Gaglidari v. Denny's Restaurants, Inc.

• Decision Date: 19 September 1991
• Docket Number: No. 56091-9
• Citation: Gaglidari v. Denny's Restaurants, Inc., 815 P.2d 1362, 117 Wn.2d 426 (Wash. 1991)
• Parties: , 60 USLW 2344, 6 IER Cases 1473 Ronda GAGLIDARI, Respondent, v. DENNY'S RESTAURANTS, INC., Appellant.
• Court: Washington Supreme Court

Page 426

117 Wn.2d 426

815 P.2d 1362, 60 USLW 2344, 6 IER

Cases 1473

Ronda GAGLIDARI, Respondent, v. DENNY'S RESTAURANTS, INC., Appellant.

No. 56091-9.

Supreme Court of Washington En Banc.

Sept. 19, 1991.

Reconsideration Denied Oct. 23, 1991.

Perkins & Coie, Nancy Williams, Timothy J. O'Connell, Bart Waldman, Seattle, for appellant.

David A. Williams, Bellevue, for respondent.

Bryan P. Harnetiaux, Spokane, Kelby D. Fletcher, Seattle, Robert H. Whaley, Spokane, amicus curiae, for respondent on behalf of Washington State Trial Lawyers Ass'n.

DOLLIVER, Justice.

Defendant Denny's appeals from a jury verdict in favor of plaintiff Ronda Gaglidari in her breach of employment contract suit. We reverse and remand for a new trial consistent with this opinion.

In September 1980, defendant hired plaintiff to work as a bartender in its Tukwila restaurant. On her first day of work, the assistant manager gave plaintiff a copy of the 1979 employee handbook and explained its provisions to her. Plaintiff signed a form acknowledging receipt of the manual and agreeing to abide by the rules.

The handbook contained provisions relating to employee benefits, expectations and termination procedures. The termination section stated that fighting on duty was grounds for immediate dismissal. For rule infractions not covered by the immediate dismissal provision, the handbook provided for counseling review and review by a certain level manager depending upon the number of years employed. Over the years, defendant revised the handbook but gave new editions only to new employees. Defendant never provided plaintiff with copies of the revised manuals although these new handbooks were available at the restaurant.

In 1986, defendant gave plaintiff an alcoholic beverage handbook. Plaintiff signed for this book in the same manner as the 1979 employee handbook and received training in accordance with the terms of this handbook on her responsibilities as a server of alcohol. This handbook contained the provision that fighting on company premises was grounds for immediate dismissal.

On February 7, 1987, while off duty, plaintiff visited the Tukwila Denny's. Shortly after the bartender, Beverly Gobelman, gave "last call" to the customers in the lounge, plaintiff and her friend, Maureen Connelly, who were in the dining area, entered the lounge through the employee area to get one last drink before the bar closed.

Raymond Porthen was in the lounge that night with a group seated at a table. Norman Mars arrived around 1 a.m. and sat at the bar. Ms. Gobelman had been having trouble with the group at the table being rude and had requested assistance from the unit aide several times. No manager was on duty that night. Wilma Katherine (Kathy) Hatcher, the unit aide, was the only supervisory employee.

When plaintiff and Ms. Connelly requested and obtained a drink after last call, Mr. Porthen became angry because his group had been denied drinks after last call. Mr. Porthen and plaintiff exchanged rude remarks. The unit aide asked Mr. Porthen's group to finish their drinks and leave. At this point, plaintiff approached the table and informed them it was time to go. She started to pick up empty glasses from the table. Mr. Porthen got up and hit plaintiff in the face, knocking her down. Ms. Hatcher ran into the office to call the police and did not see the rest of the incident. An altercation involving Mr. Porthen, plaintiff and Ms. Connelly ensued, the details of which are confused. Mr. Porthen left the lounge and drove himself to the hospital where he was treated for lacerations of the scalp and right knee, contusion of the left ankle and a fractured right ankle. Plaintiff and Ms. Connelly were treated for minor injuries.

Ms. Hatcher placed a notation in the manager's log that a fight had occurred involving plaintiff. On Monday, February 9, after discussing the situation with the district manager, the manager, Douglas Worden, began investigating the incident. He talked with Kathy Hatcher, Beverly Gobelman, Ronda Gaglidari, Maureen Connelly, and Norman Mars, as well as Carol Lester, who was seated at the table with Mr. Porthen. Mr. Worden did not know the names of anyone else who was in the lounge that night and had witnessed the scene.

On Tuesday, February 10, Mr. Worden again spoke with the district manager. They concluded plaintiff should be discharged for fighting on company premises and for behavior leading to the altercation which violated company policies. The district manager discussed the matter with the regional manager at lunch. The regional manager approved the discharge based on the district manager's representation of Mr. Worden's investigation. Early Tuesday afternoon Mr. Worden fired plaintiff.

Shortly thereafter, plaintiff began seeing a psychiatrist who determined that she was suffering from acute traumatic stress syndrome. Although the psychiatrist recommended plaintiff discontinue working in environments where alcohol is served, she continued working at another bar for several months. Eventually, plaintiff and the owner decided that it was best if plaintiff left because she was having trouble dealing with a bar atmosphere.

Plaintiff brought suit against defendant for not discharging her according to the terms of her employment handbook. The case went to trial on plaintiff's claims against defendant for breach of employment contract and the tort of outrage.

Defendant moved to preclude emotional distress damages. The court granted this motion but later reversed itself. At the conclusion of the plaintiff's case, defendant moved for directed verdict. The judge granted the directed verdict in favor of defendant on the plaintiff's claim of outrage.

The jury returned a verdict for plaintiff. She was awarded $55,000 for economic damages and $75,000 for noneconomic damages. Defendant moved for judgment notwithstanding the verdict, which was denied. The court awarded plaintiff $8,000 in attorney fees pursuant to RCW 49.48.030. Defendant appealed directly to this court. Plaintiff cross-appealed on the issue of attorney fees.

The following issues are presented:

1. Whether the employee handbooks, distributed to plaintiff, for which she signed an acknowledgment agreeing to abide by their rules and policies and which contained termination procedures, created a contract between defendant and plaintiff.

2. If a contract was formed, whether defendant breached this employment contract when it discharged plaintiff.

3. Whether the trial court erred in allowing plaintiff to seek emotional distress damages for breach of employment contract.

4. Whether the trial court erred in awarding attorney fees to plaintiff for back pay pursuant to RCW 49.48.030, which provides for attorney fees for actions in which the claimant recovers wages owed.

We hold the 1979 employee handbook did give rise to a contract and that its terms were modified by the alcoholic beverage handbook plaintiff received in 1986. If defendant reached a reasonable belief supported by substantial evidence that plaintiff was fighting, there were grounds for immediate dismissal. If, however, defendant's belief plaintiff was fighting was not well founded, then defendant was required to follow specified pretermination procedures outlined. A jury question still exists as to the reasonableness of defendant's belief plaintiff was fighting. We remand for a new trial on whether defendant breached the contract when it discharged plaintiff.

We also hold emotional distress damages are not recoverable, and find the court erred in denying defendant's motion to preclude damages for emotional distress. We do not reach the issue of prejudice from the trial judge's reservation of exceptions until after jury deliberations began. Prior to hearing argument and exceptions on his proposed jury instructions, the trial judge was in a car accident and another judge took his place. The new judge reserved exceptions for a later date and gave the jury the trial judge's proposed instructions. The exceptions to the jury instructions were taken after closing arguments and jury deliberations had commenced. There is no need to discuss the possible prejudice from this situation since a new trial will be held. Should plaintiff recover lost wages, attorney fees are appropriate under RCW 49.48.030. Since we remand the case, the award of attorney fees to plaintiff pursuant to RCW 49.48.030 will abide the result.

I

No formal express written contract of employment exists here. Traditionally, such employment relationships are terminable at will. Generally, terminable-at-will employment may be terminated by either party without cause. Roberts v. ARCO, 88 Wash.2d 887, 891, 568 P.2d 764 (1977). However, plaintiff argues the employee handbook defendant provided her on her first day of work modified this relationship. Whether it did is a question of law for the court. Stewart v. Chevron Chem. Co., 111 Wash.2d 609, 613, 762 P.2d 1143 (1988).

Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081 (1984) is the leading case in Washington on when employee handbooks give rise to contractual obligations on the part of the employer. In Thompson, we held an employment relationship terminable at will can be modified by statements contained in policy manuals or handbooks. Thompson, 102 Wash.2d at 228, 685 P.2d 1081. The concepts of offer, acceptance and consideration are requisite to a contract analysis of employee handbooks. Thompson, 102 Wash.2d at 228, 685 P.2d 1081. Employer obligations may also arise independent of traditional contract analysis when the employer creates an atmosphere of job security and fair treatment with promises of specific treatment in specific situations and the employee relies thereon. Thompson, 102 Wash.2d at 230, 685 P.2d 1081.

The employee handbook defendant gave plaintiff was the 1979 version. It provides for a counseling review program for employees whose performance is...