Thompson v. St. Regis Paper Co.

Citation685 P.2d 1081,102 Wn.2d 219
Decision Date05 July 1984
Docket NumberNo. 49592-1,49592-1
Parties, 116 L.R.R.M. (BNA) 3142, 105 Lab.Cas. P 55,616, 1 IER Cases 392 Kenneth L. THOMPSON, Appellant, v. ST. REGIS PAPER COMPANY, Respondent.
CourtUnited States State Supreme Court of Washington

Thomas C. Lowry, Tacoma, for appellant.

Eisenhower, Carlson, Newlands, Reha, Henriot & Quinn, James F. Henriot, James M. Hushagen, Tacoma, for respondent.

BRACHTENBACH, Justice.

Does a terminable at will employee have a cause of action for wrongful discharge when his employer summarily discharges him and gives no reason for so doing? The trial court granted the employer's motion for summary judgment and dismissed the employee's action. We reverse and remand for trial.

Reviewing all the material submitted in a light most favorable to the appellant, the nonmoving party, Yakima Fruit & Cold Storage Co. v. Central Heating & Plumbing Co., 81 Wash.2d 528, 530, 503 P.2d 108 (1972), the record establishes the following.

The appellant, Kenneth L. Thompson, began working for St. Regis Paper Company (hereinafter St. Regis) in 1963. There is no written agreement concerning his employment. In 1973 he was promoted into a management position, reaching the rank of divisional controller for the Distribution Yards and Industrial Supply Division of St. Regis in Tacoma, Washington. From 1973 through 1979 he received regular bonuses under the Management Incentive Compensation Plan. Throughout this period the appellant received no complaints or criticism from his superiors concerning his work. In December 1979, he received a merit pay raise.

Despite this apparent satisfactory service, on January 17, 1980, after 17 years of service, he was asked to resign for the benefit of himself and the company. The only reason given was that he "stepped on somebody's toes." Ironically, the next day he was awarded a $10,000 bonus for his last year's performance. St. Regis has refused to give any other reason for the discharge. Appellant's personnel records classify his termination as an involuntary separation and state that it was a "mutual separation for the best interest of employee and Company". His severance benefits were awarded under the St. Regis Policy and Procedural Guide section applicable to employees terminated for no cause.

Appellant sued and alleged in his complaint:

[St. Regis] acted dishonestly and without good faith in demanding the plaintiff's resignation for purposes not consistent with business of the defendant, and in violation of the agreement of employment of the plaintiff and defendant.

St. Regis refused to answer appellant's interrogatories directed at ascertaining the reasons for appellant's dismissal. Citing Webster v. Schauble, 65 Wash.2d 849, 400 P.2d 292 (1965), St. Regis argued that because appellant's employment was terminable at will, the inquiries were not relevant and would not lead to relevant evidence. Appellant's motion to compel answers was denied.

St. Regis moved for summary judgment arguing that the employment relationship was terminable at will and, therefore, no material issue of fact was presented. Respondent's supporting affidavit contained excerpts from appellant's deposition and the St. Regis Management Incentive Compensation Plan. St. Regis argued that the excerpts show that the appellant had merely a subjective belief that he would be terminated only with cause, which was an insufficient basis for finding an implied contract.

The appellant responded by filing his own affidavit and numerous exhibits, including St. Regis documents which indicate he was doing satisfactory work, excerpts from the St. Regis Policy and Procedural Guide, and St. Regis internal memoranda. The language cited in the Policy and Procedural Guide states: that terminations "will be processed in a manner which will at all times be fair, reasonable and just"; evaluation procedures for merit pay increase; a stated policy of promotion from within the company; and the existence of a 90-day probationary period for all employees. He also quotes an internal memoranda stating termination of controllers will be discussed before the fact between the corporate controller and divisional operations managers.

Appellant's principal argument was that the fact he was doing a good job, coupled with the quoted corporate policies, created an implied contract he would be fired only for cause. He also argued that signing an employment agreement assigning all inventions and patents to the employer constitutes sufficient additional consideration for an implied contract. Lastly, he argued that he was fired because he instituted accurate accounting procedures in compliance with the Foreign Corrupt Practices Act of 1977, 91 Stat. 1494, and his summary discharge without approval of the corporate controller was intended to be a warning to all the divisional controllers.

The trial court granted St. Regis' motion. The court found that the exhibits concerning merit pay increases, and St. Regis' general policies of promotion from within were not relevant to termination proceedings. The court found that the remaining policies, fair treatment, a probationary period and review before the fact, did not create an implied contract and that no additional consideration was given. The court concluded that there was no material issue of fact. This conclusion was also the rationale for denying appellant's motion to compel St. Regis to answer his interrogatories.

I

Both parties concede there is no formalized agreement concerning appellant's employment relationship with St. Regis. Generally, an employment contract, indefinite as to duration, is terminable at will by either the employee or employer. Roberts v. ARCO, 88 Wash.2d 887, 894, 568 P.2d 764 (1977), Lasser v. Grunbaum Bros. Furniture Co., 46 Wash.2d 408, 410, 281 P.2d 832 (1955). However, such a contract is terminable by the employer only for cause if (1) there is an implied agreement to that effect or (2) the employee gives consideration in addition to the contemplated service. Roberts, 88 Wash.2d at 894, 568 P.2d 764.

We agree with the trial court's conclusion that the employment contract between the parties was not terminable by the employer only for just cause.

Appellant argued to the trial court that he gave independent consideration when he signed an employment agreement assigning any inventions or patents during his employment to St. Regis. Parker v. United Airlines, Inc., 32 Wash.App. 722, 649 P.2d 181 (1982) is on point. Parker held that this type of agreement was not sufficient independent consideration because it merely defined the employee's required service, put him on notice and indicated his common law liability. Parker, at 726, 649 P.2d 181. Additionally, the employment agreement signed by the appellant in this case states

In ... consideration ... [for] employment ... during such times as may be mutually agreeable to said Company and myself ...

(Italics ours.) This indicates that the employment relationship was terminable at will and not terminable for cause only.

Appellant also argues that based on St. Regis policies enumerated in its Policy and Procedural Guide, there was an implied contract that he would be discharged only with cause. In support he cites cases from other jurisdictions and asks us to adopt the rationale of those cases.

The trial court, relying on Parker, concluded that there was no implied contract. Parker held that the nonnegotiated unilateral grievance process did no more than implement a company policy to treat employees in a fair and consistent manner. Similarly, the 6-month probationary policy and statements by the employer's president did not imply termination for cause only. Parker, at 727, 649 P.2d 181. St. Regis' Policy and Procedural Guide is similar to the employee policy manual analyzed in Parker. The St. Regis Policy and Procedural Guide states that terminations will be handled in a fair, just and equitable manner and, thus, merely implements a company policy to treat employees in a fair and consistent manner. Our examination of the Policy and Procedural Guide and the entire record shows no evidence of an implied contract that appellant was to be discharged only for cause. The appellant only had a subjective understanding that he would be discharged only for cause which is insufficient to establish an implied contract to that effect. Lasser v. Grunbaum Bros. Furniture Co., 46 Wash.2d 408, 413, 281 P.2d 832 (1955); Accord, Roberts v. ARCO, supra.

Additionally, the cases cited by the appellant, Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980) and Pugh v. See's Candies, Inc., 116 Cal.App.3d 311, 171 Cal.Rptr. 917 (1981), are distinguishable. In Toussaint the employee received oral assurance of job security before accepting employment and the company manual stated dismissal for cause only. Toussaint, 408 Mich. at 614, 292 N.W.2d 880. See Schwartz v. Michigan Sugar Co., 106 Mich.App. 471, 308 N.W.2d 459 (1981). Similar findings were made in Pugh. Pugh, 116 Cal.App.3d at 317, 329, 171 Cal.Rptr. 917 (verbal assurance from president of company and policy of terminating only for cause.) Neither fact is involved in this case. Under Roberts v. ARCO, supra and Parker v. United Airlines, the trial court correctly found that there was no implied contract that appellant would be discharged only for cause.

This conclusion, however, does not end our inquiry but rather presents its starting point. The employment relationship at issue is, under our prior case law, terminable at will by either the employer or employee for any reason without either incurring liability. Roberts v. ARCO, supra. In Roberts, however, we noted that a number of states have carved out exceptions to the common-law rule and we implied that in the future we might also modify the employment at will doctrine. We stated "[w]hile the future of this doctrine is a compelling issue, it is one that must be left for another day...

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