KERR v GIBSON S PRODUCTS CO OF BO
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UO. 86-352 IN THE SUPREME COURT OF THE STATE OF MONTANA 1987 PENNY L. KERR, Plaintiff and Respondent, -VS- GIBSON'S PRODUCTS COMPANY OF BOZEMAN, INC., a Montana corpora-tion, Defendant and Appellant. APPEAL FROM: District Court of the Eighteenth Judicial District, In and for the County of Gallatin, The Honorble Joseph B. Gary, Judge presiding. COUNSEL OF RECORD: For Appellant: Landoe, Brown, Planalp, Kommers Brown, Bozeman, Montana & Johnstone; Gene I. For Respondent: Cok & Wheat; Michael D. Cok, Bozeman, Montana Submitted on Briefs: Decided: Dec. 3, 1986 March 10, 1987 Mr. Chief Justice J. A. Turnage delivered the Opinion of the Court. Gibson's Products Company of Rozeman, Inc., appeals a jury verdict entered by the District Court of the Eighteenth Judicial District of the State of Montana, in favor of respondent Penny Kerr, on her claims for relief from the termination of her employment. We affirm. Gibson's raises two issues for our review: 1. Whether there was substantial credible evidence to support submission of respondent's case to the jury based upon breach of implied covenant of good faith and fair dealing? 2. Whether the jury properly awarded compensatory damages to the respondent? Kerr (respondent) was hired as a sales clerk and teller on June 14, 1978. She worked in various capacities until February 10, 1984, at which time Roy Hampton, Gibson's manager, discharged her. Hampton testified that Kerr was not terminated for cause but as a necessary business decision. The issues presented credible evidence questions. for review involve substantial We will examine the facts in a light favorable to respondent. v. Twombly First National Bank in Libby (Mont. 19841, 689 P.2d 1776, 41 St.Rep. 1948; Jacques v. Montana National Guard (1982), 199 Mont. 493, 503, 644 P.2d straint 1319, 1325. in Additionally, we will exercise re- interfering with process of jury decision. the constitutionally-mandated Barmeyer v. MPC (Mont. 1983) , 657 P.2d 594, 40 St.Rep. 23. During the five and one-half years of her employment, respondent performed her job in a satisfactory manner. She wa.s promoted to the position of department head and supervised at least eight different departments. as head cashier for two years. She also served Kerr's starting wage of $2.75 per hour was steadily increased by eleven merit pay raises to S7.25 per hour. action. Kerr was never the subject of disciplinary In 1983, she publicly received a bonus as a sign of Gibson's appreciation for her five years of service. Gibson's Products Company of Bozeman, Inc., began to experience financial difficulties in 1980. Its financial difficulties continued until the store was sold to Chaffin, Inc., in May 1984. During 1983 and 1984, Kerr, along with other employees of Gibson's, were assured by Charles Brooks, the store's owner, that Gibson's was not going bankrupt. Hampton and Brooks told the employees that Gibson's would cut back employee hours before they would terminate employees. Despite Hampton's and Brooks' assurances, Kerr was discharged during her shift, without notice or severance pay, on February 10, 1984. Hampton refused to provide her with a refer- ence letter. Gibson's did not offer her a transfer, reduced hours or reduced pay. Gibson's contended that Kerr was terminated as part of a legitimate store-wide reduction in force during which Gibson's also discharged or transferred thirteen other employees, some of whom were seasonal employees. However, within four months of Kerr's termination, Gibson's replaced the terminated employees with eleven lower paid employees. Additionally, the Gibson's employee handbook outlined its termination procedure. The handbook stated that a layoff due to lack of work would be termination without prejudice and the employee would retain recall rights. given recall rights. Kerr was not Further, her termination report indi- cated there was no chance for rehire. Kerr filed the present action on November 8, 1984, alleging that she had been wrongfully discharged from her employment with Gibson's Products Company and sought damages under several theories. Kerr alleged tha-t Gibson's breached the implied covenant of good faith and fair dealing. She further alleged that appellant acted negligently, maliciously and with reckless disregard of her rights, entitling her to exemplary damages. fourth count distress. A The complaint was amended to include a alleging negligent infliction of jury trial was held on March 5, 1986. emotional The jury found for Kerr and awarded her $59,026 in compensatory damages. Issue One Was there substantial credible evidence to support submission of respondent's case based upon breach of the implied covenant of good faith and fair dealing? The principal argument a.dvanced by appellant is that Gibson's was experiencing severe economic problems. There- fore, in an effort designed to cut costs, Gibson's terminated the respondent. was imminent. Appellant claims that bankruptcy of Gibson's Appellant did not recall the respondent, offer her a lower paid position or offer to transfer to her to another Gibson's store or department. In a fashion similar to Flanigan v. Prudential Fed. S & L Assoc. (Mont. 1986), 720 P.2d 257, 259, 43 St.Rep. 941, 943, appellant argues that a Montana jury should not be a silent partner in every decision to terminate an employee. However, here, as in Flanigan, there is evidence that the employer acted with other than purely economic motives when the respondent was terminated. Kerr disputed that she was terminated as a necessary reduction-of-force. She cites her termination without notice and Gibson's refusal to rehire her at a lower wage. Respon- dent points to the refusal of Gibson's to offer a letter of recommendation and its hiring of eleven employees at lower One of these newly-hired employees assumed respon- wages. dent's duties in the lawn and garden department. Further, Kerr argues that Gibson's failed to follow its own termination policy promulgated in its handbook. Gibson's employee handbook states as follows: The "4. Layoff--A layoff due to lack of work will be considered a termination without rights." prejudice and the employee will retain recall Respondent points to the fact that Gibson's not only failed to recall her, but placed "No Rehire" in her termination report. Appellant claims that because Gibson's employee handbook was distributed after respondent began her employment, the handbook does not create contractual rights. Life of Montana Ins. Co. Gates v. (Gates I) (19821, 196 Monk. 178, 183, 638 P.2d 1063. The employee handbook was distributed in June 1979 and was in effect for the remaining four and one-half years of respondent's employment. Gibson's employee handbook contained rules of employee conduct and sanctions for employee misconduct. The handbook contained Gibson's policy for employee benefits, promotions and terminations. As an employer, Gibson's was freely able to enforce employee handbook rules of conduct. It likewise follows that Kerr, as an employee, could reasonably rely on the procedures outlined in Gibson's employee handbook during employment termination. The circumstances of this case are that the employee entered into an employment contract terminable at the will of either party at any time. The employer later promulgated a handbook of personnel policies establishing certain procedures with regard to terminations. The employer need not have done so, but presumably sought to secure an orderly, cooperative and loyal work force by establishing uniform policies. The employee, having faith that she would be treated fairly, then developed the peace of mind associated with job security. If the - - employer has failed-to follow its of-mind own policies, the peace _ _ - of its is and an employees - shattered - - injustice is done. [Emphasis supplied.1 -Gates I, 196 Mont. at 184, 638 P.2d at 1067. Implicit throughout the respond-ent s case is the alle' gation that she was terminated because of her high wages. Kerr was one of Gibson's most senior employees. performance was satisfactory. Her work However, testimony revealed that Gibson's retained or hired less-experienced employees, who then occupied positions respondent had previously held. The covenant of good faith and fair dealing is implied when objective manifestations by the employer give rise to the employee's reasonable belief that he or she has security and will be trea-ted fairly. job Dare v. Montana Petro- leum Marketing Company (Mont. 1984), 687 P.2d 1015, 1020, 41 St.Rep. 1.735, 1739. Gibson's repeatedly acknowledged respon- dent's work as satisfactory through promotions and. pay in- creases. It was reasonable for respondent to believe that she had job security and. would be treated fairly. We hold that sufficient evidence was presented rebutting appellant's claim of economic necessity. Our holding does not foreclose an employer from engaging in legitimate reductions in force necessary to maintain economic vitality of the company. Flanigan, 720 P.2d at 261, 43 St.Rep. at 946. Therefore, the trial court properly submitted this issue to the jury. Issue Two Whether the jury properly awarded compensatory damages to the respondent? Respondent was awarded $50,995 in lost wages and $8,031 for her interest in the profit testimony of Kerr's sharing plan. Extensive search for employment was presented. Testimony revealed that respondent held numerous temporary and part-time jobs before becoming employed in 1985 at First Security Bank in Bozeman. Kerr presently earns $3.67 per hour at First Security Bank. Dominque Carestia, an economics expert, testified that respondent's lost wages to present income, is $50,995. wages to 1989, based July 1989, mitigated by her Carestia projected Kerr's lost on respondent's testimony that she planned to quit Gibson's and raise a family at that time. Additionally, Carestia determined that Kerr would have received $8,031 upon the sale of Gibson's to Chaffin Corporation in May 1984. Appellant argues that Kerr is not entitled to future damages after May Corporation. 1984 when Gibson's was sold to Chaffin Appellant does not dispute that nearly all of Gibson's employees were retained by Chaffin. Nor does appel- lant dispute that Chaffin disbursed Gibson's profit sharing account in 1984. in May If respondent had been employed by Gibson's 1984, less than four months after her discharge, clearly she would have received an additional $8,031. In Gates v. Life of Montana Ins. Co. (Gates 11) (~ont. 1983), 668 P.2d 213, 214, 40 St.Rep. 1287, 1289, this Court held that a breach of the implied covenant of good faith and fair dealing has its remedy in tort. Further, this Court has recognized expert testimony on future damages. Graham v. Clark Fork's National Bank (Mont. 1981), 631 P.2d 718, 720, 721, 38 St.Rep. 1140, citing Frisnegger v. Gibson (1979), 183 .. . Section 27-1-203, MCA, provides that damages may be awarded in a judicial proceeding for detriment resulting after commencement thereof "or certain [Ilt to result in the future." has always been the practice in Montana to instruct juries that future damages and not need only be reasonably certain, - - ... absolutely certain - - statute seems as the to imply. A jury or an expert testifying on the subject must make assumptions to some degree. Frisnegger, 598 P.2d at 582. As a.n additional precaution, Judge Gary properly instructed the jury not to award speculative damages. We find that evidence was properly presented to the jury of respondent's future earnings reduced by her present wages under the standard of Graham and 5 27-1-203, MCA. evidence was sufficient to uphold damages. Affirmed. Fe concur: l 1 the jury's The finding of
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