Case Title: Sanchez v. Life Care Centers of America, Inc.

Citation: 

Docket Number: 92-25

State: wyoming

Court: Wyoming Supreme Court

Date: 1993-07-15T00:00:00Z

Document:
Sanchez v. Life Care Centers of America, Inc.1993 WY 101855 P.2d 1256Case Number: 92-25Decided: 07/15/1993Supreme Court of Wyoming
Marie SANCHEZ, 

Appellant 
(Plaintiff),

v.

LIFE CARE CENTERS OF 
AMERICA, INC., 

Appellee 
(Defendant).

 

Bernard Q. 
Phelan, Cheyenne, for appellant.

Kate M. Fox, 
Cheyenne, for appellee.

Before MACY, 
C.J., CARDINE, GOLDEN and TAYLOR, JJ., and BROWN, J. 
(Retired).

Cardine, J., dissented and filed 
opinion in which Taylor, J., joined.

BROWN, Justice 
(Retired).

[¶1]      This case is a 
wrongful employee termination action brought by appellant Marie Sanchez, against 
appellee Life Care Centers of America, Inc. (Life Care). The district court 
granted summary judgment against appellant.

[¶2]      The issues on 
appeal are:

I.

Whether the disclaimer 
contained in the Handbook of Employment Guidelines is sufficiently conspicuous 
to maintain the at-will nature of employment.

II.

Whether this Court 
recognizes the doctrine of promissory estoppel as a cause of action in wrongful 
termination cases, and, if so, whether the conspicuous disclaimers contained in 
the Life Care Employment Guidelines prevent its application in this 
case.

We reverse and 
remand.

[¶3]      During a portion 
of 1990, appellant was employed by Life Care. At the time of her employment, she 
was issued a Handbook of Employment Guidelines. This handbook contained a 
"handbook disclaimer."

[¶4]      Detailed facts 
surrounding appellant's termination are disputed, but were not considered by the 
trial court and are not at issue in this appeal, nor do they appear in the 
record. However, we do know that appellant called in on July 20, 1990, to inform 
her employer that she could not come in the following day due to fatigue; that 
she was told to "forget coming in"; and that she was removed from the work 
schedule, which effectively terminated her employment.

[¶5]      The district 
court's order granting summary judgment was filed December 23, 1991. The court 
ruled in favor of Life Care, holding that (1) the handbook disclaimer was 
conspicuous as a matter of law and did not modify the at-will status of 
appellant's employment; and (2) that no majority of the Wyoming Supreme Court 
had recognized a cause of action based on promissory estoppel in wrongful 
termination cases in Wyoming and, therefore, appellant did not state a claim 
upon which relief could be granted.

[¶6]      Our standard of 
review in cases involving the granting of summary judgment has been stated many 
times. W.R.C.P. 56(c) provides in pertinent part:

The judgment sought shall 
be rendered forthwith if the pleadings, depositions, answers to interrogatories, 
and admissions on file, together with the affidavits, if any, show that there is 
no genuine issue as to any material fact and that the moving party is entitled 
to a judgment as a matter of law.

[¶7]      In Boehm v. Cody 
Country Chamber of Commerce, 748 P.2d 704, 710 (Wyo. 1987) (citations omitted), 
we said:

     A motion for summary 
judgment places an initial burden on the movant to make a prima facie showing 
that no genuine issue of material fact exists and that summary judgment should 
be granted as a matter of law. Rule 56(c), Wyoming Rules of Civil Procedure. 
Once a prima facie showing is made, the burden shifts to the party opposing the 
motion to present specific facts showing that a genuine issue of material fact 
does exist. We analyze challenges to a grant of summary judgment by reviewing 
the record in a light most favorable to the party opposing the motion giving him 
all favorable inferences that can be drawn from the facts. Conclusory statements 
or mere opinions are insufficient, however, to satisfy an opposing party's 
burden.

[¶8]      When the issue on 
review is the construction and interpretation of a contract, the standard of 
review is further stated as follows:

Normally, the 
construction and interpretation of a contract is for the court as a matter of 
law. If the meaning of a contract is ambiguous or not apparent, it may be 
necessary to determine the intention of the parties from evidence other than the 
contract itself, and interpretation becomes a mixed question of law and 
fact.

McDonald v. 
Mobil Coal Producing, Inc., 820 P.2d 986, 988 (Wyo. 1991) (quoting Mobil Coal 
Producing, Inc. v. Parks, 704 P.2d 702, 706 (Wyo. 1985)).

[¶9]      In Wyoming, 
employment is presumed to be at-will; however, "[a] handbook may change the 
employer's unfettered right to discharge an employee." Leithead v. American 
Colloid Company, 721 P.2d 1059, 1062 (Wyo. 1986); Alexander v. Phillips Oil 
Company, 707 P.2d 1385 (Wyo. 1985); Mobil Coal Producing, Inc., 704 P.2d 702.

[¶10]   The disposition of this case 
depends on construction of the purported disclaimer along with other provisions 
in the Handbook in the nature of disclaimers. "The Handbook of Employment 
Guidelines" given to appellant when she was employed contained a disclaimer on 
as follows:

HANDBOOK 
DISCLAIMER

The guidelines outlined 
in this handbook are for the mutual benefit of this nursing center and its 
associates. These guidelines include methods of procedure which, when 
implemented, can effectively enhance the management of a successful nursing 
center. The executive director and supervisors must therefore reserve all the 
customary rights of management, including the right to supervise and control all 
operations; direct all work; interpret, change or cancel all personnel policies 
with or without notice; hire, schedule, terminate, layoff, transfer, promote, 
reward, discipline, or otherwise manage associates and select the manner, method 
and means of doing so. This handbook is not a contract and contains no promises, 
guarantees, representations, agreements, or warranties upon which any 
prospective, current or prior associates of this nursing center can reasonably 
maintain or create any expectations of such.

 

[¶11]   Life Care points to provisions in 
the handbook disclaimer to support its contention:

The executive director 
and supervisors * * * reserve * * * the right * * * to * * * interpret, change 
or cancel all personnel policies with or without notice; hire, schedule, 
terminate, layoff, transfer, promote, reward, discipline, or 
otherwise manage associates and select the manner, method and means of doing 
so. This handbook is not a contract and contains no promises, guarantees, 
representations, agreements, or warranties * * *. [Emphasis 
added.]

The "Handbook of 
Employment Guidelines" contains twenty-five numbered pages and five unnumbered 
pages, including the "Table of Contents." The contents were in fine print - 
topic headings were in larger print and bold-faced. Under the caption 
"Discipline and Termination," thirty-nine examples of unacceptable employee 
conduct are listed. The paragraph at the top of cautions:

The list that follows, 
though not all-inclusive, gives examples of violations of the nursing center 
principles of conduct which may subject the offender to disciplinary action. 
Such action includes, but is not limited to, warning notices, suspension and/or 
discharge.

[¶12]   Under the caption "Disciplinary 
Procedures" of the handbook, a four-step progressive discipline approach is 
outlined which the employer will "generally" apply. The first paragraph states 
that "[t]he nursing center may, depending on the severity of the offense 
terminate an associate after the first offense." After listing the four 
disciplinary steps, the handbook further states:

This will be our usual 
and preferred process for administering discipline. However, conduct of any type 
which causes the center to lose confidence in your ability to perform adequately 
your assigned job may result in immediate discharge.

[¶13]   The handbook contains a tear-out 
"Acknowledgment Card," in which the employee states that she will familiarize 
herself with its contents. Appellant signed her acknowledgment card December 4, 
1989.

[¶14]   In McDonald, 820 P.2d  at 986, this 
court adopted the rules set forth in Jimenez v. Colorado Interstate Gas Company, 
690 F. Supp. 977, 980 (D.Wyo. 1988) (citations omitted) which 
state:

For this disclaimer to be 
effective against plaintiff, it must be conspicuous. Whether a disclaimer is 
conspicuous is a question of law. * * *

Defendant was not 
obligated to write SOPs and to post them in an employee area. Because it has 
done so, the court is now faced with a "strong equitable and social policy 
reasons militating against allowing employers to promulgate for their employees 
potentially misleading personnel manuals while reserving the right to deviate 
from them at their own caprice." These policy reasons help explain why an 
effective disclaimer must be conspicuous. The disclaimer in question is not set 
off in any way that would attract attention. It falls under the heading "GENERAL 
INSTRUCTIONS" and the subheading "CONTENTS." Nothing is capitalized that would 
give notice of a disclaimer. The type size equals that of other provisions on 
the same page. No border sets the disclaimer apart from any other paragraph on 
the page. The disclaimer is not conspicuous. Therefore, this court grants 
summary judgment that the SOPs create implied contract 
rights.

[¶15]   In McDonald, 820 P.2d  at 986, we 
quoted with approval Woolley v. Hoffman-La Roche, Inc., 99 N.J. 284, 491 A.2d 1257 (1985), mod., 101 N.J. 10, 499 A.2d 515 (1985). In Woolley, the court set 
out an example of what need be done if the employer does not want the manual to 
be capable of being construed by the court as a binding contract. The court 
said:

It would be unfair to 
allow an employer to distribute a policy manual that makes the workforce believe 
that certain promises have been made and then to allow the employer to renege on 
those promises. What is sought here is basic honesty: if the employer, for 
whatever reason, does not want the manual to be capable of being construed by 
the court as a binding contract, there are simple ways to attain that goal. All 
that need be done is the inclusion in a very prominent position of an 
appropriate statement that there is no promise of any kind by the employer 
contained in the manual; that regardless of what the manual says or provides, 
the employer promises nothing and remains free to change wages and all other 
working conditions without having to consult anyone and without anyone's 
agreement; and that the employer continues to have the absolute power to fire 
anyone with or without good cause.

Woolley, 491 A.2d  at 1271.

[¶16]   In Jimenez, 690 F. Supp.  at 980, 
the court observed that "[u]nder Wyoming decisions, handbooks that list 
misconduct that could result in discharge imply that cause is required." (citing 
Leithead, 721 P.2d  at 1063; and Parks, 704 P.2d  at 705.

[¶17]   In Parks, 704 P.2d  at 706 
(citations omitted), this court outlined the procedure for resolving ambiguous 
employee handbooks, stating:

Some handbooks or manuals 
may be ambiguous or may not have apparent meaning, making the determination of 
their effect on at will employment a question of fact. * * * If the meaning of a 
contract is ambiguous or not apparent, it may be necessary to determine the 
intention of the parties from evidence other than the contract itself, and 
interpretation becomes a mixed question of law and fact.

[¶18]   In the case before us, the 
disclaimer is in the "Introduction" section of the handbook, subtitled "Handbook 
Disclaimer." The language of the disclaimer speaks in terms of "mutual benefit," 
management "enhancement" and the right to supervise. It does not say that the 
employer retains the right to deviate from the terms of the handbook at its own 
caprice. It does not say that the employer remains free to change wages and all 
other working conditions without consulting the employee or obtaining his 
agreement, nor that the employer retains absolute power to fire anyone with or 
without good cause. Instead, there is an inference in the disclaimer that it is 
a guide for "mutual benefit," that certain procedures contained therein would be 
"implemented" to "enhance the management of a successful nursing center," and 
that the "customary rights" of the employer were set forth in the 
handbook.

[¶19]   The operative language in the 
disclaimer is not bold lettered; it is buried in introductory paragraphs. It is 
not designed to attract attention and is stated in language which does not tell 
the employee what he needs to know. We are reluctant to specify language and the 
placement of a disclaimer in order that it be effective. Perhaps this could be 
accomplished in numerous ways. Additionally, the handbook listed misconduct that 
could result in discharge, thus implying that cause is required. Jimenez, 690 F. Supp.  at 980. Detailing stages of progressive discipline results in a further 
implication that cause is required to discharge. Most likely a lawyer would have 
told appellant that, under her employment arrangement, she could be discharged 
without cause. An employee should not have to hire a lawyer to learn 
that.

[¶20]   In summary, we determine that the 
disclaimer was not physically conspicuous and its contents were ambiguous in 
that there was language that inferred that Life Care intended to modify the 
at-will employment to an employment which could only be terminated for cause. 
Furthermore, listing numerous types of misconduct that could result in 
termination coupled with progressive stages of discipline inferred that cause is 
required to discharge. Our resolution of the first issue in this case makes it 
unnecessary to address the second issue.

[¶21]   The meaning and effect of the 
employment relationship in this case, a mixed question of law and fact, remains 
unresolved. Therefore, we must reverse summary judgment. The case is remanded to 
the trial court for determination of whether the employee handbook modified the 
employment relationship from one terminable at will to one terminable only for 
cause.

CARDINE, J., files a dissenting 
opinion in which TAYLOR, J., joins.

CARDINE, Justice, dissenting, 
with whom TAYLOR, J., joins.

[¶22]   This is yet another case to come 
before us in which an employer has tried to satisfy the court's secret concept 
of an adequate disclaimer in an employee handbook. The employer was, in essence, 
told: "Sorry, you failed again - but keep trying - you may get it right." Why 
don't we just tell litigants what is "right?"

[¶23]   I dissent because the disclaimer in 
this employee handbook was clear, explicit and adequate to inform any reasonable 
employee that the at-will employment relationship was preserved. I dissent also 
because the court fails once again to inform an employer what is acceptable as 
an effective disclaimer in an employee handbook.

[¶24]   The court has been liberal in 
holding that an employee handbook can create a contract which will eliminate the 
at-will status of the employee: (a) Alexander v. Phillips Oil Co., 707 P.2d 1385, 1388 (Wyo. 1985); (b) Leithead v. American Colloid Co., 721 P.2d 1059, 
1063 (Wyo. 1986); (c) Mobil Coal Producing, Inc. v. Parks, 704 P.2d 702, 708 
(Wyo. 1985); (d) McDonald v. Mobil Coal Producing, Inc., 789 P.2d 866, 870 (Wyo. 
1990), reh'g granted 820 P.2d 986, 990 (Wyo. 1991).

[¶25]   In Mobil Coal Producing, Inc. v. 
Parks, 704 P.2d 702, 708 (Wyo. 1985), we affirmed an award of damages to an 
employee because the employer did not substantially comply with its handbook 
when it terminated the employee. In Parks the court found that the provisions of 
the handbook altered the employer's unfettered right to discharge an employee 
any time, without cause. Parks, 704 P.2d  at 707.

[¶26]   In McDonald v. Mobil Coal 
Producing, Inc. (McDonald I), 789 P.2d 866, 870 (Wyo. 1990), the employee manual 
listed causes for discipline and a five-step disciplinary process. The 
employment application signed by the employee stated:

I agree that any offer of 
employment, and acceptance thereof, does not constitute a binding contract of 
any length, and that such employment is terminable at the will of either party, 
subject to applicable state and/or federal laws.

789 P.2d  at 
867-68. The majority found that the effect of the disclaimer in the revised 
handbook was that there was not a contract between the parties but that, 
nevertheless, promissory estoppel applied. On appeal, we reversed summary 
judgment for the employer. McDonald I, 789 P.2d  at 870.

[¶27]   The court granted rehearing in 
McDonald I, and in McDonald v. Mobil Coal Producing, Inc. (McDonald II), 820 P.2d 986, 990 (Wyo. 1991), held that summary judgment should be reversed to 
determine whether Mobil's course of conduct created manifestations of Mobil's 
assent to contract that were sufficient to create reasonable reliance by the 
employee. In addition to the disclaimer above recited, in McDonald I the 
handbook also stated:

[This handbook] is not a 
comprehensive policies and procedures manual, nor an employment 
contract.

[¶28]   I dissented in McDonald I and 
McDonald II on much the same basis that I must dissent from this decision. 
McDonald I, 789 P.2d  at 871 (Cardine, J., dissenting); McDonald II, 820 P.2d  at 
992 (Cardine, J. dissenting, with whom Thomas, J., joins.). In both McDonald I 
and II, Mobil disclaimed creating a contract. McDonald I, 789 P.2d  at 869; 
McDonald II, 820 P.2d  at 988-89. The disclaimer in this case is even more 
detailed, clear as to intent, and specific. It reads as 
follows:

The guidelines outlined 
in this handbook are for the mutual benefit of this nursing center and its 
associates. These guidelines include methods of procedure which, when 
implemented, can effectively enhance the management of a successful nursing 
center. The executive director and supervisors must therefore reserve all the 
customary rights of management, including the right to supervise and control all 
operations; direct all work; interpret, change or cancel all personnel policies 
with or without notice; hire, schedule, terminate, layoff, transfer, promote, 
reward, discipline, or otherwise manage associates and select the manner, method 
and means of doing so. This handbook is not a contract and contains no promises, 
guarantees, representations, agreements, or warranties upon which any 
prospective, current, or prior associates of this nursing center can reasonably 
maintain or create any expectations of such.

It appears on 
page two of the handbook. It is conspicuous. It cannot be misunderstood. 
Nevertheless, the court found that the above disclaimer in this case was 
insufficient. I believe the court, in fairness to litigants, should now say what 
is sufficient. The most the court has said thus far is that the disclaimer must 
be conspicuous under the standards adopted in Jimenez v. Colorado Interstate Gas 
Co., 690 F. Supp. 977, 980 (D.Wyo. 1988), and that even if the disclaimer is 
conspicuous, it still may be negated by a course of conduct which implies that 
cause is required in order to terminate an employee. McDonald II, 820 P.2d  at 
990-91.

[¶29]   Our rulings discourage employers 
from providing their employees with a manual. This deprives employees of useful 
information about company policies. The dilemma businesses face was well 
described in this law review article:

Employers who have large 
numbers of employees or who have complicated company policies find themselves in 
a precarious position. If these employers do not promulgate any sort of policy 
manual, they may be required to formulate employee policy on an ad hoc basis and 
face administrative chaos. Conversely, if they do issue a manual and comply with 
its procedures to such a degree that their employees reasonably expect them to 
continue to do so in the future, they may be subjected to unintended contractual 
liability.

Michael W. 
Wallace, "Employee Manuals as Implied Contracts: The Guidelines That Bind," 27 
Tulsa L.J. 263, 263-64 (1991) (hereinafter: "Employee Manuals as Implied 
Contracts").

[¶30]   My other concern with discouraging 
employers from issuing manuals is that employees will be deprived of useful 
safety information that is sometimes contained in the employee manuals. Without 
a handbook, employees are not apprised of communication processes within the 
company that are important for maintaining a positive work environment. The time 
is now for the court to clearly state what would be sufficient, not just 
continue ruling ad hoc that the particular disclaimer before the court is 
insufficient.

[¶31]   I would adopt a straight-forward 
rule that gives clear guidance to employers. One treatise gives employers this 
advice:

Disclaimers are most 
likely to survive a legal challenge if they are clearly stated and conspicuously 
placed in an appropriate document, and if the employee acknowledges receipt and 
review of the document including the disclaimer. Employers may also want to 
provide in the disclaimer itself that the disclaimer may only be modified in 
writing by management. Employers that include disclaimers in their policies are 
well-advised to carefully review the terms and conditions of employment, 
including disclaimers, with new employees and to review company policies, 
including the limitations on the enforceability of those policies, periodically 
with employees.

Alfred G. Feliu, 
Primer on Individual Employee Rights, 23 (1992).

[¶32]   There are disclaimers in use today 
that effectively continue the at-will status of employees. Sears, Roebuck and 
Company have used this disclaimer:

In consideration of my 
employment, I agree to conform to the rules and regulations of Sears, Roebuck 
and Co., and my employment and compensation can be terminated with or without 
cause, and with or without notice, at any time, at the option of either the 
Company or myself. I understand that no store manager or representative of 
Sears, Roebuck and Co., other than the president or vice-president of the 
Company, has any authority to enter into any agreement for employment for any 
specified period of time, or to make any agreement contrary to the 
foregoing.

Reid v. Sears, 
Roebuck & Co., 790 F.2d 453, 456 (6th Cir. 1986). This disclaimer has been 
repeatedly upheld.

[¶33]   Courts repeatedly uphold 
disclaimers in employee handbooks. See e.g., Preston v. Champion Home Builders 
Inc., 187 A.D.2d 795, 589 N.Y.S.2d 940, 941-42 (1992); French v. Foods, Inc., 
495 N.W.2d 768, 770 (Iowa 1993). Not only have other courts accepted handbook 
disclaimers, but they have accepted disclaimers that are substantially less 
detailed than disclaimers this court has rejected. See Preston, 187 A.D.2d 795, 
589 N.Y.S.2d  at 941 (manual contained statement "the company retains the right 
to terminate your employment at any time, with or without cause or notice."). 
The disclaimer in Preston was accepted by the court even though the manual also 
listed causes for discipline. 589 N YS.2d at 941-42. Other courts strive even 
more to preserve the employment at-will presumption. In Texas, for example, an 
employee manual does not impliedly modify at-will status, and only an express 
modification of at-will status is recognized by Texas courts. Reynolds Mfg. Co. 
v. Mendoza, 644 S.W.2d 536, 539 (Tex. App. 1982); discussed in "Employee Manuals 
as Implied Contracts" at 273. Texas courts follow the view that employer manuals 
are issued by employers in order to provide their employees with information 
about company policy. The manuals are issued to promote administrative 
efficiency and without any intention to limit their own conduct. "Employee 
Manuals as Implied Contracts," at 273-74 n. 61.

[¶34]   The court is moving along a path 
which will lead to the eventual demise of the employment at-will presumption. 
The majority opinion states: "In Wyoming, employment is presumed to be at-will; 
however, `[a] handbook may change the employer's unfettered right to discharge 
an employee.'" Maj. op. at 1257 (citations omitted). The majority does not then 
proceed through its analysis by presuming that Sanchez's employment was at will, 
rather the majority presumes there was a contract unless the disclaimer was 
effective. The majority's willingness to read every handbook as a contract, 
despite a disclaimer, renders the at-will presumption 
hollow.

[¶35]   Unless the court clearly defines 
what is a legally sufficient handbook disclaimer, then a handbook will become a 
contract with every employee. By not making the law clear, the court puts 
employers in a position wherein the safer practice will be to issue no employee 
handbook. The course now being pursued by the court only creates confusion and 
continued litigation.