Madden v. Omega Optical, Inc. (94-654); 165 Vt 306; 683 A.2d 386
[Opinion Filed 12-Jul-1996]
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. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
Lee K. Madden, et al. Supreme Court
On Appeal from
v. Windham Superior Court
Omega Optical, Inc. March Term, 1996
Richard W. Norton, J.
Thomas W. Costello, John C. Mabie and Joel T. Faxon of Thomas W.
Costello, P.C., Brattleboro, for plaintiffs-appellants
J. Scott Cameron and David R. Putnam of Paterson & Walke, P.C.,
Montpelier, for defendant-appellee
PRESENT: Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.
ALLEN, C.J. Plaintiffs appeal an order granting defendant summary
judgment on their claims of breach of contract, wrongful discharge in
violation of public policy, and promissory estoppel. We affirm.
This lawsuit arose when defendant, Omega Optical, Inc., instituted a
new personnel policy requiring all its employees to sign a Confidentiality,
Disclosure, and Noncompetition Agreement (Agreement). The noncompetition
portion of the Agreement prohibits an employee from participating in the
thin-film, optical-coating business anywhere in the United States for a
period of six months following termination of employment with defendant.
Initially, only employees hired after January 1, 1991 were required to sign
the Agreement. In August of 1991, after several employees quit to start a
competing corporation, defendant changed the policy to require all
employees to sign the Agreement as a condition of employment. Plaintiffs,
five Omega employees, refused to sign the Agreement and were terminated as
At the time plaintiffs were fired in August of 1991, they had been
employed at Omega
for between one and six years. When plaintiffs accepted employment with
defendant, an employee handbook did not exist. In early 1990, however,
defendant distributed a handbook to all employees. The handbook contained
a review procedure, which read, "[D]ismissal from Omega/Omicron will be
considered after two unsatisfactory reviews." The handbook also contained
a disclaimer, which read, "[N]othing in this handbook or any other policy
or communication changes the fact that employment is at-will for an
indefinite period . . . ."
Plaintiffs alleged that even though they may have been hired as
at-will employees, defendant unilaterally modified their at-will status
through its employee handbook and by creating a company-wide practice of
not firing employees without just cause. Plaintiffs argued that their
termination for refusing to sign the noncompetition agreement did not
constitute just cause, and therefore they were wrongfully discharged.
Defendant filed a motion for summary judgment and the trial court granted
it, concluding that plaintiffs' evidence was insufficient to establish
genuine issues of material fact.
In reviewing a grant of summary judgment, this Court applies the same
standard as the trial court. Ross v. Times Mirror, Inc., ___ Vt. ___, ___,
665 A.2d 580, 582 (1995). Summary judgment should be granted when, taking
all allegations made by the nonmoving party as true, there are no genuine
issues of material fact and the movant is entitled to judgment as a matter
of law. Id. "Where the moving party does not bear the burden of
persuasion at trial, it may satisfy its burden of production by showing the
court that there is an absence of evidence in the record to support the
nonmoving party's case. . . . The burden then shifts to the nonmoving party
to persuade the court that there is a triable issue of fact." Id. at ___,
665 A.2d at 583.
Plaintiffs argue that an issue of material fact exists regarding
whether they had a contractual right to be terminated for just cause. As
employees hired for an indefinite period, plaintiffs are presumed to have
been at-will employees. Taylor v. National Life Ins. Co., 161
Vt. 457, 462, 652 A.2d 466, 470-71 (1993). Plaintiffs can overcome this
presumption by presenting evidence that defendant unilaterally modified
their at-will status. Id.; see Ross, ___ Vt. at ___, 665 A.2d at 584 ("An
employer may limit its discretion to terminate an employee at will by
instituting company-wide personnel policies."). Therefore, we must
determine whether plaintiffs have met their summary judgment burden to show
that a triable issue of fact exists regarding the issue of unilateral
modification of their at-will status. Ross, ___ Vt. at ___, 665 A.2d at
582-83; see also Poplaski v. Lamphere, 152 Vt. 251, 254-55, 565 A.2d 1326,
1329 (1989) (summary judgment appropriate where, after adequate time for
discovery, party with burden of proof at trial fails to make showing
sufficient to establish existence of elements essential to case).
Plaintiffs first argue that the employee handbook is evidence that
defendant unilaterally modified their at-will status such that they could
be terminated only for just cause. In defendant's seventy-page employee
manual, the only reference to dismissal is found in the "Review Procedure"
section, which reads:
The purpose of the review is to check individual job performance and
work habits, define and adjust job descriptions, provide information from
fellow employees, set short and long-term goals, and clarify expectations
for the future. . . .
. . . .
. . . Dismissal from Omega/Omicron will be considered after two
Plaintiffs argue that the above statement creates a factual dispute
regarding whether their at-will status was modified such that they could be
terminated only for just cause. We disagree. Even if we assume that the
above statement modified plaintiffs' at-will status, under no
interpretation does the statement limit the causes for termination. At
best, the statement in the handbook creates a disciplinary procedure for
one cause -- poor job performance -- rather than limiting the causes for
termination. As the trial court noted, "there is no specific statement [in
the handbook] that limits grounds for dismissal to unsatisfactory
performance . . . [and] no statement
that non-compliance with a workplace requirement would be an impermissible
ground for termination." Therefore, even if the handbook modified
plaintiffs' at-will status with respect to unsatisfactory performance by
creating a disciplinary procedure, an issue we do not decide, plaintiffs
could still be fired for reasons other than poor performance.1 See Foote
v. Simmonds Precision Products Co., 158 Vt. 566, 571, 613 A.2d 1277, 1280
(1992) ("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.").
Second, plaintiffs argue that their affidavit statements regarding
alleged oral and written representations made to them by defendant are
sufficient to defeat summary judgment on the issue of unilateral
modification of their at-will status. In affidavits submitted in response
to defendant's summary judgment motion, plaintiffs each made identical
statements that defendant "regularly made representations to [them],
through the review process, the evaluations, the employee handbook,
conversations, memoranda, etc., that [their] employment would be terminated
only from [sic] unsatisfactory performance." Even after conducting
discovery, however, plaintiffs failed to provide specific information as to
who made the alleged representations and when or where they were made, or
produce any of the evaluations or memoranda in which defendant allegedly
made representations to plaintiffs.
Plaintiffs' affidavit statements regarding written representations are
to be disregarded in determining whether they made a sufficient showing to
defeat summary judgment because the statements would be inadmissible under
the best evidence rule. V.R.C.P 56(e) (affidavits shall set forth facts as
would be admissible in evidence); Northern Aircraft, Inc. v. Reed, 154 Vt.
36, 45, 572 A.2d 1382, 1388 (1990). Plaintiffs' statements about alleged
representations made by defendant in evaluations and memoranda are
inadmissible under the best evidence rule, V.R.E. 1003, unless the
documents fall within an exception under V.R.E. 1004. Plaintiffs have
no evidence to explain the absence of the documents that they allege
contain these representations by the defendant.
Plaintiffs' affidavit statements regarding oral representations made
in the review process and in conversations are insufficient as a matter of
law to show unilateral modification of their at-will employment status. As
we stated in Ross, "Only those policies which are definitive in form,
communicated to the employees, and demonstrate an objective manifestation
of the employer's intent to bind itself will be enforced." Ross, ___ Vt.
at ___, 665 A.2d at 584. Evidence of defendant's intent to bind itself
would include, at the very least, the identity of the persons who made the
oral representations to plaintiffs. Only with such evidence could the
agency relationship between the persons making the representations and
defendant be determined.
Finally, plaintiffs argue that statements made by defendant's
president during his deposition create a genuine issue of material fact as
to the existence of a company-wide policy limiting termination to just
cause.2 Because the president's statements are responses to either
hypothetical questions or questions testing his knowledge of legal
definitions, they do not meet the requirements set out in Ross. Id. The
president's deposition statements are not "definitive" in form. In
addition, even if the president believed in the existence of a company-wide
of terminating employees only for cause, plaintiffs have not presented any
evidence tending to show that the president ever communicated that belief
to the employees. Therefore, because plaintiffs failed to show the
existence of a triable question of fact on the issue of unilateral
modification of their at-will status, the court did not err in granting
summary judgment on plaintiffs' breach of contract claim.
Plaintiffs' remaining claims of illegal contract modification and
violation of the covenant of good faith and fair dealing also fail because
plaintiffs have not established through the handbook or other evidence that
their at-will status was modified such that they could be terminated only
for just cause.
Plaintiffs argue that the Confidentiality, Disclosure, and
Noncompetition Agreement was unenforceable and lacked consideration and, as
a result, was an illegal modification of a contract. According to
plaintiffs, because they were fired for refusing to sign an illegal
contract modification, they were not fired for just cause. This
contention, however, relies on the premise that plaintiffs' at-will status
had been modified to require just cause for termination. As discussed
above, plaintiffs failed to establish that their at-will employment status
was modified to require just cause, and as at-will employees they could be
fired without cause. Sherman v. Rutland Hosp., Inc., 146 Vt. 204, 207, 500 A.2d 230, 232 (1985) ("[A]n `at-will' agreement [is] terminable at any
time, for any reason or for none at all."). Therefore, the trial court
properly granted summary judgment on plaintiffs' illegal contract
Plaintiffs also claimed that defendant violated the covenant of good
faith and fair dealing when it fired plaintiffs for refusing to sign an
unenforceable agreement. Plaintiffs' good faith and fair dealing claim,
however, is clearly foreclosed by Ross. In Ross, we stated that "[t]o
imply a covenant as to tenure in an unmodified at-will contract
irreconcilably conflicts with the employment at will doctrine." Ross, ___
Vt. at ___, 665 A.2d at 586. Here, because plaintiffs have failed to
produce any evidence tending to show that their at-will status was modified
with respect to cause, their good faith and fair dealing claim also fails.
Plaintiffs next argue that their termination for refusing to sign the
Agreement constituted a wrongful discharge in violation of public policy.
We have held that an at-will employee can maintain a separate, independent
claim for wrongful discharge in violation of public policy. Payne v.
Rosendaal, 147 Vt. 488, 491, 520 A.2d 586, 588 (1986). Plaintiffs argue
that the issue of whether their termination violates public policy depends
on enforceability of the Agreement. We hold that, regardless of whether
the Agreement was enforceable, plaintiffs' termination for refusing to sign
it did not violate public policy.
In Payne, the plaintiffs were at-will employees who were terminated
solely because of their age. Although there was no state statute
prohibiting age discrimination, we held that "the discharge of an employee
solely on the basis of age is a practice so contrary to our society's
concern for providing equity and justice that there is a clear and
compelling public policy against it." Id. at 494, 520 A.2d at 584. The
age discrimination in Payne and defendant's conduct here are not
comparable. The termination of an employee who refused to sign an
allegedly unenforceable noncompetition agreement is not so contrary to our
society's concern for providing equity and justice that it violates clear
and compelling public policy and is not a "`course of conduct [that] is
cruel or shocking to the average man's conception of justice.'" Id. at
493, 520 A.2d at 580 (quoting Pittsburgh, Chi., Cin. & St. Louis. Ry. v.
Kinney, 115 N.E. 505, 507 (Ohio 1916)).3 If the Agreement is
unenforceable, plaintiffs took no risk by signing it because they could
later challenge the Agreement when defendant sought to enforce it. And if
plaintiffs refused to sign the Agreement because of its potential impact on
their careers if enforceable, then defendant terminated them for protecting
a "private or proprietary" interest that falls outside the public policy
exception to the at-will doctrine. Wagenseller v. Scottsdale
Memorial Hosp., 710 P.2d 1025, 1034 (Ariz. 1985); see also Pierce v. Ortho
Pharmaceutical Corp., 417 A.2d 505, 513-14 (N.J. 1980) (termination of
doctor for refusal to perform research on "controversial" drug which
contravened her personal morals not contrary to clear mandate of public
policy). Defendant is entitled to judgment as a matter of law on
plaintiffs' claim of wrongful discharge in violation of public policy.
Finally, plaintiffs argue that the court erred by granting summary
judgment on their promissory estoppel claim. We have held that the
doctrine of promissory estoppel may modify an employment contract that is
otherwise terminable at will. Foote, 158 Vt. at 567, 613 A.2d at 1278. As
we stated in Foote, promissory estoppel is "`[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.'" Id. at 473, 613 A.2d at 1281 (quoting Restatement (Second)
of Contracts § 90(1) (1981)). Here, plaintiffs' promissory estoppel claim
fails because they have not made "a showing sufficient to establish the
existence of an element" of their claim. Poplaski, 152 Vt. at 254-55, 565 A.2d at 1329.
In Foote, the employee handbook explicitly stated that employees who
followed the grievance procedure would not be "criticized or penalized in
any way." Foote, 158 Vt. at 568, 613 A.2d 1278. The plaintiff followed
the grievance procedure in the handbook but was fired nonetheless. As we
noted in Foote, "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." Id. at 573, 613 A.2d at 1281. Here, the handbook stated
that termination would be considered after two unsatisfactory performance
reviews. Plaintiffs contend that they detrimentally relied upon the
statement when they refused to sign the agreement. Plaintiffs erroneously
interpreted the statement to mean that they could be terminated only for
just cause. Unlike Foote, defendant here would not have reasonably
expected that plaintiffs would misinterpret the handbook and that the
handbook would thereby induce action or forbearance by plaintiffs. The
trial court did not
err by granting defendant's motion for summary judgment.
FOR THE COURT:
FN1. Defendant argues that the handbook disclaimer precludes
modification of employee at-will status by the handbook. We need not, and
do not, reach this issue.
FN2. Plaintiffs point to one exchange in particular that they argue
constitutes an admission of a company-wide policy:
Q: If, in fact, the person, an employee of the Company executed the
Agreement as demanded by you on August 12 of '91 that person could not have
been summarily fired the following day; isn't that correct?
A: The conditions that were in existence on that day would not have
Q: Because he could not have been fired without just cause?
FN3. Plaintiffs argue that a "jury could find that [defendant's]
activities in this case fit the definition of shocking to the average man's
conception of justice." Whether an activity violates public policy is not
an issue of fact for a jury to determine.