Havill v. Woodstock Soapstone Co.

Havill v. Woodstock Soapstone Co. (99-516); 172 Vt. 625; 783 A.2d 423

[Filed 18-Sep-2001]


                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 1999-516

                               MAY TERM, 2001


Lois Havill	                       }	APPEALED FROM:
                                       }
                                       }
     v.	                               }	Windsor Superior Court
                                       }	
Woodstock Soapstone Company	       }
                                       }	DOCKET NO. 147-3-98 Wrcv

                                                Trial Judge: Richard W. Norton

             In the above-entitled cause, the Clerk will enter:


       Plaintiff Lois Havill appeals from a grant of summary judgment in
  favor of employer  Woodstock Soapstone Company, Inc., on her breach of
  contract claim.  Plaintiff contends that  employer's personnel policies
  entitled her to continued employment absent just cause and that   genuine
  issues of material fact exist regarding whether employer's reorganization
  was just cause for  her termination.  Employer cross-appeals from the
  court's denial of its motion to dismiss for lack of  personal jurisdiction,
  arguing that its contacts with Vermont were insufficient to allow
  jurisdiction  over it in a Vermont court.  Concluding that employer had
  sufficient minimum contacts with  Vermont, we affirm the denial of
  employer's motion to dismiss.  We reverse the grant of summary  judgment in
  favor of employer because genuine issues of material fact exist on whether
  the personnel  policies modified the at-will relationship and whether
  employer reorganized and eliminated  plaintiff's position.

       Employer manufactures wood burning stoves at its sole place of
  business in West Lebanon,  New Hampshire.  Plaintiff began working for
  employer on a part-time basis in 1982, when the  company was incorporated
  in Vermont.  Employer then moved its business to New Hampshire where  it
  was incorporated in 1985.  Plaintiff was terminated in 1987, and asked to
  return on a part-time  basis in 1990.  In 1994, she became a full-time
  customer service representative. Her duties included  entering data,
  processing orders, preparing informational packets and videos, assisting
  customers on  the phone and in the showroom, and general office work.  

       In 1994, employer distributed to plaintiff and all employees its
  Corporate Personnel Policies,  which were "intended to encourage mutual
  understanding, respect and cooperation."  The policies  declare that "[t]he
  interest and loyalty of every employee is needed to maintain and improve
  our  competitive market position, assure financial stability for the
  company, and job security for each  employee."  The policies provide that
  dealings with employees will be fair, open, and impartial, and 

 

  that "[s]teady employment will be provided for the greatest number of
  employees for the longest  possible period, depending on the amount and
  character of business which can be obtained."  Also  included are
  procedures for termination of employees and progressive discipline.  Absent
  from the  policies is any attempt by employer to limit or disclaim the
  creation of contractual liability arising  therefrom.

       On November 10, 1997, employer terminated plaintiff, claiming lack of
  work and that her  position had been eliminated.  Plaintiff filed a
  complaint alleging breach of her employment contract,  and later amended
  the complaint to include counts for intentional and negligent
  misrepresentation.  Before filing its answer, employer filed a motion to
  dismiss for lack of personal jurisdiction.  The  court denied employer's
  motion, reasoning that employer had purposefully directed activity toward 
  residents of Vermont in soliciting job applicants generally and plaintiff
  specifically, and that the  litigation arose out of that activity. 
  Employer moved the court to reconsider its decision or in the  alternative
  for permission to appeal pursuant to V.R.A.P. 5(b)(1).  Although modifying
  its decision  to base it on undisputed facts, the court denied employer's
  motion to dismiss and motion to appeal.

       After an opportunity for discovery, both parties moved for summary
  judgment on the breach of  contract claim.  The court granted employer's
  motion and denied plaintiff's, concluding that  employer's personnel
  policies did not alter plaintiff's  at-will employment status.  The court
  also held  that even if the policies did modify the employment agreement to
  require good cause for termination,  the elimination of plaintiff's
  position in the company reorganization constituted good cause about   which
  there were no disputed issues of fact.  Plaintiff moved the court to
  reconsider its decision and  to appeal, both of which the court denied. 
  Employer filed a motion to dismiss the two remaining  counts, intentional
  and negligent misrepresentation, which the court denied. The court granted 
  plaintiff's motion to dismiss these two counts without prejudice. 
  Plaintiff and employer both appeal.

                     I. Employer's jurisdictional claim

       Employer appeals the denial of its motion to dismiss for lack of
  personal jurisdiction.   Vermont's long arm statute, 12 V.S.A. § 913(b),
  confers "jurisdiction over nonresident defendants to  the full extent
  permitted by the Due Process Clause."  Dall v. Kaylor, 163 Vt. 274, 275,
  658 A.2d 78,  79 (1995).  Personal jurisdiction is permitted where the
  defendant has sufficient "minimum contacts  with the forum state such that
  the maintenance of the suit does not offend traditional notions of fair 
  play and substantial justice."  Id. (quoting International Shoe v.
  Washington, 326 U.S. 310, 316  (1945))(internal quotations and citation
  omitted).  We have held that in determining whether  minimum contacts are
  met, the critical consideration is "whether the defendant's conduct and 
  connection with the forum State are such that [a defendant] should
  reasonably anticipate being haled  into court there."  Id. at 276, 658 A.2d 
  at 79 (quoting World-Wide Volkswagen Corp. v. Woodson,  444 U.S. 286, 297
  (1980))(internal quotation omitted).  

       Employer contends that its contacts with Vermont are insufficient to
  establish the requisite  minimum contacts for Vermont to exercise specific
  jurisdiction over a breach of contract claim 

 

  arising out of plaintiff's employment at its New Hampshire place of
  business.  See Metropolitan Life  Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567-68 (2d Cir.), cert denied, 519 U.S. 1006 (1996)  ("Specific
  jurisdiction exists when a State exercises personal jurisdiction over a
  defendant in a suit  arising out of or related to the defendant's contacts
  with the forum.").  We disagree.  Plaintiff began  her career with employer
  during its earlier incarnation as a Vermont corporation. After it was 
  incorporated in New Hampshire, employer specifically recruited plaintiff by
  going to her Vermont  home and asking that she return to work for the
  company.  Plaintiff brought home work and was paid  for additional work she
  performed at her Vermont home.   In addition, the independent contractors 
  now performing some of plaintiff's former duties are Vermont residents who
  complete these tasks  from their Vermont homes.  Employer solicits new
  hires by advertising in The Valley News, a paper  in circulation in both
  Vermont and New Hampshire.  The fruit of this solicitation, employer's 
  workforce, is comprised of both Vermont and New Hampshire residents. 
  Having purposely solicited  plaintiff, a Vermont resident, and recruited
  other Vermonters to work at its New Hampshire site or  from their Vermont
  homes, it is not unreasonable for defendant to anticipate being called to
  answer a  complaint brought by a Vermont resident in a Vermont court on the
  subject of her employment.  See  Brown v. Cal Dykstra Equip. Co., 169 Vt.
  636, 637, 740 A.2d 793, 795 (1999) (mem.) (Wisconsin  crane company had
  sufficient minimum contacts with Vermont where it placed national 
  advertisement and Vermont resident inspected and purchased crane in
  Wisconsin and accepted  delivery in New Hampshire); Dall, 163 Vt. at 277,
  658 A.2d  at 80 (placing advertisement in national  publication resulting in
  sale of horse to Vermont resident with delivery in Vermont was sufficient
  to  establish minimum contacts).  Because a Vermont court's assertion of
  jurisdiction over employer  does not offend the traditional notions of fair
  play and substantial justice, we affirm the decision of  the trial court
  denying employer's motion to dismiss.  

                       II.  Plaintiff's contract claim

       Turning to plaintiff's appeal, plaintiff first contends that the court
  erred in granting employer's  motion for summary judgment on the ground
  that she was an at-will employee.  Plaintiff argues that  employer's
  personnel policies modified the at-will relationship between herself and
  employee.   Employer contends that the law of New Hampshire should resolve
  this issue.  The lower court found  that there was no conflict and that the
  outcome would be the same in either jurisdiction.  The court,  therefore,
  relied on Vermont law in evaluating plaintiff's claim. See Williams v.
  Stone, 109 F.3d 890,  893 (3rd Cir. 1997) (under general conflict of law
  principles, where the laws of the two jurisdictions  would produce the same
  result, the court should avoid the choice-of-law question); Seizer v.
  Session,  940 P.2d 261, 264 (Wash. 1997) (where there is no conflict
  between the jurisdictions, a court should  avoid the choice of law question
  and apply the law of the forum state). Although we agree that there  is no
  conflict, we reach a different result than did the lower court regarding
  the ultimate outcome. 

       The law in both Vermont and New Hampshire is that employment contracts
  for an indefinite  term are "at will."  In both states, however, this is a
  rule of construction, and not of substantive law,  which the parties can
  modify according to the usual rules of contract. See, e.g., Taylor v.
  National  Life Ins. Co., 161 Vt. 457, 462, 652 A.2d 466, 470 (1993); Panto
  v. Moore Business Forms, Inc., 

 

  547 A.2d 260, 267 (N.H. 1988) (at will status of an employment relationship
  is "one of prima facie  construction," not substantive law).  In New
  Hampshire, statements by an employer regarding  benefits and incidents of
  employment "can be viewed objectively, as meant to be a subject of binding 
  agreement."  Panto, 547 A.2d  at 264.  An employee, who is otherwise free to
  leave her employment,  who continues working furnishes the necessary
  consideration to modify the employment terms to  include these benefits. 
  See id. at 265; see also Miesowicz v. Essex Group, Inc., No. Civ.
  91-667-JD,  1994 WL 260645, at *3 (D.N.H. Apr. 12, 1994) (distinguishing
  employer's statements regarding  incidental benefits of employment which
  can create an offer for unilateral contract formation from  letter
  announcing employee's suspension and investigation procedure for infraction
  precipitating  suspension, which do not modify her at-will status).  An
  employer can avoid "contractual liability by  clearly stating its intent
  not to be contractually bound by the terms of the promulgated policy."  
  Butler v. Walker Power, Inc., 629 A.2d 91, 93 (N.H. 1993).

       As it relates to the issues on appeal, Vermont law does not conflict
  with that of New  Hampshire.  We have held that provisions of a personnel
  manual inconsistent with the at-will  relationship may be used as evidence
  that the employment contract requires good cause for  termination.  See ,
  e.g., Taylor, 161 Vt. at 464, 652 A.2d  at 471; Haynes v. Golub Corp., 166
  Vt. 228,  234, 692 A.2d 377, 380 (1997); Madden v. Omega Optical, Inc., 165
  Vt. 306, 310, 683 A.2d 386,  389 (1996).  Personnel policies that commit an
  employer to a progressive discipline system present a  triable issue of
  fact on whether an employer may terminate an employee only for just cause.  
  Trombley v. Southwestern Vt. Med. Ctr., 169 Vt. 386, 392, 738 A.2d 103, 108
  (1999).  Policies that  are definitive in form, communicated to employees,
  and evince an employer's intent to bind itself  will be enforced.  Ross v.
  Times Mirror, Inc., 164 Vt. 13, 20, 665 A.2d 580, 584 (1995). 

       Plaintiff has raised a genuine issue of fact that employer's personnel
  policies modified the at-will employment relationship between plaintiff
  and employer.  The policies begin with a declaration  designed to imbue
  employees with a sense of loyalty and job security.  "The interest and
  loyalty of  every employee is needed to maintain and improve our
  competitive market position, assure financial  stability for the company,
  and job security for each employee."  The policies contain a progressive 
  discipline procedure detailing the consequences for violations of the
  personnel policies.  In its  "Termination of Employment" section, the
  policies provide that "[a]n area supervisor shall have the  authority to
  dismiss an employee for just cause" and provides a non-exhaustive list of
  what  infractions constitute just clause.  At a minimum, the above
  provisions present a triable issue of fact  on whether employer intended to
  bind itself to the terms of the personnel policies generally and the  just
  cause termination procedure specifically.

       The court granted summary judgment on the alternative ground that even
  if employer's  corporate personnel policies modified the at-will employment
  relationship, the termination provision  did not preclude employer from
  terminating plaintiff based on employer's elimination of her position  as
  part of its reorganization.  "[E]conomic circumstances that necessitate
  employer layoffs constitute  good cause for termination."  Taylor, 161 Vt.
  at 466, 652 A.2d  at 472.  Plaintiff contends that  disputed questions of
  fact exist regarding whether economic necessity compelled the
  reorganization  and whether the reorganization resulted in the elimination
  of her job. 

 

       An employer "cannot use the defense of economic necessity as a pretext
  'for discharges which  would otherwise be subject to a just cause attack by
  the employee.' " Zoerb v. Chugach Elec. Ass'n,  798 P.2d 1258, 1263 (Alaska
  1990) (quoting Ewers v. Stroh Brewery Co., 443 N.W.2d 504, 507  (Mich. Ct.
  App. 1989)).  To defeat employer's summary judgment motion, plaintiff has
  the burden of  presenting "some evidence that [her] termination was not for
  the reason specified [by employer]."   Taylor, 161 Vt. at 469, 652 A.2d  at
  473.  An employee creates a triable issue of material fact when  she comes
  forward with evidence contradicting employer's claim.  Clutterham v.
  Coachmen Indus.,  Inc., 215 Cal. Rptr. 795, 797 (Cal. Ct. App. 1985) (no
  triable issue of fact where employee failed to  submit evidence to
  contradict employer's showing that termination was necessitated by market 
  conditions and company reorganization); McCart v. J. Walter Thompson USA,
  Inc., 469 N.W.2d 284, 287 (Mich. 1991) (plaintiff must raise a genuine
  issue of fact regarding the validity of  employer's proof that adverse
  business conditions existed and that the elimination of plaintiff's 
  position was necessitated by those conditions).  

       Plaintiff does not challenge employer's argument that market forces
  necessitated a  reorganization.  Instead, she offers contradictory evidence
  to employer's claim  that a reorganization  occurred that resulted in the
  elimination of her job.  So limited, plaintiff's challenge does not require 
  a court to perform the inappropriate function of second-guessing employer's
  decisions regarding  whether and under what circumstances to reorganize or
  eliminate segments of its work force.  See  Taylor, 161 Vt. at 467, 652 A.2d  at 472 (adopting rule that attempting to second-guess work force 
  shifts is an inappropriate interference in managerial decisions).  

       By its termination notice, employer claims it laid-off or terminated
  plaintiff "due to lack of  work, and her position (office support
  w/emphasis on data entry/mail fulfillment) was eliminated."   In support of
  its motion for summary judgment, employer added that plaintiff's primary 
  responsibilities of telephone contact with customers, data entry, and
  mailing of company literature  and videos have either been eliminated by
  the installation of a new phone system or outsourced to  independent
  contractors.  Review of the record reveals that in addition to the above
  functions,  plaintiff also processed orders, assembled chimney packages,
  provided showroom tours, responded  to customer inquiries in the showroom,
  and performed general office duties including filing.   Regarding the new
  phone system, as an initial matter, it was not in operation until January
  1999, over  one year after plaintiff was fired.  Once installed, although a
  new 800 number routed catalog calls to  an off-site call center, the
  preexisting lines still generated calls directly to the West Lebanon
  office.   Customer service representatives hired after plaintiff was
  terminated answer and process these calls.   These replacement customer
  service representatives also perform other functions once performed by 
  plaintiff, including telephone inquiries and order processing.

       Of plaintiff's remaining duties, for five or six months after
  plaintiff was terminated, the data  entry function was performed by other
  permanent staff or a temporary worker at the West Lebanon  site.  Although
  the data entry process was eventually upgraded, employer admits that
  plaintiff could  perform this task.  The data entry is now performed by a
  woman working as an independent  contractor from her home in Sharon,
  Vermont.  Employer still requires the assembling of mailing  packets of
  company literature and brochures.  This function is now performed by a
  worker at her 

 

  Bridgewater Corners, Vermont home.  At various time during her tenure with
  employer, plaintiff  worked out of her home.  Defendant has failed to offer
  any reason why plaintiff could not continue  performing these tasks from
  her Vermont home.  Affording plaintiff the benefit of all reasonable 
  doubts and inferences, we conclude that a genuine issue of fact exists on
  employer's claim that  plaintiff was laid off because there was no work for
  her to perform and that her position had been  eliminated.  

       The denial of employer's motion to dismiss for lack of personal
  jurisdiction is affirmed. The  award of summary judgment to employer is
  reversed.  The matter is remanded for such further  proceedings as are
  consistent with this opinion.  




                                       BY THE COURT:


                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice