Rowe v. Montgomery Ward & Co., Inc.

• Decision Date: 31 July 1991
• Docket Number: Docket No. 84848
• Citation: 437 Mich. 627,473 N.W.2d 268
• Court: Michigan Supreme Court
• Parties: Mary ROWE, Plaintiff-Appellant, v. MONTGOMERY WARD & CO., INCORPORATED, Defendant-Appellee. 437 Mich. 627, 473 N.W.2d 268, 60 U.S.L.W. 2191, 121 Lab.Cas. P 56,870, 6 Indiv.Empl.Rts.Cas. (BNA) 1185

Page 268

473 N.W.2d 268

Mary ROWE, Plaintiff-Appellant, v. MONTGOMERY WARD & CO., INCORPORATED, Defendant-Appellee.

Docket No. 84848.

437 Mich. 627, 473 N.W.2d 268, 60 U.S.L.W. 2191,

121 Lab.Cas. P 56,870,

6 Indiv.Empl.Rts.Cas. (BNA) 1185

Supreme Court of Michigan.

Argued Oct. 2, 1990.

Decided July 31, 1991.

Meana, Spruit & Bedevia, P.C. by Richard M. Spruit, Grand Rapids, for plaintiff/appellant.

Dykema Gossett by Charles C. DeWitt, Jr., Detroit, for defendant/appellee.

Clark, Klein & Beaumont by Dwight H. Vincent, J. Walker Henry, Rachelle G. Silberberg, Detroit, for Michigan Mfrs. Ass'n, amicus curiae.

Mark Granzotto, Detroit, Monica Farris Linkner, Berkley, Charles P. Burbach, Southfield, amicus curiae for the Michigan Trial Lawyers Ass'n.

Miller, Canfield, Paddock and Stone, Diane M. Soubly, Detroit, for amici curiae American Soc. of Employers, Motor Vehicle Mfrs. Ass'n of the U.S., Inc., Greater Detroit Chamber of Commerce, and Michigan State Chamber of Commerce.

RILEY, Justice.

In Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980), this Court joined the forefront of a nationwide experiment in which, under varying theories, courts extended job security to nonunionized employees. In the vast outpouring of ensuing cases, there are indeed situations in which employers have in reality agreed to limit managerial discretion. However, the theory remains troubling because of those instances in which application of contract law is a transparent invitation to the factfinder to decide not what the "contract" was, but what "fairness" requires.

That courts have not been successful in unraveling the logic of the theory to produce principles that distinguish the first category of cases from the second, is not necessarily a reason to abandon the experiment. As Justice Griffin put it in In re Certified Question, 432 Mich. 438, 457, 443 N.W.2d 112 (1989), "[f]airness suggests that a discharge-for- policy announced with flourishes and fanfare at noonday should not be revoked by a pennywhistle trill at midnight." But unless the theory has some relation to the reality, calling something a contract that is in no sense a contract cannot advance respect for the law. Thus, we seek a resolution which is consistent with contract law relative to the employment setting while minimizing the possibility of abuse by either party to the employment relationship.

It is in this context that we address the question presented in this appeal: whether an employer's oral statements and written policy statements created an employment contract terminable only for cause.

FACTS AND PROCEEDINGS

In August of 1976, plaintiff applied for a sales position at defendant's North Kent Mall store in Grand Rapids. Plaintiff was interviewed by Mr. Vern Harryman who, according to plaintiff, told her that she would have a job at Montgomery Ward & Co., Incorporated, as long as she achieved her sales quota. With regard to his meeting with plaintiff, Mr. Harryman testified:

"When we hired commission salespeople, that's sort of a different type of employee than a time-card person. Their main objective, the number one thing was that they must attain their draw of a hundred and twenty-six dollars a week, and generally , as long as they generated sales and were honest, why, they had a job at Wards, and that's the way we used to hire our people."

At the time of her hiring, plaintiff signed a sheet entitled "Rules of Personal Conduct." The sheet stated that adherence to company policies wouldhelp an employee to achieve "growth, profit, security, [and a] successful career." The rules further provided that anyone involved in the following activities would be immediately dismissed. ¹

Several years later, in January of 1982, defendant issued to all employees a handbook entitled "Welcome to Wards." The handbook contained disciplinary guidelines which classified infractions according to severity, and allowed four types of discipline for transgression: "1) Written Warning(s); 2) Suspension without Pay; 3) Probation ...; and 4) Separation." In the back of the handbook was a form designated the "New Employee Sign-Off Sheet." The sheet provided in part:

"I have read and fully understand the rules governing my employment with Montgomery Ward. I agree to employment with Montgomery Ward under the conditions explained. I understand these conditions can be changed by the Company, without notice, at any time. I also understand and agree that my employment is for no definite period and may, regardless of the time and manner of payment of my wages and salary, be terminated at any time, with or without cause, and without any previous notice."

Although a personnel employee informed plaintiff that the sheet was applicable to her, plaintiff refused to sign the form. Plaintiff claimed that it applied only to new employees, and she did not "feel it's right that you can fire somebody for no reason, at all." Plaintiff noted on the back of the sign-off sheet, "Read and do not wish to sign. 5-20-82. [s] Mary Rowe."

Defendant issued another employee handbook to its work force in August of 1982. The August, 1982 handbook also contained an "Employee Sign-off Sheet" providing for termination with or without cause. Plaintiff received but did not sign this sheet. All Montgomery Ward employees, including plaintiff, received another handbook in May of 1983. In the 1983 handbook, there was further language providing for employment at will. Virtually the same disciplinary guidelines were included in all the handbooks.

The Court of Appeals opinion aptly describes the facts surrounding plaintiff's termination.

"On March 8, 1984, plaintiff was scheduled to work from 1 p.m. to 9 p.m. At 2 p.m., she was observed leaving the store from an unauthorized exit by security personnel. She returned approximately four hours later. Plaintiff did not receive permission to leave the store from her supervisor, although she claimed that she attempted to contact him several times since the previous day but was unable. She did tell her co-workers that she had to leave on an emergency but did not say where she was going or how long she would be gone. Further, even though the salaries of commissioned salespersons are not dependent upon the hours worked, plaintiff failed to punch out when she left or punch in when she returned, as required by company policy. Neither did she make note of her four-hour absence on the time card which she turned in at the end of the work week.

"Two days later, plaintiff was called into the office of the store manager to answer for the unauthorized absence. She allegedly gave no explanation for leaving the store and refused to provide a written statement on the matter. She said only that she could not remember where she was for those four hours. As a result of this incident, plaintiff was terminated from defendant's employ.

"On May 14, 1984, plaintiff filed a complaint against defendant in the Kent Circuit Court asserting claims for wrongful discharge, breach of contract, and several other causes of action which are not relevant for purposes of this appeal. A jury trial on the matter was held on February 18 and 19, 1986. At the conclusion of plaintiff's proofs, defendant moved for a directed verdict on the ground that she was an at-will employee who was subject to dismissal at any time without cause. The court denied that motion, reasoning that an issue of fact existed for the jury to determine whether there was a just-cause employment contract or whether plaintiff's employ was terminable at the will of defendant. The trial then continued and eventually concluded in a jury verdict of $86,500 plus interest in favor of plaintiff. A judgment to that effect was thereafter entered by the court.

"On May 1, 1986, defendant filed motions for judgment notwithstanding the verdict (JNOV), a new trial, or remittitur. By court order dated June 19, 1986, each of those motions was denied." ²

Defendant appealed the decision, and the Court of Appeals reversed, ³ finding that plaintiff was an employee at will. Plaintiff appealed in this Court, and we ordered Rowe held in abeyance pending resolution of In re Certified Question, 432 Mich. 438, 443 N.W.2d 112 (1989), and Bullock v. Automobile Club of Michigan, 432 Mich. 472, 444 N.W.2d 114 (1989). On May 2, 1990, this Court granted leave to appeal. 434 Mich. 910 (1990).

I

The issue posed by this case is whether defendant employer's oral statements and written policy statements directed at plaintiff may be interpreted to permit a promise implied in fact not to terminate except for cause. We find that plaintiff's allegations are insufficient to support her contention of a promise implied in fact limiting the defendant's right to terminate her employment. Thus, plaintiff cannot maintain an action for breach of contract as a result of her dismissal.

This Court has held that contracts for permanent employment are for an indefinite period of time and are presumptively construed to provide employment at will. Lynas v. Maxwell Farms, 279 Mich. 684, 687, 273 N.W. 315 (1937). When contract claims rest on proofs of oral representations, the presumption provides assurance that oral contracts for an indefinite term, which fall outside the statute of frauds, will be recognized only where circumstances suggest both parties intended to be bound. The presumption may be overcome by proof of an express contract for a definite term or a provision forbidding discharge in the absence of just cause, or it may be overcome by proofs which permit a promise implied in fact of employment security, i.e., for a particular period of time or to terminate only for just cause.

In Lynas, the Court declined to imply a durational term where the plaintiff accepted an offer of a "permanent lifetime position with the defendant." The Court observed, however, that the presumption of employment at will can be overcome if a contract is...