Morosetti v. Louisiana Land and Exploration Co.

• Decision Date: 12 December 1991
• Docket Number: No. 65,No. 66,66,65
• Citation: 522 Pa. 492,564 A.2d 151
• Parties: , 58 USLW 2227, 115 Lab.Cas. P 56,303, 4 IER Cases 1260 James MOROSETTI, George Silvat, Robert Polis, Robert Neal, Edward Schmude, and William D. Wilson, individually and on behalf of themselves and all others similarly situated, Appellants at, v. The LOUISIANA LAND AND EXPLORATION COMPANY, and H.M. Copper, Inc., formerly Hussey Metals, Inc., Appellants at 65 W.D. 1988 66 W.D. 1988
• Court: Pennsylvania Supreme Court

Page 151

564 A.2d 151

522 Pa. 492, 58 USLW 2227, 115

Lab.Cas. P 56,303,

4 IER Cases 1260

James MOROSETTI, George Silvat, Robert Polis, Robert NealEdward Schmude, and William D. Wilsonindividually and on behalf of themselves and all others similarly situated, Appellants at No. 66, v.The LOUISIANA LAND AND EXPLORATION COMPANY, and H.M. Copper Inc., formerly Hussey Metals, Inc., Appellants at No. 65.

65 W.D. 1988

66 W.D. 1988

Supreme Court of Pennsylvania.

Argued March 7, 1989.

Decided Sept. 15, 1989.

Reargument Denied Dec. 12, 1991.

E.J. Strassburger, Strassburger, McKenna, Gutnick & Potter, Pittsburgh, Thomas H.M. Hough, Hough & Gleason, P.C., Poughkeepsie, for appellants.

Jeffrey I. Pasek, for Pa. Chamber of Business and Industry Amicus Curiae.

Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, ZAPPALA and PAPADAKOS, JJ.

OPINION

McDERMOTT, Justice.

The class action plaintiffs in this case were employees of the Hussey Company.The Hussey Company, a wholly owned subsidiary of the appellant, was sold in May 1984.When the sale was consummated, the employees were offered either new positions with the purchasers or up to a maximum of twenty-six weeks severance pay for each year of service.The class plaintiffs chose to accept employment with the purchasing company and now claim that they are entitled to the twenty-six weeks severance pay as well.The appellee contends that while there was indeed a severance pay policy at their company, it was not communicated as an offer or inducement to accept or continue employment with their concern and therefore was not an enforceable contract.

The employees were granted a directed verdict at trial, and were sustained on appeal before the Superior Court.The trial judge directed verdict upon his view that there existed a "handbook" offer by the company for severance pay and therefore the requisite offer and acceptance of contract.We cannot agree that the evidence offered by the employees was sufficient to sustain that view.The company from time to time issued flyers outlining various benefits the company offered to employees such as health and life insurance, tuition credits, vacation, and the like.The company however never made known to their employees the policy for severance pay.They kept their policy in a manual for the use of their personnel manager for guidance as occasion arose.The employees could not say other than they believed the company had a policy.They did not know the policy because they were never told.They based their belief and supposition as to its terms upon what occurred when various employees were, from time to time, given severance pay.The amounts given were different with each employee, some more, some less, some none at all.The company never denied that they had a severance pay policy, but insist that its terms were not an inducement to employment because they did not solidify its terms into an offer for mutual or unilateral contract.

It is basic contract law that one cannot suppose, believe, suspect, imagine or hope that an offer has been made.An offer must be intentional, definite, ¹ in its terms and communicated, ² otherwise the minds cannot meet.³Nor can one be bound because they are contemplating making an offer, or that they would or should have or that someday they might.An offer must define its terms, specify the thing offered and be an intention of the present or the future to be bound.

A handbook distributed to employees as inducement for employment may be an offer and its acceptance a contract.The employees here, however, could not show, other than an internal consideration of policy for what might be given, if and when they announced a policy for all employees.It is not sufficient to show only that they had a policy.It must be shown that they intended to offer it as a binding contract.Nor can their intention be proved by bits and pieces of their policy given individual employees at different times under varying circumstances.

The employees in their evidence were able only to show that they believed there was a policy of severance pay.The only evidence was that in a company manual, which unlike other policies that were communicated to employees by flyers, there were procedures for severance the company followed from time to time.The employees materially differed in testimony on its terms.Some testified they felt, heard, expected, or were entitled.They all differed on the amount or term of service required for whatever severance pay might be available.In short, all the evidence offered could prove no more than that each employee had a different view and different expectation.The evidence at best was a general feeling that there was a severance pay policy.

Again, it is basic contract law that there must be more than a general awareness; there must be an intended, definite, specific offer before any offer can be accepted or any enforceable contract created.One cannot suppose that another made an offer, was willing to make an offer or intended sometime to do so.Minds, for contractual obligation, must meet upon definite, specific things.

The learned trial judge fell into error when he equated an uncommunicated personnel manual with a "handbook."The employees here however, could show no more than an employer's internal consideration of a policy for what might be given when occasion arose.It is not sufficient to show they had a policy.It must be shown they offered it as binding terms of employment.A company may indeed have a policy upon which they intend to act, given certain circumstances or events, but unless they communicate that policy as part of a definite offer of employment they are free to change as events may require.SeeRichardson v. Charles Cole Memorial Hospital, 320 Pa.Super. 106, 466 A.2d 1084(1983).

In reviewing the propriety of a directed verdict we accept as true, as must the trial judge, all facts and inferences tending to support the party against whom the motion has been made, rejecting all testimony and references to the contrary.Jozsa v. Hottenstein, 364 Pa.Super. 469, 528 A.2d 606(1987).In this casethe appellants against whom the verdict was directed are entitled to that consideration.In that light we reverse.

ZAPPALA, J., files a concurring opinion.

LARSEN, J., files a dissenting opinion.

ZAPPALA, Justice, concurring.

I join in the holding of the majority opinion that the uncommunicated policy of severance pay was not contractually binding upon the employer.I perceive an important distinction between the policy and an employer's handbook that is disseminated to the employees.Because this Court has not yet addressed the issue as to whether an employee handbook unilaterally issued by an employer constitutes part of an employee's contract of employment, the dicta in the majority's opinion may be construed prematurely as controlling.

The majority states that "A handbook distributed to employees as inducement for employment may be an offer and its acceptance a contract."(Majority slip opinion at 152).Having concluded that the uncommunicated personnel manual could not be equated with a handbook, the majority's statement is of no precedential value.I write then only to emphasize that the issue of the effect of the distribution an employee handbook has not been resolved by this Court and that I would reserve discussion until the matter is squarely before us.

LARSEN, Justice, dissenting.

I dissent.The facts of this case as found by the trial court are as follows.Copper Range Company(CRC) was a wholly-owned subsidiary of the Louisiana Land and Exploration Company(LLE) engaged in the mining and refining of copper, and the production and sale of copper products.Hussey Metals Division(Hussey Division) was an unincorporated division of CRC.Hussey Division operated plant facilities in Leetsdale, Pennsylvania and Eminence, Kentucky as well as sales offices and warehouses in Pennsylvania (Philadelphia) New Jersey, New York, Illinois, Ohio, Missouri and North Carolina.

Although the Mineral Division of LLE(of which CRC was a part) provided certain company-wide benefits for salaried non-union employees, it did not have a policy for severance benefits.CRC instituted a severance pay policy in or about August of 1970 which provided for one week of base pay for each year of service, up to a maximum of twenty-six weeks.This policy was revised as it related to Hussey Division on September 29, 1982, by R.D. Allen, its President and General Manager, to allow one week of base pay for each year of service up to a maximum of 12 weeks.Severance was paid in accordance with the 1982 revision in 1982 and 1983.

In December of 1983, Hussey Division was incorporated as a wholly-owned subsidiary of LLE under the name of Hussey Metals, Inc.(Hussey Inc.)At this time, LLE attempted to sell Hussey Inc. as an ongoing concern, but was unsuccessful.On May 14, 1984, several representatives of LLE appeared at the Leetsdale facility to announce the closing of the plant--its last day of operation would be Friday, May 18, 1984.On that day, a memorandum prepared by LLE was distributed to all of the salaried non-union employees of Hussey Inc. stating that the formula and timing for severance pay would be communicated to them on or before June 1, 1984.Between the Leetsdale plant closing on May 18, 1984, through May 27, 1984, a few employees remained in the office to answer the phone and a skeletal crew provided security.The Eminence plant continued operations without interruption.

During the weekend of May 19-20, R.D. Allen, was able to put together a group of investors to purchase the assets of Leetsdale and Eminence facilities.The new company was named Hussey Copper Ltd.This company, headed by Mr. Allen (himself a former official of Hussey Inc.) began to hire former employees of the Leetsdale facility on May 27, 1984.On May 30, 1984, Mr. Allen, upon the request of LLE,...