Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-92-08010/USCOURTS-ca10-92-08010-0/pdf.json

Parties Involved:
Enron Gas Processing Company
Appellant
Wayne G. Kempke
Appellee

Document Text:

FILLD 

Unit.ed States Coμrt ~ A-ppealt 

UNITED STATES COURT OF APPEALS 

Tenth C1reu1t 

WAYNE G. KEMPKE, 

Plaintiff-Appellee, 

v . 

TENTH CIRCUIT 

ENRON GAS PROCESSING COMPANY, 

Defendant-Appellant. 

MAR 1 6 1993 

ROBERT L. HOECKER 

Clerk 

No . 92-8010 

(D . C. No. 91 - CV- 071-J) 

(D . Wyo .) 

ORDER AND JUDGMENT* 

Before TACHA, SETH and BALDOCK, Circuit Judges. 

This appeal requires a determination of whether an employment 

contract arose between an employer and employee, changing the 

status of the employment from terminable at will to terminable for 

cause, and if so, whether the employee was terminated for cause . 

Appellee Wayne G. Kernpke filed a suit in the United States 

District Court for the District of Wyoming, alleging that his 

employment with Appellant Enron Gas Processing Company had been 

wrongfully terminated. The jury found in favor of Appellee, and 

after denying Appellant's motions for new trial, judgment 

notwithstanding the verdict, and rernittitur of judgment, the 

*This order and judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

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district court entered a judgment on the jury verdict. Appellant 

appeals the denial of the motions. We reverse. 

On appeal, the Company contends that the district court 

erroneously denied its motions for directed verdict and judgment 

notwithstanding the verdict, on the basis that (1) Appellee was an 

employee at will; and (2 ) Appellee was terminated for cause . 

Alternatively, Appellant claims that the district court erred in 

denying its motion for new trial on the grounds that the jury 

ignored uncontroverted evidence regarding the cause of 

termination. Because we find that Appellee's employment at will 

was not changed by the course of dealing between the Company and 

Appellee, we do not reach the question of whether Appellee was 

terminated for cause. 

Our standard of review for motions for directed verdict and 

judgment notwithstanding the verdict is the same: our review is 

de novo, First Sec. Bank of Beaver, Okla. v. Taylor, 964 F.2d 

1053, 1055 (10th Cir.), and we may find error in the denial of 

such a motion "only if the evidence points but one way and is 

susceptible to no reasonable inferences supporting the party for 

whom the jury found; we must construe the evidence and inferences 

most favorably to the nonmoving party." Zimmerman v. First 

Federal Sav. & Loan Ass'n, 848 F . 2d 1047, 1051 (10th Cir. ). 

The facts of this case are as follows. Appellee worked in 

Appellant's Bushton, Kansas plant beginning in 1959 . He received 

promotions every three or four years, working his way up from 

maintenance person to shift supervisor. 

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In 1979, when Appellant opened a new plant in Wyoming, the 

Painter plant, it asked Appellee if he would consider taking the 

position of plant manager of the Painter plant. Appellee declined 

the offer. David Pratt became manager of the Painter plant in 

1979, and in 1986 Randy Vohries became assistant plant manager. 

David Pratt was subsequently promoted in 1987, and moved to the 

Houston office, and Randy Vohries became plant manager. Appellant 

again requested that Appellee consider a position in the Painter 

plant, this time as assistant plant manager. David Pratt, George 

Rood, Vice President of Operations, and Tom Liewer, Director of 

the Rocky Mountain Region, told Appellee that Randy Vohries would 

not retain the position of plant manager for very long, and that 

in a couple of years Appellee would hold the plant manager 

position. Appellee accepted the offer of the move and promotion. 

At trial, Appellee argued that under two theories his at will 

employment had been changed to terminable only for cause. One was 

under a theory of promissory estoppel. He argued that the 

employee handbook made certain representations to the employees 

regarding the Company's corrective discipline and fair treatment 

policies, and it was estopped from avoiding adherence to those 

representations. Appellee alternatively argued that the oral 

representations made to him by officials of Appellant created an 

express contract. 

On appeal, the Company argues that in the case on which 

Appellee relied for its promissory estoppel theory, McDonald v. 

Mobil Coal Producing, Inc., 789 P.2d 866 (Wyo.) [McDonald I], the 

promissory estoppel theory was adopted by only two of five judges. 

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On rehearing, the Wyoming Supreme Court did not discuss the 

promissory estoppel theory, and instead relied on the theory that 

an employee handbook can create a contract that modifies 

employment at will. McDonald v. Mobil Coal Producing, Inc., 820 

P.2d 986 (Wyo.) [McDonald II] . The Company argues that after the 

rehearing, the previous opinion was withdrawn and has no effect 

since it was not readopted by the court. Therefore, it argues the 

promissory estoppel doctrine for employment cases is not 

recognized in Wyoming case law. We need not decide this issue, 

for Appellee does not contest the Company's arguments. Under Fed. 

R. Civ. P. 8 (d ) , averments in a pleading to which a responsive 

pleading is required are admitted if not denied. 

Rather than responding to Appellant's challenge to the 

promissory estoppel argument , Appellee urges on this appeal the 

more common theory of recovery in McDonald II, that the employee 

handbook itself could create a contract. However, this theory is 

not available to Appellee in this court because after the Appellee 

closed his case at trial, the district court judge raised this 

theory of recovery, which had not previously been advanced by 

Appellee. The district court stated that the Wyoming Supreme 

Court had held that the language of an employee handbook can 

create a contract. Leithead v. American Colloid Co., 721 P.2d 

1059 (Wyo.); Alexander v. Phillips Oil Co., 707 P.2d 1385 (Wyo.); 

Mobil Coal Producing, Inc. v. Parks, 704 P.2d 702 (Wyo . ) . 

Appellee then moved to amend the complaint to conform to the 

evidence that a contract was formed by the employee manual. The 

district court denied the motion noting that it was not an issue 

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in the case until the court mentioned it. Therefore, Appellee 

cannot now advance his case on this theory. 

Appellee further contends that by not objecting to the 

evidence admitted at trial which supports the contract theory, the 

Company impliedly consented to the issue under Fed. R. Civ. P. 

15 (b) . Appellee argues that when an issue is tried by implied 

consent, the original complaint is treated as if amended to 

incorporate claims and allegations supported by the issues 

actually tried. R. A. Pohl Constr. Co. v. Marshall, 640 F.2d 266, 

267 (10th Cir.). However, Appellee ignores the fact that the 

evidence which supports the contract theory also supports his 

promissory estoppel theory raised at trial, and there was no 

indication at trial that he had intended to raise a new issue . 

Thus, Appellant cannot be said to have consented to trial on the 

contract theory. Hardin v. Manitowoc-Forsythe Corp., 691 F.2d 

449, 457 (10th Cir.) . 

The second theory presented at trial, which both parties have 

appropriately raised on appeal, is that the oral representations 

of the employees of Appellant gave rise to a binding contract. 

The evidence and inferences most favorable to Appellee support a 

finding that Appellant's officials orally represented to Appellee 

that he would be promoted to plant manager in two years, and these 

representations led Appellee to accept the position of assistant 

plant manager. 

The district court relied on Larson v. Kreiser's, Inc., 472 

N.W.2d 761 (S.D.), holding that the oral representations of 

promotion created an employment contract which could be terminated 

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only for good cause. The district court further stated that 

Appellant's conduct caused expectations in Appellee which 

generated implied terms of an employment contract. 

We think that the Larson case does not correctly state the 

law of Wyoming. In Wyoming, employment for an indefinite period 

of time has historically been terminable at will. Rompf v. John 

Q. Hammons Hotels, Inc., 685 P.2d 25, 27 (Wyo.). Wyoming has 

adopted an exception to this rule, discussed above, that an 

employer's personnel manual may constitute an implied term of an 

employment contract. Leithead, 721 P.2d at 1062; Alexander, 707 

P.2d at 1386; Parks, 704 P.2d at 704. However, the Wyoming courts 

have not taken the position of the Larson case that a 

representation of promotion without more will give rise to an 

employment contract that is terminable only for cause. 

In Allen v. Safeway Stores Inc., 699 P.2d 277 (Wyo.), the 

plaintiff alleged that his employment agreement with Safeway 

included the understanding that at the end of three years, he and 

his wife would have an opportunity to return to Salt Lake City and 

continue their employment with Safeway. The Wyoming Supreme Court 

stated: 

"Subjective understandings and expectations do 

not establish an employment contract with a 

definite term of duration .... Specific 

provisions in an employment contract, other 

than one fixing a definite term of employment, 

do not make the contract other than one 

terminable at will." 

Allen, 699 P.2d at 282 (citation omitted). The only term of the 

"contract" in this case is a promise to promote within two years. 

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Under Wyoming law, this is insufficient to change the employment 

to terminable only for cause. 

Appellee further relies on McDonald II for the establishment 

of a contract. In McDonald II, the Wyoming Supreme Court adopted 

the "objective theory" of contract formation stated in the 

Restatement (Second) of Contracts§ 21 (1979). The court stated: 

"[C]ontractual obligation is imposed not on 

the basis of the subjective intent of the 

parties, but rather upon the outward 

manifestations of a party's assent sufficient 

to create reasonable reliance by the other 

party. 11 

McDonald II, 820 P.2d at 990 . The facts of the case, even when 

construed most favorably to Appellee, indicate only that a promise 

to promote was made. Appellant made no other manifestations of 

assent to modify the terms of Appellee's at will employment that 

were sufficient to create reasonable reliance by Appellee . Even 

under the "objective theory," a terminable for cause employment 

contract was not formed. 

Because we find that the employment agreement between 

Appellant and Appellee remained terminable at will, we do not 

reach the issue of whether Appellee was terminated for cause . 

Accordingly, the order of the District Court for the District 

of Wyoming is REVERSED. 

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Entered for the Court 

Oliver Seth 

Circuit Judge 

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