Olson v. Souris River Telecommunications Co-op., Inc., 960144

• Citation: 558 N.W.2d 333,1997 ND 10
• Decision Date: 24 January 1997
• Docket Number: No. 960144,960144
• Parties: 134 Lab.Cas. P 58,290, 12 IER Cases 921, 1997 ND 10 Milton A. OLSON, Plaintiff and Appellee, v. SOURIS RIVER TELECOMMUNICATIONS COOPERATIVE, INC., Defendant and Appellant. Civil
• Court: United States State Supreme Court of North Dakota

Page 333

558 N.W.2d 333

134 Lab.Cas. P 58,290, 12 IER Cases 921, 1997 ND 10

Milton A. OLSON, Plaintiff and Appellee, v. SOURIS RIVER TELECOMMUNICATIONS COOPERATIVE, INC., Defendant and Appellant.

Civil No. 960144.

Supreme Court of North Dakota.

Jan. 24, 1997.

Deborah J. Carpenter, Carpenter Offices, Bismarck, for plaintiff and appellee.

Jan M. Sebby, Pringle & Herigstad, PC, Minot, for defendant and appellant.

VANDE WALLE, Chief Justice.

¶1 Souris River Telecommunications Cooperative (SRT) appealed from the trial court's judgment that it committed a breach of contract in its employment relationship with the plaintiff, Milton Olson. The trial court awarded $201,882.35 in damages to the plaintiff. SRT claims the trial court erred in finding an employment contract existed, and further contends, even if a contract did exist, the trial court did not properly measure the damages for any breach. Because the statutory presumption of employment at will was not overcome, we reverse.

¶2 Milton Olson was hired by SRT as an accounting and office supervisor in 1989. Olson interviewed with Warren Hight, SRT's General Manager, and Jerome Jaeger, SRT's Personnel Director. During this interview, Olson disclosed that he suffered from hyperthyroidism, and informed Hight and Jaeger this condition had affected his previous employment. However, Olson stated he was currently under medication which kept the problem "under control." Neither Hight or Jaeger inquired any further into the matter.

¶3 In late 1990, Olson was given the highest scores in all categories during a mandatory job performance evaluation. In December of 1990, Olson was hospitalized for tests for his hyperthyroid condition. These tests involved some psychiatric evaluations. Following his release from the hospital, Olson informed Hight of the nature and results of the tests, and told Hight further tests would be required. On January 7, there was an incident in the office involving Olson and another SRT employee. As a result of this incident, Hight asked Olson to apologize to the employee. Olson did so, but also prepared a grievance report regarding his version of the event. This grievance report was given to Hight on January 8. The next day, Hight gave Olson the choice to resign or be fired. Olson's employment was terminated the same day.

¶4 Olson sued, filing a complaint against SRT in May of 1991, claiming breach of contract, professional defamation, and discrimination against the handicapped. In the breach of contract claim, Olson argued the progressive-employment termination steps found in the SRT employee handbook were not followed and this constituted a breach of Olson's employment agreement with SRT.

¶5 SRT filed a motion for summary judgment in June of 1992. The motion was denied. Following extensive discovery, the case went to trial in May of 1995. The trial court issued a memorandum decision, in late 1995, dismissing the discrimination and defamation claims. As to the breach of contract claim, however, the trial court found a valid employment contract existed between Olson and SRT based on the language found in the employee handbook. The trial court stated:

"But for his writing and presenting his grievances to Hight Olson would not have been fired.

"We have here a precipitate firing with no advance warning to a management level employee, an employee, within the coverage of the Personnel Policy Manual. The manual purports to be the means of providing the employee and the employee's job with a very important personnel tool that is designed to serve as a source of information that an employee can look to with authority and completeness. If the job is furnished with this tool then the tool must be implemented when the job is affected....

* * * * * *

The manual can disclaim a contract but in viewing the document as a whole I find sufficient guarantees accorded to an employee to show an intent to overcome the presumption of § 34-03-01 NDCC to prevent a firing in the manner, and for the causes demonstrated...." (emphasis added).

¶6 SRT raises three issues on appeal.

I

¶7 SRT claims the trial court erred when it found the employee manual created a contract. SRT contends the language in the handbook, which includes an expressed disclaimer providing the handbook "is not a contract," also includes the necessary language to remove any intent to create a contract.

¶8 The construction of the language of a written contract to determine the legal effect is a question of law for the court to decide. Bailey v. Perkins Restaurants, Inc., 398 N.W.2d 120, 121 (N.D.1986) (citing Miller v. Schwartz, 354 N.W.2d 685, 688 (N.D.1984)). On appeal we examine and construe the language independently to determine if the trial court erred in its interpretation. Bailey, 398 N.W.2d at 121. In doing so, we read the contract language in its entirety and take all of its provisions into consideration to determine the parties intent. Id. (citing Miller, 354 N.W.2d at 688).

¶9 When a person is hired for an indefinite term, the employment is presumed to be at will. N.D.C.C. § 34-03-01. Bailey, 398 N.W.2d at 122. Section 34-03-01 states, "[a]n employment having no specified term may be terminated at the will of either party on notice to the other, except when otherwise provided by this title." The presumption of at will employment may be overcome when an employer provides a personnel manual which dictates company policy. Bailey, 398 N.W.2d at 122. In these situations, the entire manual must be examined to determine if language in the manual creates an intent to overcome the at will presumption and create an employment contract. Schmidt v. Ramsey County, 488 N.W.2d 411, 413 (N.D.Ct.App.1992) (citing Eldridge v. Evangelical Lutheran Good Samaritan Society, 417 N.W.2d 797, 799 (N.D.1987)). Therefore, we examine SRT's employee manual, in its entirety, to determine if SRT intended to create an employment contract.

¶10 The SRT employee manual states:

"Statement of Purpose

"This written policy statement is not a contract. It is a statement of personnel policies which have been established by management. These policies are subject to change in the sole discretion of management.

"This manual contains statements of personnel policies, practices, guidelines, and procedure. It is designed to be a working guide for supervisory and staff personnel in the day-to-day administration of our company program.

"Authority and Distribution

"This Personnel Policy Manual is the property of Souris River Telephone and is issued to you as a means of providing you and your job with a very important personnel tool. It is not for public use. It is designed to serve as a source of information you can look to with authority and completeness."

As the manual pertains to discharges and grievances, it reads as follows:

"Cause for Immediate Discharge

"Employee may be dismissed without notice for the following causes:

1. Dishonesty, deceit or falsification of records.

2. Theft[.]

3. Absence from the job without leave.

4. Conduct contrary to the interests of the Cooperative.

"Discipline Procedures

"In the event a situation occurs, and immediate discharge is not necessary, the following disciplinary procedure shall be followed:

1st offense--Employee will be given a warning.

2nd offense--Employee will be suspended for one day without pay.

3rd offense--Employee will be suspended for three days without pay.

4th offense--Shall be considered as cause for discharge.

"Grievance Procedures

"It is our purpose to provide an effective and acceptable means for employees to bring problems and complaints concerning their well-being at work to the attention of management. Therefore, a formal grievance procedure has been established for the benefit and use of non-union employees.

"A grievance is defined as 'any condition of employment that the employee thinks or feels is unjust or inequitable.' Under the plan, hourly non-union employees and salaried employees may submit grievances in the following sequence:

1. To assure prompt attention, grievances should be submitted within five days of the event prompting the grievance.

2. Grievances are presented to the employee's immediate supervisor.

3. If the grievance cannot be settled by the employee's immediate supervisor, the supervisor should, within two working days, give a report to the department head, or Manager.

4. If no satisfactory action is taken within one week, the employee should submit grievance to the Personnel Director."

¶11 The trial court, after considering the relevant evidence, found a valid employment contract existed. The trial court relied on a recent Washington Supreme Court ruling, Swanson v. Liquid Air Corp., 118 Wash.2d 512, 826 P.2d 664 (1992), where that court re-evaluated the standard set in Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081 (1984), a case which our previous decisions on this issue found persuasive. See Eldridge, 417 N.W.2d at 799 (stating St. Regis Paper Co., provided the general rule for at will employment and employee handbooks) and Bailey, 398 N.W.2d at 122 (quoting St. Regis Paper Co., as authoritative). The trial court, quoting the Washington Supreme Court in Swanson, stated, " '[w]e reject the premise that this disclaimer can, as a matter of law, effectively serve as an eternal escape hatch for an employer who may then make whatever unenforceable promises of working conditions it is to its benefit to make.' " 826 P.2d at 674.

¶12 In relying on this decision, the trial court seemed to suggest North Dakota law should parallel Washington law because our initial rulings used St. Regis Paper Co. for support. But, the trial court's reliance on Swanson fails to consider several important factual and legal differences between Swanson and this case. Significantly, Washington's at will employment law is based on common law doctrine. St. Regis Paper Co., 685 P.2d at 1084. Washington developed their law...