Shelton v. Oscar Meyer Foods Corp.
| Decision Date | 07 February 1995 |
| Docket Number | No. 2312,2312 |
| Court | South Carolina Court of Appeals |
| Parties | Julian Harris SHELTON, Appellant, v. OSCAR MAYER FOODS CORPORATION, d/b/a Louis Rich, a wholly owned subsidiary of Phillip Morris Companies, Inc., Barton Protective Services, Inc., and William Brown, of which Oscar Mayer Foods Corporation, d/b/a Louis Rich, a wholly owned subsidiary of Phillip Morris Companies, Inc., is the Respondent. . Heard |
C. Richard Kelly, Columbia, and Samuel M. Price, Jr., Newberry, for appellant.
Thomas A. Bright and Mary C. McCormac, Haynsworth, Baldwin, Johnson & Greaves, Greenville, for respondent.
ORDER GRANTING PETITION FOR REHEARING
After a careful consideration of the parties' respective Petitions for Rehearing, it is ordered that the opinion heretofore filed, Op. No. 2312, filed February 27, 1995, be withdrawn and the attached opinion be substituted. The Petitions for Rehearing are granted without oral argument.
This case arises out of an alleged wrongful termination of employment and, so far as is pertinent here, involves claims by Julian Harris Shelton against Louis Rich, a subsidiary of Oscar Mayer Foods Corporation, for breach of contract, breach of contract accompanied by a fraudulent act, fraudulent misrepresentation, and breach of covenant of good faith and fair dealing. Louis Rich discharged Shelton after a security guard reported he observed Shelton and another employee smoking marijuana in the Louis Rich parking lot. Judge James W. Johnson, Jr., granted Louis Rich's motion for a directed verdict on the breach of contract claim. All other claims were previously disposed of on motions to dismiss or for summary judgment by either Judge Johnson or Judge T.L. Hughston, Jr. Shelton appeals. We affirm in part, reverse in part, and remand.
Shelton worked at the Louis Rich processing plant in Newberry. When he was hired, he received the 1979 employee handbook. The handbook contained employee conduct rules and company policies. In 1983, Louis Rich distributed another handbook that included a change in company policies, but Louis Rich did not otherwise notify the employees of the change. In 1987, William Brown, a security guard, told Louis Rich management that he had observed Shelton and a co-worker smoking marijuana in the Louis Rich parking lot in the co-worker's van. There is conflicting testimony concerning whether Louis Rich investigated the allegation before it discharged Shelton. Shelton claims Louis Rich failed to "[e]nsure," as its handbook provided, that its rules governing employee conduct "[would] be enforced fairly and equally with regard to all employees."
Shelton first argues Louis Rich was collaterally estopped from relitigating a factual issue that was decided during a contested hearing conducted by the South Carolina Employment Security Commission (ESC) to determine whether Louis Rich discharged Shelton for cause.
The issue of whether collateral estoppel applies to rulings of the ESC has never been directly addressed by the appellate courts of this state. 1
In deciding whether collateral estoppel should apply to factual findings of the ESC, we look first to the purposes served by ESC hearings.
S.C.Code Ann. § 41-27-20 (1986) sets forth the public policy underlying South Carolina Employment Security Law as follows:
Economic insecurity due to unemployment is a serious menace to health, morals and welfare of the people of this State; involuntary unemployment is therefore a subject of general interest and concern which requires appropriate action by the General Assembly to prevent its spread and to lighten its burden which so often falls with crushing force upon the unemployed worker and his family; the achievement of social security requires protection against this greatest hazard of our economic life; this can be provided by encouraging the employers to provide more stable employment and by the systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment, thus maintaining purchasing power and limiting the serious social consequences of poor relief assistance. The General Assembly therefore declares that in its considered judgment the public good and the general welfare of the citizens of this State require the enactment of this measure, under the police powers of the State, for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own.
It is evident that the legislature intended to keep procedural hurdles to a minimum so as to enable unemployed claimants to obtain prompt decisions regarding benefits from the ESC. See, e.g., California Dep't of Human Resources Dev. v. Java, 402 U.S. 121, 135, 91 S.Ct. 1347, 1356, 28 L.Ed.2d 666, 676 (1971) ().
Because of the policy underlying ESC hearings, the narrow issue the ESC decides is simply whether the claimant's discharge was with or without cause in order to determine whether the claimant should receive unemployment benefits. Employers are not likely to fully litigate all issues before the ESC because the matter in controversy is comparatively small. Further, claimants are generally likely to be unrepresented by counsel at these hearings. If collateral estoppel applied to ESC decisions, ESC hearings would essentially become forums for employers and employees to engage in lengthy civil litigation over claims relating to an employee's discharge. This, we feel, would frustrate the intent underlying the employment security law.
After full consideration of the policy reasons behind South Carolina Employment Security Law and the implications of applying collateral estoppel to ESC findings, and after a review of the case law of other states dealing with this issue, 2 we hold the better rule is not to apply collateral estoppel to ESC findings. This decision leaves the employer and employee free to litigate any civil claims in the proper forum while preserving the function and purpose of ESC hearings, i.e., to expedite benefits decisions for workers who become unemployed through no fault of their own.
Shelton also argues the trial court erred in granting a directed verdict in favor of Louis Rich on Shelton's breach of contract claim. We agree.
In Small v. Springs Indus., Inc., 292 S.C. 481, 357 S.E.2d 452 (1987), the supreme court held an employee handbook could constitute a contract, thereby altering an employee's at-will status. The court also recognized that, under the common law, a trial court should submit to the jury the issue of the existence of a contract when its existence is questioned and the evidence is either conflicting or admits of more than one inference. Specifically, the court held it was for a jury to determine whether an employee handbook constituted an employment contract. Id.
On appeal from a directed verdict, a court must view the evidence and all its reasonable inferences in the light most favorable to the nonmoving party. If the evidence as a whole is susceptible of more than one reasonable inference, a jury issue is created and the motion should be denied. Whelan v. Welch, 304 S.C. 548, 405 S.E.2d 836 (Ct.App.1991).
Viewing the evidence and its reasonable inferences in the light most favorable to Shelton, the nonmoving party, we hold the language of the 1979 employee handbook could have created an employment contract. In Small, the supreme court held that "[i]t is patently unjust to allow an employer to couch a handbook ... in mandatory terms and then allow him to ignore these very policies as 'a gratuitous, nonbinding statement of general policy' whenever it works to his disadvantage," and that once an employer voluntarily chooses to publish a handbook and "assure[s] the employees that the provisions of [the handbook] w[ill] be followed," the employer may be held liable for breach of contract. Small, 292 S.C. at 485, 357 S.E.2d at 454-55.
The handbook language at issue here, when referring to the Employee Rules of Conduct, reads in pertinent part: "These rules are a fair way to protect everyone and the company will [e]nsure that these rules will be enforced fairly and equally with regard to all employees." (emphasis added). This is not a case where the employer has merely made general, gratuitous assurances of fair dealing, as Louis Rich would have us hold. See, e.g., Mills v. Leath, 709 F.Supp. 671, 674 (D.S.C.1988) (). Rather, it is a case where the employer, by inserting mandatory language in its employee handbook, has expressly guaranteed its employees that it will implement and adhere to the rules outlined in the handbook.
The trial court, therefore, erred in directing a verdict in favor of Louis Rich on the issue of the existence of an employment contract. The issues of the existence of a contract, any breach of the contract, and any damages resulting from the breach should have been submitted to the jury.
In light of the South Carolina Supreme Court's recent decision in Fleming v. Borden, Inc., 316 S.C. 452, 450 S.E.2d 589 (1994), we address the issue of actual notice, an issue Louis Rich raised as a defense but the trial court did not reach in directing a verdict for Louis Rich.
Louis Rich contends Shelton's alleged actual knowledge of the 1983 disclaimer provides an additional sustaining ground for the trial court's directed verdict. Rules 207(b)(2) and 220(c), SCACR. The facts relevant to this defense are as...
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