F I L E D

United States Court of Appeals

Tenth Circuit

FEB 25 1997

PATRICK FISHER

Clerk

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

ARTHUR L. BLACK,

Plaintiff-Appellant,

v.

BAKER OIL TOOLS, INC., a division

of Baker Hughes, Inc., a corporation,

Defendant-Appellee.

No. 96-5049

Appeal from the United States District Court

for the Northern District of Oklahoma 

(D.C. No. 95-C-126-K)

Thomas L. Bright, Tulsa, OK, argued the cause for the appellant.

Deirdre O. Dexter, Tulsa, OK, argued the cause for the appellee. Rebecca S. Woodward,

Tulsa, OK, assisted on the brief.

Before EBEL, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and KELLY,

Circuit Judge.

EBEL, Circuit Judge.

Plaintiff Arthur L. Black (“Black”) had two heart attacks while working as an

engineering supervisor for Baker Oil Tools (“Baker Oil”). After the second heart attack,

Baker Oil did not allow Black to continue working.
- 2 -

Black sued Baker Oil in Oklahoma state court for breach of contract, claiming that

under Oklahoma law, Baker Oil created an employment contract by issuing him a

supervisors’ manual and verbally reiterating the policies contained therein. Black

claimed that Baker Oil breached the provisions of the alleged “contract” (the supervisors’

manual) prohibiting discrimination against handicapped people, when it constructively

discharged him because of his heart condition. 

Baker Oil, a Texas-based corporation, removed the case to federal district court

under 28 U.S.C. § 1332 (1994) (diversity jurisdiction). The district court subsequently

granted Baker Oil’s motion for summary judgment. Black v. Baker Oil Tools, No. 95-C126-K, slip op. at 5 (N.D. Okla. Feb. 8, 1996) (Order granting summary judgment) (Kern,

J.). Black appeals pursuant to 28 U.S.C. § 1291 (1994). Because we agree with the

district court that no contract was ever created between Black and Baker Oil, we affirm. 

BACKGROUND

Arthur L. Black joined the Baker Oil Tool Company as an engineering supervisor

in 1984. He suffered his first heart attack in 1988; his second in July, 1992. Following

the 1992 heart attack, one of Black’s treating physicians, Dr. Gregory J. McWilliams,

wrote that Black had lost more than 70% of his heart function and should retire. By

September, 1992, Dr. McWilliams’s report had come to the attention of Black’s

immediate supervisor Richard Forehand. Forehand, after consulting with other top

management at Baker Oil, offered Black a choice between “voluntary” retirement or a
- 3 -

long-term disability leave of absence. Black chose retirement, though he protested that he

would rather keep working. Under the “retirement plan,” Black kept his medical benefits,

but received no other retirement benefits.

During Black’s tenure at Baker Oil, Black was issued a copy of Baker Oil’s

“Supervisor Human Resource Policy Manual” (the “Supervisor’s Manual”), which

contained a two-page statement entitled “Human Resources Policies: Equal Employment

Opportunity” (the “EEO Statement”). The EEO Statement expressed Baker Oil’s antidiscrimination policies, including a policy forbidding discrimination against the

physically handicapped. While working for Baker Oil, Black was additionally apprised of

Baker Oil’s anti-discrimination policies at a managers’ meeting in Houston (the “Houston

meeting”) conducted by a Baker Oil vice-president of human resources. At the same time

he was issued the Supervisor’s Manual, Black was also issued copies of Baker Oil’s

Human Resources Policies and Procedures Manual (the “Policy Manual”) and the Baker

Employee Handbook (“Employee Handbook”), each of which expressly disclaimed

creating any implied or express contractual obligations. The Policy Manual contained the

same EEO Statement that appeared in the Supervisor’s Manual.

In September, 1994, Black sued Baker Oil in Oklahoma state court. Baker Oil

removed the case to federal district court, where Black twice amended his complaint. The

district court granted summary judgment in favor of Baker Oil on all of Black’s claims

contained in his second amended complaint. Black has appealed. We affirm.
- 4 -

DISCUSSION

Standard of Review

We review a grant of summary judgment de novo. Applied Genetics Int’l, Inc. v.

First Affiliated Sec., 912 F.2d 1238, 1241 (10th Cir. 1990). We apply the same standard

under Fed. R. Civ. P. 56(c) used by the district court: we determine whether a genuine

issue of material fact was in dispute, and, if not, whether the substantive law was

correctly applied. Id. To demonstrate the existence of a material issue of fact, the

nonmoving party may not rest on its pleadings. Id. Rather, the nonmoving party must set

forth specific facts showing that there is a genuine issue of fact for trial as to those

dispositive matters for which it carries the burden of proof. Id. Genuine factual issues

must be supported by "more than a mere scintilla of evidence." Vitkus v. Beatrice Co., 11

F.3d 1535, 1539 (10th Cir.1993) (citing Anderson v. Liberty Lobby Inc., 477 U.S. 242

(1986)). "To avoid summary judgment, the evidence must be such that a reasonable jury

could return a verdict for the nonmoving party. Summary judgment may be granted if the

evidence is merely colorable or is not significantly probative." Id.

The Contract Claim

We apply the substantive law of Oklahoma in deciding this case. See Barrett v.

Tallon, 30 F.3d 1296, 1300 (10th Cir. 1994) (a federal court sitting in diversity applies the
- 5 -

substantive law of the forum state). In general, Oklahoma is an “employment-at-will”

state. Burk v. K-Mart Corp., 770 P.2d 24, 26 (Okla. 1989). In the absence of an express

or implied agreement to the contrary between an Oklahoma employer and its employees,

the employer may terminate an employee at any time “for good cause, for no cause, or

even for cause morally wrong, without being thereby guilty of legal wrong.” Id. “Where

an employment contract is of indefinite duration, it is terminable at will by either party,”

subject to certain exceptions. Hayes v. Eateries, Inc., 905 P.2d 778, 781-82 (Okla. 1995). 

In Oklahoma, “no implied covenant of good faith and fair dealing . . . governs the

employer’s decision to terminate in an employment-at-will contract.” Burk, 770 P.2d at

27. If Black was an “at-will” employee in 1992, then he lacks any claim cognizable under

Oklahoma law.

The mere fact that Black and Baker Oil never signed any traditional employment

contract, however, is not fatal to Black’s claim. “A contract consists not only of the

agreements which the parties have expressed in words, but also of the obligations which

are reasonably implied. . . .” Id. at 26-27 (quoting Wright v. Fidelity & Deposit Co. of

Md., 54 P.2d 1084, 1087 (Okla. 1935)); see also Okla. Stat. Ann. tit. 15, § 131 (West

1996) (“A contract is either express or implied”); Okla. Stat. Ann. tit. 15, § 133 (West

1996) (“An implied contract is one, the existence and terms of which are manifested by

conduct.”). In Oklahoma, “normally the issue of whether an implied contract exists is
- 6 -

factual.” Hayes v. Eateries, Inc., 905 P.2d 778, 783 (Okla. 1995) (citing DuPree v.

United Parcel Serv., 956 F.2d 219, 222 (10th Cir. 1992)). 

Oklahoma analyzes claims of an implied contract right to job security by balancing

several relevant factors, including: “(a) evidence of some ‘separate consideration’

beyond the employee's services to support the implied term, (b) longevity of employment,

(c) employer handbooks and policy manuals, (d) detrimental reliance on oral assurances,

pre-employment interviews, company policy and past practices and (e) promotions and

commendations.” Hinson v. Cameron, 742 P.2d 549, 554-55 (Okla. 1987). These

factors are all to be weighed, but need not each be proven in order for a court to find an

implied contract. Id.

In the present case, Black points to no “separate consideration” furnished by him

in exchange for his claimed right to job security, beyond his continued employment at

Baker Oil. Similarly, he presents no evidence that he detrimentally relied on the language

in Baker Oil’s EEO Statement by, for example, foregoing other employment

opportunities. He presents no evidence of promotions or commendations, nor any

evidence of any definite term of employment specified in the contract. Although he does

present evidence of longevity of employment (11 years), he does not claim that this
1He also adds that, at the Houston meeting, Baker Oil verbally manifested its

intention to adhere to the antidiscrimination policies contained in its manuals, and that it

never retracted any statements to that effect.

- 7 -

longevity relates in any way to his breach of contract claim. Rather, Black essentially

rests his case on the existence and contents of employer handbooks and policy manuals.1

To contribute to the creation of an implied contract, “the promises in the employee

manual which may operate to restrict the employer's power to discharge must be in

definite terms--not in the form of vague assurances.” Gilmore v. Enogex, Inc., 878 P.2d

360, 368 (Okla. 1994). Thus, although the issue of whether an implied contract exists is

normally factual, if the alleged promises are “nothing more than vague assurances,” then

the issue can be decided as a matter of law. Hayes, 905 P.2d at 783 (citing Dupree v.

United Parcel Serv., 956 F.2d 219, 222 (10th Cir. 1992)). “Guarantees” in a employee

manual are merely “vague assurances” if they do not purport to place “substantive

restrictions” on the reasons the employer may terminate the employee. Id. (citing Blanton

v. Housing Auth., 794 P.2d 412, 415 (Okla. 1990)).

In the case at bar, the parties agree that the relevant portion of the Supervisor’s

Manual is the EEO Statement. The Statement, in pertinent part, provides that:

GENERAL:

It is the policy of Baker Oil Tools to grant equal employment

opportunity to all qualified persons without regard to . . . physical . . .

handicap. . . . To deny one’s contribution to our efforts because he or she is

a member of a minority group is an injustice, not only to the individual, but

to the company as well. It is the intent and desire of the company that equal

employment opportunity will be provided in employment, promotions,
- 8 -

wages, benefits and all other privileges, terms, and conditions of

employment.

SCOPE:

 The Baker Oil Tools policy of non-discrimination must prevail

throughout every aspect of the employment relationship, including . . .

layoff . . . and termination.

PURPOSE

The purpose of this policy is to affirm the Division’s position

regarding non-discrimination in all matters relating to employment

throughout the organization.

APPLICATIONS

All relations and decisions pertaining to employment . . . [and]

terminations . . . will be executed without regard to . . . physical . . .

handicap. . . .

The threshold issue, then, is whether these provisions are merely “vague

assurances,” or, rather, whether they purport to place substantive limitations on Baker

Oil’s power to discharge handicapped employees. We note that although these provisions

do not purport to extend any specific procedural rights to employees, the

“APPLICATIONS” provision does purport to guarantee, substantively, that employees

will not be terminated on the basis of physical handicap. The district court found, as a

matter of law, that “the EEO statement itself did not provide ‘in definite terms’ a

guarantee against discharge due to handicap, but rather was a general policy statement of

nondiscrimination.” Black, slip op. at 4-5 (citing Gilmore, 878 P.2d at 369; DuPree, 956

F.2d at 222). Reviewing this conclusion de novo, we disagree. We believe the promise

that “[a]ll relations and decisions pertaining to employment . . . [and] terminations . . .
- 9 -

will be executed without regard to . . . physical . . . handicap. . . .” is more than a mere

“vague assurance” or “puffery,” but rather is a “substantive restriction” on Baker Oil’s

ability to terminate its employees.

Having passed this threshold, the next issue is whether Baker Oil effectively

disclaimed any representations in the Supervisor’s Manual altering the at-will

employment relationship. See Johnson v. Nasca, 802 P.2d 1294, 1297 (Okla. Ct. App.

1990) (“While an employer may disclaim the creation of contractual rights, such a

disclaimer must be clear.”); see generally George L. Blum, Annotation, Effectiveness of

Employer’s Disclaimer of Representations in Personnel Manual or Employee Handbook

Altering At-Will Employment Relationship, 17 A.L.R.5th 1, 88-94 (1994 & Supp. 1996)

(surveying cases where employer’s disclaimer of intent to create contractual liability was

alleged to have been ineffectively communicated to employee). The Supervisor’s Manual

contained no disclaimers--clear or otherwise--of any intention to form any implied

contract. As the district court noted, however, an EEO statement identical to the one

contained in the Supervisor’s Manual was also contained in the Policy Manual, which,

like the Supervisor’s Manual, was given to all supervisors, including Black. The Policy

Manual began with the following disclaimer: “This Manual is not intended to contain a

complete listing of all Baker Oil Tools’ policies nor is it intended to imply any contractual

obligations. Baker Oil Tools expects to continue these policies indefinitely but reserves

the right to terminate or amend them at any time.” (emphasis in original). In addition,
2

Indeed, a supervisor in Black’s position might have reasonably believed that the

disclaimers in the employee manuals were absent from the Supervisor’s Manual precisely

because supervisors were provided with rights not extended to lower-ranking employees. 

- 10 -

the Employee Handbook, which did not contain the EEO statement, began with an

introduction containing the following statements:

This handbook is not an employment agreement, a contract of employment,

or a guarantee of continued employment with Baker Oil Tools and/or its

subsidiaries, foreign or domestic. Employment with Baker Oil Tools is ‘atwill,’ which means that you or Baker may terminate the employment

relationship at any time.

. . .

DISCLAIMER: This employee handbook has been drafted as a guideline

for our employees. It shall not be constructed to form a contract between

the Company and its employees. Rather, it describes the Company’s

general philosophy concerning policies and procedures.

The district court found that, as a result of the disclaimers in the Policy Manual

and the Employee Handbook, a reasonable trier of fact would be compelled to find that

Black was “on notice that the EEO statement was not meant to imply contractual

obligations upon Baker.” Once again, we disagree. The disclaimer in the Policy Manual

referred to “This Manual.” The disclaimer in the Employee Handbook referred to “This

handbook.” It is not obvious or inevitable that these disclaimers would be understood by

a reasonable reader to encompass all manuals and handbooks promulgated by Baker Oil,

despite their plain language to the contrary.2

 Further, Black, in his affidavit, denied

knowledge of the disclaimers in the other two manuals, claiming that, as a supervisor, he
3

 As noted previously, Black also established his longevity of employment at Baker

Oil, but he did not relate this Hinson factor in any way to Baker Oil’s alleged promise of

nondiscrimination in terminations.

- 11 -

familiarized himself only with the Supervisor’s Manual. Therefore, it was error to grant

summary judgment to Baker Oil on the basis that the disclaimers were clear and effective. 

We thus disagree with the district court’s conclusion that no reasonable jury could

find that the Supervisor’s Manual itself could fulfill the “employer handbooks and policy

manuals” prong of the five-part Hinson test. Accordingly, we find that Black has

satisfied one of the five Hinson factors: (1) a promise contained in an employer handbook

and/or policy manual, and not effectively disclaimed.3

On the other hand, we agree with the district court’s conclusion that Black failed to

satisfy the other four Hinson factors: (1) evidence of some "separate consideration"

beyond the employee's services to support the implied term; (2) detrimental reliance on

oral assurances, pre-employment interviews, company policy and past practices; (3)

promotions and commendations; or (4) longevity of employment where such longevity

can be linked in some way to the alleged promise sought to be enforced against the

company.

Unfortunately, neither the Hinson Court nor any subsequent Oklahoma court has 

indicated how the five Hinson factors should be weighed when, as here, they weigh in

opposite directions. We note, however, that the court in Gilmore v. Enogex, Inc., 878

P.2d 360 (Okla. 1994), while citing Hinson, recognized that an implied employment
4The Gilmore court has some additional language stating that an employee manual

“only alters the at-will relationship with respect to accrued benefits--it does not limit

prospectively the power of either party to terminate the relationship at any time. . . .” 

Gilmore, 878 P.2d at 368 & n.40 (citing Langdon v. Saga Corp., 569 P.2d 524, 527-28

(Okla. Ct. App. 1976)) (emphasis in original). Taken literally, this statement might imply

that an employee handbook or manual could never support an employee’s claim to job

security under Oklahoma contract law, because termination can be expressed

prospectively. Yet Oklahoma courts both before and after Gilmore have recognized the

potential viability of job security claims predicated on handbook promises. See Hayes,

905 P.2d at 783 (handbook promises to job security which are definite and not “vague

assurances” may be enforceable if reasonably relied on by employee) (decided after

Gilmore); Hinson, 742 P.2d at 554-55 (establishing five-factor test for analyzing

employee manual-based claim to job security) (decided before Gilmore).

The resolution of this apparent inconsistency may lie in the fact that neither

Gilmore nor Langdon involved a handbook-based claim to a right to job security. See

Gilmore, 878 P.2d at 368-69 (denying alleged handbook-based right of employee to

refuse a mandatory drug test); Langdon, 569 P.2d at 526-28 (approving handbook-based

right of employee to accrued but unused paid vacation time and certain severance

allowances). It is likely, therefore, that Gilmore means only that an employer who has

issued a handbook specifying the terms and conditions of employment generally remains

free to terminate or modify those terms and conditions prospectively, by, for example,

rescinding, replacing, or modifying the handbook. If the employee assents to the new

terms and conditions of employment (by continuing to work or otherwise), then the new

handbook governs the employment relationship prospectively, while the superseded

handbook continues to govern disputes related to benefits accrued prior to the

modification. The accrued/prospective dichotomy is hard to apply in a case involving a

claim for job security.

In any event, even assuming arguendo that Baker Oil retained at all times the

(continued...)

- 12 -

contract claim might be brought based solely on the language of an employee manual. Id.

at 368 & nn.38-39. In evaluating the merits of such a claim, the Gilmore court reverted to

the general contract principles articulated in Okla. Stat. Ann. tit. 15, § 2 (West 1996) (a

contract requires: (1) parties capable of contracting; (2) their consent; (3) a lawful object;

and (4) sufficient cause or consideration). See id.4
4

(...continued)

power to modify prospectively its employees’ alleged handbook-based right to job

security, Baker Oil never exercised this right prior to terminating Black. Specifically,

Baker Oil never modified, either expressly or by implication, its promise (contained in the

Supervisor’s Manual) not to discriminate in terminations on the basis of a physical

handicap. Thus, if we find that the language in the Supervisor’s Manual otherwise vested

Black with a limited contractual right to job security, nothing in Gilmore would preclude

the enforcement of that right against Baker Oil.

- 13 -

Following the lead of the Gilmore court, we analyze Black’s claim in light of these

general contract principles as applied by Oklahoma courts. We find that Black and Baker

Oil were parties capable of contracting, and that agreeing to employment free of

discrimination based on physical handicap would be a lawful object for a contract. We do

not reach the issue of whether the parties “consented” to a contract within the meaning of

Okla. Stat. Ann. tit. 15, § 2(2) (West 1996), because we find no evidence that Black gave

consideration for this promise as required by Okla. Stat. Ann. tit. 15, § 2(4) (West 1996). 

Based on our finding of no sufficient consideration, we find that no contract was created

by the Supervisor’s Manual.

Under Okla. Stat. Ann. tit. 15, § 2(4) (West 1996), “[s]ufficient cause or

consideration” is “essential to the existence of a contract.” In 1890, however, the

Oklahoma legislature modified the common-law “pre-existing duty rule,” to allow

enforcement of contracts supported only by promises to perform pre-existing obligations. 

See Okla. Stat. Ann. tit. 15, § 107 (West 1996) (“An existing legal obligation resting on

the promisor . . . is also a good consideration for a promise, to the extent corresponding
5Although neither Gragg nor its precedents make reference to Okla. Stat. Ann. tit.

15, § 107 (West 1996) or its predecessor statutes, we presume that the Oklahoma

(continued...)

- 14 -

with the extent of the obligation, but no further or otherwise.”) (emphasis added). 

Oklahoma courts, however, have enforced such contracts exceedingly sparingly, more

often indicating that contracts are unenforceable if they rest solely on pre-existing

obligations for consideration. See e.g. Gragg v. James, 452 P.2d 579, 587 (Okla. 1969)

(“Performance of . . . obligations a party already is legally bound to perform, is not

sufficient consideration to support a contract.”) (emphasis added) (citing Home Owners’

Loan Corp. v. Thornburgh, 106 P.2d 511, 512 (Okla. 1940); Watson v. American

Creosote Works, Inc., 84 P.2d 431, 433, 434 (Okla. 1938)); accord Bowers v. Missouri

State Life Ins. Co., 169 P. 633, 635-36 (Okla. 1917) (per curiam); Maker v. Taft, 139 P.

970, 971 (Okla. 1914) (per curiam); compare Kaiser v. Fadem, 280 P.2d 728, 731 (Okla.

1955) (relying on Okla. Stat. Ann. tit. 15, § 107 to enforce a contract in which the

consideration for a promise was only a moral--but not a legal--obligation to pay for

services previously rendered).

When we sit in diversity, “we must apply the most recent statement of state law by

the state’s highest court.” Wood v. Eli Lilly & Co., 38 F.3d 510, 513 (10th Cir. 1994)

(citation omitted). When Oklahoma’s highest court has said that a pre-existing obligation

cannot constitute consideration for a later promise, notwithstanding this statute, we must

accept that interpretation of Oklahoma law.5
5

(...continued)

Supreme Court has taken that statute into consideration in determining that performing a

pre-existing duty is not sufficient consideration to support a contract in Oklahoma. 

- 15 -

In the case at bar, Black argues that he supplied two types of consideration in

exchange for Baker Oil’s promise not to terminate him on the basis of physical handicap:

(1) he performed his job satisfactorily during his term of employment; and (2) he

refrained from exercising his option to quit his job during that term. We find that, on the

facts of this case, neither of these actions constitute consideration under Oklahoma law.

First, as discussed supra, Black had an existing legal obligation to perform his

work for Baker Oil in exchange for his salary. Under Gragg v. James, 452 P.2d 579, 587

(Okla. 1969), Black’s mere performance of this obligation could not constitute valid

consideration to support a second contract or a contract modification.

In support of his second argument, Black cites our decision in Williams v.

Maremont Corp., 875 F.2d 1476 (10th Cir. 1989). In Williams, we held that, under

Oklahoma law, an employee’s decision not to quit his job can constitute sufficient

consideration to support an employer’s promise, and thus form an employment contract. 

Id. at 1482 (citing Langdon v. Saga Corp., 569 P.2d 524, 527 (Okla. Ct. App. 1976)). We

did not, however, imply that such a decision by the employee would always constitute

valid consideration. Rather, we quoted an Oklahoma court’s statement that “[w]here an

employee at will forgoes options to refuse future performance in reliance or in partial

reliance on articulated personnel policies of the employer, the employer is bound by those
- 16 -

policies insofar as they have accrued to an employee for performance rendered while they

were in effect and have not been excluded or modified by another valid contractual

arrangement.” Id. (quoting Langdon, 569 P.2d at 527) (emphasis in Williams). We

emphasized the Langdon court’s requirement of reliance to make it clear that in an action

for enforcement of an alleged implied employment contract under Oklahoma law, the

employee must prove that his decision not to quit, at the time he made that decision, was

based at least in part on his reliance on the employer’s promise. Accord Hinson v.

Cameron, 742 P.2d 549, 556 n.28 (Okla. 1987).

Here, Black has introduced no evidence suggesting any such reliance on Baker

Oil’s promise during the term of his employment. Rather, he bases his claim exclusively

on the mere fact of the printed text of the Supervisor’s Manual, combined with the fact

that he did not quit his job after he acquired knowledge of the promises contained in that

Manual. However, in the absence of evidence that Black continued working for Baker

Oil in reliance on the statement in the Supervisor’s Manual that Baker Oil would not

discriminate on the basis of a physical handicap, Black has failed to establish, under

Oklahoma law, that his continued employment at Baker Oil constituted consideration

sufficient to transform the Supervisor’s Manual into an employment contract. Thus,

Black remained an employee-at-will. Summary judgment in favor of Baker Oil was

therefore proper. See Vitkus v. Beatrice Co., 11 F.3d 1535, 1539 (10th Cir. 1993) (“To
- 17 -

avoid summary judgment, the evidence must be such that a reasonable jury could return a

verdict for the nonmoving party.”).

Because we affirm the district court’s grant of summary judgment on the grounds

that no contract was ever formed, we need not reach the issue, also not reached by the

district court, of whether Baker Oil breached any contract that may have been formed. 

CONCLUSION

We AFFIRM the order of the district court granting summary judgment in favor of

Baker Oil on the ground that the record contained insufficient evidence of contract

formation to support Black’s claim under Oklahoma law.