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Federal Exp. Corp. v. Dutschmann

Supreme Court of Texas
Feb 3, 1993
846 S.W.2d 282 (Tex. 1993)

Summary

holding that an employee handbook, which specifically disclaimed any intent to create contractual rights, did not place any restrictions on the employment-at-will relationship

Summary of this case from Paniagua v. City of Galveston, Texas

Opinion

No. D-3185.

February 3, 1993.

Appeal from the District Court Number 170, McLennan County, Joe N. Johnson, J.

Phillip R. Jones, William Gary Fowler, Dallas, Connie Lewis Lensing, Memphis, TN, for petitioner.

Jon R. Ker, Hewitt, for respondent.


Marcie Dutschmann sued for wrongful discharge from employment. The jury found that: (1) Dutschmann was discharged in retaliation for filing claims of sexual harassment against fellow employees; (2) Federal Express had contracted to provide a "Guaranteed Fair Treatment Procedure" to Dutschmann; and (3) Federal Express breached a duty of good faith and fair dealing in the conduct of the GFTP. The jury awarded actual damages on the retaliatory discharge and breach of contract claims, and punitive damages on the breach of good faith and fair dealing. Judgment was rendered on the jury findings and the court of appeals, with one justice dissenting in part, affirmed. 838 S.W.2d 804.

We disagree with the court of appeals' opinion that the trial court was correct in submitting a jury question regarding the existence of an employment contract because no contract existed as a matter of law between the parties. However, we affirm the judgments of the court of appeals and the trial court regarding statutory damages because, despite the lack of an employment contract, the statutory damage award is supported by the finding of retaliatory discharge.

Because Dutschmann is not entitled to an award of punitive damages without a finding of actual tort damages, we reverse that portion of the judgments of the court of appeals and trial court awarding punitive damages to Dutschmann.

Federal Express discharged Dutschmann from employment for allegedly falsifying delivery records. Federal Express's employee handbook stated that employment was at-will, that the handbook did not constitute an employment contract, and that the handbook could be modified or withdrawn at any time. Dutschmann signed an agreement acknowledging receipt of the handbook and acknowledging that the handbook did not create an employment contract or otherwise modify her at-will employment status.

The handbook outlined Federal Express's "Guaranteed Fair Treatment Procedure" (GFTP), which permitted discharged employees to receive a review of their termination, with the possibility of reinstatement. Dutschmann availed herself of the GFTP, appealing all the way to the Board of Review, a final discretionary review granted by the chief executive officer of Federal Express. During the GFTP, Dutschmann alleged that she was fired in retaliation for making sexual harassment complaints against a co-worker several years prior to her discharge.

After her termination was upheld by the Board of Review, Dutschmann filed this suit. The jury found Federal Express liable for retaliatory discharge under the Texas Commission on Human Rights Act, TEX.REV.CIV.STAT.ANN. art. 5221k § 5.05 (Vernon 1987) (the "Act"), for breach of contract with regard to the GFTP, and for breach of a duty of good faith and fair dealing with regard to the GFTP. The jury awarded $20,000 in actual damages based on the findings of retaliatory discharge and breach of contract, and $50,000 in punitive damages based on the breach of duty of good faith and fair dealing.

The long-standing rule in Texas provides for employment at will, terminable at any time by either party, with or without cause, absent an express agreement to the contrary. Schroeder v. Texas Iron Works, 813 S.W.2d 483, 489 (Tex. 1991); East Line R.R.R. v. Scott, 72 Tex. 70, 10 S.W. 99, 102 (1888).

The Federal Express employee handbook, which outlined the GFTP, expressly provided that the handbook did not create any contractual rights. Further, the Federal Express Personnel Policy Procedure Manual, which detailed the GFTP, stated that "the policies and procedures set forth in this manual provide guidelines for management and employees during employment, but do not create contractual rights regarding termination or otherwise." Significantly, Dutschmann signed a "Record of Receipt" for the handbook, acknowledging that "I understand (the handbook) is not a contract and the information provided may need to be changed by the company from time to time."

A disclaimer in an employee handbook, such as the one included by Federal Express, negates any implication that a personnel procedures manual places a restriction on the employment at will relationship. See Wilhite v. H.E. Butt Co., 812 S.W.2d 1, 6 (Tex.App. — Corpus Christi 1991, no writ); Hicks v. Baylor Univ. Med. Center, 789 S.W.2d 299, 302 (Tex.App. — Dallas 1990, writ denied); Berry v. Doctor's Health Facilities, 715 S.W.2d 60, 61-62 (Tex.App. — Dallas 1986, no writ); Zimmerman v. H.E. Butt Grocery Co., 932 F.2d 469, 470 (5th Cir.), cert. denied, ___ U.S. ___, 112 S.Ct. 591, 116 L.Ed.2d 615 (1991) (employee signed acknowledgement that employee handbook did not constitute a contract); Perez v. Vinnell Corp., 763 F. Supp. 199, 200-01 (S.D.Tex. 1991) (employee manual expressly provided that it was a guide, not a contract); White v. Federal Express Corp., 729 F. Supp. 1536, 1547-49 (E.D.Va. 1990), aff'd, 939 F.2d 157 (4th Cir. 1991) (same employee handbook at issue in the current case held not to be a contract modifying at-will employment); Bowser v. McDonald's Corp., 714 F. Supp. 839, 842 (S.D.Tex. 1989) (employee manual provided that employment was at will). See also RESTATEMENT (SECOND) OF CONTRACTS § 21 (1979) (manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract); Mark G. Yudof, Contorts and the Muddled Quest for Bright Lines, 1991 STATE BAR OF TEXAS ADVANCED CIVIL TRIAL COURSE § MM-8 (promissory obligations are voluntarily assumed, therefore they may be voluntarily disclaimed).

The court of appeals' distinction between employee handbooks that establish policies during employment and those that grant post-termination rights ignores that Federal Express's explicit disclaimer is found in the Personnel Policy and Procedure Manual. And it is that manual which outlined the GFTP available for terminated employees.

As a matter of law, no contract restricting the employment at will relationship existed between Federal Express and Dutschmann. However, the jury's award of actual damages and attorney's fees was based on both breach of contract and retaliatory discharge. These damages are supported as statutory damages by the finding of retaliatory discharge, even though no contract existed as a matter of law. TEX.REV.CIV.STAT.ANN. art. 5221k § 5.05. Therefore, we affirm the award of actual damages and attorney's fees.

There is no finding of actual tort damages in the record in this case. Recovery of punitive damages requires a finding of an independent tort with accompanying actual damages. Texas Nat'l Bank v. Karnes, 717 S.W.2d 901, 903 (Tex. 1986); Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986); Bellefonte Underwriters Ins. Co. v. Brown, 704 S.W.2d 742, 745 (Tex. 1986); Doubleday Co. v. Rogers, 674 S.W.2d 751, 753-54 (Tex. 1984). Without a finding of tort damages, Dutschmann is not entitled to any award of punitive damages.

The trial court submitted to the jury a question regarding breach of the duty of good faith and fair dealing by Federal Express which the jury found in favor of Dutschmann. The tort duty of good faith and fair dealing has been found only in certain "special relationships." See, e.g., Aranda v. Insurance Co. of N. Am., 748 S.W.2d 210, 212-13 (Tex. 1988); Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987). We have declined to recognize a general duty of good faith and fair dealing in the employer-employee relationship. Winters v. Houston Chronicle Publishing Co., 795 S.W.2d 723, 724-25 n. 2 (Tex. 1990); McClendon v. Ingersoll-Rand Co., 779 S.W.2d 69, 70 n. 1 (Tex. 1989), rev'd on other grounds, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990); see also Day Zimmermann, Inc. v. Hatridge, 831 S.W.2d 65, 71 (Tex.App. — Texarkana 1992, writ denied); Winograd v. Willis, 789 S.W.2d 307, 312 (Tex.App. — Houston [14th Dist.] 1990, writ denied); Hicks, 789 S.W.2d at 303-04; Lumpkin v. H C Communications, Inc., 755 S.W.2d 538, 540 (Tex.App. — Houston [1st Dist.] 1988, writ denied).
However, no damages question was submitted to the jury with respect to the breach of good faith and fair dealing. Consequently, the jury did not find that Dutschmann suffered actual tort damages as a result of any breach of the duty of good faith and fair dealing. Therefore we do not revisit the question of whether the duty of good faith and fair dealing exists in an employment relationship.

Pursuant to Texas Rule of Appellate Procedure 170, without hearing oral argument, a majority of this court grants petitioner's writ of error, reverses the portion of the judgments of the court of appeals and the trial court awarding punitive damages and renders judgment for Federal Express on that issue. The judgments of the court of appeals and the trial court are affirmed in all other respects.


Summaries of

Federal Exp. Corp. v. Dutschmann

Supreme Court of Texas
Feb 3, 1993
846 S.W.2d 282 (Tex. 1993)

holding that an employee handbook, which specifically disclaimed any intent to create contractual rights, did not place any restrictions on the employment-at-will relationship

Summary of this case from Paniagua v. City of Galveston, Texas

holding that an employment handbook which expressly disclaims that it creates contractual rights does not constitute a contract in an employment at-will context

Summary of this case from Green v. Medco Health Solutions of Texas, LLC

holding recovery of punitive damages requires finding of independent tort with accompanying actual damages

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holding recovery of punitive damages requires finding of independent tort with accompanying actual damages

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holding that recovery of exemplary damages requires finding of independent tort and accompanying damages

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holding there can be no recovery of punitive damages without a finding of an independent tort with accompanying actual damages

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holding there can be no recovery of punitive damages without a finding of an independent tort with accompanying actual damages

Summary of this case from Piper v. Edwards

holding "[r]ecovery of punitive damages requires a finding of an independent tort with accompanying actual damages"

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holding that the employee had no legitimate expectation in continued employment because the employment manual contained a provision stating that nothing in the document created any contractual rights "regarding termination or otherwise"

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holding " disclaimer in an employee handbook . . . negates any implication that a . . . manual places a restriction on the employment at will relationship"

Summary of this case from Tenet Healthcare v. Cooper

holding an employee manual did not create contract restricting the employment-at-will relationship

Summary of this case from Burlington Northern R. v. Akpan

concluding that a disclaimer in the Federal Express employee handbook, which stated the handbook was not a contract and did not create contractual rights, negated any implication that the manual placed a restriction on the at-will employment relationship

Summary of this case from Stephens v. Dallas Area R. T

determining that express disclaimer in employee handbook negated any implication that "Guaranteed Fair Treatment Procedure" outlined in personnel procedures manual placed restriction on company's right to terminate employment at will

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recognizing use of handbook disclaimer to prevent contract formation

Summary of this case from McAllen Hosps., L.P. v. Lopez

discussing the parameters of the at-will doctrine in Texas

Summary of this case from Coburn Supply Co. Inc. v. Kohler Co.

In Dutschmann, the plaintiff sued her employer in both contract and tort. The jury returned a verdict for the plaintiff on both causes of action and awarded the plaintiff punitive damages on the tort cause of action.

Summary of this case from Hadley v. VAM P T S

explaining that no-alteration-of-employment-at-will disclaimer precludes a contractual employment relationship

Summary of this case from City of Denton v. Rushing

stating that a disclaimer in an employee handbook negates any implication that personnel procedures create contractual relationships

Summary of this case from Burton v. Bloodcare

In Dutschmann, the actual damage award and attorney's fee award were based on both breach of contract and retaliatory discharge (a statutory violation).

Summary of this case from Solomon v. Steitler

In Federal Express Corp. v. Dutschmann, 846 S.W.2d 282 (Tex. 1993), Federal Express discharged an employee for allegedly making false delivery records.

Summary of this case from City, Comanche v. Florence
Case details for

Federal Exp. Corp. v. Dutschmann

Case Details

Full title:FEDERAL EXPRESS CORPORATION, Petitioner, v. Marcie DUTSCHMANN, Respondent

Court:Supreme Court of Texas

Date published: Feb 3, 1993

Citations

846 S.W.2d 282 (Tex. 1993)

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