Continental Air Lines, Inc. v. Keenan, No. 84SC460

• Docket Nº: No. 84SC460
• Citation: 731 P.2d 708
• Case Date: January 20, 1987
• Court: Supreme Court of Colorado

Page 708

731 P.2d 708 55 USLW 2439, 105 Lab.Cas. P 55,671,
1 IER Cases 1361 CONTINENTAL AIR LINES, INC., a Nevada corporation, Petitioner,
v.
Maynard W. KEENAN, Jr., Respondent. No. 84SC460. Supreme Court of Colorado,
En Banc. Jan. 20, 1987.

Page 709

Holland & Hart, John M. Husband, Denver, for petitioner.

Epstein, Epstein & Lozow, P.C., Donald L. Lozow, Bradley A. Lozow, Denver, for respondent.

Sherman & Howard, Theodore A. Olsen, Denver, for amicus curiae, Mountain States Employers Council.

Feiger & Hyman, Lynn D. Feiger, Thomas A. Feldman, Denver, for amicus curiae, plaintiff Employment Lawyers Ass'n.

VOLLACK, Justice.

The petitioner, Continental Air Lines, Inc. (Continental), appeals from the court of appeals' unpublished opinion, Keenan v. Continental Air Lines, Inc., No. 83CA1104 (Oct. 18, 1984), which held that

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an employer's distribution to employees of handbooks or policy manuals which contain specific procedures for termination of employment, when relied upon by an employee and supported by the consideration of continued service, may result in the employer becoming contractually bound to comply with those procedures. The court of appeals concluded that there were material questions of fact; therefore, summary judgment was inappropriate. We granted certiorari review, and we reverse in part and remand with directions.

I.

The respondent, Maynard W. Keenan, Jr., was employed by Continental from May 1974 to September 1981, when he was discharged. Keenan then filed this suit alleging wrongful discharge based on the failure of Continental to follow procedures set forth in its policy manual or handbook. Keenan alleged in his complaint that he was given "certain job security assurances" contained in Continental's handbook. At his deposition, Keenan stated that he had not relied on any policies contained in the manual at the time he became employed and stated that he did not receive a copy of that manual until after his employment had started. Subsequently, however, Keenan contradicted his deposition testimony in an affidavit and stated that he was given a copy of the handbook when he was hired.

Continental published the handbook before Keenan was hired. Periodically, the handbook was subject to revision by Continental. The pertinent portion of the handbook concerns a corporate hearing procedure for management personnel who wish to challenge a discipline, discharge, or other job action taken by the company. The hearing procedure was revised by Continental on February 1, 1979, prior to the time Keenan assumed a management position. There is no evidence that Keenan participated in the revision or negotiated for the terms of the handbook either prior to accepting his initial position or prior to accepting the management position. After Keenan was discharged, he made a request for a hearing pursuant to the applicable portion of the handbook. Keenan was denied this hearing.

The trial court granted Continental's motion for summary judgment. Keenan appealed, and the court of appeals reversed and remanded the cause.

II.

We granted certiorari to determine whether an employee may sue an employer for breach of contract on the theory that an employee manual, unilaterally published by the employer, may serve as a basis for altering the terms of an employment otherwise terminable at will. Courts have taken varied and sometimes contradictory approaches to this question. Several courts have concluded that employee manuals setting forth termination procedures are not contractually binding on the employer. E.g., Beidler v. W.R. Grace, Inc., 461 F.Supp. 1013 (E.D.Pa.1978), aff'd mem., 609 F.2d 500 (3d Cir.1979); Muller v. Stromberg Carlson Corp., 427 So.2d 266 (Fla.Dist.Ct.App.1983); Shaw v. S.S. Kresge Co., 167 Ind.App. 1, 328 N.E.2d 775 (1975); Gates v. Life of Montana Insurance Co., 196 Mont. 178, 638 P.2d 1063 (1982); Edwards v. Citibank, N.A., 74 A.D.2d 553, 425 N.Y.S.2d 327 (1980); Griffin v. Housing Authority, 62 N.C.App. 556, 303 S.E.2d 200 (1983). Other courts have held that an employee manual on termination procedures is a unilateral offer of employment for which continued service by the employee may constitute consideration and acceptance. See, e.g., Carter v. Kaskasia Community Action Agency, 24 Ill.App.3d 1056, 322 N.E.2d 574 (1974); Dahl v. Brunswick Corp., 227 Md. 471, 356 A.2d 221 (1976); Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980); Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn.1983); Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d 261 (1983); Langdon v. Saga Corp., 569 P.2d 524 (Okla.Ct.App.1976); Hercules Powder Co. v. Brookfield, 189 Va. 531, 53 S.E.2d 804 (1949). Still another approach is

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that an employee manual may be binding on the employer not on the theory of contract but on the basis of the employee's reasonable and detrimental reliance on the terms of the manual. See, e.g., Cleary v. American Airlines, Inc., 111 Cal.App.3d 443, 168 Cal.Rptr. 722 (1980); Toussaint, 408 Mich. 579, 292 N.W.2d 880; Arie v. Intertherm, Inc., 648 S.W.2d 142 (Mo.Ct.App.1983); Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081 (1984).

There is similar uncertainty in Colorado concerning the formulation of the appropriate standard in such cases. See Garcia v. Aetna Finance Co., 752 F.2d 488 (10th Cir.1984) (termination policy set forth in manual was a unilateral expression of policy by the employer, not an employment contract between employee and employer for a definite term); Salimi v. Farmers Insurance Group, 684 P.2d 264 (Colo.App.1984) (employer may become contractually bound to comply with...