McGinnis v. Honeywell, Inc.

• Decision Date: 02 May 1990
• Docket Number: No. 18103,18103
• Citation: 1990 NMSC 43,791 P.2d 452,110 N.M. 1
• Parties: , 58 USLW 2707, 117 Lab.Cas. P 56,524, 5 IER Cases [PG564 Shirley McGINNIS, Plaintiff-Appellee, and Cross-Appellant, v. HONEYWELL, INC., Defendant-Appellant, and Cross-Appellee.
• Court: New Mexico Supreme Court

Page 452

791 P.2d 452

110 N.M. 1, 58 USLW 2707, 117

Lab.Cas. P 56,524, 5 IER Cases [PG564

Shirley McGINNIS, Plaintiff-Appellee, and Cross-Appellant, v. HONEYWELL, INC., Defendant-Appellant, and Cross-Appellee.

No. 18103.

Supreme Court of New Mexico.

May 2, 1990.

[110 N.M. 2] Sherman & Howard, Robert P. Tinnin, Jr., Albuquerque, for defendant-appellant, and cross-appellee.

Girard Street Legal Clinic, Eric Isbell-Sirotkin, Albuquerque, for plaintiff-appellee, and cross-appellant.

OPINION

MONTGOMERY, Justice.

This is an employee's wrongful-discharge case. The employee, Shirley McGinnis, sued her former employer, Honeywell, Inc., for breach of an implied employment contract and retaliatory discharge, seeking compensatory and punitive damages. The trial court granted Honeywell's motion for a directed verdict on the retaliatory discharge claim and the claim for punitive damages, but submitted the issues of breach of an employment contract and compensatory damages to a jury. The jury found in McGinnis's favor, awarding her damages of $515,161.00 for breach of her employment contract. Honeywell appeals, claiming that there was insufficient evidence of an implied employment contract and that the damage award was excessive. McGinnis cross-appeals, claiming that the trial court erred in directing a verdict on her claims for retaliatory discharge and punitive damages. We affirm the trial court on all issues.

I.

Shirley McGinnis began work in 1980 as a senior secretary at Honeywell's Albuquerque facility. At the time she applied for employment she executed an employment agreement providing:

My employment is in accordance with any applicable written agreement and applicable personnel practices published to employees, and, subject to such agreements or practices, may be terminated by me or by Honeywell at any time, but in no case shall it continue after I reach the age of retirement required in the Honeywell retirement or pension plan then applicable to me. [Emphasis added.]

In 1982, McGinnis was promoted to the nonsupervisory position of benefits administrator in the Honeywell Human Resources Department. As benefits administrator, McGinnis became familiar with various personnel policies and manuals, including a "work force realignment guide" setting out policies as to reductions in force. This guide, like the others on which McGinnis relies, was not distributed to employees, but it was maintained in the Human Resources Department and employees could review it and the other guides upon request.

Honeywell underwent two reductions in force at its Albuquerque facility. The first occurred in 1984, when approximately 100 employees (nearly 30 percent of the work force) were laid off. The second took place in late 1985 and early 1986; approximately 20 employees (nearly 10 percent of the work force) were laid off at that time. In the second reduction the Human Resources Department was ordered to reduce its staff by one person. McGinnis's position as benefits administrator was eliminated and she was laid off on January 9, 1986.

The work force realignment guide provided that in the event of a reduction in force, an exempt employee like McGinnis had the option to take a nonexempt position "if he/she formerly held that job family." At the time of the layoff, another employee, Sherri Montoya, held the position of senior human resources clerk, a nonexempt position in the same job family as the secretarial position formerly held by McGinnis. Accordingly, under the policy McGinnis had the option to assume Montoya's position, but it was not offered to her. In addition, the guide provided that if a nonexempt position was held by a temporary employee, an exempt employee had the option to take that position. Although there were no temporary employees in McGinnis's job family immediately before the layoff, one was hired at about the time McGinnis was terminated and later became a permanent employee.

In the spring of 1985, friction began to develop between McGinnis and the manager of the Albuquerque facility, Cliff Moulton. Moulton and other supervisors became critical of McGinnis's "communication skills," and McGinnis was placed on a program for continuing evaluation and improvement of those skills. Meanwhile, at about the same time, McGinnis became concerned about a $128,000 "refund" credited from the home office to the Albuquerque facility's budget for medical expenses. Apparently McGinnis believed that the $128,000 should have been, but was not, received by the facility in cash, and that such a receipt would have increased Honeywell's tax obligations to the state. She "investigated" this apparent discrepancy and complained to management that money was missing and taxes were underpaid. Later that same year McGinnis uncovered what she thought was a discrepancy in Honeywell's books regarding medical cost allocations. She discussed her concerns with various supervisors, who concluded that she did not understand the company's accounting and expense allocation system.

After McGinnis's employment was terminated, she attempted to locate other work, making inquiries at "hundreds" of places, but was unemployed at the time of trial. She was forty-eight years old when laid off and fifty-one at the trial. Her salary at the time of termination was $23,880 per year, and she had retirement benefits which would have paid her $1,573.73 per month on retirement. She was well-educated and had held a teaching certificate, which had expired during her employment with Honeywell. Despite these skills and her apparent employability, no evidence was presented as to any specific job available to her.

McGinnis's complaint alleged that she had "an employment contract" with Honeywell, evidenced by various personnel manuals, oral representations and the like, and that she had been terminated in violation of the policies and procedures set forth in these documents. The case was tried on the theory that Honeywell had breached an implied employment contract, although McGinnis's position and the evidence submitted to the jury were equally consistent with breach of an express contract if one existed. The complaint also charged that Honeywell wrongfully terminated McGinnis in retaliation for her having exposed possible fraud or criminal wrongdoing and because she had refused to ignore financial and accounting inconsistencies. The usual allegations of willful, reckless, etc., conduct were made to support the claim for punitive damages. As noted above, the trial court found insufficient evidence to support the retaliatory-discharge and punitive-damage claims but submitted to the jury the issues of breach of employment contract and compensatory damages.

On appeal, Honeywell contends that there was insufficient evidence to support a jury finding that McGinnis had an implied contract of employment which would overcome the presumption that her employment was terminable at will. Honeywell also argues that the jury failed to follow the court's instructions in calculating damages, in that the award was not reduced by any mitigation that would result from alternative employment or, if the jury found she could not mitigate by taking other work, then it failed to discount her damages to present value. On her cross-appeal, McGinnis claims that evidence sufficient to go to the jury was introduced showing that her layoff was a pretext for a disciplinary firing in retaliation for her having explored financial discrepancies in a manner favored by public policy. She also claims that there was sufficient evidence of Honeywell's bad faith in discharging her to permit the jury to assess punitive damages.

II.

At the outset of our consideration of Honeywell's contentions on the breach-of-contract issue, we are struck by the fact that the parties at trial by and large confined themselves to a dispute about whether or not an implied contract of employment existed, without addressing the point, which strikes us as fairly obvious, that there was an express contract. Honeywell acknowledges that McGinnis signed an employment agreement which, while it provided that her employment could be terminated "at any time," also provided that a termination was subject to "applicable personnel practices published to employees." Thus, if applicable personnel practices permitted her employment to be terminated only under certain conditions and in certain ways, and if such practices were published to employees, and if Honeywell terminated her in violation of those practices, then Honeywell breached an express contract of employment and is liable for the damages sustained by McGinnis as a result. See Lakeside v. Freightliner Corp., 612 F.Supp. 10, 12 (D.Or.1984) (dictum) (in order to prevail on contract claim, employee must show express or implied agreement modifying employment-at-will relationship); Bennett v. Eastern Rebuilders, Inc., 52 N.C.App. 579, 582, 279 S.E.2d 46, 49 (1981) (where employer promised at-will employee she would be returned to factory line if her promotion did not work out and then fired her instead, employer breached express contract: "Under the agreement * * * she could be terminated from her position as supervisor at any time; however, such termination was to result not in her discharge from defendant's employ, but in her demotion to her former job on the line. * * * [Employer's] failure to do this amounted to breach of their contract.").

We believe that the theory on which the case was submitted to the jury, while repeatedly emphasizing an implied contract of employment, was broad enough to encompass a jury finding that there was an express agreement not to terminate except in compliance with applicable personnel practices. The jury could also have found that the work force realignment guide prescribed such practices, that they were published to employees, and that Honeywell terminated McGinnis without complying with the practices outlined in the guide. The jury was...