Woolley v. Hoffmann-La Roche, Inc.

• Decision Date: 09 May 1985
• Docket Number: HOFFMANN-L
• Citation: 99 N.J. 284,491 A.2d 1257
• Parties: , 119 L.R.R.M. (BNA) 2380, 53 USLW 2578, 102 Lab.Cas. P 55,496, 1 IER Cases 995 Richard M. WOOLLEY, Plaintiff-Appellant, v.a ROCHE, INC., a New Jersey corporation, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 284

99 N.J. 284

491 A.2d 1257, 119 L.R.R.M. (BNA) 2380,

53 USLW 2578,

102 Lab.Cas. P 55,496, 1 IER Cases 995

Richard M. WOOLLEY, Plaintiff-Appellant, v. HOFFMANN-La ROCHE, INC., a New Jersey corporation,

Defendant-Respondent.

Supreme Court of New Jersey.

Argued March 21, 1983.

Decided May 9, 1985.

Timothy G. Hagan, Detroit, Mich., a member of the Michigan bar, for plaintiff-appellant (Rabner & Allcorn, Upper Montclair, attorneys; Thomas Tucker, Upper Montclair, on briefs)

Frederick C. Kentz, III, Newark, for defendant-respondent (Crummy, Del Deo, Dolan & Purcell, Newark, attorneys).

The opinion of the Court was delivered by

WILENTZ, C.J.

I.

The issue before us is whether certain terms in a company's employment manual may contractually bind the company. We hold that absent a clear and prominent disclaimer, an implied promise contained in an employment manual that an employee will be fired only for cause may be enforceable against an

employer even when the employment is for an indefinite term and would otherwise be terminable at will.

II.

Plaintiff, Richard Woolley, was hired by defendant, Hoffmann-La Roche, Inc., in October 1969, as an Engineering Section Head in defendant's Central Engineering Department at Nutley. There was no written employment contract between plaintiff and defendant. Plaintiff began work in mid-November 1969. Some time in December, plaintiff received and read the personnel manual on which his claims are based.

In 1976, plaintiff was promoted, and in January 1977 he was promoted again, this latter time to Group Leader for the Civil Engineering, the Piping Design, the Plant Layout, and the Standards and Systems Sections. In March 1978, plaintiff was directed to write a report to his supervisors about piping problems in one of defendant's buildings in Nutley. This report was written and submitted to plaintiff's immediate supervisor on April 5, 1978. On May 3, 1978, stating that the General Manager of defendant's Corporate Engineering Department had lost confidence in him, plaintiff's supervisors requested his resignation. Following this, by letter dated May 22, 1978, plaintiff was formally asked for his resignation, to be effective July 15, 1978.

Plaintiff refused to resign. Two weeks later defendant again requested plaintiff's resignation, and told him he would be fired if he did not resign. Plaintiff again declined, and he was fired in July.

Plaintiff filed a complaint alleging breach of contract, intentional infliction of emotional distress, and defamation, but subsequently consented to the dismissal of the latter two claims. The gist of plaintiff's breach of contract claim is that the express and implied promises in defendant's employment manual Defendant's motion for summary judgment was granted by the trial court, which held that the employment manual was not contractually binding on defendant, thus allowing defendant to terminate plaintiff's employment at will. ² The Appellate Division affirmed. We granted certification. 91 N.J. 548, 453 A.2d 865 (1982). ³

                created a contract under which he could not be fired at will, but rather only for cause, and then only after the procedures outlined in the manual were followed. 1  Plaintiff contends that he was not dismissed for good cause, and that his firing was a breach of contract
                

III.

Hoffmann-La Roche contends that the formation of the type of contract claimed by plaintiff to exist--Hoffmann-La Roche calls it a permanent employment contract for life--is subject to special contractual requirements: the intent of the parties to create such an undertaking must be clear and definite; in addition to an explicit provision setting forth its duration, the agreement must specifically cover the essential terms of employment--the duties, responsibilities, and compensation of the employee, and the proof of these terms must be clear and convincing; the undertaking must be supported by consideration in addition to the employee's continued work. Woolley claims that the requirements for the formation of such a contract have been met here and that they do not extend as far as Hoffmann-La Roche claims. Further, Woolley argues that this is not a "permanent contract for life," but rather an employment contract of indefinite duration that may be terminated only for good cause and in accordance with the procedure set forth in the personnel policy manual. Both parties agree that the employment contract is one of indefinite duration; Hoffmann-La Roche contends that in New Jersey, when an employment contract is of indefinite duration, the inescapable legal conclusion is that it is an employment at will; Woolley claims that even such a contract--of indefinite duration--may contain provisions requiring that termination be only for cause.

The trial court, relying on Savarese v. Pyrene Mfg. Co., 9 N.J. 595, 89 A.2d 237 (1952), Hindle v. Morrison Steel Co., 92 N.J.Super. 75, 223 A.2d 193 (App.Div.1966), and Piechowski v. Matarese, 54 N.J.Super. 333, 148 A.2d 872 (App.Div.1959), held that in the absence of a "most convincing[ ]" demonstration that "it was the intent of the parties to enter into such long-range commitments ... clearly, specifically and definitely expressed" (using, almost verbatim, the language of Savarese, supra, 9 N.J. at 601, 89 A.2d 237), supported by consideration over and above the employee's rendition of services, the employment is at will. Finding that the personnel policy manual did not contain any such clear and definite expression The Appellate Division, viewing plaintiff's claim as one for a "permanent or lifetime employment," found that the company's policy manual did not specifically set forth the term, work, hours or duties of the employment and "appear[ed] to be a unilateral expression of company policies and procedures ... not bargained for by the parties," this last reference being similar to the notion, relied on by the trial court, that additional consideration was required. Based on that view, it held that the "promulgation and circulation of the personnel policy manual by defendant did not give plaintiff any enforceable contractual rights." In so doing it noted the "objections to a lifetime employment contract that make it contrary to public policy, i.e., lack of definiteness, unequal burden of performance, etc.," citing Savarese, supra, 9 N.J. at 600-01, 89 A.2d 237. While it did not purport to establish any special contractual rule concerning company personnel policy manuals, its analysis suggests they would ordinarily not lead to contractual consequences except for such provisions as those "involving severance pay," which "deal with a specific term of a contract. Its parameters are clearly set forth. The conditions and factors involved are definite and easily ascertained."

and, further, that there was no such additional consideration, the court granted summary judgment in favor of defendant, sustaining its right to fire plaintiff with or without cause.

We are thus faced with the question of whether this is the kind of employment contract--a "long-range commitment"--that must be construed as one of indefinite duration and therefore at will unless the stringent requirements of Savarese are met, or whether ordinary contractual doctrine applies. In either case, the question is whether Hoffmann-La Roche retained the right to fire with or without cause or whether, as Woolley claims, his employment could be terminated only for cause. We believe another question, not explicitly treated below, is involved: should the legal effect of the dissemination of a personnel policy manual by a company with a substantial number of employees be determined solely and strictly by traditional contract

                doctrine?   Is that analysis adequate for the realities of such a workplace?
                

IV.

As originally conceived in the late 1800's, the law was that an employment contract for an indefinite term was presumed to be terminable at will; an employee with an at-will contract could be fired for any reason (or no reason) whatsoever, be it good cause, no cause, or even morally wrong cause. Comment, "A Common Law Action For The Abusively Discharged Employee," 26 Hastings L.J., 1435, 1438 (1975) [hereinafter cited as Comment, 26 Hastings L.J. 1435]. Pursuant to that rule, in New Jersey employers were free to terminate an at-will employment relationship with or without cause. English v. College of Medicine and Dentistry of N.J., 73 N.J. 20, 23, 372 A.2d 295 (1977); Schlenk v. Lehigh Valley R.R. Co., 1 N.J. 131, 135, 62 A.2d 380 (1948).

The at-will rule has come under severe criticism from commentators who argue that the economic justifications for the development of the rule have changed dramatically and no longer support its harshness. See, e.g., Note, "Protecting At Will Employees Against Wrongful Discharge: The Duty to Terminate Only in Good Faith," 93 Harv.L.Rev. 1816 (1980) [hereinafter cited as Note, 93 Harv.L.Rev. 1816]; Comment, supra, 26 Hastings L.J. 1435; Comment, "Implied Contract Rights To Job Security," 26 Stan.L.Rev. 335 (1974). The Legislature here, as in most states, has limited the at-will rule to the extent that it conflicts with the policies of our various civil rights laws so that, for instance, a firing cannot be sustained in New Jersey if it is based on the employee's race, color, religion, sex, national origin, or age. N.J.S.A. 10:5-4; see also 42 U.S.C.S. § 2000e-1 to -15 (1970) (Title VII of the Civil Rights Act of 1964); 29 U.S.C.S. § 623 (1970) (Age Discrimination in Employment Act).

This Court has clearly announced its unwillingness to continue to adhere to rules regularly leading to the conclusion that an employer can fire an employee-at-will, with or without cause Commentators have questioned the compatibility of the traditional at will doctrine with the realities of modern economics and employment practices.... The common law rule has been modified by the enactment of labor relations legislation.... The ...