Simpson v. Western Graphics Corp.

• Court: Oregon Supreme Court
• Writing for the Court: TANZER; LENT, J., filed a dissenting opinion in which LINDE; LENT; LINDE
• Citation: Simpson v. Western Graphics Corp., 293 Or. 96, 643 P.2d 1276 (Or. 1982)
• Decision Date: 04 May 1982
• Parties: Susan SIMPSON and Betty L. Jackson, Petitioners on Review, v. WESTERN GRAPHICS CORPORATION, Respondent on Review. CA 17979; SC 28052. . *

Page 1276

643 P.2d 1276

293 Or. 96

Susan SIMPSON and Betty L. Jackson, Petitioners on Review, v. WESTERN GRAPHICS CORPORATION, Respondent on Review.

CA 17979; SC 28052.

Supreme Court of Oregon, In Banc. ^*

Argued and Submitted Dec. 7, 1981.

Decided May 4, 1982.

Henry H. Drummonds, Eugene, argued the cause for petitioner. With him on the petition and briefs was Kulongoski, Heid, Durham & Drummonds, Eugene.

Arthur C. Johnson, Eugene, argued the cause for respondent. With him on the brief were R. Scott Palmer and Johnson, Harrang, Swanson & Long, Eugene.

TANZER, Justice.

Plaintiffs are former employees of defendant who were discharged for allegedly threatening violence against another employee. They brought this breach of contract action for reinstatement and back pay, claiming that they were discharged without "just cause," contrary to the provisions of defendant's Employee Handbook. The case was tried to the court. It found that plaintiffs were discharged for just cause and it entered judgment for defendant. The Court of Appeals affirmed. Plaintiffs contend that the courts below erred because the court, not just the employer, must find that the facts constituting just cause for discharge actually exist.

The facts relevant to our disposition of this appeal are not disputed. When plaintiffs began their employment they were given a copy of defendant's Employee Handbook. The handbook provides that employees will be dismissed only for "just cause." Plaintiffs were dismissed after their supervisor determined that they had made threats of violence against another employee. Plaintiffs deny having made such threats. Plaintiffs then brought this action. The trial court made the following Findings of Fact and Conclusions of Law:

"8. The defendant (1) investigated the facts claimed to be the basis for discharge (alleged threats by plaintiffs to other employee), (2) notified the plaintiffs of the claimed facts, and (3) afforded the employees an opportunity to present their side.

"9. Defendant discharged plaintiffs for reasons the defendant, through defendant's agent, reasonably believed the truth, and defendant made a good faith determination that sufficient cause for discharge existed.

"10. It was reasonable for defendant's agents to conclude from the employees' responses that the facts ascertained were confirmed. The employer did investigate and determine that evidence of threats existed and reasonably believed the same in good faith.

"11. The Court makes no finding with respect to whether threats (as opposed to statements made in jest) were in fact made and intended to frighten the other employee, because the same is unnecessary to determine the issues herein.

"CONCLUSIONS OF LAW

"1. To constitute 'just cause,' the employer (or agent of the employer) must make a good faith determination of a sufficient cause for discharge based on facts reasonably believed to be true and not for any arbitrary, capricious, or illegal reason. It is not necessary that the alleged reason for discharge (intentional threats against fellow employee) actually in fact has occurred, but only that the evidence of threats existed which the employer reasonably believed in good faith after an investigation.

"2. The plaintiffs' discharge was for just cause as defined above.

* * * "

On review, plaintiffs challenge the trial court's refusal to find whether the alleged threats were made. The Court of Appeals concluded that the trial court was correct. It held that where a private employer adopts a policy of discharging employees only for just cause, a trial court reviewing the discharge need only find that there was substantial evidence to support the employer's decision and that the employer believed the evidence and acted in good faith. Accordingly, the court affirmed the judgment for defendant. We allowed review to consider whether by agreeing to discharge employees only for "just cause," a private employer also relinquishes its right to determine whether facts constituting just cause exist.

In the absence of a contract, statute or constitutional requirement to the contrary, an employee may quit or an employer may discharge an employee at any time. See, Vaughn v. Pacific Northwest Bell Telephone, 289 Or. 73, 90, 611 P.2d 281 (1980); Nees v. Hocks, 272 Or. 210, 216, 536 P.2d 512 (1975). ¹ Here, the parties agree that the terms of the Employee Handbook are contractual terms of the plaintiffs' employment. See, Yartzoff v. Democrat-Herald Publishing Co., 281 Or. 651, 576 P.2d 356 (1978). The handbook's "just cause" provision suggests two distinct questions: (1) what is the meaning of just cause; and (2) who makes the requisite factual determination. Here, there is no dispute about the first question. The parties agree that the clause is a substantive restriction of the employer's rights to terminate employment at will and that if plaintiffs' alleged conduct occurred it constituted just cause. Consequently, we do not determine what fact constitutes just cause, or who decides whether the facts constitute just cause. Only the second question is in issue. On that issue the Employee Handbook is silent. It contains no express contractual transfer of this management decisional prerogative.

Transfer of employer prerogatives can also be accomplished implicitly by accepted practice or mutual tacit understanding. In an analogous case, where no express just cause requirement was stated in a labor contract and where there was no extrinsic basis to find an implicit agreement, we declined to read a "just cause" requirement into the arbitration provision of the contract, Swanson v. Van Duyn Choc. Shops, 282 Or. 491, 579 P.2d 239 (1978).

Here, the converse is true: there is a just cause provision, but no express provision transferring authority to make factual determinations from the employer to another arbiter. Neither is there reason to infer that such a meaning was intended by the terms of the Employee Handbook. Although an employer's statement of employment policy has a degree of contractual effect, see Yartzoff v. Democrat-Herald Publishing Co., supra, its terms are not necessarily to be construed in the same way as those of a negotiated labor contract. The handbook was not negotiated. It is a unilateral statement by the employer of self-imposed limitations upon its prerogatives. It was furnished to plaintiffs after they were hired and the...