Unpublished Disposition, 904 F.2d 41 (9th Cir. 1987)

MEMORANDUM^** 

Appellant Jack R. Thomas appeals, pro se, a grant of summary judgment for appellee Garrett Corporation. The district court ruled that Thomas failed to establish a genuine issue of material fact in his attempt to show that Garrett's employee handbook had become a part of appellant's employment contract. Thomas contends that the summary judgment is contrary to Arizona law, which recognizes a cause of action for wrongful termination through breach of an implied contract whose terms are contained in an employee handbook. We reject Thomas's contention and affirm the district court's grant of summary judgment. We deny the Garrett Corporation's request for sanctions pursuant to Fed. R. App. P. 38.

We review the district court's grant of summary judgment de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989). The question of whether Thomas's complaint states a cause of action is a question of state law, and we must review the district court's interpretation of state law de novo. In re McLinn, 739 F.2d 1395, 1397 (9th Cir. 1984) (en banc). Because we are applying Arizona law to appellant's complaint, we are bound by the Arizona Supreme Court's case law. Olympic Sports Prod., Inc. v. Universal Athletic Sales Co., 760 F.2d 910, 912-13 (9th Cir. 1985), cert. denied sub nom Whitaker Corp. v. Olympic Sports Prod., Inc., 474 U.S. 1060 (1986).

Arizona law recognizes that the at-will effect of an employment agreement may be modified by the conduct and statements of the parties. Wagenseller v. Scottsdale Memorial Hosp., 710 P.2d 1025, 1036 (Ariz.1985). An employer's policy statements, as expressed for example in an employee handbook, regarding such things as job security and employee disciplinary procedures "may become part of the contract, supplementing the verbalized at-will agreement, and thus limiting the employer's absolute right to discharge an at-will employee." Id. But where an employer issues a personnel manual that clearly and conspicuously tells employees that the manual is not part of the employment contract and that their jobs are terminable at will, no reasonable expectations of job security are instilled in employees, nor does the manual give employees any reason to rely on representations in the manual. Leikvold v. Valley View Community Hosp., 688 P.2d 170, 174 (Ariz.1984).

On August 26, 1987, Thomas was laid off by the Garrett Corporation. Thomas contends that his layoff was in violation of the corporation's employee handbook, which stated that layoffs would be made based on seniority within each of its departments.¹  The handbook, however, included a disclaimer that read:

[y]our employment with Garrett is voluntarily entered into, and you are free to resign at any time. Similarly, Garrett may terminate the employment relationship where it believes it is in the Company's best interest. Neither this handbook nor any other communication by a managerial representative is intended in any way to create a contract of permanent employment. However, all members of management are dedicated to ensuring that discipline, including dismissal, is administered in a consistent and equal manner.

The district court interpreted the disclaimer as negating any possibility that the handbook could be construed as modifying appellant's at will employment contract. The district court's interpretation is consistent with the Arizona Supreme Court's holding in Leikvold. The judgment of the district court is therefore AFFIRMED. Appellee's request for sanctions is DENIED.