USLW 2084, 122 Lab.Cas. P 56,927,

4 Indiv.Empl.Rts.Cas. (BNA) 833

Severo A. CHAVEZ, Plaintiff-Appellant, v. MANVILLE PRODUCTS CORPORATION and Manville Sales Corporation, Defendants-Appellees,

No. 17596.

Supreme Court of New Mexico.

July 5, 1989.

Rehearing Denied Aug. 8, 1989.

[108 NM 644] David Graham, Eliu E. Romero, Taos, for plaintiff-appellant.

William H. Carpenter, Michael B. Browde, Albuquerque, amicus curiae New Mexico Trial Lawyers Ass'n.

Poole, Tinnin & Martin, Mel E. Yost, Christopher Moody, Santa Fe, for defendants-appellees.

Carpenter, Crout & Olmstead, Michael W. Brennan, Santa Fe, amicus curiae Ass'n of Commerce & Industry of N.M.

OPINION

SCARBOROUGH, Justice.

Plaintiff-appellant, Severo A. Chavez, brought suit against his former employer for breach of an express or implied employment contract and for retaliatory discharge. Defendants-appellees are the Manville Products Corporation and Manville Sales Corporation (collectively Manville). Chavez appeals the entry of summary judgment against him on claims sounding in contract, and the entry of a directed verdict against him on the claim of retaliatory discharge. We granted motions from the New Mexico Trial Lawyers Association and from the Association of Commerce and Industry of New Mexico to submit amicus briefs. We affirm the dismissal of the contract claims, but reverse the district court on the question of retaliatory discharge and remand for a new trial solely on that issue.

Factual Background

Manville operates an open pit mine and processing mill for perlite ore at No Agua, New Mexico. Chavez began working at the Manville mine and mill in 1965 as an hourly laborer. By 1973 he had worked his way up to a position as lead mill operator and was a union shop steward. That year, Manville offered Chavez a non-union supervisory position in the production mill, which Chavez accepted. For the next twelve years he worked as a production supervisor.

In the early part of 1985, Manville was engaged in a concerted lobbying effort in support of federal legislation concerning asbestos liability and claims. In a corporate-wide campaign termed the "Call to Action" program, Manville sought to involve its employees in its lobbying efforts. Plant manager Loretta Turner acted as the local coordinator for the No Agua facility. Chavez had been asked to participate in the lobbying effort, but had declined to do so.

On April 3, 1985, plant manager Turner received a request for assistance in influencing an upcoming vote in the United States Senate on proposed asbestos legislation. Turner sent a mailgram to United States Senator Pete V. Domenici stating that the undersigned employees of Manville, including Chavez, urged the Senator to support the legislation.

Chavez had not given Manville permission to use his name. He testified before the district court that when he arrived at work on April 3, shortly before 4:00 p.m., he was asked to assist with the lobbying effort, and he again refused. His immediate supervisor, Jack Carraher, then informed Chavez that he would have to call Turner and tell her of the refusal.

About a month later, Chavez received a letter from Senator Domenici thanking him for his recent mailgram in support of the legislation. Angry, he took the letter to work for an explanation, but states that his immediate supervisor only made light of the matter.

Sometime in the following month Manville decided to terminate Chavez' employment. Turner obtained approval for the termination decision from her district manager and on June 10, 1985, she summoned Chavez to her office. She advised him that he was being laid off for a month. Thereafter, Chavez was told that his job had been eliminated. He was told that he had been selected for termination as only two production foremen were now required and he was the worst of the three employed. In its documentation of the separation, however, Manville listed Chavez as being ineligible for future employment with the corporation in any capacity.

Breach of Employment Contract

Chavez' initial employment in 1965 as an hourly worker could be terminated by Manville at will. Later, the terms of his employment were changed when Manville entered into a union collective bargaining agreement covering hourly workers. In 1973, when Chavez contemplated accepting the supervisory position, he realized he would once again have an at-will status absent an agreement to the contrary. This was consistent with Manville's policy of avoiding the use of employment contracts with all salaried personnel. Chavez stated that when he was offered the supervisory position in 1973, he was reluctant to accept it and lose the security afforded by the recently negotiated collective bargaining agreement. He claims he was given an express assurance from the now-deceased former plant manager that he if didn't work out in the new role, he could return to his former hourly position without loss in seniority. Thus, Chavez claims that he had an oral employment contract which Manville breached in 1985 when it refused his request to return him to hourly work.

In support of its motion for summary judgment, Manville submitted an employee agreement executed by Chavez and Manville in 1965 and an employee handbook for salaried employees issued in 1981, which was in effect when Chavez was fired. Manville argues that the provisions in these documents concerning Chavez' at-will status are unequivocal and should be enforced. Chavez answers that the 1965 agreement is irrelevant since it was modified by the collective bargaining agreement and argues that the unilateral publication of the employment manual cannot abrogate the earlier oral agreement between Manville and Chavez.

The "Employment Agreement and Record of Changes," executed in 1965, provides that Chavez' employment was "terminable by either the company or the undersigned [Chavez] at any time." The contract continues and addresses certain other conditions of employment, such as the company ownership of inventions and patents developed while employed at Manville and the nondisclosure of company secrets. The contract then provides:

It is further agreed that as a condition of said employment, no modification of any of the terms of this employment agreement shall be of any force or effect unless such modification shall be in writing.

* * * * * *

The undersigned hereby further agrees that in the event of the transfer of his employment from the company to any subsidiary, parent, or affiliated company thereof, his employment shall continue to be subject to each and all of the terms and conditions hereof, except as modified as herein provided.

(Emphasis added). The Employment Practices section in Manville's 1981 Employee Handbook for salaried personnel states that employment with Manville can be terminated at any time, and, without express authorization of the Board of Directors, employees do not have a contract of employment with the company, either written, verbal, or implied.

New Mexico recognizes an exception to at-will employment when the words and conduct of the parties give rise to an implied employment contract. Forrester v. Parker, 93 N.M. 781, 606 P.2d 191 (1980) (implied contract based upon provisions of employee handbook); Kestenbaum v. Pennzoil Co., 108 N.M. 20, 766 P.2d 280 (1988) (oral statements made by an employer may be sufficient to create an implied contract), cert. denied, --- U.S. ----, 109 S.Ct. 3163, 104 L.Ed.2d 1026 (1989). However, we are of the opinion that the alleged oral representations made to Chavez in 1973 cannot create enforceable contractual obligations in the face of the provision in the 1965 agreement that any modification of the employment agreement must be in writing. As a matter of law, this provision precluded Manville's oral assent to modification of its contractual relationship with Chavez. It also precludes the possibility that any reliance by Chavez on the alleged representations was reasonable.

Numerous decisions in other jurisdictions recognize that an employer is free to enter into written contracts that explicitly provide the employer may terminate the employment contract at any time, with or without reason. E.g., Pratt v. Brown Mach. Co., 855 F.2d 1225 (6th Cir.1988); Reid v. Sears, Roebuck & Co., 790 F.2d 453 (6th Cir.1986); Eliel v. Sears, Roebuck & Co., 150 Mich.App. 137, 387 N.W.2d 842 (1985). Similarly, this Court, in Lukoski v. Sandia Indian Management Co., 106 N.M. 664, 748 P.2d 507 (1988), recognized that various means exist whereby employers may limit their employees' reasonable expectations concerning the employment relationship.

We do not mean to imply that all personnel manuals will become part of employment contracts. Employers are certainly free to issue no personnel manual at all or to issue a personnel manual that clearly and conspicuously tells their employees that the manual is not part of the employment contract and that their jobs are terminable at the will of the employer with or without reason. Such actions ... instill no reasonable expectations of job security and do not give employees any reason to rely on representations in the manual.

Id. at 666-67, 748 P.2d at 509-10 (quoting Leikvold v. Valley View Community Hosp., 141 Ariz. 544, 548, 688 P.2d 170, 174 (1984) (en banc)).

In the instant case, it is not the contractual provision concerning at-will employment alone that is significant; also significant is the condition in the 1965 contract that any modification of the employment agreement is to be in writing. This provision, like the at-will provision, is enforceable and clearly was intended to protect the employer from claims based upon oral representations made to employees concerning their employment status, such as were alleged in this case.

Chavez asserts that the 1965 agreement is irrelevant since it was modified by the 1973 collective bargaining agreement. We agree that the...