Opinion ID: 2218201
Heading Depth: 2
Heading Rank: 1

Heading: group a

Text: Group A was informed of the seven percent commission at the time of hiring, but defendant made no explicit promises to plaintiffs regarding the duration of the policy. In framing the breach of contract action with regard to Group A, it is important to note that because no express promises of permanency were made to plaintiffs, any contractual rights to that effect had to spring from the legitimate expectations leg of Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579, 598; 292 NW2d 880 (1980). [3] Thus, the threshold inquiry for Group A should be whether to extend the legitimate expectations leg of Toussaint beyond wrongful discharge disputes to cover an employer's compensation policy. [4] We choose not to extend the legitimate expectations cause of action to this case. In Toussaint, this Court held that a company's written policy statements providing for dismissal for just cause may create contractual obligations if the statements give rise in the employee to legitimate expectations of dismissal for just cause. In Toussaint, this Court found that the plaintiff's wrongful discharge claim based on written policy statements and express oral statements could be submitted to a jury. While Toussaint created a legitimate expectations claim in the wrongful-discharge setting, earlier cases held that written policy statements could give rise to contractual obligations outside the discharge context. [5] Although some of the cases dealt with compensation policies, those policies created contract rights with regard to deferred compensation. As Justice RYAN stated in his dissent in Toussaint, supra, p 648: In each of the cases cited, policy statements by the employer announced the existence of bonus, profit-sharing or pension benefits and the employer or the claimant-employee satisfied the burden of proof that work already performed was in consideration of the announced benefit and that what was sought was merely deferred compensation. [Emphasis added.] In other words, a change in a compensation policy which affects vested rights already accrued may give rise to a cause of action in contract. In re Certified Question, supra, p 457, n 17. However, in the instant case, there were no representations made to plaintiffs with regard to deferred compensation. The right to renewal commissions depends on the contract between the agent and insurance company. Stevenson v Brotherhoods Mutual Benefit, 317 Mich 575, 580; 27 NW2d 104 (1947). Unless otherwise provided by contract, renewal commissions or future commissions do not rest upon the sale of the original policy. Renewal contracts are separate from the originals, in part requiring additional effort and consideration by salespersons in keeping policies alive. Id. at 581. In the instant case, plaintiffs do not contend that their contracts provided for the vesting of renewal commissions upon the sale of original policies. In fact, each of the cases cited in n 5 operate under traditional contract principles. For instance, in Cain v Allen Electric & Equipment Co, 346 Mich 568, 579-580; 78 NW2d 296 (1956), the Court stated: In short, the adoption of the described policies by the company constituted an offer of a contract. This offer ... the plaintiff accepted ... by continuing in its employment beyond the 5-year period specified in exhibit B.... While the deferred compensation cases are subject to contract law, the legitimate expectations doctrine of Toussaint does not follow traditional contract analysis. Therefore, it does not logically follow that Toussaint should be extended to the area of compensation. Also, since employees' accrued benefits are protected by the presence of traditional contract remedies, there is no need to extend the expectations rationale to compensation. In addition to the lack of precedent extending Toussaint to facts similar to those presented here, policy considerations weigh in favor of containing Toussaint to the wrongful-discharge scenario. Were we to extend the legitimate-expectations claim to every area governed by company policy, then each time a policy change took place contract rights would be called into question. The fear of courting litigation would result in a substantial impairment of a company's operations and its ability to formulate policy. Justice GRIFFIN'S majority opinion in In re Certified Question, supra, p 456, discussed the nature of a business policy: In other words, a policy is commonly understood to be a flexible framework for operational guidance, not a perpetually binding contractual obligation. In the modern economic climate, the operating policies of a business enterprise must be adaptable and responsive to change. Our opinion in In re Certified Question was in furtherance of this Court's traditional reluctance to limit or second guess the decision-making ability of business management. As stated in In re Butterfield Estate, 418 Mich 241, 255; 341 NW2d 453 (1983), [a] court should be most reluctant to interfere with the business judgment and discretion of directors in the conduct of corporate affairs. Much the same conclusion was reached by Justice GRIFFIN in Bullock v Automobile Club of Michigan, supra, pp 521-522: Even if it can be said that policy considerations were sufficient to justify the Toussaint intervention to protect job security, it is difficult to imagine the scope of difficulties and mischief that would be encountered if Toussaint were to be extended beyond wrongful discharge into every facet of the employment relationship. Particularly in light of the enormous potential cost to the system that such an extension would entail, including damage to the delicate balance of the employee-employer relationship, I take this occasion to express the view that it would be prudent and wise to leave to the Legislature the public policy decision whether, or to what extent, Toussaint should be extended beyond wrongful discharge. [GRIFFIN, J., concurring in part and dissenting in part.] Given the traditional reluctance of courts to interfere with management decisions and the needed flexibility of businesses to change their policies to respond to changing economic circumstances, we conclude that Toussaint should not be extended to create legitimate expectations of a permanent compensation plan. Previous cases have not extended the legitimate-expectations theory to facts similar to these, and we decline the opportunity to extend the theory to compensation terms.