Court Opinion

ID: 9677796
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:00:07.189533+00
Date Added: 2024-06-11T18:14:32.750649
License: Public Domain

HECHT, Justice,
dissenting.
In this case, an employer allowed an at-will employee to continue working under her brother’s supervision, even though it violated the company’s anti-nepotism policy. When the employer finally insisted on compliance, the employee refused, sued the employer for breach of contract, and recovered over $600,-000 in damages. The Court affirms this result.
The Court holds that an employer’s failure to enforce an employment policy constitutes a contract with its otherwise at-will employees not to terminate them for failure to comply with the policy. An employer who has no policies at all may terminate an at-will employee without warning for any reason not prohibited by law, or for no reason at all. Winters v. Houston Chronicle Publishing Co., 795 S.W.2d 723, 723-724 (Tex.1990). An employer may adopt and enforce totally new policies, if it notifies its employees; an employee who continues working with knowledge of the changes is deemed to have accepted those changes as a matter of law. Hathaway v. General Mills, Inc., 711 S.W.2d 227, 229 (Tex.1986) (change in commissions was not accepted). But an employer who has policies which are not strictly enforced has, according to the Court, contracted not to discharge an employee for any reason that would constitute a policy violation. Latitude, forgiveness and oversight impose obligations and the risk of liability on the employer; rigid enforcement does not. Thus, from an employer’s perspective, it is better to have no policies at all, essential to strictly apply any that are adopted, and unadvisable to be flexible in the least.
The Court cannot, of course, find a single case which reaches this result in anything like the present circumstances. The reason for this, it seems to me, is that the Court’s view is exactly opposite what the law should be. It is clearly better for an employer to have policies rather than not, since the employees thereby have more information about what is expected of them. And it is surely better to exercise some latitude in enforcing those policies rather than always requiring strict adherence. Under these rules, Goodyear would not be liable in this case. Accordingly, I dissent.
Hortencia Portilla worked as an at-will employee in a Goodyear Tire and Rubber Company store in Port Lavaca under the direct supervision of her brother Reynaldo Reyes for 17 years, contrary to Goodyear’s anti-nepotism policy. In such circumstances the *53policy required that one of the two employees transfer to another store or be terminated unless granted an exception from the policy. Corporate management knew of Por-tilla’s situation for at least 12 years but took no action. (One corporate official recalled advising a local district manager to offer Portilla a transfer but, if she refused, to allow her to remain in her position, but that decision was never communicated to Portilla or her brother Reyes.) Finally, Goodyear insisted that Portilla either transfer to Houston or leave its employ. Portilla refused the offer of transfer because of her husband’s job and their family commitments in Port Lava-ca, and her employment was terminated. A week later her brother terminated his employment with Goodyear.
The trial court rendered judgment against Goodyear for breach of contract, awarding Portilla $396,000.00 in actual damages, $58,-376.86 in prejudgment interest, and $181,-512.88 in attorney fees, altogether totaling $635,889.74. The court of appeals affirmed this award, holding that there was evidence that Goodyear gave Portilla assurances of continued employment which amounted to an agreement not to terminate her except for good cause, so that she was no longer an at-will employee. 836 S.W.2d 664. In this Court, the parties vigorously contest the effect of Goodyear’s statements to Portilla, and we granted writ of error to resolve this dispute. 36 Tex.Sup.Ct.J. 489 (Jan. 27, 1993). The Court now attempts to avoid the parties’ arguments by devising another theory to allow recovery. The Court seizes on jury findings that Goodyear waived its anti-nepotism policy and its right to insist that she transfer to another store, and that it discharged her because of her relationship to Reyes and her refusal to transfer. By waiving its anti-nepotism policy, the Court says, Goodyear affirmatively agreed not to discharge Portilla for a violation of the policy. In effect, the Court reasons, the jury found that Goodyear breached that agreement.
The first difficulty with the Court’s analysis is that Goodyear’s nonenforcement of its policy, even if it amounted to a waiver of some sort, cannot be converted into an agreement with Portilla. Goodyear never offered to Portilla that it would not enforce the anti-nepotism policy against her. Without an offer and acceptance, there could be no agreement, and without an agreement, there can be no recovery of damages for breach of an agreement. Portilla was awarded damages for breach of contract. Goodyear’s failure to enforce its own policy cannot be construed as a contract with Portilla.
Furthermore, the Court does not explain how it is that Goodyear’s nonenforcement of its anti-nepotism policy in the past — waiver, if that is what it is to be called — constituted an agreement that Goodyear would not enforce the policy in the future? Even if Goodyear could not require Portilla to transfer based upon her past violation of the policy, surely Goodyear could insist at some point that the policy be adhered to in the future. I am not aware of any situation in which a waiver of a right constitutes an agreement, in perpetuity, never to demand the right again in any circumstances. The rule is to the contrary. For example, a person’s acceptance of late payments without protest precludes a complaint that the debt agreement has been breached, but it does not preclude insistence upon timely payments in the future. A.L. Carter Lumber Co. v. Saide, 140 Tex. 523, 168 S.W.2d 629, 630 (1943). The acceptance of late payments never constitutes an agreement to continue doing so which is then breached by the creditor’s insistence on future promptness. It would be a perverse rule indeed that would entitle a debtor who had been extended some latitude in his payments to sue his creditor for breach of contract when the creditor lost patience and demanded timeliness in the future. That, however, is the nature of the rule the Court adopts in this case.
The only authority the Court cites supports the undisputed proposition that an employer may agree with an at-will employee not to discharge him except under specified circumstances. The possibility of such agreements says nothing about the effect of nonenforeement of a policy. The point is not that Goodyear could have agreed with Portil-la that it would not dismiss her except for specific reasons; the point is that no such agreement was ever made.
*54The Court is determined to avoid the principal issue in this case. The essence of Por-tilla’s claim is that Goodyear terminated her employment despite its management’s assurances that it would not do so as long as she did a good job. The issue addressed by the court of appeals, argued by the parties and amicus curiae, and squarely presented for decision, is whether such assurances modified her at-will status. I would hold that they did not, and accordingly, that Portilla is not entitled to recover against Goodyear. I therefore dissent.