Foote v. Simmonds Precision Products

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 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
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                                 No. 90-182


 Fletcher E. Foote                            Supreme Court

                                              On Appeal from
      v.                                      Addison Superior Court

 Simmonds Precision Products Co.,             November Term, 1991
 Inc., Robert Morris, Paul Brace
 and Anthony Panella


 David A. Jenkins, J.

 Thomas Z. Carlson of Langrock, Sperry & Wool, Burlington, for plaintiff-
   appellee

 Craig Weatherly of Gravel and Shea, Burlington, for defendant-appellant


 PRESENT:  Allen, C.J., Dooley, Morse and Johnson, JJ., Peck, J. (Ret.),
      Specially Assigned



      JOHNSON, J.   The primary issue before us is whether the doctrine of
 promissory estoppel may modify an employment contract that is otherwise
 terminable at will.  We hold that it may and affirm.
      This is an appeal from a jury verdict for plaintiff, Fletcher Foote,
 against his former employer, Simmonds Precision Products Co., Inc.
 Plaintiff was discharged from his employment as a computer operator after
 approximately twenty years of service.  Defendant claimed that plaintiff was
 fired for falsifying his time card.  Plaintiff alleged that his discharge
 was the result of his efforts to use the grievance procedure published in
 the company's employee handbook.  The procedure assured employees that
 "[i]f you follow these steps, you cannot be criticized or penalized in any
 way."  Plaintiff claimed that he relied on this promise of nonretaliation.
 Defendant pointed to another passage in the employee handbook, which stated
 that "[t]he employment relationship between the company and you may be
 terminated by either party at any time."  On that basis, it contended that
 plaintiff was an at-will employee and it was entitled to discharge him.
      The evidence showed that, prior to his use of the grievance procedure,
 plaintiff had an excellent work history as a senior computer operator at
 Simmonds.  His periodic evaluations were consistently very good to
 outstanding.  In the late summer of 1986, he and other operators became
 concerned about the hiring of a supervisor whom they considered unqualified,
 and about changes in pay and benefit practices.  Although plaintiff wanted
 to pursue these problems through defendant's grievance process, he was
 concerned about losing his job.   He consulted an employee relations manager
 about how to pursue grievances within the company's policy.  The manager
 referred him to the "Problem-Solving Procedure" in the Employee Handbook,
 containing the language that employees could not be criticized or penalized
 in any way if they complied with the procedures.  Defendant's personnel
 manager testified that the company intended that employees rely on the
 statement.
      Plaintiff attempted to follow the procedure, but was met with
 increasing irritation by his supervisors.  In December 1986, plaintiff
 suffered a poor work evaluation, which he claimed was unjustified.  Three
 months later, he was discharged.  According to defendant, plaintiff recorded
 hours on his time card that he had not actually worked.  Plaintiff contended
 he was relying on a policy that allowed computer operators to leave before
 the end of their shifts.  Defendant claimed it had discontinued the policy
 and specifically notified plaintiff.
      The jury believed plaintiff's side of the story.  Although plaintiff
 proceeded on express and implied contract theories, as well as promissory
 estoppel, the jury based its verdict solely on promissory estoppel.  Its
 verdict was reflected in a series of interrogatories.  The relevant inter-
 rogatories and answers were:
         1.  At the time of termination of employment of Fletcher
         Foote, was there an employment contract that could be
         terminated at will by the employer?  Yes.

         2.  At the time of termination of employment, was there
         an employment contract that required good cause for
         termination of employment by the employer?  No.

         3.  Did Simmonds Precision Products Co., Inc. breach a
         contract of employment when Fletcher Foote was term-
         inated from employment?  No.

         4.  Was Fletcher Foote terminated from employment by
         Simmonds Precision Products Co., Inc. for good cause?
         No.

         5.  Were Fletcher Foote's grievances the real reason
         leading to termination and the real reason for term-
         ination was not any false time card and the employer
         should be estopped from saying he was properly
         terminated?  Yes.

         7.  What damages do you find, if any, for breach of
         contract?  $150,000.00.

 After the jury returned its verdict, an additional interrogatory was
 submitted and answered, as follows:
         Is the damage amount of $150,000.00 for damages
         proximately caused by the promissory estoppel answer of
         question #5.  Yes.

     On appeal, defendant argues that the trial court erred in denying its
 motions for a directed verdict and for judgment notwithstanding the verdict.
 Although variously phrased, defendant's arguments boil down to three  --
 promissory estoppel should not have been charged as an independent cause of
 action that may modify an at-will employment contract, the jury's answers to
 the interrogatories are legally inconsistent, and alternatively, that the
 evidence was insufficient to prove the elements of promissory estoppel. (FN1)
      The legal question raised by motions for directed verdict and for
 judgment notwithstanding the verdict under V.R.C.P. 50 is the same.  The
 question is whether the result reached by the jury is sound in law on the
 evidence produced.  Kinzer v. Degler Corp., 145 Vt. 410, 412, 491 A.2d 1017,
 1018 (1985).  In reviewing the denial of these motions, we view the evidence
 in the light most favorable to the nonmoving party and exclude the effect of
 any modifying evidence.  Center v. Mad River Corporation, 151 Vt. 408, 413,
 561 A.2d 90, 93 (1989).  If any evidence fairly or reasonably supported a
 lawful theory of the plaintiff, then the trial court acted properly in
 denying the motions.  Id.
                                     I.
      We turn first to defendant's argument that at-will employment and the
 doctrine of promissory estoppel are mutually exclusive, and that the court's
 instructions on these issues produced a verdict that is legally incon-
 sistent.
       As we stated in Sherman v. Rutland Hospital, 146 Vt. 204, 207, 500 A.2d 230, 232 (1985), an employment contract for an indefinite term is an
 "at-will" agreement, terminable at any time, for any reason.   However, this
 is simply a rule of contract construction.  Toussaint v. Blue Cross & Blue
 Shield, 408 Mich. 579, 596-97, 292 N.W.2d 880, 884 (1980).  The common law
 presumes the existence of an at-will provision when employment is for an
 indefinite term.  It is a presumption that may, like any other, be overcome
 by evidence to the contrary.  Pugh v. See's Candies, Inc., 116 Cal. App. 3d 311, 324, 171 Cal. Rptr. 917, 924 (1981).  The rule imposes no substantive
 limitation on the right of contracting parties to modify terms of their
 arrangement or to specify other terms that supersede the terminable-at-
 will provision.  Sherman, 146 Vt. at 207, 500 A.2d  at 232; Helle v.
 Landmark, Inc., 15 Ohio App.3d 1, 7, 472 N.E.2d 765, 772 (1984).
      Aside from bilateral modifications as in Sherman, at-will employment
 contracts may be modified by statute or common law.  Federal and state laws
 prohibiting discrimination on the basis of race, sex, religion, national
 origin, handicap and age, are examples of statutory modifications that alter
 every at-will contract in the Vermont.  42 U.S.C. { 2000e-2(a); 21 V.S.A. {
 495(a).  Common law public policy exceptions to the at-will doctrine have
 also been recognized in this state.  Payne v. Rozendaal, 147 Vt. 488, 491,
 520 A.2d 586, 588 (1986); Jones v. Keough, 137 Vt. 562, 564, 409 A.2d 581,
 582 (1979).
      A number of courts have held that an employer may unilaterally modify
 an at-will contract, by publishing a company handbook or manual on which it
 intends employees to rely.  See Thomspon v. St. Regis Paper Co., 102 Wash. 2d 219, 229-30, 685 P.2d 1081, 1087-88 (1984) (employer's unilateral
 objective manifestation of intent that employee will remain on job creates
 expectation, and obligation of treatment in accord with written promises);
 Toussaint, 408 Mich. at 619, 292 N.W.2d  at 895 (employer may not treat
 announced promise to dismiss for cause only as illusory); Continental
 Airlines v. Keenan, 731 P.2d 708, 711-12 (Colo. 1987) (at-will employee may
 be able to enforce termination procedures in employee manual under theories
 of unilateral contract or promissory estoppel).
      Similarly, promissory estoppel may modify an at-will employment
 relationship and provide a remedy for wrongful discharge.  Mers v. Dispatch
 Printing Co., 19 Ohio St. 3d 100, 105, 483 N.E.2d 150, 155 (1985); Rognlien
 v. Carter, 443 N.W.2d 217, 220 (Minn. Ct. App. 1989).  Contrary to defend-
 ant's assertion, it is an independent cause of action, and may be used
 affirmatively, if the elements are present.  See LaRose v. Agway, 147 Vt. 1,
 3-4, 508 A.2d 1364, 1366 (1986) (insufficient evidence on element of
 reliance deprived discharged employee of promissory estoppel claim).
      Nothing about the at-will doctrine suggests that it does not coexist
 with numerous modifications and exceptions imposed by law, including the law
 of promissory estoppel, depending on the facts of a particular case.
 Whether or not these modifications technically remove the employment con-
 tract from the at-will realm, as defendant argues, is form over substance.
 Even with modifications, employees for an indefinite term are still
 considered at-will employees, who may be discharged for any number of
 reasons not prohibited by the modifications.
      In this case, the jury's answers to the interrogatories showed that
 they believed the company's right to discharge was modified in the at-will
 employment contract in one respect -- plaintiff could not be discharged for
 the pursuit of grievances in accordance with the handbook.  Because it
 determined that he was discharged for that reason, the jury found liability
 against the company.  That the plaintiff was otherwise an at-will employee,
 and legally could have been discharged for any other reason not in violation
 of statute or public policy, does not mean that the verdict is inconsistent.
 In fact, the employer advanced such a reason -- that plaintiff had falsified
 his time cards -- but the jury did not believe it.
                                     II.
      Defendant makes a more direct attack, grounded on the same legal
 theory, asserting the legal inconsistency of the answers to the
 interrogatories.  It contends that, once the jury found that plaintiff was
 an at-will employee (interrogatory 1), and that defendant did not breach an
 employment agreement (interrogatory 3), the jury could not find defendant
 liable for discharging plaintiff, no matter what the reason.  According to
 defendant, the jury's deliberations should have ended after it made the at-
 will finding.
      A party has an obligation to object to the portions of the charge or
 interrogatories it challenges, "stating distinctly the matter objected to
 and the grounds of the objection."  Hartnett v. Union Mut. Fire Ins., 153
 Vt. 152, 160, 569 A.2d 486, 490 (1989)(quoting V.R.C.P. 51(b)).  Thus,
 errors in jury interrogatories can be raised before this Court only if the
 party claiming error seasonably objects before the trial court.  Silva v.
 Stevens,  156 Vt. 94, 110, 589 A.2d 852, 861 (1991).
      The record reveals no objection by defendant to the interrogatories as
 written and submitted.  The interrogatories themselves, as set forth above,
 are devoid of instructions that would limit the jury's responses to the
 questions in any way.  The court instructed that there were three claims in
 the case -- contract, estoppel, and tort.  As already discussed, it was
 proper for the court to charge the jury that promissory estoppel is an
 independent cause of action.  The court instructed that if the jury found
 defendant not liable on the theories of contract and estoppel, it need not
 go any further, and that it could continue with deliberations on damages
 only if it said yes to contract or estoppel.  Again, defendant did not
 object to this oral instruction on how the jury was to proceed. (FN2) The only
 objection to the inconsistency of the interrogatories on the ground
 defendant now claims -- that answering all the interrogatories as the jury
 did produced inconsistent results -- came after the jury rendered its
 verdict.  This was too late, however, and defendant must take the answers as
 given.
                                    III.
      Defendant argues, alternatively, that there was insufficient evidence
 for the jury to make a finding of promissory estoppel.
      The doctrine of promissory estoppel, as recognized in Vermont, is set
 forth in the Restatement (Second) of Contracts { 90(1) (1981).
      A promise which the promisor should reasonably expect to induce
      action or forbearance on the part of the promisee or a third
      person and which does induce such action or forbearance is binding
      if injustice can be avoided only by enforcement of the promise.
 See LaRose, 147 Vt. at 3, 508 A.2d  at 1366; Overlock v. Central Vermont
 Public Service Corp., 126 Vt. 549, 552, 237 A.2d 356, 358 (1967).
      There was sufficient evidence on each element.  The promise in the
 employee handbook relating to "Problem Solving Procedures" within the
 company stated, "If you follow these steps, you cannot be criticized or
 penalized in any way."  The maker of such a statement in an employee
 handbook should expect action or forbearance on the part of the promisee as
 a result of the statement.  Indeed, defendant's personnel manager testified
 that the company intended that employees rely on the statement.  Even
 without that testimony, the entire tone of the "Problem Solving Procedure"
 indicates defendant's intention to create a working environment in which its
 employees could expect to be treated fairly in the pursuit of grievances. (FN3)
 See Toussaint, 408 Mich. at 613, 292 N.W.2d  at 892 (employer's establishment
 of fair policies enhances the employment relationship to the employer's
 benefit, and creates an obligation to follow them).  Defendant does not now
 argue that it did not intend reliance; instead, it contends plaintiff
 exceeded the bounds of what defendant expected its employees to do and
 became a pest.  But, the jury implicitly rejected that view when it found
 for plaintiff on the estoppel theory.  There is no basis for overturning the
 jury's determination.
      Affirmed.


                                    FOR THE COURT:



                                    _______________________________
                                    Associate Justice





FN1.  Defendant also assigned as error the trial court's charge on the
 elements of promissory estoppel, claiming the charge was confusing and
 misleading; however, defendant failed to preserve an objection on this
 ground, and indeed, the transcript reveals defendant's agreement with the
 charge as given.

FN2.  Defendant did preserve its objection to the charge on promissory
 estoppel insofar as it was charged as a separate and independent cause of
 action, but it did not ask the court for any instructions that would have
 precluded the jury from answering subsequent questions after answering the
 at-will question in the affirmative.

FN3.  The Problem Solving Procedure begins with the following statement:
 "We make a constant and conscientious effort to see that all our employees
 are treated with consideration and fairness.  We want them to be satisfied
 in their relations with us and with each other.  So we have established our
 Problem Solving Procedure as a system of communication between employees and
 management."