Opinion ID: 744570
Heading Depth: 2
Heading Rank: 1

Heading: Creation of An Implied Employment Contract

Text: 11 We review the grant of summary judgment de novo. Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir.1996). Under Oregon law, there is a legal presumption that absent a contractual, statutory or constitutional requirement, an employer may discharge an employee at any time and for any reason. Patton v. J.C. Penney Co., 301 Or. 117, 719 P.2d 854, 856 (1986); Brett v. City of Eugene, 130 Or.App. 53, 880 P.2d 937, 939 (1994). We must decide whether Koepping raised any genuine issues of material fact as to whether he and Tri-Met agreed to modify his at-will status. We find that he has. 12 Oregon subscribes to the objective theory of contract interpretation, which requires a court to look not at the parties' subjective understandings, but at their communications and overt acts. See City of Canby v. Rinkes, 136 Or.App. 602, 902 P.2d 605, 610 (1995) (whether parties entered into an agreement depends not on whether their 'minds met' but on whether the parties agreed to the same, express terms and on whether those terms constitute an enforceable agreement); Real Estate Loan Fund Oreg. Ltd. v. Hevner, 76 Or.App. 349, 709 P.2d 727, 730 (1985) (In determining whether a contract exists and what its terms are, we examine the objective manifestations of intent, as evidenced by the parties' communications and acts.). 13 Koepping made a clear manifestation of his intent to modify his at-will status when he agreed to stay on in his position as a non-represented managerial employee in reliance upon Brentano's promise that his job was secure as long as he continued to do good work. 7 14 The district court rejected Koepping's assertion that Brentano's statement that the jobs are secure as long as you're doing good work converted Koepping's at-will employment status to one that was terminable only for cause because [e]mployment contracts cannot be created by 'mere casual or unauthorized comments,'  (citing Butler v. Portland Gen. Elec. Co., 748 F.Supp. 783, 792 (D.Or.1990), aff'd sub nom. Flynn v. Portland Gen. Elec. Co., 958 F.2d 377 (9th Cir.1992)). 15 We conclude that the uncontroverted facts suggest that Brentano's statement was neither casual nor unauthorized. Brentano made it during a series of meetings with Koepping and other foremen who had expressed concerns about their future employment security. These meetings were held during the pendency of the state administrative proceedings by which Tri-Met sought removal of the foremen from the employment protections of the CBA, which required just cause to discharge them. At these meetings the foremen expressed concern that there would be a hatchet job if they were removed from the bargaining unit. They asked what protection they would have if they came out of the bargaining unit. 16 In that context, Brentano's statement: as long as he felt we were all doing good work, as long as we continued to do good work, there would be no problem, may well have created an implied contract not to fire the foremen except for cause. No one controverts the fact that this promise was made to assure the foremen that they would be secure after their positions were removed from the legal protection afforded by the CBA. Whether it was made to secure their cooperation during the pendency of the administrative reclassification procedure is a disputed issue of material fact. 17 In Seibel v. Liberty Homes, Inc., 85 Or.App. 261, 736 P.2d 578 (1987), aff'd, 305 Or. 362, 752 P.2d 291 (1988), the employer's offer of permanent employment as long as [defendant has] production to run was made under oath at a worker's compensation hearing in which the plaintiff sought permanent total disability benefits. The court reasoned, [a] jury could conclude that such an unusual offer of employment had been extended to avoid what the employer may have perceived as a probable award of permanent total disability to plaintiff. Id., 736 P.2d at 579. In Langendorf United Bakeries, Inc. v. Moore, 327 F.2d 592, 595 (9th Cir.1964), we found that a jury could reasonably conclude that a promise of permanent employment that was collateral to the sale of plaintiff's Portland, Oregon, bakery and his agreement not to compete for five years, was an enforceable contract. It was dispositive that this promise was made where the services [desired by the promisor] were peculiarly necessary to the employing corporation and involved a substantial change of position on the part of the employee. Id. 18 Here, too, Brentano's promise was given in return for the loyalty of the foremen, who were valuable, long-term employees of Tri-Met, and whose legal right to be fired only for just cause was about to be lost as a result of the removal of their jobs from the CBA. Under these extraordinary circumstances, a reasonable jury could conclude that this promise created an enforceable employment contract to fire the foremen only for cause. See Id. (The extraordinary nature of the lifetime employment contract has ... led to rejection of submitting such a question to the jury in cases involving nothing more than a simple hiring of an employee. But the courts have increasingly recognized apparent authority to make such a contract where there are additional circumstances which would render such a promise not unreasonable in the light of that which is bargained for.). 19 The authority relied upon by appellees is factually different. In Butler, the promise of continued employment was directly contradicted by language in a generally-distributed employee manual stating that employment was at-will and could be terminated at any time by either party. Butler, 748 F.Supp. at 792. It was therefore not reasonable for the employee to rely upon the employer's promise of continued employment. In Wooton v. Viking Distrib. Co., Inc., 136 Or.App. 56, 899 P.2d 1219, 1223 (1995), the statement [the employee] could work there long term and retire from the company if all went well and if everyone was pleased with my work, was characterized merely as an expression of mutual hope. Brentano's promise, in contrast, was not a generalized statement relating to future employment; it was a specific statement of the employment rights that would be afforded to the foremen subsequent to their removal from the protections of the CBA. In Haskins v. Owens-Corning Fiberglas Corp., 811 F.Supp. 534 (D.Or.1992), a statement that the plaintiff would have a job for life was contradicted by an employee manual which specifically stated that completion of the probationary period is no guarantee of permanent employment, and by a written policy that an employee found fighting on company property, as the plaintiff was, would be subject to immediate termination. Id. at 540. 20 While we agree with the Seventh Circuit that [a] casual remark made at a meeting, a phrase plucked out of context, is too fragile a base on which to rest such a heavy obligation inherent in [an implied contract of employment], Mursch v. Van Dorn Co., 851 F.2d 990, 997 (7th Cir.1988), we find that Brentano's promise, evaluated in context, supports an inference that an oral employment contract was created. 21 The district court found Brentano's promise to be unauthorized. Under Oregon law, an employer may be held liable for contracts made by its agent, if the employer has by words or conduct led third parties to believe that the agent has authority and the third party actually believes the agent is authorized on the basis of the employer's statements or conduct. Filter v. City of Vernonia, 64 Or.App. 559, 669 P.2d 350, 353 (1983) (statements made in employee manual distributed by chief of police created binding obligations for city if chief had apparent authority to do so); Wiggins v. Barrett & Assoc., Inc., 295 Or. 679, 669 P.2d 1132, 1144 (1983) (Oregon municipal entities may be held liable for unauthorized contracts made by their agents with apparent authority). Appointment of an employee to a management position is conduct that suggests that the agent has the authority to make management decisions, including the creation of employment contracts. See Filter, 669 P.2d at 352 (citing Restatement (Second) of Agency §§ 8, cmt. c, 27, 59). In the absence of evidence to the contrary, a general manager has the power to enter into employment contracts. Doolittle v. Pacific Coast Safe & Vault Works, 79 Or. 498, 154 P. 753, 755 (1916). Under Oregon law, whether or not an employee was acting within the scope of his employment is a question of fact for the jury to decide. Stanfield v. Laccoarce, 284 Or. 651, 588 P.2d 1271, 1274 (1978). 22 All the evidence seems to point to both actual and apparent authority to bind Tri-Met to an employment contract. Brentano had been employed by Tri-Met for 20 years, 17 of those years as a manager. He had been the Director of Bus Maintenance since 1979 and was responsible for the management of three Tri-Met operating divisions. His promise was made during a meeting held in Tri-Met's central administrative offices. Given Brentano's long tenure as a management representative for Tri-Met and the official nature of the meeting, it was reasonable for Koepping to rely upon his promise as one authorized by Tri-Met. 23 Additionally, we conclude that Koepping produced sufficient evidence from which a jury could infer that Tri-Met's Performance Evaluation Program created an implied limitation on its ability to discharge for poor performance. The district court correctly found that 24 nothing in [the O & A Manual and the PEP Manual] requires an employee to be progressively disciplined before being terminated or demoted. The manuals state that a superior 'may wish to schedule' a special evaluation for an employee with poor performance, and that an employee 'may be subject to termination after the appropriate evaluation period(s).' This language, however only states that the evaluation may be done; it does not require them to be done. 25 The district court erred, however, in concluding that Koepping failed to raise triable issues of fact concerning his claim that Tri-Met's custom and practice of implementing this program modified his at-will employment contract. 26 Koepping testified that, after his position had been converted to a non-represented managerial position, Tri-Met's personnel director Nelson: 27 had an interview with me in which she told me of the--she gave me a management packet of information, and she told me about the evaluation process in which during the course of the conversation she told me that--about how a manager documents performance and everything. And so what I got out of our conversation was that--which I knew to be, as a long-time supervisor--I knew to be a long-time practice at Tri-Met, you had to have documentation. This was what was required of me as a supervisor, to have documentation on anybody that I recommended for discipline.... 28 Tri-Met's Performance Evaluation Program promises that managers will use a fair and objective means for identifying how employees are doing relative to job requirements. It sets forth specific standards for measuring performance and requires adherence to procedures in determining performance including a specific schedule for written evaluation on at least an annual basis. It defines a system of five rating levels for performance. It includes a procedure to assure that employees agree upon job performance standards. It sets forth a requirement that managers detail the specific assistance that will be made available to (employees) with deficient performance; and it grants employees a right to contest and appeal a formal evaluating rating that shall be final and binding. 29 Brentano, who made the decision to demote Koepping, stated that the policy and procedure at Tri-Met for removing a supervisor would reasonably follow a period of counseling and some notification to the employee of the deficiency. In Koepping's case, Brentano stated that if he was not aware [of the reasons for his demotion] ... he should have been made aware. Brentano also stated that he regularly did performance evaluations with his subordinates, and that he understood Tri-Met's policy to require annual evaluations. Other Tri-Met supervisors stated that they regularly used progressive discipline. 30 Tri-Met asserts that Koepping was never explicitly told that he could only be removed from his position after compliance with any review process; that Koepping's knowledge of Tri-Met's practice came from his own discipline of union employees, who were covered by the CBA; and that Koepping only saw the O & A and PEP Manuals after he was removed from his position. 31 We conclude that material issues of fact remain as to whether it was reasonable for Koepping to rely upon Tri-Met's policy of following its internal regulations and provide its employees with notice of performance problems, and the opportunity to try and correct them, before being terminated. 32