Taylor v. National Life Ins. Co.

• Citation: 161 Vt. 457,652 A.2d 466
• Decision Date: 17 December 1993
• Docket Number: No. 92-389,92-389
• Parties: , 127 Lab.Cas. P 57,671, 9 IER Cases 116 Charles S. TAYLOR v. NATIONAL LIFE INSURANCE CO., John H. Harding and Mark J. Levesque.
• Court: Vermont Supreme Court

Page 466

652 A.2d 466

161 Vt. 457, 127 Lab.Cas. P 57,671,

9 IER Cases 116

Charles S. TAYLOR v. NATIONAL LIFE INSURANCE CO., John H. Harding and Mark J. Levesque.

No. 92-389.

Supreme Court of Vermont.

Dec. 17, 1993.

Motion for Reargument Denied March 17, 1994.

Leslie C. Pratt and Robert Mello, South Burlington, for plaintiff-appellant.

Robert S. Burke, Montpelier, for defendants-appellees.

Before ALLEN, C.J., GIBSON, DOOLEY, MORSE and JOHNSON, JJ.

DOOLEY, Justice.

Plaintiff Charles Taylor brought a wrongful discharge suit against defendants National Life Insurance Company and two of its officers individually. Plaintiff's complaint included seven different bases for recovery: claims resting on theories of discrimination on the basis of age or handicap condition under both disparate treatment and disparate impact doctrines, on theories of contract and promissory estoppel, and on the basis of negligence and intentional infliction of emotional distress. The court allowed the claims based on age and disability discrimination to go to the jury, which found for defendant National Life and the individual defendants. The court granted a directed verdict on the latter four claims. Plaintiff now appeals solely the grant of a directed verdict to National Life on the breach of contract and promissory estoppel claims. ¹ We affirm in part and reverse in part.

Plaintiff began his career with National Life in January 1966. By 1986, he had risen to officer status in the corporation and was running National Life's User Information Center servicing National Life's computer operations. He developed heart disease and had a triple bypass operation in October of 1985, but returned to work within a month. In February 1986, the plaintiff's department was reorganized and renamed the Automation Support Department. National Life split responsibility for its computer operations between plaintiff and Greg Doremus; plaintiff continued to oversee internal computer operations while Doremus took on management of National Life's field staff computer operations. A year later, the Automation Support Department was again reorganized. Plaintiff was placed in an enhanced job that carried with it greater responsibility. Award of the new job title and associated increased salary, however, was made contingent upon plaintiff's satisfactory performance of the job in the ensuing six months. Plaintiff's supervisor told him that he would be evaluated after six months and either be given the additional salary or be given another position at a lower job grade.

Prior to 1986, National Life enjoyed sound financial health, but in 1986, its financial picture began to change. It suffered losses of $38 million in fiscal year 1986, and by the third quarter of fiscal year 1987 had losses of an additional $47 million. As a result, in early 1987, National Life implemented a program aimed at reducing operating expenses by about ten percent, or close to $8 million in total savings. Plaintiff was aware of and participated in the expense reduction efforts, including discussions about reducing his own staff.

In September 1987, National Life offered an early retirement plan to 163 employees; ninety-two persons accepted the offer. Plaintiff, age forty-nine at the time, was eligible for the plan, but chose not to take early retirement because his pension would have been small. National Life then began to reduce staff through layoffs, eliminating forty-nine jobs, including the one occupied by plaintiff. Plaintiff's work overseeing internal computer operations was merged with Doremus' work overseeing field computer operations in a new position. Plaintiff's supervisor chose Doremus, who was in his early thirties at the time, for the new position. Two assistant director jobs reporting to Doremus became available in computer operations at this time, but they were filled by other people.

Because plaintiff's position was eliminated, he was laid off. He was neither offered the chance to apply for nor did he seek either of the assistant director jobs that were filled by others. He did not find another job within National Life or with any other company. He was given a severance package and was also able to elect the early retirement plan to receive a pension.

I.

On appeal plaintiff contends that the trial court improperly granted National Life's motion for a directed verdict on his breach of contract and promissory estoppel claims. "When reviewing a trial court's grant of a directed verdict, we must view the evidence in the light most favorable to the nonmoving party, excluding any modifying evidence; a directed verdict is not proper if any evidence fairly and reasonably supports the nonmoving party's claim." Meller v. Bartlett, 154 Vt. 622, 623-24, 580 A.2d 484, 485 (1990). Further, "we will uphold the trial court where the nonmoving party has failed to present evidence on an essential element of [the] case." Id. at 624, 580 A.2d at 485.

Plaintiff contends that the jury could find that his employment agreement with National Life was not at-will, and had, in fact, been transformed from an at-will agreement to a contract for employment that precluded National Life from terminating him during its 1987 staff downsizing. For purpose of analysis, it is helpful to break down plaintiff's overall claim into four main issues: (1) whether the written offer of employment to plaintiff, oral representations made to plaintiff, and National Life's personnel manual were sufficient to present a jury issue on whether there was an implied contract that plaintiff could be terminated only for good cause; (2) whether the economic conditions faced by National Life created good cause; (3) whether the jury could find plaintiff was terminated for a different reason; and (4) whether the events surrounding plaintiff's 1987 conditional promotion and layoff could be found to have created a special contract that was breached. We address each of these issues in turn. We start with the basic implied-contract issue.

II.

Plaintiff bases his overall contract theory on three main items. The first is his 1966 employment letter, which stated, in part: "Continuous employment with [National Life] is subject to one's performing in an entirely satisfactory manner...." Plaintiff argues that such language indicates that he could be terminated only if his performance was unsatisfactory. National Life responds with additional language from the letter: "It is understood that employment may be terminated by the employee or by the Company upon reasonable notice if the employment arrangement has not worked out satisfactorily." It argues that the additional language shows an at-will employment contract, allowing the employer to terminate for any reason or no reason.

Second, plaintiff relies on statements made at the time of his hiring that National Life was a stable employer and "if you did your job ... you could expect ... to stay there and ... retire from there." Consistent with these statements, National Life's Vice President of Human Relations testified that if there was no misconduct, "job security could be expected, I would say that was a cultural expectation."

Third, plaintiff relies on statements in the personnel policy manual. The most important of these are:

(1) "It is paramount that each individual be treated fairly, uniformly, and impartially...."

(2) "It is Company policy to make every effort to avoid involuntary terminations. Discharge is of course the severest form of disciplinary action and requires careful consideration before being resorted to."

(3) "Only after every possibility has been explored should you 'give up' on an employee and consider termination...." [The manual lists three steps to be taken before termination].

(4) "The following are circumstances which may warrant termination." [The manual lists and describes "Misconduct," "Attendance" and "Inadequate Performance."]

(5) "Unless a serious wrong has been committed, the supervisor should take progressive disciplinary actions, with the severity increasing with each offense."

(6) When discipline is imposed the supervisor must "[g]ive the employee the right to appeal."

The personnel policy manual made no reference to termination because of downsizing or reductions in force.

It is helpful to recapitulate our decisions on employment contracts and grounds for termination. A basic precept of employment contract construction is that "an employment contract for an indefinite term is an 'at-will' agreement, terminable at any time, for any reason." Foote v. Simmonds Precision Prods. Co., 158 Vt. 566, 570, 613 A.2d 1277, 1279 (1992). This is, however, "simply a rule of contract construction" that can "be overcome by evidence to the contrary." Id.

We began to define what could be "evidence to the contrary" in Sherman v. Rutland Hospital, Inc., 146 Vt. 204, 500 A.2d 230 (1985). In that case, plaintiff received defendant's personnel policy manual as part of the hiring negotiation. The manual set forth a progressive discipline process, ending with termination. Upon commencing work, plaintiff signed a statement that he had read and understood the manual. Plaintiff was eventually fired because the employees he supervised complained about his management style. In his wrongful termination suit, the jury found that plaintiff's employment contract included the disciplinary grounds and procedures in the manual and that the manual requirements were breached.

This Court affirmed, holding that the employee and employer could bargain for, and agree to be bound by, termination provisions set forth in the personnel manual, even if the bargain applies only to the employee before the court and not the entire employee population. Id. at 207-08, 500 A.2d at 232. We noted that the case involved an alleged bilateral agreement to make the manual terms part of the employment agreement and left for another day "whether the employee manual itself created...