Madden v. Omega Optical, Inc.

Annotate this Case
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
  to press.

                                 No. 94-654

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
  a result.

       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
    unsatisfactory reviews.

  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
  modification claim.

       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 ยง 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:

                              Chief Justice


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
  allowed termination.

  Q:   Because he could not have been fired without just cause?

  A:   Correct.

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.