Hoffman-La Roche, Inc. v. Campbell

• Decision Date: 10 July 1987
• Docket Number: HOFFMAN-LA
• Citation: 512 So.2d 725
• Parties: , 2 IER Cases 739 ROCHE, INC. v. Hugh CAMPBELL. 85-123.
• Court: Alabama Supreme Court

Page 725

512 So.2d 725

56 USLW 2175, 2 IER Cases 739

HOFFMAN-LA ROCHE, INC. v. Hugh CAMPBELL.

85-123.

Supreme Court of Alabama.

July 10, 1987.

Fournier J. Gale III, James L. Goyer III, and James M. Proctor II, of Maynard, Cooper, Frierson & Gale, Birmingham, for appellant.

William G. McKnight and George Beck, Montgomery, for appellee.

BEATTY, Justice.

The appellant, Hoffman-La Roche, Inc. ("Roche"), appeals from a judgment of the Etowah Circuit Court entered upon jury verdicts against it on both a count of breach of an employment contract and a count of fraud. The action had been filed by a former employee, Hugh Campbell. The jury assessed damages at $150,000. The determinative issue on appeal is whether certain provisions contained in an employee handbook issued by Roche modified the employment relationship which existed between Roche and Campbell so as to make the relationship terminable only by compliance with those provisions.

Campbell was hired by Roche as a pharmaceutical sales representative in October 1974. Prior to his acceptance of the position, he had engaged in several discussions with E.P. Delk, a division sales manager of Roche. During these discussions, he was informed of various benefits which Roche made available to its employees. Delk also discussed with Campbell the general responsibilities of a Roche salesman and a potential conflict of interest that existed because of Campbell's part ownership of a drug store. He was given a pre-employment physical examination by a physician of Roche's choosing and, even though he had earlier been involved in an accident which had caused serious injury to his left leg, was found physically able to perform the job.

Subsequently, Campbell and Roche entered into a written agreement, which was characterized by Delk during his testimony as "an agreement to employ Mr. Campbell for certain compensation and certain conditions stated in that contract." The document itself stated that Campbell must, among other things, give up his interest in the drug store and agree not to disclose any trade secrets or confidential information to which he might become privy while in the employ of Roche, "[i]n consideration of the employment or continued employment of EMPLOYEE [Campbell] by Roche and of salary, wages or other compensation to be paid by ROCHE to EMPLOYEE."

At the time of his hiring, Campbell was also given a copy of an employee handbook entitled "Roche Employee Handbook." He was instructed to become familiar with the provisions of this handbook. During his employment at Roche, this handbook was "updated" on several occasions.

Campbell's position with Roche required him to call upon physicians, drug stores, and hospitals in a specific territory in northeast Alabama. During his first year with Roche, he received various sales awards for outstanding performance. Among these awards was the highest award one could attain at Roche.

In 1978, however, Campbell began to experience health problems. Over the next several years, he received treatment at various hospitals, and various diagnoses were made before, ultimately, in April 1980, a correct diagnosis was made at the University of Alabama at Birmingham Hospital Infectious Disease Center. Surgery was performed as part of the treatment for his illness. As a result of this lingering illness, caused by an infectious organism that had attacked the bone in his left leg, Campbell's work performance slipped.

On September 19, 1980, he was given an "unacceptable" performance rating by his supervisor. He was told that if his performance did not improve "in three months," he would be terminated. It is not clear from the record whether this three-month period was to start immediately (as of September 19, 1980) or at some later date. What is clear, however, is that at this time Campbell was still recuperating from his surgery and was in a full leg cast. In early January 1981, he was placed on "probation." Then, on January 31, 1981, he was informed by a telegram that he had been terminated. The telegram stated no reason for this termination. However, Roche's contention, as set out in the pre-trial order, was that the termination was based upon Campbell's deteriorating job performance. The testimony at trial supported this contention. No other reason was given at trial.

Campbell testified that, in late 1978, he had talked with his supervisor, Delk, about his deteriorating health when he inquired as to whether he should take sick leave or keep on working. Delk advised him to "keep working." Campbell testified that, throughout the time of his illness, he abided by Delk's instructions not to take sick leave. Instead, he would simply notify Delk and the company when he was sick, and he worked when he could. He used a form provided by the company to report these "sick" days. He testified that the use of this form was the "customary and accepted" method used to report sick days during his time with the company.

Delk's testimony differed sharply from that of Campbell. Delk testified that, although Campbell had indicated earlier that he was "not 100%," he never informed him that his problems were affecting the performance of his work. He testified that Campbell never requested sick leave.

It was stipulated to by the parties that Roche became a self-insurer of the benefits program it made available to its employees. It was Campbell's argument at trial that Roche had dismissed him so as to avoid paying him those benefits he had been promised through the issuance of an employee handbook.

On appeal from the judgment entered on the jury verdict against it, Roche argues that the employment agreement signed by Campbell did not set out a definite duration of employment and, therefore, that Campbell was an employee at will and could have been terminated for any reason or, even, for no reason at all. Campbell, on the other hand, argues that the jury's verdict is correct because Roche limited its right to terminate him by its issuance of an employee handbook containing certain provisions specifying the only procedures by which an employee could be discharged. He argues that Roche did not follow those procedures.

By now, the rule is well settled in Alabama that an employee contract at will may be terminated by either party with or without cause or justification. See, e.g., Meeks v. Opp Cotton Mills, Inc., 459 So.2d 814 (Ala.1984); Hinrichs v. Tranquilaire Hospital, 352 So.2d 1130 (Ala.1977). This means a good reason, a wrong reason, or no reason. Hinrichs, supra.

The cases reveal that three elements must be shown to establish that an employment contract is one other than one terminable at will: (1) that there was a clear and unequivocal offer of lifetime employment or employment of definite duration, Bates v. Jim Walter Resources, Inc., 418 So.2d 903 (Ala.1982); (2) that the hiring agent had authority to bind the principal to a permanent employment contract, Alabama Mills, Inc. v. Smith, 237 Ala. 296, 186 So. 699 (1939); and (3) that the employee provided substantial consideration for the contract separate from the services to be rendered, United Security Life Ins. Co. v. Gregory, 281 Ala. 264, 201 So.2d 853 (1967). This Court has repeatedly refused to modify this doctrine even so much as to recognize a so-called public policy exception to its application. Thus, we have refused to recognize an exception where an employee had been dismissed for refusing to commit a criminal act, see, e.g., Jones v. Ethridge, 497 So.2d 1107 (Ala.1986); Williams v. Killough, 474 So.2d 680 (Ala.1985), or where an employee had been dismissed because he filed a workmen's compensation claim, see Meeks v. Opp Cotton Mills, Inc., supra, or where an employee had been dismissed because he responded to a subpoena for jury duty, see Bender Ship Repair, Inc. v. Stevens, 379 So.2d 594 (Ala.1980). ¹

The Court continues to adhere to the above-stated principles today. Indeed, in this case, we are not asked to abrogate the employment-at-will doctrine. We are asked only to determine what effect certain provisions set out in an employee handbook had upon the employer's right to exercise its powers to terminate the employment relationship at will.

The appellant argues that this Court has already addressed this question in White v. Chelsea Industries, Inc., 425 So.2d 1090 (Ala.1983). In that case, it was said:

"Relying on the employee handbook, plaintiff alleges that an implied contract existed between himself and the company and that his employment was not terminable at will. A copy of the handbook was supplied to us with the record on appeal. After reviewing the handbook, we conclude that it does not create a binding employment agreement and that Mr. White's employment relationship with the company was terminable at the will of either party. Courts faced with claims similar to that in the instant case in which employees contended that a handbook rose to the level of a contract of employment support our conclusion and have held that the handbook does not vary the general common law rule that an employee is terminable at will...."

425 So.2d at 1090.

The statements made in White are limited to the facts of that case, and are not to be taken as standing for the proposition that a handbook may never rise to the level of a contract. Indeed, in White, no determination on the effect of the handbook was made until after the contents of the handbook were "reviewed." Such a review would not have been necessary if the issuance of a handbook could not, under any circumstances, have created a contractual agreement between the employer and the employee. Such a rule would also be contrary to traditional contract law principles. A review of our cases reveals that we have not applied such a rule.

In Duff v. American Cast Iron Pipe Co., 362 So.2d 886 (Ala.1978), this Court found that the violation of a rule contained in an employee handbook was a "contractual precondition to...