Title: Arch of Wyoming, Inc. v. Sisneros

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Arch of Wyoming, Inc. v. Sisneros1999 WY 7971 P.2d 981Case Number: 98-63Decided: 01/25/1999Supreme Court of Wyoming
 
ARCH 
OF WYOMING, INC., a Delaware Corporation, Appellant (Defendant),

 v.

 J. Gilbert 
SISNEROS, Appellee (Plaintiff). 

Appeal from the District 
Court, Carbon County, Kenneth E. Stebner, J.

Bruce A. 
Salzburg of Herschler, Freudenthal, Salzburg, Bonds & Zerga, P.C., Cheyenne, 
for Appellant.

Walter Urbigkit 
of Frotier Law Center, Cheyenne, for 
Appellee.

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

* Retired November 2, 
1998.

MACY, 
Justice.

[¶1]      Appellant Arch of 
Wyoming, Inc. appeals from the judgment which was entered after the jury 
returned a verdict in favor of Appellee J. Gilbert Sisneros on his claim for 
breach of an employment contract.

[¶2]      We 
affirm.

ISSUE

[¶3]      Arch presents a 
single issue on appeal:

When an employer 
promulgates an employment handbook, reserving the right to unilaterally modify 
the terms of the handbook, must the reservation itself be "conspicuous" in order 
to be effective?

FACTS

[¶4]      Arch hired 
Sisneros in June 1989 to operate heavy equipment in its Medicine Bow mine. In 
August 1989, Arch gave Sisneros a copy of its employee handbook (the original 
handbook). The last page of the original handbook stated in 
part:

In writing this 
handbook, management has tried to avoid legal words and phrases as much as 
possible. It was written for our employees as a matter of information only and 
is not to be construed as a contract between Arch of Wyoming - Medicine Bow Mine 
and its employees. New situations develop constantly, and it is to be understood 
that the Company reserves the right to change, suspend, or cancel all or any 
part of this handbook as circumstances may require.

The original 
handbook also contained provisions relating to reductions in force and 
subsequent rehires of employees who were laid off because of a reduction in 
force.

 [¶5]     In 1991, Arch revised 
its handbook (the revised handbook). Sisneros received a copy of that handbook 
on May 14, 1991. The disclaimer language was moved to the first page of the 
revised handbook, and the reduction-in-force provision was changed slightly. 
Because of changes in the coal market, Arch decided to reduce the number of its 
employees. Sisneros was laid off from his job in October 1991 as part of the 
reduction in force.

[¶6]      On July 12, 1995, 
Sisneros filed a complaint against Arch, stating two causes of action: (1) 
breach of an implied contract for employment created by Arch's handbook; and (2) 
breach of the implied covenant of good faith and fair dealing. Arch filed a 
motion for a summary judgment on both of Sisneros' claims. The trial court 
granted Arch's motion on Sisneros' claim for breach of the implied covenant of 
good faith and fair dealing. The trial court denied Arch's motion on Sisneros' 
claim for breach of the implied employment contract. Specifically, the trial 
court held that the disclaimer in the original handbook was not sufficient to 
preclude the formation of a contract between the parties for continued 
employment. The trial court also held that, although the disclaimer in the 
revised handbook was sufficiently conspicuous, Arch was required to provide 
additional consideration to its employees if it unilaterally revised the 
original handbook. The trial court concluded, therefore, that material questions 
of fact existed on Sisneros' breach-of-contract claim.

[¶7]      When the trial 
court issued its summary judgment decision, Brodie v. General Chemical 
Corporation, 934 P.2d 1263 (Wyo. 1997), was pending before the Wyoming Supreme 
Court. The parties believed that the issues in Brodie were similar to the issues 
in their case and moved to have their case stayed until this Court decided 
Brodie. After we rendered our decision in Brodie, Arch renewed its motion for a 
summary judgment on Sisneros' claim for breach of the employment contract. The 
trial court denied Arch's renewed motion for a summary 
judgment.

[¶8]      The matter was 
tried to a jury in December 1997. The trial court instructed the jury that, as a 
matter of law, the original handbook created an employment contract between the 
parties. The jury returned a special verdict, finding that Arch breached its 
contract with Sisneros by laying him off but that it did not breach the contract 
when it failed to rehire him. The jury awarded Sisneros $70,000 in damages. The 
trial court entered a judgment on the jury's verdict, and Arch appealed to the 
Wyoming Supreme Court.

DISCUSSION

[¶9]      Arch reserved the 
right to "change, suspend, or cancel all or any part of [the original] handbook 
as circumstances may require." It argued to the trial court that this 
reservation allowed it to modify the handbook without providing separate 
consideration to its employees. The trial court responded to Arch's argument by 
stating: "The fact that the provision concerning reservation of rights was 
inconspicuous negates the argument that the provision, by itself, gives the 
employer the right to unilaterally change the terms of the contractual 
relationship." Arch contends on appeal that the reservation language did not 
have to be conspicuous to be effective.

[¶10]   The salient facts in this case are 
not in dispute, and Arch's issue presents a narrow question of law. We review 
issues of law de novo. Anderson v. Bommer, 926 P.2d 959, 961 (Wyo. 1996). In 
Wyoming, employment relationships are presumed to be at-will. Loghry v. Unicover 
Corporation, 878 P.2d 510, 512 (Wyo. 1994); Sanchez v. Life Care Centers of 
America, Inc., 855 P.2d 1256, 1257 (Wyo. 1993). The parties can, however, modify 
the presumption that employment is at-will through an express or implied 
agreement. Brodie, 934 P.2d  at 1265; Davis v. Wyoming Medical Center, Inc., 934 P.2d 1246, 1249 (Wyo. 1997). "An employee handbook may constitute an implied 
contract if it intends to create an expectation that employment will not be 
terminated except for cause." Jewell v. North Big Horn Hospital District, 953 P.2d 135, 137 (Wyo. 1998). See also Lincoln v. Wackenhut Corporation, 867 P.2d 701, 703 (Wyo. 1994). An employer may, however, avoid the formation of an 
implied contract for continued employment by including a conspicuous and 
unambiguous disclaimer in its handbook. Lincoln, 867 P.2d  at 
703.

[¶11]   We determine as a matter of law 
whether or not a disclaimer is conspicuous and unambiguous. McDonald v. Mobil 
Coal Producing, Inc., 820 P.2d 986, 988 (Wyo. 1991). In making that 
determination, we consider the prominence of the text of the disclaimer and the 
placement of the disclaimer in relation to the other text in the handbook. 
Lincoln, 867 P.2d  at 703-05. We also construe the language of the disclaimer to 
determine whether it clearly stated the employer's intention to retain at-will 
employment and to disclaim the formation of a contract for continued employment. 
867 P.2d  at 704-05. We place particular emphasis on whether or not the employer 
reserved the right to alter the language of the handbook. Id.; Davis, 934 P.2d  
at 1252.

[¶12]   Under certain conditions, an 
employer can modify its employee handbook if it previously included language in 
the handbook which reserved its right to make unilateral modifications. Brodie, 
934 P.2d  at 1266; see also Lincoln, 867 P.2d  at 705. On the basis of this 
rationale, an employer can reinstate the at-will employment status by adding a 
proper disclaimer to a handbook which ostensibly provides job security to its 
employees. Jewell, 953 P.2d  at 138; Brodie, 934 P.2d  at 1268. The employer 
generally must provide additional consideration to its employees when it makes 
such a revision. Id.

[¶13]   In Lincoln, we recognized that an 
employer's reservation of the right to alter the language of a handbook can be 
included in a disclaimer. 867 P.2d  at 705; see also Woolley v. Hoffmann-La 
Roche, Inc., 99 N.J. 284, 491 A.2d 1257, 1270, modified, 101 N.J. 10, 499 A.2d 515 (N.J. 1985), quoted with approval in McDonald, 820 P.2d  at 989. We require 
that disclaimers be conspicuous so that employers are prevented from 
promulgating handbooks which imply job security while they are reserving the 
right to deviate from the handbooks at their own caprice. Sanchez, 855 P.2d  at 
1258. Job security is a valuable contractual right, and an employer cannot 
unilaterally revoke that right without sufficiently informing the employee that 
it has reserved the option to revise the handbook. See Brodie, 934 P.2d  at 
1268.

[¶14]   Arch states in its brief that, in 
adopting the revised handbook with the conspicuous disclaimer, it did not 
"change the nature of the employment relationship from contractual to at-will . 
. ., it merely made a previously inconspicuous disclaimer conspicuous." We do 
not agree with Arch's statement. Because the disclaimer was not conspicuous, the 
original handbook created an employment contract. When Arch revised the handbook 
to make the disclaimer conspicuous, it obviously attempted to change the nature 
of its relationship with its employees from contractual to at-will. If we were 
to allow an employer to deprive its employees of promised job security by 
relying on an inconspicuous reservation of the right to modify the handbook, we 
would be undermining the foundation of our employment handbook jurisprudence. We 
refuse to do that.

[¶15]   We conclude that, if an employer 
wants to reserve the right to unilaterally modify its handbook, it must make 
sure that the reservation language is conspicuous and unambiguous. The trial 
court determined that the reservation in this case was not sufficiently 
conspicuous, and Arch does not contest that finding.

[¶16]   Affirmed.