Case Name: ROWE v. MONTGOMERY WARD & CO, INCORPORATED
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1991-07-31
Citations: 437 Mich. 627
Docket Number: Docket No. 84848
Parties: ROWE v MONTGOMERY WARD & CO, INCORPORATED
Judges: Brickley and Griffin, JJ., concurred with Riley, J.
Reporter: Michigan Reports
Volume: 437
Pages: 627–722

Head Matter:
ROWE v MONTGOMERY WARD & CO, INCORPORATED
Docket No. 84848.
Argued October 2, 1990
(Calendar No. 3).
Decided July 31, 1991.
Dissenting opinion by Levin, J., filed August 2, 1991.
Mary Rowe brought an action in the Kent Circuit Court against Montgomery Ward & Co., Incorporated, alleging wrongful discharge and breach of a contract not to terminate her employment except for cause. The court, Roman J. Snow, J., entered judgment on a jury verdict for the plaintiff. Thereafter, the defendant’s motions for judgment notwithstanding the verdict, a new trial, or remittitur were denied. The Court of Appeals, Maher, P.J., and L. F. Simmons, J. (Gribbs, J., dissenting), reversed in an unpublished opinion per curiam, finding that the plaintiff was an employee at will (Docket No. 93817). The plaintiff appeals.
In an opinion by Justice Riley, joined by Justices Brickley and Griffin, and an opinion by Justice Boyle, the Supreme Court held:
The plaintiff may not maintain an action for breach of contract as a result of her dismissal. Her proofs are insufficient to support her claim of a promise by the defendant, implied in fact, not to terminate her employment except for just cause.
1. Contracts for permanent employment are for indefinite periods of time and are presumed to provide employment at will unless accompanied by distinguishing features or provisions or additional consideration supporting a term of permanent employment. Termination for just cause may be provided in a contract of employment for indefinite duration by express agreement or may arise as a result of an employee’s legitimate expectations grounded in an employer’s policy statements. Contractual implications arising from oral statements are determined on the basis of the meaning reasonable persons might attach to the language, given the circumstances presented. Any _contractual obligation for permanent employment arising from oral representations must be based on more than an expression of an optimistic hope of a long relationship, and the statements clearly must permit a construction which supports the asserted meaning. In this case, objective evidence was lacking to permit a reasonable juror to find implied in fact a promise of termination only for just cause. The employer expressed a policy in general terms with regard to termination, clearly not intending to form a contract for permanent employment. There was no evidence from which reasonable minds could deduce mutual agreement of employment terminable only for cause.
References
Am Jur 2d, Master and Servant §§ 32, 45.
Comment Note — Validity and duration of contract purporting to be for permanent employment. 60 ALR3d 226.
2. The defendant clearly and unambiguously gave the plaintiff reasonable notice of its policy of termination at will in its handbook, distributed in 1983, which modified any prior expectations of termination only for cause and precluded any legitimate expectation by the plaintiff of discharge only for cause. The fact that the plaintiff failed to sign employment-at-will disclaimers was not determinative.
Justice Boyle, concurring, stated that where the parties have not supplied a term of duration, employment at will is inferred, but may be overcome by establishing that a contrary inference is more likely. Enforceable obligations arise from explicit promises, from promises implied in fact, or obligations implied in law. Where the communication between the parties has more than one possible meaning, a court will employ its own criteria for interpretation; where the contract fails to provide for a contingency, courts may fill the gaps to avoid failure for indefiniteness.
"As long as” may be interpreted either in a temporal or a qualitative sense. It may be read literally, as an obligation to provide lifetime employment, or as an offer of steady employment. Because it is susceptible of either meaning, it cannot be said that the "plain meaning” of the phrase addresses when or how termination will occur or binds the employer for any particular length of time. Where the parties have failed to set forth a material term, the court must interpret language and conduct to determine the parties’ intent. In the employment context, "as long as,” like "lifetime” and "permanent,” are construed as offers of steady employment.
In the context of employment arrangements, a promissory theory of liability is analyzed in the light of the presumption of employment at will. Where it is asserted that the proofs are insufficient to create an issue of fact, a claim of a promise implied in fact requires the court to focus on the words or actions of the defendant to determine whether there is sufficient evidence that a reasonable promisee could believe mani fested an intention to make a commitment of job security. Because the defendant’s commitment-making actions do not predominate, the decision of the Court of Appeals should be affirmed.
Affirmed.
Justice Levin, dissenting, stated that the plaintiff’s claim for wrongful. discharge based on an express contract does not depend on Montgomery Ward’s written policy statements or on terms left to inference, but rather on Montgomery Ward’s offer, subject to the Rules of Personal Conduct that enumerated grounds for discharge, to employ her to sell appliances at a stated compensation for as long as she was able to do the work. Because the promise by the employer stated a term of duration and required no performance by the plaintiff ether than that she sell, she could be discharged only for a failure to sell, or for a cause stated in the Rules of Personal Conduct, or for a cause the employer might seek to establish by implication.
Contracts with "as long as” durational terms are express contracts. By its terms such a promise is not for permanent or lifetime employment, but rather for employment for a term coextensive with the time that the employee is able to do the work.
An offer by an employer to employ a person for stated compensation as long as the person is able to do the work defines clearly, specifically, and unambiguously the work to be done, the compensation to be paid, and the term of the contract, so that the trier of fact may find, upon acceptance, an express contract of employment was formed for as long as the employee is able to do the work. Because the contract provides a method for determining the length of the engagement, the duration of the contract is determinable. The duration is sufficiently definite, even though it is uncertain how long the employee will be able to do the work.
The promise to provide the employee with work at a stated compensation for as long as the employee is able to do the work is express, not implied, overcoming a presumption of employment at will.
The correct focus is not on what the promisor actually intended, but on what a reasonable promisee would conclude the offer meant. The question whether the words used by the parties are sufficient to support a finding of a contract of employment does not depend on whether the words are in writing or are expressed orally. There is no rule of law requiring objective support in the form of a manual or other writing, or other corroborative evidence for an oral term of a contract of employment. A term of duration of an employment contract is not negated, as a matter of law, by evidence that the employee when hired did not inquire about or negotiate for job security, or by evidence that the employee was seeking a sales position rather than a singular, executive job position.
Chief Justice Cavanagh, dissenting, stated that the relevant issue regarding the terms of the plaintiff’s oral employment contract, including the durational or job security term, is what terms in fact were agreed to, not how or whether they were negotiated. To the extent that objective support for the express oral contract is relevant, such factors support the plaintiff.
The majority’s newly invented requirement of objective support for an express oral employment contract from policy manuals or statements alters and misapplies the holding and reasoning in Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579 (1980), and its companion case, Ebling. While it is true that Toussaint was given a manual specifically providing termination only for just cause, it was not relied on to support the existence of the oral contract providing termination only for just cause, but was relevant only to his separate claim that his dismissal without cause was barred by the legitimate expectations created by the manual.
Whether two parties, by express oral statements, have entered into a contract providing termination only for just cause is a question of fact for the jury. That determination should not be disturbed unless, considering the record in the light most favorable to the verdict, there is neither competent nor sufficient evidence from which reasonable minds could reach the jury’s conclusion. In this case, the oral contract enjoys sufficient factual support to justify the jury’s verdict. For all relevant and dispositive purposes, this case is legally and factually indistinguishable from Toussaint.
Justice Mallett took no part in the decision of this case.
Master and Servant — Employment at Will — Termination for Cause — Implied Contracts.
Termination for just cause may be provided in a contract of employment for indefinite duration by express agreement or may arise as a result of an employee’s legitimate expectations grounded in an employer’s policy statements; contractual implications arising from oral statements are to be determined on the basis of the meaning reasonable persons might attach to the language, given the circumstances presented; any contractual obligation for permanent employment arising from oral representations must be based on more than an expression of an optimistic hope of a long relationship and the statements clearly must permit a construction which supports the asserted meaning.
Meana, Spruit & Bedevia, P.C. (by Richard M. Spruit), for the plaintiff.
Dykema, Gossett (by Charles C. DeWitt, Jr.) for the defendant.
Amici Curiae:
Mark Granzotto, Monica Farris Linkner, and Charles P. Burbach for the Michigan Trial Lawyers Association.
Clark, Klein & Beaumont (by Dwight H. Vincent, J. Walker Henry, and Rachelle G. Silberberg) for Michigan Manufacturers Association.
Miller, Canñeld, Paddock & Stone (by Diane M. Soubly) for American Society of Employers, Motor Vehicle Manufacturers Association of the United States, Inc., Greater Detroit Chamber of Commerce, and Michigan State Chamber of Commerce.

Opinion:
Riley, J.
In Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579; 292 NW2d 880 (1980), this Court joined the forefront of a nationwide experiment in which, under varying theories, courts extended job security to nonunionized employees. In the vast outpouring of ensuing cases, there are indeed situations in which employers have in reality agreed to limit managerial discretion. However, the theory remains troubling because of those instances in which application of contract law is a transparent invitation to the factfinder to decide not what the "contract" was, but what "fairness" requires.
That courts have not been successful in unravel ing the logic of the theory to produce principles that distinguish the first category of cases from the second, is not necessarily a reason to abandon the experiment. As Justice Griffin put it in In re Certified Question, Bankey v Storer Broadcasting Co, 432 Mich 438, 457; 443 NW2d 112 (1989), "[fjairness suggests that a discharge-for-cause policy announced with flourishes and fanfare at noonday should not- be revoked by a pennywhistle trill at midnight." But unless the theory has some relation to the reality, calling something a contract that is in no sense a contract cannot advance respect for the law. Thus, we seek a resolution which is consistent with contract law relative to the employment setting while minimizing the possibility of abuse by either party to the employment relationship.
It is in this context that we address the question presented in this appeal: whether an employer's oral statements and written policy statements created an employment contract terminable only for cause.
FACTS AND PROCEEDINGS
In August of 1976, plaintiff applied for a sales position at defendant's North Kent Mall store in Grand Rapids. Plaintiff was interviewed by Mr. Vern Harryman who, according to plaintiff, told her that she would have a job at Montgomery Ward & Co., Incorporated, as long as she achieved her sales quota. With regard to his meeting with plaintiff, Mr. Harryman testified:
When we hired commission salespeople, that's sort of a different type of employee than a time-card person. Their main objective, the number one thing was that they must attain their draw of a hundred and twenty-six dollars a week, and gener ally, as long as they generated sales and were honest, why, they had a job at Wards, and that's the way we used to hire our people.
At the time of her hiring, plaintiff signed a sheet entitled "Rules of Personal Conduct." The sheet stated that adherence to company policies would help an employee to achieve "growth, profit, security, [and a] successful career." The rules further provided that anyone involved in the following activities would be immediately dismissed.
Several years later, in January of 1982, defendant issued to all employees a handbook entitled "Welcome to Wards." The handbook contained disciplinary guidelines which classified infractions according to severity, and allowed four types of discipline for transgression: "1) Written Warning(s); 2) Suspension without Pay; 3) Probation . . . ; and 4) Separation." In the back of the handbook was a form designated the "New Employee Sign-Off Sheet." The sheet provided in part:
I have read and fully understand the rules governing my employment with Montgomery Ward. I agree to employment with Montgomery Ward under the conditions explained. I understand these conditions can be changed by the Company, without notice, at any time. I also understand and agree that my employment is for no definite period and may, regardless of the time and manner of payment of my wages and salary, be terminated at any time, with or without cause, and without any previous notice.
Although a personnel employee informed plaintiff that the sheet was. applicable to her, plaintiff refused to sign the form. Plaintiff claimed that it applied only to new employees, and she did not "feel it's right that you can fire somebody for no reason, at all." Plaintiff noted on the back of the sign-off sheet, "Read and do not wish to sign. 5-20-82. [s] Mary Rowe."
Defendant issued another employee handbook to its work force in August of 1982. The August, 1982 handbook also contained an "Employee Sign-off Sheet" providing for termination with or without cause. Plaintiff received but did not sign this sheet. All Montgomery Ward employees, including plaintiff, received another handbook in May of 1983. In the 1983 handbook, there was further language providing for employment at will. Virtually the same disciplinary guidelines were included in all the handbooks.
The Court of Appeals opinion aptly describes the facts surrounding plaintiff's termination.
On March 8, 1984, plaintiff was scheduled to work from 1 p.m. to 9 p.m. At 2 p.m., she was observed leaving the store from an unauthorized exit by security personnel. She returned approximately four hours later. Plaintiff did not receive permission to leave the store from her supervisor, although she claimed that she attempted to contact him several times since the previous day but was unable. She did tell her co-workers that she had to leave on an emergency but did not say where she was going or how long she would be gone. Further, even though the salaries of commis sioned salespersons are not do. indent upon the hours worked, plaintiff failed t_. punch out when she left or punch in when she returned, as required by company policy. Neither did she make note of her four-hour absence on the time card which she turned in at the end of the work week.
Two days later, plaintiff was called into the office of the store manager to answer for the unauthorized absence. She allegedly gave no explanation for leaving the store and refused to provide a written statement on the matter. She said only that she could not remember where she was for those four hours. As a result of this incident, plaintiff was terminated from defendant's employ.
On May 14, 1984, plaintiff filed a complaint against defendant in the Kent Circuit Court asserting claims for wrongful discharge, breach of contract, and several other causes of action which are not relevant for purposes of this appeal. A jury trial on the matter was held on February 18 and 19, 1986. At the conclusion of plaintiff's proofs, defendant moved for a directed verdict on the ground that she was an at-will employee who was subject to dismissal at any time without cause. The court denied that motion, reasoning that an issue of fact existed for the jury to determine whether there was a just-cause employment contract or whether plaintiff's employ was terminable at the will of defendant. The trial then continued and eventually concluded in a jury verdict of $86,500 plus interest in favor of plaintiff. A judgment to that effect was thereafter entered by the court.
On May 1, 1986, defendant filed motions for judgment notwithstanding the verdict (JNOV), a new trial, or remittitur. By court order dated June 19, 1986, each of those motions was denied.[ ]
Defendant appealed the decision, and the Court of Appeals reversed, finding that plaintiff was an employee at will. Plaintiff appealed in this Court, and we ordered Rowe held in abeyance pending resolution of In re Certified Question, supra, and Bullock v Automobile Club of Michigan, 432 Mich 472; 444 NW2d 114 (1989). On May 2, 1990, this Court granted leave to appeal. 434 Mich 910 (1990).
i
The issue posed by this case is whether defendant employer's oral statements and written policy statements directed at plaintiff may be interpreted to permit a promise implied in fact not to terminate except for cause. We find that plaintiff's allegations are insufficient to support her contention of a promise implied in fact limiting the defendant's right to terminate her employment. Thus, plaintiff cannot maintain an action for breach of contract as a result of her dismissal.
This Court has held that contracts for permanent employment are for an indefinite period of time and are presumptively construed to provide employment at will. Lynas v Maxwell Farms, 279 Mich 684, 687; 273 NW 315 (1937). When contract claims rest on proofs of oral representations, the presumption provides assurance that oral contracts for an indefinite term, which fall outside the statute of frauds, will be recognized only where circumstances suggest both parties intended to be bound. The presumption may be overcome by proof of an express contract for a definite term or a provision forbidding discharge in the absence of just cause, or it may be overcome by proofs which permit a promise implied in fact of employment security, i.e., for a particular period of time or to terminate only for just cause.
In Lynas, the Court declined to imply a durational term where the plaintiff accepted an offer of a "permanent lifetime position with the defendant." The Court observed, however, that the presumption of employment at will can be overcome if a contract is accompanied by "distinguishing features or provisions," or additional consideration supporting a term of permanent employment.
Again, in Toussaint v Blue Cross & Blue Shield of Michigan, supra, p 600, the Court stated that "[b]ecause the parties began with complete freer dom, the court will presume that they intended to obligate themselves to a relationship at will." In general, parties to an employment contract "remain free to provide, or not to provide, for job security." Valentine v General American Credit, Inc, 420 Mich 256, 258; 362 NW2d 628 (1984).
In Toussaint, we had the opportunity to expand on the rule in Lynas and explore the kinds of "distinguishing features or provisions," or special circumstances which limit an employer's right to discharge on an open-ended contract. This Court there found sufficient factual evidence to permit a jury to imply a limitation on the employer's right to discharge and held that a provision of termination for just cause may become part of a contract for indefinite duration by express agreement, or "as a result of an employee's legitimate expectations grounded in an employer's policy statements." 408 Mich 598. However, the Court was careful to limit the effect of its holding:
Employers are most assuredly free to enter into employment contracts terminable at will without assigning cause. We hold only that an employer's express agreement to terminate only for cause, or statements of company policy and procedure to that effect, can give rise to rights enforceable in contract. [408 Mich 610. Emphasis added.][ ]
Plaintiff asserts that oral statements made to her at a prehiring interview amounted to a contract to terminate only for just cause, while defendant asserts that the plaintiff was an employee at will. However, this is not a situation in which interpretation requires an express determination of credibility. McIntyre v Smith-Bridgman & Co, 301 Mich 629; 4 NW2d 36 (1942). Rather, this is a situation in which the parties attach different meanings to undisputed facts, and the Court is asked to conclude that the jury was entitled to determine from the conduct of the parties that a promise existed limiting the employer's ability to discharge.
Again, we are asked here to decide whether an employer's oral statements and written policy statements created an employment contract terminable only for cause. We do not decide that the words and conduct of parties cannot, as a matter of law, create an issue submissible to a jury regarding the existence of a contract implied in fact. Moreover, we do not suggest that a contract of employment is too indefinite to be enforced where the employee's consideration is the work performed in response to a unilateral offer. Nor do we depart from the concept that the presumption of employment at will is a rule of construction rather than a substantive limitation. As Justice Ryan acknowledged in his dissent in Toussaint, supra, p 645, "[w]e have no doubt that circumstances could exist in which an employer's written policies . . . might be incorporated by reference, expressly or impliedly, into an otherwise oral employment contract and thus become a declaration of the employment agreement." It is just as true, however, that the party bearing the burden of overcoming the presumption of employment at will must convince the court either that it should supply an omitted term or that the circumstances are such that the jury should be permitted to so conclude.
In determining whether a reasonable factfinder can find a promise of job security implied in fact, we look to all the facts and circumstances to evaluate the intent of the parties. As stated in Miller v Stevens, 224 Mich 626, 632; 195 NW 481 (1923):
A contract is implied where the intention as to it is not manifested by direct or explicit words between the parties, but is to be gathered by implication or proper deduction from the conduct of the parties, language used or things done by them, or other pertinent circumstances attending the transaction.
In deciding whether there was mutual assent to a just-cause provision, we use an objective test, "looking to the expressed words of the parties and their visible acts." (Emphasis added.) Goldman v Century Ins Co, 354 Mich 528, 535; 93 NW2d 240 (1958); Stark v Kent Products, Inc, 62 Mich App 546; 233 NW2d 643 (1975).
The starting point in analyzing oral statements for contractual implications is to determine the meaning that reasonable persons might have attached to the language, given the circumstances presented. In our analysis, we agree with the federal district court in Carpenter v American Excelsior Co, 650 F Supp 933, 936, n 6 (ED Mich, 1987):
After all Lynas as well as reality compels recognition of the fact that neither party to the beginning of an employment relationship expects it to be unsatisfactory, and both hope it will have a significant duration. This hope and noncontractual wish is expressed in terms of language such as "as long as you do the job."
Consequently, the court stated that any orally grounded contractual obligation for permanent employment "must be based on more than an expression of an optimistic hope of a long relationship." Id. (Emphasis added.)
Along the same lines, Justice Griffin's remarks in Bullock, supra at 517, are instructive:
Surely, a modicum of realism and common sense is needed. An assurance such as that alleged in the instant case simply cannot be separated from the realities of the working world. It should be recognized that "lifetime" employment contracts are extraordinary and, being so, "must be expressed in clear and unequivocal terms before a court will conclude that an employer intended to enter into such a weighty obligation." [Griffin, J., concurring in part and dissenting in part. Citations omitted.]
To be sure, because of the difficulty in verifying oral promises, the statements must clearly permit a construction which supports the asserted meaning. The "overreaching principle of contract interpretation" is that the court looks to all the relevant circumstances surrounding the transaction, including all writings, oral statements, and other conduct by which the parties manifested their intent. Farnsworth, Contracts, § 7.10, p 492.
We thus look to the facts in Toussaint to guide us in evaluating the oral statements implicated in the case before us. Both of the plaintiffs, Mr. Toussaint and Mr. Ebling, "negotiated specifically regarding job security with the persons who interviewed and hired them." 408 Mich 612. Prior to being hired, Toussaint had several interviews with the cotreasurer of the company, and the position he sought was assistant to the treasurer. Toussaint claimed he was promised he would not be terminated " 'as long as I did my job.' " Further, upon inquiring about job security, he was handed a manual which expressly confirmed that he could be released " 'for just cause only.' " Id. at 613.
Ebling also had several interviews prior to being hired. He was interviewed by the executive vice president and the general manager about a marketing director position. He expressed concerns specifically about job security to the vice president. In particular, he voiced concerns about a personality conflict with his supervisor. Subsequent to negotiations, the vice president agreed not to terminate Ebling as long as he was doing his job.
In the instant case, plaintiff was interviewed for the job by Vern Harryman, sales manager of the appliance department. Although defendant had been advertising to attract salespersons, plaintiff told Harryman " 'Well, I hadn't seen the ad, I just kind of stumbled in there .'" With regard to representations pertinent to job security, plaintiff testified that "[h]e said that he needed somebody to sell sewing machines and vacuum cleaners and that this job would involve selling, and as long as I sold, I would have a job at Montgomery Ward." (Emphasis added.) _
Contrasting the surrounding circumstances of this case with Toussaint and Ebling to determine if there was mutual assent on a provision for permanent employment, or if the statements were noncontractual expressions of "optimistic hope of a long relationship," we find the oral statements insufficient to rise to the level of an agreement providing termination only for just cause. Although the "as long as" statement bears resemblance to remarks made in Toussaint, we find objective evidence lacking to permit a reasonable juror to find that a reasonable promisee would interpret Harryman's statements and actions as a promise of termination only for cause implied in fact.
Unlike Toussaint, plaintiff did not engage in preemployment negotiations regarding security. She simply "stumbled" into the store one day and had one interview before being hired. Nor is there any testimony suggesting that plaintiff inquired about job security. Therefore, Harryman's statements could not have been addressed to any inquiry regarding job security. In short, no objective evidence exists that their minds met on the subject of continued employment. In addition, we note that in Toussaint, the plaintiffs were applying for singular, executive job positions. That the positions were unique supports the finding that the terms were specifically negotiated. Here, plaintiff was one of many departmental salespersons. The fact that plaintiff applied for one of several identical positions militates against the likelihood that the contract terms were negotiable and suggests that company policy was more likely to govern.
Furthermore, in Toussaint, in response to in quiries about job security, Toussaint was given a manual specifically providing termination only for just cause, and containing extensive disciplinary classifications. The manual offered objective support for the oral representations made to the plaintiff. In the instant case, the objective support was lacking. Upon being hired, plaintiff signed a "Rules of Personal Conduct" sheet. The sheet did not contain elaborate disciplinary procedures and, more importantly, did not contain the "release for just cause only" language. Moreover, the signed sheet conflicts with plaintiff's interpretation of the oral remarks that she would have a job as long as she achieved her sales quota, and undercuts any belief that a contract arose from the interview. The rules listed conduct such as theft, destruction of property, falsification of records, and moral impropriety which would result in immediate dismissal. Plaintiff's agreement to abide by those rules suggests that any subjective belief she maintained that she could only be dismissed for failure to obtain her quota was not reasonable.
Lastly, we find that Harryman's testimony was insufficient to support an agreement of termination only for just cause. As suggested by our holding in Lynas, supra, and supported by this Court's treatment of the facts in Toussaint and Ebling, an employee who seeks to establish from conduct a promise implied in fact must meet a higher standard than an employee who relies on express language. Logic compels the conclusion that where parties expressly negotiate with offers and counteroffers, it is more reasonable to anticipate mutual assent. Conversely, there is less chance that the parties desired or intended the result prayed for where, as here, conduct and oral statements are claimed to create a promise of job security implied in fact. See DiBonaventura v Consolidated Rail Corp, 372 Pa Super 420; 539 A2d 865 (1988).
Thus, we conclude that the oral statements of job security must be clear and unequivocal to overcome the presumption of employment at will. As stated by Justice Ryan in his separate opinion in Toussaint, supra at 632-633:
The second exception to the general rule consists of those instances in which the employment agreement includes some "distinguishing feature[s] or provision^]," as the Court put it in Lynas, supra, so as to preclude a construction of employment at will. A classic example of this type modification of an indefinite hiring is the modern collective bargaining agreement in which there is often included a provision that an employee shall be discharged only for cause. Provisions of this nature clearly and forcefully indicate a mutual intention to limit the employer's discretion in terminating the employment relationship.
Harryman's words were couched in general terms, more akin to stating a policy as opposed to offering an express contract. His words were vague when discussing termination (e.g., "generally, as long as they generated sales and were honest . . . they had a job at Wards"; "about the only way that you could be terminated would be if you failed to make your draw . . . ."). (Emphasis added.) We find that these words do not clearly indicate an intent to form a contract for permanent employment. Rather, the context of Harry-man's comments suggests that they were merely intended to emphasize the number one priority of plaintiff's job — sales.
We also reject plaintiff's contention that the "Rules of Personal Conduct" created a contract to terminate only for cause. In signing the sheet, plaintiff agreed that she would be dismissed if she engaged in the prohibited conduct. Nothing in the rules suggested that the enumerated conduct was the only basis for dismissal, and the rules were consistent with a termination-at-will policy. Thus, we find no evidence from which a reasonable promisee could find a promise of job security. Consequently, we find no evidence from which reasonable minds could find that there was mutual assent on a term of employment terminable only for cause.
ii
'Having concluded that the employer's oral statements and the "Rules of Personal Conduct" did not form contracts for permanent employment, we must next decide whether the disciplinary guidelines promulgated by defendant gave rise to an employment contract providing termination only for just cause where defendant concurrently issued sign-off sheets containing an employment-at-will policy. We find that plaintiff cannot maintain an action for breach of contract on the basis of the disciplinary guidelines because the last handbook which plaintiff received clearly set forth an employment-at-will policy.
In Toussaint, this Court held that an employer's written policy statements announcing a policy of termination only for cause may create contract rights if the statements give rise to "legitimate expectations" of just-cause employment in the employee. In that case, the Court determined a jury question was presented regarding whether a policy manual created such expectations. The Court stated:
Since Blue Cross published and distributed a 260-page manual establishing elaborate procedures promising "[t]o provide for the administration of fair, consistent and reasonable corrective discipline" and "to treat employees leaving Blue Cross in a fair and consistent manner and to release employees for just cause only," its employees could justifiably rely on those expressions and conduct themselves accordingly. [408 Mich 617. Emphasis added.]
Referring to the just-cause provision, the Court stated:
There were, thus, on this separate basis alone, special circumstances sufficient to overcome the presumptive construction that the contract was terminable at will. [408 Mich 614.]
In In re Certified Question, supra, the Sixth Circuit Court of Appeals certified the following question to this Court:
"Once a provision that an employee shall not be discharged except for cause becomes legally enforceable under Toussaint [supra], as a result of an employee's legitimate expectations grounded in the employer's written policy statements, may the employer thereafter unilaterally change those written policy statements by adopting a generally applicable policy and alter the employment relationship of existing employees to one at the will of the employer in the absence of an express notification to the employees from the outset that the employer reserves the right to make such a change?" [432 Mich 441.]
In responding to the certified question, this Court held that a company's written policy statements, which created legitimate expectations in the employee of discharge for cause only, could be unilat erally modified by the employer. The Court stated that
[a]n employer may, without an express reservation of the right to do so, unilaterally change its written policy from one of discharge for cause to one of termination at will, provided that the employer gives affected employees reasonable notice of the policy change. [432 Mich 441.]
The Court also required that the notice be uniformly given to employees affected by the policy change.
Much of the same documentation as in the case before us was involved in Dell v Montgomery Ward & Co, Inc, 811 F2d 970, 972 (CA 6, 1987). In Dell, the plaintiff sued for breach of contract after he was terminated by the defendant. The plaintiff alleged a contract terminable only for cause arose out of the defendant's Progressive Discipline Reference Guide (pdrg). The pdrg was designed to give supervisors a procedure to follow when punishing employees. However, within the pdrg, it was stated that "[t]his procedure does not form an employment contract." (Emphasis deleted.) Also, the defendant's Human Resources Policy Manual contained a provision that discharge could be with or without cause, and also that discipline procedures did not constitute employment contracts. Furthermore, the plaintiff signed a sheet in 1982 which stated that employment could be terminated with or without cause. Writing for the court, Judge Ryan determined that there was no contract making employment terminable only for cause:
It is difficult to imagine what more the defendant might have done to make it crystal clear to Dell, and all Montgomery Ward employees, that, unless some other arrangement were made di rectly with the President and Chief Executive Officer or Executive Vice President of Human Resources, Montgomery Ward employees are employees "at will" who may be discharged with or without cause.
. . . The unequivocal language in the "sign off sheet" in this case, which stated that the employees could be discharged "with or without cause and without any previous notice," means what it says and is binding upon the parties. Similarly, the plain and simple statement in the pdrg, that the due process procedures established there did "not form an employment contract," likewise means what it says. [811 F2d 974.]
In the instant case, plaintiff received handbooks containing disciplinary guidelines. She claims the guidelines at least create a question for the jury regarding the existence of a contract providing termination for cause.
However, similar to the "sign-off sheet" in Dell, in the instant case the 1983 handbook contained unequivocal language expressing defendant's termination-at-will policy. Under a heading entitled "Employment Relationship," a paragraph in. the 1983 handbook provided:
Because business requirements fluctuate often in our industry, your employment conditions and status are subject to change at any time. Therefore, although you may have been hired for a specific position, with specified hours, pay, duties, etc., all of these can be reduced, increased or, in fact, terminated without advance notice and for any reason. Consequently, you also have the right to terminate your employment in the same man ner, at any time, for any reason. This lack of a guarantee or an employment contract also applies to other benefits, privileges and working conditions of employment at Montgomery Ward.
Whatever the nature of plaintiff's expectations with regard to termination prior to the issuance of the 1983 manual, the last handbook distributed to plaintiff, we find that the 1983 manual clearly and unambiguously notified plaintiff of the company's termination-at-will policy. We are persuaded therefore that the 1983 manual would have succeeded in modifying any prior expectations of termination only for cause.
Furthermore, we reject plaintiff's argument that she did not have reasonable notice of the policy. In addition to the May, 1983, manual, the two earlier sign-off sheets distributed in 1982 asserted a termination-at-will policy. Plaintiff was asked several times by the personnel department to sign the January, 1982, sign-off sheet, but she refused. We also note that the August, 1982, sheet was addressed to "employees," not "new employees." Also, plaintiff was not discharged until March 8, 1984. The last handbook distributed to plaintiff was sent out at least nine months before her discharge. Therefore, as a matter of law, we find that the existence of three handbooks clearly providing for termination at will, the last of which was sent to plaintiff at least nine months prior to termination, constituted reasonable notice of defendant's policy.
Moreover, we find the fact that plaintiff did not sign the employment at will disclaimers is not determinative. If plaintiff had a prior express contract to be discharged only for cause, her assent would be required to modify the agreement. However, there was no such prior agreement. Consequently, we agree with the Court of Appeals statement that:
Her disagreement with the provisions contained therein cannot negate their effect. She was aware of the provisions and, therefore, any contrary expectations she may have harbored cannot be deemed reasonable. [Unpublished opinion per curiam, decided November 9, 1988 (Docket No. 93817), pp 5-6.]
In light of our findings, we would hold that upon receiving the May, 1983, manual, plaintiff could no longer harbor any legitimate expectations of a discharge-for-cause policy. Defendant expressly and clearly reserved the right to discharge employees at will.
hi
Justice Levin's lengthy dissent clearly evidences an insistence that this Court broaden the reach of his majority opinion in Toussaint which we elect not to do.
Thus, we respond — briefly—noting:
—In his dissenting opinion, Justice Levin relies on § 32 of the Restatement of Contracts, stating:
Today, this Court, without reference to § 32 of the first Restatement of Contracts [presently § 33 of the Restatement of Contracts, 2d], and ignoring cases enforcing contracts with "as long as" terms, promulgates its own restatement of the law in holding that Rowe may not maintain an action to enforce a promise to employ her for as long as she did "the work" — selling—because, among other reasons, the promise did not include a durational term or a sufficiently definite durational term. [Slip op, p 22.]
While we acknowledge the Restatement as persuasive authority on the subject of contracts, this Court is not, nor is any other court, bound to follow any of the rules set out in the Restatement. Moreover, even assuming, as Justice Levin urges, that our ruling is inconsistent with the Restatement, the writings of the American Law Institute do not control the rulings of this Court, nor is the contract law of this state necessarily written to be consistent with the Restatement.
—In section ii(f) of his opinion, Justice Levin remarks that "[c]ourts generally regard 'as long as' contracts as considerably more than expressions of a 'hope and noncontractual wish,' but, rather, as expressing a durational term." Post, p 694.
However, 56 CJS, Master and Servant, § 31, p 414, states:
Permanent employment contracts. As a general rule employment contracts which in some form purport to provide for permanent employment, as where the agreement is for the employee to have a permanent position or permanent employment or employment for life, or the employee is hired to fill a "permanent vacancy," or where the employment is to be for as long as the master is operating, as long as the employee desires the position, or as long as the employee satisfactorily performs his duties, are terminable at will by either party where they are not supported by any consideration other than the obligation of service to be performed on the one hand and wages or salary to be paid on the other. [Emphasis added.]
Furthermore, this Court has previously found an "as long as" statement insufficient to supply a durational term. In Lynas, supra, p 687, "plaintiff was offered a permanent position or one for life so long as his services were satisfactory to defendant." The Court held that a durational term was lacking and that the relationship was for an indefinite term and terminable at will.
The Lynas Court analogized that case to Lord v Goldberg, 81 Cal 596, 597-598; 22 P 1126 (1889). In Lord, it was
agreed by and between plaintiff and defendants that in consideration of his entering into their employment as such solicitor, and using all his efforts to secure certain-named persons as customers, and to extend their business, "they would give him permanent employment so long as he should use his best efforts to extend their business, paying him at the rate of twenty dollars per week, and increase his salary as the business increased" . [Emphasis added.]
The court determined that the agreement was for an indefinite term and terminable at the will of either party.
In illustrating its holding, the Lynas Court also cited Rape v Mobile & ORR Co, 136 Miss 38, 45; 100 So 585 (1924), where the plaintiff was promised to have permanent and steady employment " 'as long as he was able and willing to perform such services properly.' " The court found that there was no durational term and the agreement was terminable at will.
In another case cited as illustrative by the Lynas Court, Arentz v Morse Dry Dock & Repair Co, 249 NY 439, 441; 164 NE 342 (1928), the plaintiff alleged that he was orally promised a permanent position, or a lifetime employment contract. In finding an agreement for termination at will, the Court of Appeals of New York stated that "[a]n agreement to employ the plaintiff in such a position for life is so unusual that we would expect to find it contained in some writing." The court later asked:
Are we justified in saying that under all these circumstances the plaintiff has proved a life employment, or what amounts to about the same thing, an employment which is to last as long as the corporation does business, and the plaintiff's services are satisfactory? Such contracts at least should be specific and definite, with little or no room for misunderstanding, even if they are not required to be in writing. [Id., p 443.]
The history behind the Lynas case teaches us that "as long as" statements do not necessarily provide durational terms, and contracts providing for permanent employment should be specific and definite with regard to duration.
—Many of the cases cited by Justice Levin in section ii(f) of his opinion are distinguishable from this case. Of the ones that are not distinguished here, none are controlling with respect to this Court.
—The following cases cited in Justice Levin's opinion are distinguishable from this case because they are not employment contract cases: City of Superior v Douglas Co Telephone Co, 141 Wis 363; 122 NW 1023 (1909); Caplis v Monroe, 228 Mich 586; 200 NW 123 (1924); Long Beach Drug Co v United Drug Co, 13 Cal 2d 158; 88 P2d 698 (1939); Fuchs v United Motor Stage Co, Inc, 135 Ohio St 509; 21 NE2d 669 (1939); Phelps v Shawprint, Inc, 328 Mass 352; 103 NE2d 687 (1952); Big Spring v Texas Bd of Control, 404 SW2d 810 (Tex, 1966); State v Orkin Exterminating Co, Inc, 528 So 2d 198 (La App, 1988).
—In the following cases, the contract provisions outlining durational terms are clearly and specifically set out in writing so that the parties' intent is more easily discernible. Of course, in the instant case, we must attempt to ascertain the parties' intent from vague oral statements: Fuchs; Long Beach Drug Co; Big Spring, supra; McMullan v Dickinson Co, 60 Minn 156; 62 NW 120 (1895); Kirkley v FH Roberts Co, 268 Mass 246; 167 NE 289 (1929).
In Diggs IV v Pepsi-Cola Metropolitan Bottling Co, Inc, 861 F2d 914 (CA 6, 1988), the court found an enforceable oral promise that as long as the plaintiff's performance was satisfactory, he would have a job. However, in Diggs, the promise was made in response to the plaintiff's direct inquiries about job security. In the instant case, plaintiff made no inquiries about job security. Whether the parties to a contract negotiate or specifically discuss a subject is relevant to a determination regarding mutual assent. Furthermore, the court in Diggs mischaracterizes the district court's decision in Carpenter, supra. The court in Diggs states that "[u]nlike Carpenter, Diggs did not sign an 'employment-at-will' clause." 861 F2d 918. However, the plaintiff in Carpenter also did not sign the employment application containing the clause.
In Ehrenworth v Stuhmer & Co, 229 NY 210; 128 NE 108 (1920), the plaintiff agreed to exclusively sell black bread made by the defendant, and the defendant agreed to furnish the plaintiff with all his black bread requirements. The agreement was to last as long as both parties remained in business. Since the plaintiff was an exclusive agent, selling only the defendant's black bread, the circumstances were more conducive to finding a durational term. Also, the statement that as long as both parties are in business provides a definite standard, whereas "as long as she sold" is a vague, isolated statement on which to pin a term of duration.
In State v Orkin Exterminating Co, Inc, supra, p 199, pest control services were "for the lifetime of the treated structure so long as the customer paid a specified annual renewal fee." The court focused on the phrase the "lifetime of the structure" in finding the term definite and ascertainable. However, in this state, lifetime employment contracts are indefinite and terminable at will.
—In section vn of his opinion, Justice Levin incorrectly determines that plaintiff did not assert that the 1983 manual, or procedures found therein, provided a basis for a finding of just cause employment.
Virtually the same disciplinary guidelines are found in each of the manuals. Plaintiff's brief sets out what it refers to as "four major evidentiary features" in the case: (1) the 1982 handbook, (2). the 1983 handbook, (3) the "sign-off " sheet, and (4) the testimony of Mr. Harryman and 1976 Rules of Conduct.
Further, the plaintiff's brief later states:
It is Plaintiff's contention that the 1982 hand book is a reiteration of the "for cause" policy first established by Mr. Harryman's statement and the 1976 personal rules of conduct. This means that there are three separate bases for Ms. Rowe's objective expectancy that she would not be terminated except for cause, i.e., the oral statements, the 1976 Personal Rules of Conduct (Exhibit 2), and the 1982 handbook (Exhibit 10). [Emphasis added.]
Plaintiff also argued in the Court of Appeals that the disciplinary classifications found in the manuals supported an agreement for just-cause employment. The Court of Appeals stated:
Plaintiff asserts that the jury was properly allowed to decide what type of contract existed in the instant case because two factors raised an issue for the trier of fact. Those two factors were: (1) the promise allegedly made to plaintiff at her job interview that she would have a job as long as she met her sales quota, and (2) defendant's disciplinary classification and procedure. As to the latter factor, plaintiff claimed that, because the classification encompassed misconduct that would constitute good cause for discharge, such created a reasonable expectation in the employees that they would not be discharged except for good cause. [Slip op, p 5.]
Along the same lines, Justice Levin argues that we incorrectly framed the issue. In so arguing, he states that "Rowe's express contract claim for wrongful discharge does not depend at all on Montgomery Ward's 'written policy statements' or on terms left to inference," thus flying in the face of the passages set out above that plaintiff did assert that the guidelines found within the manuals formed the basis for a just-cause contract.
CONCLUSION
In summary, we find the oral statements relied on by plaintiff insufficient to rise to the level of an agreement providing termination only for just cause. Moreover, the circumstances do not support a finding of mutual assent on a provision for permanent employment.
We also find that the "Rules of Personal Conduct" did not create a contract terminable only for cause.
Finally, plaintiff cannot maintain an action for breach of contract on the basis of the disciplinary guidelines because the last handbook which plaintiff received clearly set forth an employment-at-will policy. Thus, we would affirm the decision of the Court of Appeals.
Brickley and Griffin, JJ., concurred with Riley, J.
APPENDIX
Disciplinary Action Guidelines
Disciplinary guidelines have been established so that you know exactly what the company expects of you. These guidelines detail the actions that will cause disciplinary action to be taken by the company.
There are four types of discipline that may be used by supervisors to correct improper conduct/performance: 1) written warning(s); 2) suspension without pay; 3) probation; and 4) separation.
Violations are categorized as Class a, b, or c. The type of disciplinary action taken will depend on the violation committed. The violations are:
Class a
Counter Productive Behavior
An act or acts which result in theft, fraud, rape (or other sex offenses) arson, extortion, embezzlement, burglary, larceny, or violence using deadly weapons; willful violation of company conflict of interest policies; unauthorized disclosure of confidential company information; any other personal conduct which substantially limits your effectiveness as a Montgomery Ward employee by reason of its detrimental effect on the business or reputation of the company.
Insubordination
Refusal to follow direct instructions from a supervisor or manager.
Use or Possession of Deadly Weapons
Unauthorized use or possession of explosives, firearms or other weapons, on company premises or while performing company business.
Irresponsible Actions
Behavior which creates a substantial and unjustifiable risk or harm to another person; serious damage to company property; damage to the property or person of others while on company time or premises. Includes, but is not limited to: harassment of other employees or customers; reckless use of company equipment; physical assault, or attempted physical assault on any fellow employee, customer, vendor or visitor.
Trafficking or Use of Drugs/Alcohol
Sale, possession or use of controlled drugs or alcohol on company premises; drug or alcohol dependency that substantially interferes with your ability to perform assigned responsibilities. (If mitigating circumstances, such as bona fide legal disability are present, the employee may be reinstated with satisfactory evidence of recovery.)
Fraudulent/Deceptive Practices
Use of company property, credit, services or employment relationship in a manner other than prescribed by Company Policy, Federal, State or Local Laws. Includes, but is not limited to: willful manipulation or falsification of any company documents); misuse of employee/family discounts; misappropriation of company, vendor or customer property, services or credit; theft; fraud; price negotiation; or gross misuse of check cashing privileges. Refer to page 17 for discount information.
Class b
Hazardous Acts
Violation of applicable safety rules or actions which are in fact unsafe work practices. Includes, but is not limited to: failure to wear personal protective equipment, (safety goggles/glasses, safety toe shoes, safety belts and lanyards); report all occupational injuries or conform to applicable o.s.h.a. regulations.
Employee Harassment
Harassment based on race, sex, age, national origin, religion, physical or mental handicap affect ing any aspect of employment. Includes, but is not limited to: offensive or degrading remarks or comments, innuendoes, or implication which, to a reasonable person create a hostile, intimidating or offensive work environment.
Negligent Conduct
Failure to use reasonable care in the performance of work or work related duties, which results in injury, property damage or financial loss to the company or others, which limits or interferes with profit production. Includes, but is not limited to: horseplay; excessive customer complaints; working off the time clock; and gambling.
Unauthorized Solicitation
Distribution of literature or soliciting membership in unions, fraternal, religious, social or political organizations, while on company time; or to those who seek or have a business relationship with the company, except such activities that are officially and expressly authorized by the company.
Aiding and Abetting Gross Violations
Association with fellow employees in an unlicensed or unlawful way. Includes aiding or abetting any conduct classified as Class a violations.
Class c
Reporting to Work in Unfit Condition
Reporting to work when so physically, mentally, or emotionally impaired as to be unable to satisfactorily perform assigned responsibilities.
Excessive Absenteeism/Tardiness
Excessive absences from work, late reporting, long breaks, leaving early or other violations of company work schedules.
Unauthorized Smoking
Smoking in non-designated areas. Includes, but is not limited to: sales floor; auto service center stock; or warehouse areas.
Violation of Uniform or Dress Regulations
Failure to follow a standard of dress appropriate for the business situation involved. Includes, but is not limited to: safety toe shoes; product service technician, automotive or truck driver uniforms; or local regulations as established by management.
Lounging/Loafing
Behavior during scheduled work hours that demonstrates significant lack of attention to assigned duties or responsibilities. Includes, but is not limited to: sleeping; reading for personal pleasure; or extensive personal telephone calls.
Violation of Company Policy
Violation of applicable policies and procedures not otherwise specifically referred to in the disciplinary guidelines.
NOTE: The above guidelines are not all inclusive of violations for which you can be disciplined. [Emphasis added.]
. Theft
• D[e]struction or misappropriation of property
• Violation of accepted moral standards
• Manipulating, altering or falsifying Company records (including employment application)
• Dishonesty of any kind
Rowe v Montgomery Ward & Co, Inc, unpublished opinion per curiam of the Court of Appeals, decided November 9, 1988 (Docket No. 93817), pp 2-3.
Judge Gribbs dissented from the per curiam decision signed by Judge Maher and Judge Simmons.
In Bullock v Automobile Club of Michigan, and In re Certified Question, supra, we distinguished between a promise implied in law arising from the employer's creation of legitimate expectations and an oral contract which can be formed on the basis of an express promise of job security or a promise implied in fact.
Bullock counsels that the presumption of employment at will does not authorize dismissal of unrebutted allegations of "exceptional circumstances." But, Bullock does not stand for the proposition that all such claims are submissible to a jury.
As 3 Corbin, Contracts, § 554, pp 223-225, observes, "If the words of agreement, whether oral or written, are definite and undisputed, and if there is no doubt as to the relevant surrounding circumstances, the interpretation of the words is ordinarily held to be a matter for the court."
In the 1991 supplement to §554A, p 274, Professor Kaufman observes:
Corbin's assertion that all questions of interpretation are essentially factual was not intended to destroy that rule. What Corbin meant was that even where a judge is to decide on a particular question of interpretation, he still is obliged to treat the question as one of fact. That is, he is still obliged to hold a factual hearing, he is obliged to take evidence, to allow cross-examination, to inquire into the surrounding circumstances, the situations and prior communications of the parties, and the like. [Emphasis in original.]
Where there are two fairly reasonable interpretations of the situation or where the proper interpretation of a contract requires a determination of credibility, summary disposition is inappropriate.
Harryman testified:
Q. At the interview, who was present other than you and Mary Rowe?
A. If I remember right, and that's very difficult, I think the personnel manager introduced me, and we did most of the interview, I think, in her office. . . .
Harryman discussed with plaintiff the terms of her employment:
A. . . . Their main objective, the number one thing was that they must attain their draw of a hundred and twenty-six dollars a week, and generally, as long as they generated sales and were honest, why, they had a job at Wards, and that's the way we used to hire our people.
Q. What did you tell Mary Rowe when you hired her?
A. That that was the prime purpose, to get sales and to attain that roughly $2,000 a week or more in sales.
In further discussing the conditions of employment, Harryman stated:
A. The conditions, again, number one was to attain those sales quotas and to be honest. . . . We had those sorts of things, but again, about the only way that you could be terminated would be if you failed to make your draw for two months in a row. . . .
Q. Did you tell her any other reasons for which she may be terminated?
A. Theft or, you know, obviously, murder, or something like that; theft of any company properties, or so on.
The disciplinary guidelines are essentially the same in all the manuals. The guidelines as printed in the May, 1983, handbook are set out in the attached appendix.
According to the record, this was the last in a series of handbooks distributed to plaintiff.
Because we find the 1983 manual clearly informed plaintiff of defendant's termination-at-will policy, we do not reach the question whether the guidelines actually created expectations of termination only for cause.
All three handbooks were distributed to all employees, signifying defendant's intention that the contents were to apply to all employees.
This section responds to the latest draft of a proposed dissent circulated, but as yet not filed, by Justice Levin.
After discussing the language in the employment application, the Carpenter court stated, "secondly and more importantly, as noted before, [the plaintiff] has not established any basis for a specific durational contract." 650 F Supp 937.
The court noted:
Both lifetime contracts for employment and health club memberships are not enforced as definite contracts by legislative act. [Citation omitted.] There is no legal basis for Orkin's assertion that lifetime contracts are indefinite and will not be specifically enforced in Louisiana. [528 So 2d 201.]
Post, p 679.