Summary
In Thomas, the court explained that "the same evidence relied on to demonstrate that defendant had limited its ability to terminate plaintiffs employment also establishes that defendant reserved for itself sole authority to decide whether termination was justified."
Summary of this case from Sanders v. Kettering UniversityOpinion
Docket No. 149555.
Submitted January 5, 1994, at Detroit.
Decided May 2, 1994, at 10:10 A.M. Leave to appeal sought.
Bredell Bredell (by John H. Bredell), for the plaintiff.
Howard Howard Attorneys, P.C. (by David C. Coey and Matthew J. Coffey), for the defendant.
Plaintiff appeals as of right the trial court's dismissal of his claim of wrongful discharge on defendant's motion for summary disposition brought pursuant to MCR 2.116(C)(10). We affirm.
Plaintiff was a territory manager for defendant for sixteen years. In May of 1990, his supervisor informed him that his performance was unacceptable. He was given a list of objectives that he was to accomplish in six months or his employment would be terminated. In November of 1990, his supervisor informed him that he had failed to meet the defined objectives and that his employment with defendant was being terminated.
Plaintiff sued defendant for wrongful discharge. In his complaint, plaintiff alleged that he had an employment contract with defendant terminable for just cause only and that defendant had breached that contract by terminating his employment without just cause. In response to defendant's motion for summary disposition, the trial court ruled that plaintiff had not produced enough evidence to support his claim that his employment could be terminated only for just cause.
On appeal, plaintiff contends that he presented sufficient evidence of a just-cause contract to avoid summary disposition. Under our Supreme Court's decision in Rood v General Dynamics Corp, 444 Mich. 107, 119-127; 507 N.W.2d 591 (1993), it is clear that plaintiff did not. Plaintiff's evidence was quite similar to the evidence presented by Mr. Schippers in his companion case in Rood, and our Supreme Court held that that evidence was insufficient. Id. at 127. However, because it strikes us that calling defendant an at-will employer ignores reality, we think further comment is in order.
Toussaint v Blue Cross Blue Shield of Michigan, 408 Mich. 579; 292 N.W.2d 880 (1980), was a groundbreaking decision. However, the heart of the decision was a recognition of something obvious: an employment contract is just a contract. As a rule of construction, employment contracts of indefinite duration are presumed to be terminable at will. Lynas v Maxwell Farms, 279 Mich. 684, 687; 273 N.W. 315 (1937). The Court in Toussaint was asked to decide whether this presumption renders a contract provision that states that an employee will be terminated only for just cause a nullity. The Court concluded that parties to an employment contract are free to bind themselves however they wish. If an employment contract provides that the employer can terminate the employment only for just cause, then that provision is enforceable, and the employer cannot terminate employment at will. Id. at 610.
Subsequent court cases have dealt with the issue regarding when a just-cause provision can be viewed as being a part of an employment contract. See, e.g., Rood, supra, and Rowe v Montgomery Ward Co, Inc, 437 Mich. 627; 473 N.W.2d 268 (1991). However, they have not changed the fundamental proposition that parties to an employment contract are free to bind themselves to whatever termination provisions they wish.
Consequently, it is somewhat misleading to talk about employment contracts as being either "at-will" or "just-cause." In some employment contracts, employers choose to retain unfettered discretion to terminate an employee's employment when doing so would not violate the law. In other employment contracts, employers agree to limit their discretion to terminate an employee's employment in some way. Employers and employees are free to bind themselves as they wish, and "at-will" and "just-cause" termination provisions are merely extremes that lie on opposite ends of the continuum of possibilities.
This case involves an employment contract that lies between the two extremes. Plaintiff had not been explicitly promised that he could be fired only for just cause. Like most people, he did not negotiate about job security with his employer, he simply accepted employment at whatever terms defendant chose to impose.
Plaintiff has produced evidence from which it is possible to conclude that defendant had imposed a contract that did limit its discretion to terminate plaintiff's employment. Plaintiff's supervisor admitted that every employee of defendant could be fired only for good and just cause. Defendant's internal policies all take the same position. Defendant held itself out to all its employees, including plaintiff, as a company that would terminate employment only for cause, and it never made any statement that would suggest that it reserved for itself the discretion to terminate employment absent good and just cause.
However, the same evidence relied on to demonstrate that defendant had limited its ability to terminate plaintiff's employment also establishes that defendant reserved for itself sole authority to decide whether termination was justified. Defendant would terminate plaintiff only for good and just cause. The decision whether good and just cause existed would be made by plaintiff's supervisor, his supervisor's superior, and a personnel representative.
This decision-making approach protects defendant's employees from some risks that truly at-will employees face, such as being fired rashly in a fit of pique, and being fired only because of a personality conflict with an immediate supervisor that does not affect job performance.
Thus, despite defendant's alleged agreement to terminate plaintiff only for cause, as long as the determination that just cause existed was made by the designated personnel, it is not possible for plaintiff to state a claim that defendant breached plaintiff's employment contract by terminating his employment. Because defendant had reserved for itself the authority to determine whether there was good and just cause, and because defendant had, in the manner provided by the alleged employment contract, determined that there was good and just cause for terminating plaintiff's employment, terminating plaintiff's employment was not a breach of that contract. We are not saying that there was just cause to terminate plaintiff's employment. We are only saying that the particular employment contract alleged by plaintiff does not give courts the authority to second-guess defendant's determination.
Affirmed.
R.M. PAJTAS, J., concurred.
REILLY, P.J., concurred in the result only.