Opinion ID: 3169944
Heading Depth: 4
Heading Rank: 1

Heading: Legitimate Expectations Theory

Text: Because it is uncontested that Crawford’s employment term was indefinite, the presumption of at-will employment applies. See Dolan, 563 N.W.2d at 28. This presumption can only be overcome under the legitimate expectations theory if the employer made a promise that is “reasonably capable of instilling a legitimate expectation of just-cause employment[.]” Lytle v. Malady, 579 N.W.2d 906, 911 (Mich. 1998) (emphasis added). Just-cause employment means the employee shall not be discharged except for cause. Toussaint, 292 N.W.2d at 885. “The legitimate-expectations theory is grounded solely on public policy considerations.” Mannix, 348 F.3d at 532 (citation omitted). Crawford asserts that the Manual created a legitimate expectation of just-cause employment. His argument is unavailing for two principal reasons: (i) the Manual does not apply to Crawford’s Health Officer position; and (ii) the 5 Toussaint v. Blue Cross & Blue Shield of Michigan, 292 N.W.2d 880 (Mich. 1980). 6 To the extent Crawford also intended to rely on the contract theory, his claim would fail because Crawford did not allege facts that “clearly and unambiguously” indicate that the Health Department intended for the Manual to form a part of his employment contract. See Rood, 507 N.W.2d at 606 (“[W]here an employer establishes a policy of discharge for cause” in a policy manual or handbook, “it may become part of an employment contract only when the circumstances (e.g., the language of the handbook itself, or an employer’s oral statements or conduct) clearly and unambiguously indicate that the parties so intended.”) (emphasis added). 9 No. 14-2520, Crawford v. Benzie-Leelanau Dist. Health Dep’t, et al. policies in the Manual are not reasonably capable of being interpreted as promises of just-cause employment. (i) The Manual does not apply to Crawford’s Health Officer Position. No reasonable interpretation of the Manual suggests it applies to Crawford’s Health Officer position. Our case of Bailey v. Floyd County Bd. Of Educ., 106 F.3d 135 (6th Cir. 1997), is instructive on this point. In Bailey, we held that a Head Start Director7 could not rely on an employee manual to support just-cause employment because the manual did not apply to her. Id. at 142-43. The manual afforded Head Start employees a four-step appeals process for disciplinary issues. Id. at 139. Bailey was hired as the Head Start Director, and each year thereafter, the superintendent would issue a letter to Bailey inviting her to retain her position for the upcoming school year. Id. Bailey was eventually terminated from this position without receiving the process outlined in the manual. Id. She brought suit alleging, among other things, due process violations. Id. In analyzing the manual, we noted that the manual afforded Head Start employees the right to appeal to the Head Start Director—Bailey. Id. at 143. We reasoned that “[i]f the manual was intended to modify Bailey’s employment contract, we would expect to find a provision that would give Bailey the right to appeal to someone other than herself when confronting disciplinary action.” Id. In other words, we have determined that when examining employment policies, we may not read them in a manner that defies basic logic and common sense. In Bailey, basic logic dictated that an employee cannot appeal to herself. See id. Like the manual in Bailey, the manual upon which Crawford relies contains provisions affording employees the right to appeal to the Health Officer—i.e., Crawford. The Manual goes 7 “Head Start is a federally-funded program that provides educational and social services to lowincome families and their children.” Bailey, 106 F.3d at 138. 10 No. 14-2520, Crawford v. Benzie-Leelanau Dist. Health Dep’t, et al. a step further by vesting termination authority and the administration of the personnel policies solely in the Health Officer’s hands. Specifically, the Manual notes that “[t]he Health Officer or in his/her absence, his/her designate shall be responsible for the administration of approved personnel policies and the development and administration of rules and procedures.” Additionally, the “Termination of Service” section of the Manual notes that “[o]nly the Health Officer has the right to decide the employee’s services are not satisfactory.” R. 40-33 (emphasis added). Further, “[o]nly the Health Officer . . . has the ability to enter into a written employment contract with an employee.” R. 40-33 (emphasis added). The language of the Manual itself makes clear that it does not apply to Crawford with respect to his position as the Health Officer. The Manual cannot reasonably be understood as permitting Crawford to make the final determination as to whether his own services were satisfactory. It would also be impossible for Crawford to enter into a legally enforceable written contract with himself. Additionally, like in Bailey, “[i]f the manual was intended to modify [Crawford’s] employment contract, we would expect to find a provision that would give [Crawford] the right to appeal to someone other than” himself or his designate. See Bailey, 106 F.3d at 143. Crawford argues that notwithstanding the language of the Manual, the provisions of the Manual should apply to him because the Board consulted the Manual in finding that Crawford’s services were not “satisfactory” before his termination. Apparently, Crawford asserts that the Board turned a blind eye to the Manual’s notation that only the Health Officer can determine whether an employee’s services are not satisfactory. However, this Court has made clear that a “one-time consultation” of a manual or policy for guidance does not render the manual 11 No. 14-2520, Crawford v. Benzie-Leelanau Dist. Health Dep’t, et al. applicable to the plaintiff for purposes of changing the nature of the employment relationship. See id. For example, in Bailey, the Superintendent consulted the manual in that case “for guidance” before terminating Bailey, and the Superintendent “attempted to provide Bailey with procedures analogous to those afforded to other employees prior to commencing action against her.” Id. However, we held that this one-time consultation did “not affect our conclusion that” the manual “was not intended, and could not reasonably be understood, to affect Bailey’s” employment relationship. Id. In other words, the mere fact that an employer gives reasons for terminating an at-will employee does not mean the employment relationship ceases to be at-will. This same reasoning applies here. In terminating Crawford, the Board did not merely conclude that his services were unsatisfactory, but the Board did so after noting that Crawford “as the Health Officer and executive leader of the Health Department” should set the example for other employees in his compliance with Health Department policies. The Board noted that his unsatisfactory behavior “compromise[d] his ability to be an effective leader” and “compromise[d] his ability to maintain the respect of those persons whom he must lead.” The actions of the Board are properly viewed as a “one-time consultation” in an “attempt[] to provide” Crawford with “procedures analogous to those afforded to other employees” prior to terminating him. See id. This one-time consultation “is incapable of giving [Crawford] a property interest in” his position as the Health Officer. See id. Therefore, Crawford’s argument that because the Board consulted the Manual and the Harassment Policy, the Board de facto made the Manual applicable to his Health Officer position is meritless. 12 No. 14-2520, Crawford v. Benzie-Leelanau Dist. Health Dep’t, et al. (ii) The policies in the Manual are not reasonably capable of being interpreted as promises of just-cause employment. Crawford argues that even if his Health Officer position was not covered by the Manual, then his position of Environmental Health Director is covered. As a preliminary matter, the district court made the ruling that Crawford was not employed in two positions, but rather that he was only employed as the Health Officer and occasionally fulfilled the duties of the Environmental Health Director. The district court found that because Crawford received a salary for this Health Officer position, and ceased to receive an hourly wage for the Environmental Health Director position, he was employed only as the Health Officer at the time of his termination. Crawford asserts that this ruling was erroneous. We need not decide whether this ruling was error, because the ruling does not affect the outcome of this case. Even affording Crawford the benefit of his dual employment theory, his argument fails because the polices in the Manual are not reasonably capable of being interpreted as promises of just-cause employment. To begin with, the Manual employs a “satisfactory” standard. Under Michigan law, the “satisfactory” standard is akin to “at-will” employment. See Toussaint, 292 N.W.2d at 895. Toussaint, the seminal Michigan case recognizing the legitimate expectations theory, analogized “satisfactory” employment to “at-will” employment, and concluded that satisfactory services are not a guarantee of job security under the legitimate expectations theory. See id. at 891 n.24 (“Where the employer has not agreed to job security, it can protect itself by entering into a written contract which explicitly provides that the employee serves at the pleasure or at the will of the employer or as long as his services are satisfactory to the employer.”) (emphasis added). A promise of employment only for so long as the employee’s services are satisfactory “is not . . . a promise to discharge for cause or good or just cause only.” Toussaint, 292 N.W.2d at 895; see 13 No. 14-2520, Crawford v. Benzie-Leelanau Dist. Health Dep’t, et al. also Mannix, 348 F.3d at 533; Rowe v. Montgomery Ward & Co., Inc., 473 N.W.2d 268, 278 (Mich. 1991) (noting that the Supreme Court of Michigan views an offer of employment for “so long as” the employee’s services are “satisfactory” as “terminable at will”). The Manual in this cases employs this precise language—“An employee may be dismissed if his/her services are not satisfactory to the Department.” While the Manual purports to reject the “at-will” standard, the Department effectively adopted what is properly viewed as the “at-will” standard by another name. While “[p]arties are free to bind themselves to whatever termination provisions they wish,” Bracco v. Mich. Tech. Univ., 588 N.W.2d 467, 472 (Mich. Ct. App. 1998), the parties cannot escape controlling law on the matter. Therefore, regardless of what the employer called the standard under these circumstances, the policy is readily identifiable as one that does not create the type of job security envisioned under the legitimate expectations theory of Toussaint. See Toussaint, 292 N.W.2d at 895.8 An application of the two-step inquiry from Rood does not compel a different result. “The first step in analyzing a legitimate expectations claim . . . is to determine, what, if anything, the employer has promised.” Rood, 507 N.W.2d at 606. “Promises, like contracts, may be either express or implied.” Id. “[N]ot all policy statements will rise to the level of a promise.” Id. at 607. Naturally, the specified terms of the policy are of importance. “The more indefinite the terms, the less likely it is that a promise has been made[,]” and “if no promise is made, there is 8 Furthermore, we are not persuaded by Crawford’s reliance on the Eighth Circuit case of PaineWebber, Inc. v. Agron, 49 F.3d 347 (8th Cir. 1995), for the proposition that where an employer agrees to arbitrate employment disputes, then “some standard of discernable cause is inherently required in this context where an arbitration panel is called on to interpret the employment relationship.” 49 F.3d at 352. Michigan has not adopted this approach. See Samples v. Botsford Gen. Hosp., No. 272365, 2007 WL 1610439, at  (Mich. Ct. App. June 5, 2007) (“[T]he adoption of a binding arbitration policy does not convert at-will employment into just-cause.”); see also Hicks v. EPI Printers, Inc., 702 N.W.2d 883, 888 (Mich. Ct. App. 2005) (analyzing a case in which there was “an at-will employment relationship,” and “a manual with contractual terms that included mandatory arbitration”). 14 No. 14-2520, Crawford v. Benzie-Leelanau Dist. Health Dep’t, et al. nothing to enforce.” Id. If it is determined that a promise was made, “the second step is to determine whether the promise is reasonably capable of instilling a legitimate expectation of just-cause employment in the employer’s employees.” Id. “[O]nly policies and procedures reasonably related to employee termination are capable of instilling such expectations.” Id. The Supreme Court of Michigan has given us the following guidance: [I]n all claims brought under the legitimate expectations theory of Toussaint, the trial court should examine employer policy statements, concerning employee discharge, if any, to determine, as a threshold matter, whether such policies are reasonably capable of being interpreted as promises of just-cause employment. If the employer policies are incapable of such interpretation, then the court should dismiss the plaintiff’s complaint on defendant’s motion for summary disposition. If, however, the employer’s policies relating to the employee discharge are capable of two reasonable interpretations, the issue is for the jury. Rood, 507 N.W.2d at 607 (citation omitted) (emphasis added). “In general, a jury can find the existence of a legitimate expectation based on the ‘employer’s written policy statements set forth in the manual of personnel policies.’” Mannix, 348 F.3d at 534 (quoting Toussaint, 292 N.W.2d at 885). “Where the plaintiff argues a legitimate-expectations theory, the trial court should only allow the case to proceed if the ‘policies are reasonably capable of being interpreted as promises of just-cause employment.’” Id. (quoting Rood, 507 N.W.2d at 606). Crawford’s legitimate-expectations claim fails under both prongs. With respect to the first prong, the policy language does not constitute a “promise.” “[A] policy to act in a particular manner as long as the employer so chooses, is grounds to defeat any claim that a recognizable promise in fact has been made.” Lytle, 579 N.W.2d at 911. In other words, “an employer’s policy to act or refrain from acting in a specified way if the employer chooses is not a promise at all.” Rood, 507 N.W.2d at 607. Consequently, we have distinguished terms such as “shall” and “will,” Freeze v. City of Decherd, Tenn., 753 F.3d 661, 666 (6th Cir. 2014) (concluding that use 15 No. 14-2520, Crawford v. Benzie-Leelanau Dist. Health Dep’t, et al. of the term “shall” creates “an obligation”), from terms such as “may,” Brown v. City of Niota, Tenn., 214 F.3d 718, 721-22 (6th Cir. 2000) (concluding that use of the term “may” did not create a contractual obligation under Tennessee law). “The term ‘may’ is permissive and suggests that there are other permissible means for terminating” an employee. Id. In the instant case, the Manual reads: “An employee may be dismissed if his/her services are not satisfactory to the Department.” R. 40-33 (emphasis added). This language is permissive, and it is insufficient to create a contractual obligation on the part of the employer. See Brown, 214 F.3d at 721-22. Therefore, it is not a promise. See id. Because there is no promise, “there is nothing to enforce.” See Rood, 507 N.W.2d at 607. Even assuming that the policy is a promise, the second prong of the legitimate expectations analysis is not met because the Manual expressly rejects a “just cause” policy. See Rood, 507 N.W.2d at 607 (noting that “the second step is to determine whether the promise is reasonably capable of instilling a legitimate expectation of just-cause employment in the employer’s employees”). The Manual states that, “[t]he Department has adopted a ‘satisfaction standard’ for continued employment instead of ‘at will’ employment, ‘just cause’ employment or any other employment standard.” R. 40-33 (emphasis added). Where an employer expressly disavows a “just cause” standard, no reasonable jury can interpret the policy as adopting a “just cause” standard. Mannix, 348 F.3d at 535 (“[N]o document taken as a whole can be construed to imply what it expressly disavows.”). Additionally, the legitimate expectations theory of Toussaint may not be relied upon when there is an express provision covering the subject matter in dispute. Id. at 533 (citing Bracco, 588 N.W.2d at 472). “[A]s Toussaint taught, legitimate expectations may only imply a just-cause clause in an express contract otherwise silent on the issue.” Id. at 534. Because the 16 No. 14-2520, Crawford v. Benzie-Leelanau Dist. Health Dep’t, et al. Manual has an express provision rejecting a “just cause” standard, we cannot read into the Manual an implied provision accepting a just cause standard. See id. Accordingly, the legitimate expectations theory cannot apply. For the foregoing reasons, the policy is incapable of being interpreted as a just cause policy. See id. Accordingly, summary judgment was proper. See Rood, 507 N.W.2d at 607 (“If the employer policies are incapable” of “being interpreted as promises of just-cause employment[,]” then “the court should dismiss the plaintiff’s complaint on defendant’s motion for summary disposition.”). Relying on Rood, Crawford alternatively argues that the provision in dispute is subject to two reasonable interpretations and, therefore, the case must proceed to a jury. Crawford’s argument evinces a misreading of Rood. Rood does not stand for the proposition that where a policy expressly rejects a just cause standard and instead purports to adopt a different standard, then the question is for the jury. The Rood court was unequivocal in that if the standard is incapable of being interpreted as one for “just cause,” then “summary disposition” in favor of the Defendants is necessary. Rood, 507 N.W.2d at 607. Therefore, the “two reasonable interpretations” language from Rood can only mean that at least one of those reasonable interpretations is an interpretation of just-cause employment. See id. at 609 (noting that “if an employer elects to create policies and procedures that are reasonably capable of being interpreted as promises to refrain from discharging employees absent just cause,” then the question is for the jury). Here, as articulated above, the Manual is incapable of being interpreted as a promise of just-cause employment; therefore, the question is not for the jury and summary judgment in Defendants’ favor is warranted. See Rood, 507 N.W.2d at 607. 17 No. 14-2520, Crawford v. Benzie-Leelanau Dist. Health Dep’t, et al. Lastly, Crawford argues that the Manual created a legitimate expectation of just-cause employment because it sets forth procedures by which an employee may appeal a disciplinary decision by the Board. This argument is unavailing. “Neither the adoption of systematic procedures for dealing with employees nor the creation of disciplinary guidelines transforms an at-will relationship into one prohibiting discharge except for just-cause.” Mannix, 348 F.3d at 535 (internal quotation marks and citation omitted). “If such documents were sufficient, no employer could ever establish policies informing its employees of reasons why they could be fired without creating a ‘just-cause’ labor force.” Id. For the foregoing reasons, there was no genuine dispute as to a material fact regarding whether Crawford had a legitimate expectation of just-cause employment in either of his positions, and therefore summary judgment in favor of Defendants was proper.9