Case Title: Brodie v. General Chemical Corp.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1997-03-28T00:00:00Z

Document:
Brodie v. General Chemical Corp.1997 WY 49934 P.2d 1263Case Number: 96-151Decided: 03/28/1997Supreme Court of Wyoming

JAMES S. BRODIE, LARRY A. BUTCHER and WILLIAM A. 
THOMPSON,  

Appellants(Plaintiffs), 

 

v. 

 

GENERAL CHEMICAL CORPORATION, a Delaware 
corporation,  

Appellee(Defendant).

 

Representing 
Appellants: 

Walter Urbigkit and George 
A. Zunker of Frontier Law Center, Cheyenne.

 Representing 
Appellee: 

Vincent A. Cino of Jackson, 
Lewis, Schnitzler & Krupman, Morristown, NJ; Alan B. Minier, 
Cheyenne.

 

Before TAYLOR, C.J., and THOMAS, MACY, GOLDEN and 
LEHMAN, JJ.

 

GOLDEN, 
Justice.

 

[¶1]      Appellants James 
Brodie, Larry Butcher and William Thompson (Employees) brought suit in the 
United States District Court, District of Wyoming, against Appellee General 
Chemical Corporation (Employer) alleging that the termination of their 
employment constituted a breach of an implied contract formed by an employee 
handbook and a standard operating procedures manual. Before Employees were 
terminated, Employer had unilaterally revoked those documents and, at trial, 
Employees challenged the effectiveness of Employer's unilateral revocation. A 
panel of the United States Court of Appeals for the Tenth Circuit reversed a 
jury verdict in favor of Employer; however, that mandate was recalled by the 
court after another Tenth Circuit Court of Appeals panel issued an opinion in 
another case contradicting the opinion in this case. The United States Court of 
Appeals for the Tenth Circuit then submitted to this Court the following 
certified questions of Wyoming law:

1. Does the principle approved in Wilder v. Cody Country Chamber of 
Commerce, 868 P.2d 211, 219 (Wyo. 1994), that "a promise by an employer or 
an employee under a subsisting contract to do more or take less than that 
contract requires is invalid unless the other party gives or promises to give 
something capable of serving as consideration" apply in employee handbook 
contract cases?

2. If Wilder applies in employee handbook 
contract cases, what degree of consideration is necessary to satisfy the 
requirement, i.e., is nominal consideration sufficient?

 

FACTS

 

[¶2]      In 1986, when 
Employer took over the operations of Allied Chemical, the Employee Handbook and 
Standard Operating Procedures Manual (collectively the "handbooks"), which had 
been provided Employees earlier, were retained for plant operations. In May 
1991, Employer revoked both handbooks to remove any contended employment rights 
beyond "at-will" contract status. In 1993, Employer eliminated Employees' 
positions as part of a reduction in force and they brought suit challenging the 
1991 unilateral revocation and asserting breach of employment contract. The jury 
returned a verdict in favor of Employer with respect to the employment claims 
and Employees appealed.

 

[¶3]      Among other 
issues, Employees contended in the federal appeals court that the trial court 
had erroneously instructed the jury that an employer could validly modify or 
revoke an existing contract of employment without additional consideration. In 
its opinion, Brodie v. General Chemical 
Corp., 74 F.3d 1248 (10th Cir. 1996), the Tenth Circuit held that Wilder v. Cody Country Chamber of 
Commerce, 868 P.2d 211, 219 (Wyo. 1994), required Employer to have provided 
additional consideration in order to validly revoke the employee handbook the 
jury had found to be a contract of employment. On this issue, the Tenth Circuit 
reversed the jury's verdict and judgment on the breach of contract claim and 
remanded for a new trial on the issue of whether there was or was not cause for 
Employees' termination under their employment contract. A few days later, the 
Tenth Circuit issued an opinion, McIlravy 
v. Kerr-McGee Corp., 74 F.3d 1017 (10th Cir. 1996), which directly 
contradicted the appellate court's decision in Brodie. McIlravy held that our Wilder decision did not apply to 
handbook cases and additional consideration was not required to modify or revoke 
a handbook. Employer petitioned the Tenth Circuit for recall of its mandate, 
that request was granted, and the court certified two questions of law for 
resolution by this Court.

 

DISCUSSION

 

Wyoming Implied Employment Contract 
Law

 

[¶4]      In Wilder v. Cody Country Chamber of 
Commerce, 868 P.2d 211 (Wyo. 1994), we recognized that all employment occurs 
by either express contract or by some type of implied contract of employment. Wilder, 868 P.2d  at 216. "There cannot 
be any serious dispute that there is a bargain of some kind; otherwise, the 
employee would not be working." 1 HENRY H. PERRITT, JR., EMPLOYEE DISMISSAL LAW 
AND PRACTICE § 4.32 at 326 (3d ed. 1992). An implied contract of employment is a 
unilateral contract, meaning that the offeror's promise is accepted by 
performance, and does not involve mutuality of obligation between the parties. 
Wilder, 868 P.2d  at 217, 1 PERRITT, 
supra, § 4.37. Wyoming presumes that an implied contract of employment for an 
indefinite period is a contract for at-will employment and the employer may 
discharge for any or no reason. Loghry v. 
Unicover Corp., 927 P.2d 706, 710 (Wyo. 1996). This presumption can be 
modified by an express or implied agreement of the parties. Wilder, 868 P.2d  at 
218; Leithead v. American Colloid 
Co., 721 P.2d 1059, 1062-63 (Wyo. 1986). When an employer's specific 
representations orally made or contained in provisions in an employee handbook 
amount to an offer of job security or discharge procedures, we will enforce such 
a promise as an implied contract modification of at-will status.1 Leithead, 721 P.2d  at 
1062-63.

 

[¶5]      To determine the 
contents of any particular implied contract of employment, we examine under an 
objective test whether the employer has intended, either by words or conduct, to 
include job security as part of the implied employment contract. McDonald v. Mobil Coal Producing, Inc., 
820 P.2d 986, 990 (Wyo. 1991) (McDonald 
II). If an offer of job security can be inferred from an employer's 
representations, unilateral contract principles require that the offer be 
accepted and consideration exchanged. Mobil Coal Producing, Inc. v. Parks, 704 P.2d 702, 706-07 (Wyo. 1985). We have said that handbook provisions which 
promise job security create an expectation on the part of an employee, having 
the effect of inducing an employee to continue his employment. Parks, 704 P.2d  at 707. Under unilateral 
contract principles, we have determined that an employee's continued employment 
is acceptance of and consideration for the new rights offered by the contract 
modification. The consideration which flows to the employer is the orderly, 
cooperative and loyal workforce which the employer hoped its promise would 
evoke. Id. Other courts have 
similarly acknowledged that because the most likely motive for an employer to 
make a promise of employment security to the workforce in general is that the 
promise will encourage employees to continue their employment, it is logical to 
view continued employment as acceptance of, and consideration for, such promise. 
1 PERRITT, supra, § 
4.37.

 

[¶6]      In Wyoming, an 
employer may, under certain conditions, amend an employee handbook promising job 
security if it had previously included language in its handbook reserving the 
right to unilaterally modify. Lincoln v. 
Wackenhut, 867 P.2d 701, 705 (Wyo. 1994). The certified question presented 
in this case asks whether an employer may unilaterally modify when its employee 
handbook does not contain such a reservation. Employer contends that we have 
already implicitly answered this question in the affirmative but, should we 
disagree that is the case, Employer requests that we adopt the rule that an 
employer may unilaterally modify a handbook without additional consideration to 
the employee. As explained below, we have not implicitly recognized the rule 
advocated by Employer and today we decline to adopt such a 
rule.

 

McDonald II Did Not Implicitly Recognize Unilateral 
Modification

 

[¶7]      The notion that 
this Court had implicitly recognized that an employer could unilaterally modify 
handbook provisions and restore at-will employment arose in Durtsche v. American Colloid Co., 958 F.2d 1007, 1011 (10th Cir. 1992). There, a Tenth Circuit Court of Appeals panel 
held that Wyoming courts would not apply traditional contract principles to 
prohibit an employer from unilaterally amending an employee handbook without the 
employee's express acceptance and additional consideration. It arrived at this 
conclusion after considering our decisions regarding the effect of one company's 
handbook in Mobil Coal Producing, Inc. v. 
Parks, 704 P.2d 702 (Wyo. 1985); McDonald v. Mobil Coal Producing, Inc., 
789 P.2d 866 (Wyo. 1990) (McDonald 
I); and McDonald v. Mobil Coal 
Producing, Inc., 820 P.2d 986 (Wyo. 1991) (McDonald II). The panel reasoned that 
were this not the law, the Wyoming Supreme Court in the McDonald cases would not have considered 
whether the disclaimer in issue was conspicuous. In other words, the Durtsche panel assumed mistakenly that 
the disclaimer was a modification of a handbook to which McDonald had been 
subject before the attempted 
modification. The question becomes then, whether McDonald had in fact been a 
Mobil Coal Producing employee before the employer amended the handbook. As we 
explain below, he became a Mobil Coal Producing employee after the Parks handbook had been amended. The 
issue in McDonald's cases was whether that amendatory language was 
conspicuous.

 

[¶8]Mobil Coal Producing 
distributed a handbook to Parks in September 1982, six months after his hiring. 
The handbook created job security; it abolished Parks' at-will status. Parks, 704 P.2d  
at 706-07. In McDonald I, we noted 
that McDonald's employment period was August 1987 until June 1988. McDonald I, 789 P.2d  at 867. McDonald 
received the handbook after he started working. Id. at 868. The handbook contained a 
disclaimer stating that his employment was at-will. We noted that after our Parks decision Mobil Coal Producing had 
revised its handbook to provide that employment with it was at-will. Id. at 869. In a plurality decision, two 
justices decided that the promissory estoppel doctrine could apply as an 
exception to the at-will employment made evident by the disclaimer.2 We noted that jury issues existed 
as to whether Mobil Coal Producing's handbook contained commitments (promises) 
of continued employment and whether McDonald reasonably relied to his detriment 
on those commitments (promises). Id. 
at 870.

 

[¶9]      In McDonald II, we noted that McDonald 
signed on July 20, 1987, an employment application form which included a 
disclaimer of any employment status other than at-will. We again noted the 
disclaimer language contained in the employer handbook, viz., "this handbook . . . is not a 
comprehensive policies and procedures manual, nor an employment contract." McDonald II, 820 P.2d  at 989. We held 
that the attempted disclaimers in both the employment application form and the 
handbook "were insufficiently conspicuous to be binding on McDonald." Id. In his dissenting opinion, Justice 
Thomas pointed out that the employee handbook in question "was not adopted and 
issued after the time that McDonald was employed." Id. at 992. He could not 
understand how that handbook could amend the documented at-will employment 
status. He noted that McDonald signed the application form after Mobil Coal 
Producing had published and issued the handbook.

 

[¶10]   Taken together, McDonald I and II make clear that Mobil Coal 
Producing, the employer, revised its employee handbook from its "job security" 
nature in September 1982, when Parks was an employee, to its "at-will 
employment" nature before McDonald's hiring in August 1987. Thus, at the time of 
McDonald's hiring in August 1987, Mobil Coal Producing's employee handbook 
contained an "insufficiently conspicuous" disclaimer that employment was 
at-will.

 

[¶11]   Clearly, McDonald I and McDonald II were promissory estoppel and 
disclaimer cases, not unilateral amendment cases as the Durtsche court thought. In McDonald I and II, the handbook did not purport to 
amend a "job security" status otherwise enjoyed by McDonald. The application 
form he signed and the handbook he received at the time he was hired purported 
that he was an at-will employee but they did so with inconspicuous language. The 
handbook discussed in Parks had been 
amended before McDonald was hired. In McDonald II, the sole question was 
whether the amendment which was in place before McDonald was hired was 
conspicuous. There was no need to first question whether Mobil Coal Producing 
had unilaterally amended a handbook during McDonald's period of employment. 
Thus, in McDonald I and II, we did 
not "implicitly" recognize that an employer can unilaterally amend handbook 
provisions to restore at-will employment.

 

Contract Theory of 
Modification

 

[¶12]   We next address whether our 
decision in Wilder has resolved this 
issue. Employer contends that Wilder 
does not apply because it did not involve a handbook but rather an oral 
contract for employment allegedly expressly providing for job security. Employer 
contends that finding an implied-in-fact contract by recognition of handbook 
provisions involves an analysis which does not apply the normal contract law 
principles afforded to express contracts and further asserts that the 
distinction of express versus implied permits our applying different rules for 
modifying a handbook contract. The Michigan Supreme Court utilized an 
interpretation similar to Employer's argument in In Re Certified Question, Bankey v. Storer 
Broadcasting, 432 Mich. 438, 443 N.W.2d 112, 116 (1989). Michigan's Toussaint v. Blue Cross & 
Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880, 892 (1980), decision 
was one of the earliest decisions recognizing an employee handbook could 
constitute an implied contract for job security. Parks held Toussaint was authority for the 
proposition that consideration flowed to the employer and further analyzed that 
benefit to the promisor, an orderly, loyal and cooperative workforce, is 
sufficient consideration for a contract. Parks, 704 P.2d  at 707. In Bankey, the Michigan Supreme Court 
interpreted Toussaint to permit 
unilateral modifications because handbook promises were not enforceable under a 
contract theory, but rather under broad public policy considerations. Bankey, 443 N.W.2d  at 
119-120.

 

[¶13]   The Bankey rationale is inapposite for our 
purposes because, as explained above, our handbook decisions hold that an 
implied employment contract does arise from established contract law principles 
and our contract law concerning modification is well settled that an agreement 
altering a written contract, to be binding, must be based on consideration. Harvard v. Anderson, 524 P.2d 880, 883 
(Wyo. 1974). In Wilder, we explained that established contract law principles 
apply to the employment contract whether express or implied. Wilder, 868 P.2d  at 219. Employer 
contends that these principles should not be extended to an implied contract 
based upon an employment handbook because it will result in an employer's 
potentially facing the great difficulty and confusion of having to negotiate 
employment contracts on an individual basis if it is not permitted to 
unilaterally modify. We agree with the rationale of the Connecticut Supreme 
Court in Torosyan v. Boehringer Ingelheim 
Pharm., 234 Conn. 1, 662 A.2d 89, 99 (1995), which resolved the issue of 
whether an employee by his continued employment had consented to a unilateral 
modification of the employee handbook to amend the job security provision. Torosyan concluded that in the case of 
an implied employment handbook contract, permitting a unilateral modification of 
a right to job security would substantially interfere with an employee's 
valuable contractual right. Id. It 
further noted that an employee whose preexisting contract provided job security 
would have no way to insist on those contractual rights. Id. "The employee's only choices would 
be to resign or to continue working, either of which would result in the loss of 
the very right at issue - that is, the loss of the right to retain employment 
until terminated for cause." Id. Also 
relying on contract principles, Robinson 
v. Ada S. McKinley Community Services, 19 F.3d 359 (7th Cir. 1994), rejected 
that an employee's continued employment sufficed as acceptance and consideration 
because, in essence, the employee is merely performing duties under the 
preexisting contract. Id. at 364. Robinson also recognized that it asked 
too much to require an employee to preserve his or her rights under the original 
employment contract by quitting working. Id.

 

[¶14]   Were we to decide this issue on 
notions of fairness, the equities would favor the employees as we do not 
consider the employer's concern about negotiating employment contracts on an 
individual basis significant enough to outweigh our understanding that employees 
would risk losing a valuable contractual right without their consent. 
Established contract law principles require that we answer the first certified 
question in the affirmative. The principle of additional consideration discussed 
in Wilder does apply to a 
modification of an employment handbook which restores at-will 
status.

 

Degree of Consideration

 

[¶15]   We perceive the second certified 
question as asking whether continued employment will suffice as consideration 
for a modification which restores at-will status. As just explained, the answer 
is no, separate consideration must be provided. A valid modification requires an 
offer, acceptance, and consideration. Robinson, 19 F.3d  at 364; see Harvard, 524 P.2d  at 883. 
Consideration to modify an employment contract to restore at-will status would 
consist of either some benefit to the employee, detriment to the employer, or a 
bargained for exchange. Robinson, 19 F.3d  at 364. The question of what type of consideration is sufficient cannot be 
answered with specificity because we have long held that absent fraud or 
unconscionability, we will not look into the adequacy of consideration. Laibly v. Halseth, 345 P.2d 796, 799 
(Wyo. 1959). As long as the consideration given meets the definition of legal 
consideration, it will be considered sufficient consideration. See Hopper v. All Pet Animal Clinic, 
Inc., 861 P.2d 531, 541 (Wyo. 1993) (listing examples of separate 
consideration sufficient to support a covenant not to 
compete).

 

CONCLUSION

 

[¶16]   The answer to the first certified 
question is yes, the principle of additional consideration discussed in Wilder 
applies when an employer modifies an implied job security provision to restore 
at-will status. The answer to the second certified question is no, continued 
employment will not suffice as consideration for the modification. New, separate 
consideration must be provided which constitutes either a benefit to the 
employee, a detriment to the employer or a bargained for 
exchange.

 

Footnotes

1 Our analysis today assumes that the 
representations are made after employment has begun and is, therefore, a 
modification. A different situation is presented when the representation is made 
at the time that employment begins. In that case, the representation, if 
enforceable, is a term of the implied employment contract along with the other 
usual terms specifying pay, benefits, working hours, and job responsibilities 
under the rule that a single consideration can support several promises. 
Restatement (Second) of Contracts § 80(1) (1981).

2 A third justice disagreed that 
promissory estoppel principles applied under the facts of the case and concurred 
in the result only. McDonald I, 789 
P.2d. at 870 (Golden, J., specially concurring). Two other justices would have 
given effect to the handbook disclaimers and dissented. Id. at 871, 872 (Cardine 
and Thomas, JJ., dissenting).