ROOD v. GENERAL DYNAMIC CORPORATION; SCHIPPERS v. SPX CORPORATION
Case Details
- Citation
- 444 Mich. 107
- Judge(s)
- Brickley, Boyle, Riley, Griffin, and Mallett, JJ., concurred with Cavanagh, C.J.
- Procedural Posture — the stage the case had reached
- appeal
- State
- Michigan
Related Laws
No specific laws identified for this ruling.
Claim Types
Outcome
Split decision across two consolidated cases: In Rood v. General Dynamics, the Supreme Court reversed the lower court's summary judgment and remanded for trial, finding that the employer's written policies created a jury question about just-cause employment. In Schippers v. SPX Corporation, the Supreme Court reversed the Court of Appeals and affirmed summary judgment for the employer, finding insufficient evidence of an enforceable just-cause employment agreement.
Excerpt
ROOD v GENERAL DYNAMIC CORPORATION SCHIPPERS v SPX CORPORATION Docket Nos. 93416, 93968. Argued April 1, 1993 (Calendar Nos. 10-11). Decided September 21, 1993. Rehearings denied post, 1203. Richard A. Rood, M.D., brought an action in the Macomb Circuit Court against the General Dynamics Corporation, alleging wrongful discharge in breach of a just-cause contract. The court, Robert J. Chrzanowski, J., granted summary judgment for the defendant. The Court of Appeals, Cynar and Brennan, JJ. (Danhof, C.J., dissenting), reversed in an unpublished opinion per curiam (Docket No. 117470). In lieu of granting leave to appeal, the Supreme Court remanded the case to the Court of Appeals for reconsideration in light of Rowe v Montgomery Ward & Co, Inc, 437 Mich 627 (1991). After remand, the Court of Appeals, Danhof, C.J., and Griffin, J. (Brennan, J., dissenting), reversed its original decision in an unpublished opinion per curiam (Docket No. 145598). The plaintiff appeals. Joseph Schippers brought an action in the Muskegon Circuit Court against the SPX Corporation, alleging wrongful discharge in breach of a just-cause contract. The court, Michael E. Kobza, J., granted summary judgment for the defendant. The Court of Appeals, Neff, P.J., and Maher and Murphy, JJ., reversed (Docket No. 117549). The Supreme Court, in lieu of granting leave to appeal, remanded the case to the Court of Appeals for reconsideration in light of Rowe. After remand, the Court of Appeals, Neff, P.J., and Michael J. Kelly and Reilly, JJ., reaffirmed its original holding (Docket No. 147499). The defendant appeals. In an opinion by Chief Justice Cavanagh, joined by Justices Brickley, Boyle, Riley, Griffin, and Mallett, the Supreme Court held: A claim for wrongful discharge may be supported by contract or public policy. In these cases, while there was insufficient . evidence under the contract theory to overcome the presumption of employment at will, in Rood, the employer’s written policies and procedures were sufficiently clear and definite to create a question for the jury regarding the existence of a just-cause employment relationship. References Am Jur 2d, Master and Servant §§ 27, 45. See ALR Index under Labor and Employment. 1. Employment contracts of indefinite duration are presumed to be terminable by either party for any or no reason. To overcome the presumption, sufficient proof either of a provision for a definite term of employment or one forbidding discharge except for just cause must be shown. Express or implied promises or employer policies and procedures that instill legitimate expectations of just-cause employment may be sufficient and may become legally enforceable parts of an employment relationship. 2. Oral statements of just-cause employment must be clear and unequivocal, and the circumstances surrounding them must objectively show that a reasonable person would have interpreted them to provide a just-cause relationship. In these cases, viewing the evidence in a light most favorable to the plaintiffs, there is no evidence from which a reasonable juror could infer that the employers intended to provide just-cause employment. 3. Where a legitimate expectations theory is asserted, the trial court should examine the employer’s policy statements concerning employee discharge to determine whether they are capable of reasonably being interpreted differently, and thus questions for the jury. In Schippers, the statements were insufficient. In Rood, the policies and procedures could have instilled a legitimate expectation of just-cause employment, requiring reversal and remand for further proceedings. Rood, reversed and remanded. Schippers, reversed. Justice Levin, concurring in part and dissenting in part, stated that the evidence presented by the plaintiffs is sufficient to create a question of material fact whether oral assurances, written company policies, and company procedures and practices gave rise to a contract of just-cause employment under Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 479 (1980). It cannot properly be said that all reasonable persons would agree that no such contract was created between the parties. 194 Mich App 52; 486 NW2d 89 (1992) reversed. Master and Servant — Termination for Cause — Oral Promises. Express or implied promises or employer policies and procedures that instill legitimate expectations of just-cause employment may be sufficient and may become legally enforceable parts of an employment relationship; oral statements of just-cause employment must be clear and unequivocal, and the circumstances surrounding them must objectively show that a reasonable person would have interpreted them to provide a just-cause relationship. Sachs, Waldman, O’Hare, Helveston, Hodges & Barnes, P.C. (by Mary Katherine Norton), for the plaintiff in Rood. McCroskey, Feldman, Cochrane & Brock, P.C. (by John P. Halloran), for the plaintiff in Schipppers. Butzel, Long, P.C. (by John P. Hancock, Jr., Barbara T. Pichan, and Susan A. Hartmus), for the defendant in Rood. Culver, Lague & McNally (by Kevin B. Even) for the defendant in Schippers. Amicus Curiae: Mark Granzotto, Monica Farris Linkner, and Charles P. Burbach, for Michigan Trial Lawyers Association. Clark, Klein & Beaumont (by Dwight H. Vincent, J. Walker Henry, Rachelle G. Silberberg, and Patricia Bordman) for Michigan Manufacturers Association. Stark & Gordon (by Sheldon J. Stark, Martha I. Seijas) for National Lawyers Guild, Edgar Jerome Dew for National Conference of Black Lawyers, Reginald M. Turner, Jr., for Wolverine Bar Association, Paul J. Denenfeld for American Civil Liberties Union, and Charlene M. Snow for Women Lawyers Association of Michigan. Vamum, Riddering, Schmidt & Howlett (by Joseph J. Vogan) for Michigan Chamber of Commerce and The Employers’ Association. Cavanagh, C.J. In these wrongful discharge actions, we are asked to examine employer oral representations and written policy statements to determine the existence of alleged employment agreements terminable only for cause. In Rood, we find that the employer’s written policy statements were sufficiently clear and definite to create a jury question, regarding the existence of a just-cause employment relationship. In Schippers, however, we cannot so find. Consequently, we reverse the judgments of the different panels of the Court of Appeals. i A. SCHIPPERS v SPX CORP For fourteen years, plaintiff Joseph Schippers was employed as an "over-the-road” truck driver by defendant SPX Corporation. For approximately 12V2 of those years, Mr. Schippers was employed at the SPX-Sealed Power Division. In August 1986, Mr. Schippers transferred from Sealed Power to another division within spx, the Hy-Lift Division, which had only one truck and one driver, Mr. Schippers. Spx leased its trucks, including the truck driven by Mr. Schippers, from defendant Ryder Truck Rental. As part of the lease agreement between spx and Ryder, spx agreed to operate the trucks in a safe and careful manner. On January 28, 1987, Ryder’s district controller, Peter Stanley, sent a letter to Hy-Lift’s production control manager, Larry Bozik, informing him that Mr. Schippers had been involved in three accidents and that Ryder was placing Mr. Schippers on probation. Hy-Lift’s employee relations manager, Patrick E. Goresch challenged the basis for Ryder’s decision and requested proof to establish its claim. Ryder never sent the requested information and nothing further occurred until August 1987. On August 6, 1987, approximately one year after his transfer to Hy-Lift, Mr. Schippers was involved in a traffic accident. While Mr. Schippers claims that the accident was caused by a "steering malfunction,” an investigation conducted by Ryder indicated that the accident occurred because Mr. Schippers fell asleep at the wheel. In any event, Ryder notified spx that, pursuant to the lease agreement, it was requesting that Mr. Schip-pers not be permitted to operate any of its vehicles. Ryder further warned spx that if it allowed Mr. Schippers to operate any of its vehicles, then spx would be in breach of contract and liable for all personal injury and property damage resulting from any accident involving Mr. Schippers after the date of the letter. Following receipt of this letter, spx initiated its own investigation. The investigation revealed that this was not Mr. Schippers’ first accident; it was only "one of many which occurred while Schippers was a truck driver for spx.” On the basis of the investigation, an spx risk-management employee, James Sheridan, determined that of all spx truck drivers employed, Schippers presented the greatest risk to the enterprise. Mr. Schippers was terminated on September 4, 1987. He commenced this action against spx in Muskegon Circuit Court, on June 15, 1988, claiming that his discharge violated his employment agreement, which provided for discharge only for cause and negligent evaluation. The trial court granted spx’s motion for summary judgment on both counts, but the Court of Appeals reversed. 186 Mich App 595; 465 NW2d 34 (1990). Spx filed an application for leave to appeal in this Court, which, in lieu of granting leave, remanded to the Court of Appeals for reconsideration in light of Rowe v Montgomery Ward & Co, Inc, 437 Mich 627; 473 NW2d 268 (1991). 439 Mich 895 (1991). On remand, the Court of Appeals reaffirmed its original holding. 194 Mich App 52; 486 NW2d 89 (1992). We subsequently granted spx’s application for leave to appeal, 441 Mich 881 (1992), and we reverse. B. ROOD V GENERAL DYNAMICS CORP The plaintiff, Dr. Richard Rood, began working for Chrysler Corporation at its Hamtramck plant in 1968 as a per diem plant physician. In 1970, he converted to a salaried employee at the urging of his supervisor, Dr. George Olson. Dr. Rood’s employment responsibilities included the performance of physicals for newly hired workers and workers returning to work, and workers’ compensation evaluations. He also was responsible for providing general medical care for plant employees. In 1972, Dr. Rood was promoted to senior plant physician at the Hamtramck plant. This position required the supervision of other doctors and nurses. He performed this function until Chrysler closed its Hamtramck plant in 1980 and transferred Dr. Rood to the Detroit tank plant, where he assumed the role of plant physician, working under the direct supervision of the personnel manager, Owsley Spiller. Chrysler sold the Detroit tank plant in March 1982 to the defendant, General Dynamics Land Systems (gdls), which retained the entire plant medical department, including Dr. Rood as plant physician. As a result, Dr. Rood continued to report to Mr. Spiller, and his duties remained essentially the same. Gdls had three plants in separate states and each plant had its own plant physician who reported to nonmedical personnel. The new vice president of human resources, Donald Norman, testified that he desired to create a more efficient means of handling the various medical facilities at the three plants. As a result, he established the position of division medical director to oversee all the division’s medical personnel, and only that person reported to Mr. Norman. When filling this new position, Mr. Norman bypassed Dr. Rood and hired another doctor, Dr. Charles R. Harper, who had an extensive background as a medical director in other corporations. Gdls contends that, after hiring Dr. Harper, an economic concern developed. At the time of his termination, Dr. Rood’s annual salary was $59,000 and Dr. Harper’s starting salary was $70,000. According to Mr. Norman, it was not economically feasible for gdls to have both a full-time plant physician and a division medical director. He, therefore, purportedly decided that the division medical director would perform both the division-wide responsibilities as well as the duties of the plant physician at the Detroit plant and Dr. Rood’s position was eliminated. Dr. Rood challenges the reasons for his dismissal, however, claiming that the hiring of Dr. Harper was solely to replace him. In any event, in December 1984, the then-director of personnel relations, William Pagen, informed Dr. Rood that gdls "had decided to replace” him and that he could either submit a letter of resignation or be fired. Dr. Rood submitted his letter of resignation that became effective on January 4, 1985. Dr. Rood filed this action in Macomb Circuit Court on December 29, 1987, claiming that his discharge violated his employment agreement, negligent evaluation, and breach of the covenant of good faith and fair dealing. On gdls’ motion, the circuit court dismissed plaintiff’s negligent evaluation and breach of good-faith and fair-dealing claims for failure to state a claim on which relief can be granted. MCR 2.116(C)(8). Because Dr. Rood did not appeal this determination, the case proceeded through discovery on only the breach of implied contract claim. Following discovery, gdls filed a motion for summary judgment, which the trial court granted. Dr. Rood appealed in the Court of Appeals, which reversed in a split decision. Unpublished opinion per curiam, decided December 27, 1990 (Docket No. 117470). Gdls filed an application for leave to appeal in this Court, which, in lieu of granting leave, remanded to the Court of Appeals for reconsideration in light of Rowe. 439 Mich 851 (1991). On remand, the Court of Appeals, in yet another split decision, reversed its original holding. Unpublished opinion per curiam, decided February 19, 1992 (Docket No. 145598). We subsequently granted Dr. Rood’s application for leave to appeal, 441 Mich 880 (1992), and we reverse. ii Employment contracts for an indefinite duration are presumptively terminable at the will of either party for any reason or for no reason at all. Lynas v Maxwell Farms, 279 Mich 684, 687; 273 NW 315 (1937). This presumption is not, however, "a substantive limitation on the enforceability of employment contracts but merely a rule of 'construction.’ ” Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579, 597; 292 NW2d 880 (1980). "The presumption does not prevent proof of actual intent and should not be employed to permit unjustified evasions of promissory liability.” Rowe at 676, n 14 (Boyle, J., concurring). To overcome the presumption of employment at will, a party must present sufficient proof either of a contractual provision for a definite term of employment or a provision forbidding discharge absent just cause. Rowe at 636-637. Such provisions may become part of an employment contract as a result of "explicit” promises, Perritt, Employee Dismissal Law & Practice (2d ed), § 4.1, p 173, or promises implied in fact. Rowe at 668 (Boyle, J., concurring). As recognized in Toussaint, however, employer policies and procedures may also become a legally enforceable part of an employment relationship if such policies and procedures instill "legitimate expectations” of job security in employees. Toussaint at 615. In other words, there are two alternative theories of enforceability that may support a claim of wrongful discharge in Michigan. While the first theory is grounded solely on contract principles "relative to the employment setting,” Rowe at 632, the second theory is grounded solely on public policy considerations. As Justice Boyle noted in her concurring opinion in In re Certified Question (Bankey v Storer Broadcasting Co), 432 Mich 438, 458; 443 NW2d 112 (1989), "the pure legitimate expectations leg of Toussaint was founded on the Court’s common-law authority to recognize” enforceable obligations that arise " 'outside the operation of normal contract principles.’ ” a. "contract theory” of toussaint 1. APPLICABLE LAW Contractual liability is consensual. 1 Farns-worth, Contracts, § 3.1, p 160. A basic requirement of contract formation is that the parties mutually assent to be bound. Id. In Rowe, this Court recognized "the difficulty in verifying oral promises,” Rowe at 641, especially in the employment relations context, because individuals often harbor "optimistic hope of a long relationship” that causes them to misinterpret their employer’s oral statements as manifestations of an intention to undertake a commitment in the form of a promise of job security. Rowe at 640. Accordingly, and in an effort to recognize oral contracts for job security only where the circumstances suggest both parties intended to be bound, id. at 636, the Rowe Court held that "oral statements of job security must be clear and unequivocal to overcome the presumption of employment at will.” Id. at 645. In deciding whether a party has assented to a contract, we follow the objective theory of assent, focusing on how a reasonable person in the position of the promisee would have interpreted the promisor’s statements or conduct. Calamari & Per-illo, Contracts (3d ed), §2-2, p 27. As Professor Farnsworth stated: Since it is difficult for a workable system of contract law to take account of assent unless, there has been an overt expression of it, courts have required that assent to the formation of a contract be manifested in some way, by words or other conduct, if it is to be effective. [Id. at § 3.1, pp 160-161.] Otherwise stated, to determine whether there was mutual assent to a contract, "we use an objective test, 'looking to the expressed words of the parties and their visible acts,’ ” Rowe at 640, quoting Goldman v Century Ins Co, 354 Mich 528, 535; 93 NW2d 240 (1958), and ask whether a reasonable person could have interpreted the words or conduct in the manner that is alleged. Thus, we begin our analysis by looking "to all the relevant circumstances surrounding the transaction, including all writings, oral statements, and other conduct by which the parties manifested their intent.” Rowe at 641. (A) SCHIPPERS (i) EVIDENCE Viewed in a light most favorable to Mr. Schip-pers, the relevant evidence is as follows: Mr. Schip-pers was employed at Sealed Power for approximately 12V2 years before transferring to Hy-Lift. Before Mr. Schippers transferred to that division, Hy-Lift did not have a truck or a driver and relied totally on Sealed Power for its transportation needs. In an effort to save money and to gain additional control over its transportation needs, Hy-Lift decided to lease a truck from Ryder and approached Mr. Schippers about his willingness to transfer from Sealed Power to Hy-Lift. Although Hy-Lift had its choice of Sealed Power drivers, it wanted Mr. Schippers because he had driven for Hy-Lift, knew the routes, and was considered the most reliable. Mr. Schippers was one of seven drivers at Sealed Power, and he was second in seniority. Consequently, before deciding to make the switch to Hy-Lift, Mr. Schippers "consulted” with three of Hy-Lift supervisors, including his immediate supervisor, Mr. Bozik, and the general manager of Hy-Lift, Mr. Overway, about "job security.” During these conversations, Roy Overway told him that "as far as he was concerned, unless something was really wrong, [Mr. Schippers] would be there for retirement”' and that "Mr. Bosik [sic] went so far as to make the comment that as long as [Hy-Lift] had a truck, [he] would be the driver.” Moreover, Mr. Schippers states that he was given "similar” assurances from another "management person” at Hy-Lift, Perry Abbes, although he was unable to recall his exact words. At the time of transfer, spx had issued an employee "Information Handbook.” On page one, the handbook provides:_ We are proud of our people and recognize their value through steady employment, fair wages, good working conditions, unusually broad benefit programs, and recognition as individuals. Sealed Power has adopted overall policies of employment and standards of conduct which are fair to all employees and in the best interest of the company. These policies and standards spell out your responsibilities to the company and the company’s responsibility and obligati
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