LYTLE v. MALADY

LYTLE v MALADY (ON REHEARING) Docket No. 102515. Argued January 6, 1998 (Calendar No. 11). Decided July 1, 1998. Rehearing denied 459 Mich 1203. Nancy Lytle brought an action in the Muskegon Circuit Court against Michael Malady, her supervisor, and the Howmet Corporation, her employer, after she was discharged from her employment. She alleged breach of a contract providing for termination of employment for just cause only, and age and sex discrimination. Howmet asserted that the discharge was the result of a company-wide reduction in its work force. The court, R. Max Daniels, J., granted summary disposition for the defendants on all counts. The Court of Appeals, D. E. Holbrook, Jr., P.J., and Murphy and J. C. Kingsley, JJ., reversed (Docket No. 157627). The Supreme Court affirmed in part, finding that the plaintiff reasonably could have had a legitimate expectation of just-cause employment, but reversed the Court of Appeals by finding that the plaintiff failed to present evidence demonstrating the existence of bad faith on behalf of the defendant in conducting its reduction in force. The Supreme Court further affirmed the Court of Appeals in holding that the plaintiff raised a genuine issue of fact with respect to whether the defendant discriminated against her on the basis of her age and gender. 456 Mich 1 (1997). On motion by both parties, the Supreme Court subsequently granted rehearing. 456 Mich 1202 (1997). In an opinion by Justice Weaver, joined by Justices Boyle and Taylor, and an opinion by Chief Justice Mallett, the Supreme Court held: Even when an employer’s decision to reduce its work force is deemed bona fide, a discharged employee claiming age or gender discrimination may survive a motion for summary disposition by presenting sufficient admissible evidence to create a reasonable factual dispute that the employer’s proffered reason for discharge was a mere pretext and that age or gender discrimination was a true motivation underlying the plaintiff’s discharge. In this case, the plaintiff failed to provide sufficient evidence, direct or circumstantial, to allow a reasonable trier of fact to find that the defendant-employer’s reduction in force was a mere pretext for discriminatory animus. The Court further held that the plaintiff cannot assert a legitimate expectation of just-cause employment on the basis of the employer’s policy to terminate only for proper cause, particularly where an employer’s policy handbook specifically disclaims any intent to create contractual obligations with employees. 1. Generally, Michigan law presumes that employment relationships are terminable at the will of either party. The presumption can be rebutted, however, so that contractual obligations and limitations are imposed on an employer’s right to terminate an employment at will. The presumption is overcome with proof of either a contract provision for a definite term of employment, or one that forbids discharge absent just cause; an express agreement, either written or oral, regarding job security that is clear and unequivocal; or a contractual provision, implied at law, where an employer’s policies and procedures instill a legitimate expectation of job security in the employee. Provisions in a handbook will not create enforceable rights, particularly when the handbook expressly states that such provisions are not intended to create an employment contract; nor will oral assurances of job security create such rights, unless they are clear and unequivocal. On the basis of the facts of this case, the plaintiff cannot assert a legitimate expectation of just-cause employment. Moreover, the oral assurances given to the plaintiff were unclear and equivocal. Thus, the plaintiff failed to raise a triable issue with respect to whether she had just-cause employment with the defendant. 2. To establish a prima facie case of discrimination under the Civil Rights Act, a plaintiff must prove by a preponderance of the evidence that the plaintiff was a member of a protected class, suffered an adverse employment action, was qualified for the position, and was discharged under circumstances that give rise to an inference of unlawful discrimination. Once a plaintiff has sufficiently established a prima facie case, a presumption of discrimination arises. The burden then shifts to the employer to articulate a legitimate, nondiscriminatory reason for the plaintiff’s termination. Once the employer produces such evidence, even if later refuted or disbelieved, the presumption drops away, and the burden of proof shifts back to plaintiff. The plaintiff then must show, by a preponderance of admissible, direct, or circumstantial evidence, that there is a triable issue that the employer’s proffered reasons were not true reasons, but were a mere pretext for discrimination. Disproof of an employer’s articulated reason for an adverse employment decision defeats summary disposition only if such disproof also raises a triable issue that discriminatory animus was a motivating factor underlying the employer’s adverse action. Thus, in the context of summary disposition, a plaintiff must prove discrimination with admissible evidence, either direct or circumstantial, sufficient to permit a reasonable trier of fact to conclude that discrimination was a motivating factor for the adverse action. 3. To establish a prima facie case of age discrimination, the plaintiff must prove, by a preponderance of the evidence, that the plaintiff was a member of a protected class, suffered an adverse employment action, was qualified for the position, and was replaced by a younger person. In this case, the plaintiff failed to raise a genuine issue of fact that the employer’s proffered reason for discharge, a reduction in force, was a mere pretext for discrimination. To prove that the reduction in force was a mere pretext and that age was a determining factor, the plaintiff had to show that she was treated differently from similarly situated employees. However, her proofs cannot sustain a reasonable inference that economic necessity was really a pretext for discriminatory animus on the part of the employer. 4. To prevail in a claim of gender discrimination over a motion for summary disposition, a plaintiff must raise a triable question of fact that a demotion and eventual discharge were motivated by gender discrimination, not economic or business judgment. In this case, the plaintiff met her burden of establishing a prima facie case with proof that she was a female, was a member of a protected class, and was qualified for her position, but nonetheless was demoted and then discharged under circumstances giving rise to an inference of discrimination. However, she failed to provide evidence sufficient to raise a reasonable, triable question of fact that she was similarly situated to her replacement, the new employer manager of her department, that the reduction in force was a mere pretext for discriminatory animus, and that gender was a determining factor in the employer’s decision to demote and then discharge her. Mere disproof of an employer’s proffered nondiscriminatory reason is insufficient to survive summary disposition, unless such disproof also raises a triable question of discriminatory motive, not mere falsity. The plaintiff merely provided evidence to reasonably suggest that she and her supervisor had a personality conflict. Therefore, she has not raised a triable issue with regard to whether gender discrimination was a cause of her demotion or eventual discharge. Justice Brickley, concurring, stated that the plaintiff created a question of fact whether she was a just-cause employee because she had a legitimate expectation of just-cause employment under Rood v General Dynamics Corp, 444 Mich 107 (1993). However, summary disposition for the defendant should be upheld because the plaintiff failed to raise a question of material fact that the defendant had just cause to terminate her as part of its reduction in force. Reversed. Chief Justice Mallett, concurring in part and dissenting in part, further stated that the plaintiff cannot assert a legitimate expectation of just-cause employment because the handbook specifically disclaims any intent to create contractual or binding obligations to employees. Even when an employer demonstrates a bona fide reduction in force, a plaintiff may survive a motion for summary disposition by presenting sufficient evidence that the reduction in work force was a mere pretext and that discriminatory animus was a true motivation behind the discharge. In this case, the plaintiff has not presented sufficient evidence to survive summary disposition of her age discrimination claim; however, a reasonable person could find that her demotion was motivated by gender discrimination. Justice Cavanagh, joined by Justice Kelly, dissenting, stated that reasonable minds could conclude that the employee handbook created a legitimate expectation of just-cause employment; thus, a question of fact existed precluding summary disposition in favor of the defendants. A disclaimer of contractual intent should have no effect on a policy contained in a handbook that gives rise to legitimate expectations of just-cause employment that are outside the operation of normal contract principles. In this case, the employer’s policy statement that no employee would be terminated without proper cause or reason is reasonably capable of instilling a legitimate expectation of just-cause employment, and the employer’s contractual disclaimer did not contradict that expectation, raising a question of fact regarding whether the plaintiff had a legitimate expectation of just-cause employment. While the defendant asserted that it was conducting a reduction in force, and while it appears the reduction was genuine, factual questions remain regarding whether the plaintiff was terminated as a result of the reduction in force or as a result of unlawful discrimination. 209 Mich App 179; 530 NW2d 135 (1995) reversed. Bott & Spencer, P.C. (by Timothy J. Bott and Karen M. Spencer), for the plaintiff. Vamum, Riddering, Schmidt & Howlett, L.L.P. (by Joseph J. Vogan and Paul M. Kara), for the defendants. Amicus Curiae: Miller, Canfield, Paddock & Stone (by Charles S. Mishkind) for Michigan Chamber of Commerce. ON REHEARING Weaver, J. We granted rehearing in this case to clarify the evidentiary standard that plaintiff, alleging age and gender discrimination, must satisfy to survive summary disposition under MCR 2.116(C)(10). We hold that even when an employer’s decision to reduce its work force is deemed bona fide, a plaintiff may survive a motion for summary disposition by presenting sufficient admissible evidence to create a reasonable factual dispute that the employer’s proffered reason was a mere pretext and that age or gender discrimination was a true motivation behind plaintiff’s discharge. In this case, we find that plaintiff failed to provide sufficient evidence, direct or circumstantial, to allow a reasonable trier of fact to find that the Howmet Corporation’s (defendant-employer’s) reduction in work force (rif) was a mere pretext for discriminatory animus. We also granted rehearing to decide whether the employer’s policy handbook provisions could reasonably have created a legitimate expectation of just-cause employment. We hold that plaintiff cannot assert a legitimate expectation of just-cause employment based on the employer’s policy to terminate only for cause, particularly where the handbook specifically disclaims any intent to create contractual or binding obligations to employees. Moreover, we reject plaintiff’s claim that her supervisor’s assurances regarding secure employment were sufficient to allow a reasonable juror to find just-cause employment. Accordingly, we reverse the decision of the Court of Appeals with regard to defendant-employer, and affirm the trial court’s grant of summary disposition for the employer with regard to plaintiff’s wrongful discharge claim and her age and gender discrimination claims. i A On January 29, 1973, plaintiff Lytle was hired by the employer as a general clerk in the human resources department at its Whitehall site. Plaintiff’s first immediate supervisor was John Ozar. While plaintiff worked with Ozar, she received several favorable performance evaluations and two promotions, one in 1976 and another in 1979, when she was promoted to manager of the entire Whitehall human resources department. About this time, Ozar hired Walter Boczkaja as plaintiff’s subordinate trainee, a position he held for ten years until 1989, when he assumed plaintiff’s position as department manager. Boczkaja received a series of departmental promotions during his first two years of employment while working under plaintiff’s direction. During 1984-85, Ozar retired and was replaced by William Roof, who then decided to decentralize the department, thereby allowing the Whitehall division to have its own human resources representative. Roof also hired defendant Malady as head of the Whitehall Machined Products Division and, therefore, as plaintiffs new supervisor. Plaintiff and her new supervisor, Malady, developed a personality conflict. Plaintiff claimed the conflict stemmed from a June 1987 incident when she refused to wear a dress to a company “open house.” Plaintiff alleged that Malady told her all the “girls” should wear dresses to this company picnic event. Shortly thereafter, Malady gave her an unfavorable job evaluation, her first in her time with the company. Plaintiff claimed other similar incidents followed. Plaintiff received her second critical performance evaluation in September 1987. Two years later, in January 1989, Malady recommended, and Roof approved, a change in plaintiffs job title. Although her salary and job duties remained the same, plaintiff claimed this change constituted a demotion. Plaintiff retained this newly entitled position until her November 1, 1991, discharge. The day plaintiff was demoted in 1989, Boczkaja, her subordinate and one-time trainee, assumed her position as “employer manager” of the department. In November 1991, when plaintiff was forty-four years of age, she was notified that her position was being eliminated pursuant to the employer’s reduction in force. To rebut the presumption of discrimination, the employer showed that the company-wide rif was prompted by a projected significant decline in company sales. The employer provided statistical data to establish that between 1987 and 1992 the number of employees in Whitehall was reduced by almost fifty percent (from 4,100 to 2,450) and that in 1991 the rif resulted in termination of ninety-one employees, only fifty-four of whom were under the age of forty and sixty-eight of whom were male. Six months before plaintiff’s discharge, the employer hired Andrea Achterhoff as human resources manager of a different department. About that same time, the employer also effected a transfer of Jeff Billingsley to the training section of plaintiff’s department. Billingsley was specifically transferred to facilitate training of a new manufacturing concept, a job he had been performing for the previous two years in another department. Boczkaja completed plaintiffs termination evaluation on November 22, 1991. Her supervisor, Malady, accepted the evaluation, which indicated that plaintiff should be rehired should a nonsupervisory, administrative position become available. Meanwhile, upon discharge, plaintiffs duties were distributed among other departmental employees. Roughly two months later, on January 7, 1992, plaintiff filed a complaint against the employer and her supervisor, alleging wrongful discharge, or breach of a “just-cause” employment contract, and age and gender discrimination in violation of Michigan’s Civil Rights Act, MCL 37.2202; MSA 3.548(202). B Plaintiff’s breach of contract claim was premised on two theories. First, plaintiff asserted that she legitimately expected that her employment would not be terminated except for just cause, given certain employee handbook provisions and verbal assertions. Second, plaintiff further claimed that in 1979 she told Ozar that she was considering resigning, in response to which he assured plaintiff that her employment was not only secure, but subject to further advancement. With respect to the legitimate-expectation claim, at the time she was hired in 1973, plaintiff received an employee handbook that set forth all the employer’s employment policies and procedures. Specifically the handbook provided: The contents of this booklet are not intended to establish, and should not be interpreted to constitute any contract between the Misco Whitehall Division, Product Support Operations, Reactive Metal Operations or the Technical Center of Howmet Turbine Components Corporation and any employee, or group of employees. For over twenty years we have concentrated on the production of the finest investment castings, with the development of policies and principles which aim at the attainment of pride in every day’s work for every employee, plus the satisfaction of finding opportunities for individual growth and security. [Emphasis added.] Regarding employment status, the handbook stated that a probationary period existed during which both employer and employee could evaluate whether to continue the employment relationship. That same section also included the following statement: No employee will be terminated without proper cause or reason and not until management has made a careful review of the facts. In 1981, the employer added the following disclaimer to the handbook: “[T]he Company reserves the right to terminate employees without assigning cause; therefore, the employee serves at the will of the employer.” Generally, only new employees received direct notification of this disclaimer, which was affixed to handbooks distributed to new employees. Plaintiffs job duties, however, included supervising employees who actually placed such notices in the new handbooks. When she noticed the policy, plaintiff claims she asked a co-worker if it applied to her and was told it only applied to new employees. c Pursuant to MCR 2.116(C)(10), both defendants moved for summary disposition, which the circuit court granted with respect to all counts. The Court of Appeals partially reversed and remanded. 209 Mich App 179; 530 NW2d 135 (1995). This Court granted leave to appeal, and issued a divided opinion in which the majority affirmed the decision of the Court of Appeals, finding that plaintiff reasonably could have had a legitimate expectation of just-cause employment. The majority reversed the Court of Appeals, however, by finding that plaintiff failed to present evidence demonstrating the existence of bad faith on behalf of defendant-employer in employer’s decision to conduct an RIF. The majority further affirmed the Court of Appeals holding that plaintiff raised a genuine issue of fact with respect to whether the defendant-employer discriminated against her on the basis of her age and gender. 456 Mich 1; 566 NW2d 582 (1997). We granted the reconsideration motions filed by both parties to again consider the issues presented in this case. 456 Mich 1202 (1997). n Plaintiff claimed she was wrongfully discharged because her employment could only be terminated for just cause. Generally, and under Michigan law by presumption, employment relationships are terminable at the will of either party. Lynas v Maxwell Farms, 279 Mich 684, 687; 273 NW 315 (1937). However, the presumption of employment at will can be rebutted so that contractual obligations and limitations are imposed on an employer’s right to terminate employment. Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579; 292 NW2d 880 (1980). See also Edwards v Whirlpool Corp, 678 F Supp 1284, 1291 (WD Mich, 1987). The presumption of employment at will is overcome with proof of either a contract provision for a def