Summary
In Ford v. Blue Cross Blue Shield of Michigan, 150 Mich. App. 462, 389 N.W.2d 114 (1986), presenting an employment relationship almost identical to this case, the Michigan Court of Appeals recognized that under Toussaint, supra, "[e]mployers are most assuredly free to enter into employment contracts terminable at will without assigning cause."
Summary of this case from Taylor v. General Motors Corp.Opinion
Docket No. 77156.
Decided April 8, 1986.
David K. Wenger, for plaintiffs.
Karen S. Kienbaum and Kristine J. Galien, for defendant.
Defendant is plaintiffs' former employer. Plaintiffs' employment was terminated on October 13, 1977, for falsification of payroll records without plaintiffs' having an opportunity to express themselves to their superiors except in writing. Plaintiffs sued for breach of an implied contract which plaintiffs asserted provided that they would not be discharged without just cause. Defendant's motion for summary judgment under GCR 1963, 117.2(3) was denied. Defendant's motion for a directed verdict at the close of the plaintiffs' proofs was also denied. The jury found for plaintiffs in the amount of $10,000 for Gloria Ford, $6,625 for Marion Thomas and $5,930 for Doris Hill. The trial court denied defendant's motion for judgment notwithstanding the verdict. Defendant appeals the denial of these motions. We find that the trial court improperly denied defendant's motion for directed verdict at the close of plaintiffs' proofs, and reverse.
"This Court's review of a denial of a motion for directed verdict is limited to whether the party opposing the motion offered evidence upon which reasonable minds could differ. Perry v Hazel Park Harness Raceway, 123 Mich. App. 542, 549; 332 N.W.2d 601 (1983). The test is whether, viewing the facts in a light most favorable to plaintiff, reasonable persons could reach a different conclusion. If so, the case is properly one for the jury. Plaintiff must be given the benefit of every reasonable inference that could be drawn from the evidence. Anderson v Gene Deming Motor Sales, Inc, 371 Mich. 223, 229; 123 N.W.2d 768 (1963). The same standard of review applies where a motion for judgment notwithstanding the verdict has been denied. Anderson, supra; Goins v Ford Motor Co, 131 Mich. App. 185, 191-192; 347 N.W.2d 184 (1983)." Jenkins v American Red Cross, 141 Mich. App. 785, 792; 369 N.W.2d 223 (1985).
In Toussaint v Blue Cross Blue Shield of Michigan, 408 Mich. 579, 598-599; 292 N.W.2d 880 (1980), the Supreme Court held:
"1) a provision of an employment contract providing that an employee shall not be discharged except for cause is legally enforceable although the contract is not for a definite term — the term is `indefinite,' and
"2) such a provision may become part of the contract either by express agreement, oral or written, or as a result of an employee's legitimate expectations grounded in an employer's policy statements."
The Court also held:
"Employers are most assuredly free to enter into employment contracts terminable at will without assigning cause. We hold only that an employer's express agreement to terminate only for cause, or statements of company policy and procedure to that effect, can give rise to rights enforceable in contract." Toussaint, supra, p 610.
Plaintiffs in this case admitted that they had no contract of employment with defendant. There were no written or oral assurances to them as to job security or length of employment. In fact, the employee handbook specifically provided that employees could be terminated "at any time and for any reason".
Plaintiffs did not testify that they believed defendant needed just cause to terminate an employee. They did testify that, because of experience with others who had been terminated for poor performance or absenteeism, they expected an "exit interview" giving the employee a chance to tell his or her side of the story. Such an exit interview is provided in the employee handbook. Plaintiffs' entire claim that defendant could only terminate them for just cause rests on this procedure.
Since there is no express agreement to terminate only for cause, plaintiffs can prevail only if statements of company policy and procedures to that effect have given rise to such rights. Toussaint, supra. We find no basis for such a conclusion in the present case.
The policy stated in the handbook clearly enunciated an "at will" relationship. Therefore, if plaintiffs are to recover, there must be evidence of a contract implied in fact sufficient to overcome the statement in the handbook that employees could be released for any reason at any time.
"A contract implied in fact arises under circumstances which, according to the ordinary course of dealing and common understanding, of men, show a mutual intention to contract. In re Munro's Estate (1941), 296 Mich. 80. A contract is implied in fact where the intention as to it is not manifested by direct or explicit words between the parties, but is to be gathered by implication or proper deduction from the conduct of the parties, language used or things done by them, or other pertinent circumstances attending the transaction. Miller v Stevens (1923), 224 Mich. 626." Erickson v Goodell Oil Co, Inc, 384 Mich. 207, 211-212; 180 N.W.2d 798 (1970).
The requirements for an employment contract implied in fact were discussed in Schwartz v Michigan Sugar Co, 106 Mich. App. 471, 477-478; 308 N.W.2d 459 (1981), lv den 414 Mich. 870 (1982):
"[A]n employer's conduct and other pertinent circumstances may establish an unwritten `common law' providing the equivalent of a just cause termination policy. Rules and understandings, promulgated and fostered by the employer, may justify a legitimate claim to continued employment. Toussaint, supra, 617-618, quoting Perry v Sindermann, 408 U.S. 593, 601-603; 92 S Ct 2694; 33 L Ed 2d 570 (1972). Nonetheless, a mere subjective expectancy on the part of an employee will not create such a legitimate claim. Perry, supra."
In Schwartz, this Court found summary judgment appropriate because plaintiff's claim was based solely on subjective expectations rather than "a common understanding or mutual intent to contract that employment be continuing but for cause". 106 Mich. App. 478. In Longley v Blue Cross Blue Shield of Michigan, 136 Mich. App. 336, 341; 356 N.W.2d 20 (1984), this Court held that "an employee's admission that she knew that she could be dismissed with or without cause logically and legally precludes her from maintaining that she had any expectation, legitimate or otherwise, or termination only for cause".
In the present case, such a contract must be implied, if at all, entirely from the fact that the employer chose to give employees an opportunity to be heard rather than terminate them arbitrarily. Such an opportunity is something that any employee may expect, regardless of the nature of the employment contract. The fact that the employer chooses to codify it cannot, in and of itself, transform the "at will" contract into a contract with a "just cause" termination provision. It is as consistent with one as with the other, and is, therefore, not evidence to justify a legitimate expectation in employees that they had a "just cause" termination provision. That being the only basis for plaintiffs' claim, giving the benefit of every reasonable doubt to plaintiffs, we find no evidence that could create a legitimate expectation on the part of the plaintiffs that the employer agreed to discharge them for just cause only. Consequently, we are persuaded that defendant's motion for a directed verdict should have been granted.
Reversed and remanded for entry of a directed verdict in defendant's favor.