Hogue v. Cecil I. Walker Machinery Co.

• Decision Date: 11 June 1993
• Docket Number: No. 21406,21406
• Court: West Virginia Supreme Court
• Parties: , 8 IER Cases 1037 Charles HOGUE, Plaintiff Below, Appellee, v. CECIL I. WALKER MACHINERY COMPANY, Defendant Below, Appellant.

Page 687

431 S.E.2d 687

189 W.Va. 348, 8 IER Cases 1037

Charles HOGUE, Plaintiff Below, Appellee, v. CECIL I. WALKER MACHINERY COMPANY, Defendant Below, Appellant.

No. 21406.

Supreme Court of Appeals of West Virginia.

Submitted May 4, 1993.

Decided June 11, 1993.

Syllabus by the Court

1. "Contractual provisions relating to discharge or job security may alter the at will status of a particular employee." Syllabus Point 3, Cook v. Heck's Inc., 176 W.Va. 368, 342 S.E.2d 453 (1986).

2. "A promise of job security contained in an employee handbook distributed by an employer to its employees constitutes an offer for a unilateral contract; and an employee's continuing to work, while under no obligation to do so, constitutes an acceptance and sufficient consideration to make the employer's promise binding and enforceable." Syllabus Point 5, Cook v. Heck's Inc., 176 W.Va. 368, 342 S.E.2d 453 (1986).

3. "An employee handbook may form the basis of a unilateral contract if there is a definite promise therein by the employer not to discharge covered employees except for specified reasons." Syllabus Point 6, Cook v. Heck's Inc., 176 W.Va. 368, 342 S.E.2d 453 (1986).

4. An employer may modify or revoke prior personnel manuals or policies that have created express or implied contract rights as to job security and establish in a subsequent personnel manual or policy that the employment is one at-will. When such a change is made, the employer must give reasonable notice of the change to the employees.

5. " 'When the plaintiff's evidence, considered in the light most favorable to him, fails to establish a prima facie right of recovery, the trial court should direct a verdict in favor of the defendant.' Syllabus Point 3, Roberts v. Gale, 149 W.Va. 166, 139 S.E.2d 272 (1964)." Syllabus Point 5, Adkins v. Inco Alloys International, Inc., 187 W.Va. 219, 417 S.E.2d 910 (1992).

George Lantz, Lantz & Tebay, Parkersburg, for appellee.

Fred F. Holroyd, Holroyd & Yost, Charleston, for appellant.

MILLER, Justice:

This appeal was brought by the defendant below, Cecil I. Walker Machinery Company (Walker) from a final judgment entered on December 11, 1991, by the Circuit Court of Wood County, which affirmed a jury verdict in favor of the plaintiff below, Charles E. Hogue, in an action for wrongful discharge. The plaintiff claimed that his discharge was in violation of Walker's personnel policies set forth in its employee handbook dated February 1, 1981. By special interrogatories the jury found, at the time the plaintiff was terminated, an employment agreement existed "containing a definite promise not to discharge plaintiff except for specified reasons[.]" In addition, the jury found that the two revised versions of the handbook, one issued on August 1, 1986, and the other issued on January 1, 1989, did not apply to the plaintiff's termination. The key issue presented in the case is whether the later revisions of Walker's personnel handbook modified its initial handbook which did not contain a specific disclaimer to the effect that employment was only on an at-will basis.

Mr. Hogue was hired by Walker in September of 1973 to work as a mechanic. At that time, Mr. Hogue was a member of a union, but he did not have an individual employment contract with Walker. On February 1, 1981, the first of three employee handbooks was issued to Mr. Hogue. In 1982 or 1983, Mr. Hogue was promoted from an hourly employee to a branch manager which is a salaried position. At the time of the promotion, the 1981 handbook was in effect. Walker revised its 1981 handbook and issued a second handbook to its employees on August 1, 1986. The handbook was revised a third time and distributed by Walker on January 1, 1989. In March of 1989, Walker terminated Mr. Hogue's employment.

All three versions of the handbook concluded with a section specifically reserving the right to make periodic revisions "to reflect changes in policies, procedures, and benefits." However, both of the revised handbooks issued in 1986 and 1989 contained disclaimers in the beginning of the handbooks which read: "Because of certain court decisions we advise you that this manual is not a contract for employment unless otherwise stated, but is your employment at will. You are free to terminate your employment at anytime without statement of reason. The company has the same right." Similarly, the last sentence in the revised handbooks provides: "Employees are reminded again, that this handbook is not to be considered a contract of employment or a guarantee of rights or benefits, as these must change as business requires."

We recognized in Cook v. Heck's Inc., 176 W.Va. 368, 342 S.E.2d 453 (1986), that an employment relationship that is not based on a contract or governed by statutory provisions is ordinarily an at-will employment and can be terminated by either party. We stated:

"In the realm of the employer-employee relationship, West Virginia is an 'at will' jurisdiction. Wright v. Standard Ultramarine & Color Co., 141 W.Va. 368, 90 S.E.2d 459 (1955). Syllabus point 2 of Wright states: 'When a contract of employment is of indefinite duration it may be terminated at any time by either party to the contract.' The 'at will' principle is not wholly unqualified, as we recognized in Bell v. South Penn Natural Gas Co., 135 W.Va. 25, 31-32, 62 S.E.2d 285, 288 (1950): 'Under the law governing the relation of master and servant, an employment, unaffected by contractual or statutory provisions to the contrary, may be terminated, with or without cause, at the will of either party.' " 176 W.Va. at 372, 342 S.E.2d at 457. (Citation and emphasis omitted).

However, in Syllabus Points 3, 5, and 6 of Cook v. Heck's Inc., supra, we set out some of the methods by which an at-will employment might be changed to give contractual rights to an employee:

"3. Contractual provisions relating to discharge or job security may alter the at will status of a particular employee."

* * * * * *

"5. A promise of job security contained in an employee handbook distributed by an employer to its employees constitutes an offer for a unilateral contract; and an employee's continuing to work, while under no obligation to do so, constitutes an acceptance and sufficient consideration to make the employer's promise binding and enforceable.

"6. An employee handbook may form the basis of a unilateral contract if there is a definite promise therein by the employer not to discharge covered employees except for specified reasons."

In setting out these principles, we followed other jurisdictions which have held that an employer may be bound by provisions, express or implied, in employee handbooks or policy manuals with respect to job security and termination proceedings, and we cited the following cases:

"Thompson v. American Motor Inns, Inc., 623 F.Supp. 409 (W.D.Va.1985); Leikvold v. Valley View Community Hospital, 141 Ariz. 544, 688 P.2d 170 (1984); Shah v. American Synthetic Rubber Corp., 655 S.W.2d 489 (Ky.1983); 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); Woolley v. Hoffman-La Roche, Inc., 99 N.J. 284, 491 A.2d 1257 [modified on other grounds, 101 N.J. 10, 499 A.2d 515] (1985); Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 457 N.Y.S.2d 193, 443 N.E.2d 441 (1982); Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081 (1984); Ferraro v. Koelsch, 124 Wis.2d 154, 368 N.W.2d 666 (1985); Mobil Coal Producing, Inc. v. Parks, 704 P.2d 702 (Wyo.1985). See Annot., 33 A.L.R.4th 120 (1984)." 176 W.Va. at 372, 342 S.E.2d at 457.

See also Reed v. Sears, Roebuck & Co., Inc., 188 W.Va. 747, 426 S.E.2d 539 (1992); Adkins v. Inco Alloys Int'l, Inc., 187 W.Va. 219, 417 S.E.2d 910 (1992); Collins v. Elkay Mining Co., 179 W.Va. 549, 371 S.E.2d 46 (1988).

Subsequently, in Suter v. Harsco Corp., 184 W.Va. 734, 403 S.E.2d 751 (1991), we were presented with a situation in which an employment application contained a prominent disclaimer stating that the employee, if hired, understood that the employment was for no definite period and that it could be terminated at any time without any prior notice. We determined that such a disclaimer was effective and it was not necessary that it be placed in the employer's personnel manual in order to be effectual. ¹

More recently in Williamson v. Sharvest Management Co., 187 W.Va. 30, 415 S.E.2d 271 (1992), we dealt with the issue of whether the manager of a convenience food store had a lifetime contract. His employer gave him a written memorandum which listed the monthly salary, the daily hours of operation of the store, the right to participate in a profit sharing plan, and a Christmas bonus based on performance. It contained nothing as to the terms of employment or the right to discharge. The employer terminated the manager for poor performance, and the manager sued and recovered damages based on his claim of a lifetime contract. We rejected this claim stating that the proof was insufficient: "Courts have recognized that lifetime employment contracts are extraordinary and that an offer for lifetime employment must be expressed in clear and unequivocal terms before a court will conclude that an employer intended to enter into such a weighty obligation." 187 W.Va. at 33, 415 S.E.2d at 274. (Citations omitted).

As yet, we have not had occasion to address the question of whether an employer may supersede an earlier handbook, which gave express or clearly implied contract rights limiting termination, by issuing a subsequent personnel handbook which contains clear language disclaiming the employment relationship as other than at-will. In several other jurisdictions where the issue has been considered, courts have concluded that a subsequent handbook when issued to employees will alter the earlier handbook. For example, the Michigan Supreme Court determined that such a subsequent alteration was...