Court Opinion

ID: 9569803
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:17:31.794753+00
Date Added: 2024-06-11T12:04:03.131285
License: Public Domain

STEWART, Justice
(concurring in the result):
I agree with the majority that plaintiff has failed to raise a factual issue as to whether his discharge amounted to wrongful termination because it was without just cause. I write only because the majority opinion, in my view, could be somewhat misleading with respect to the law governing wrongful termination.
An indefinite-term employment contract creating a presumption of an at-will relationship may be modified by the implied-in-fact contract provisions which limit an employer’s right to terminate an employee. Berube v. Fashion Centre, Ltd., 771 P.2d 1033, 1044 (Utah 1989). The issue in this case is whether plaintiff raised a factual dispute as to whether Thiokol’s express statement in its employee manual that employment was on an at-will basis was modified by the disciplinary procedures outlined in the manual and by Thiokol’s course of dealings with its employees so that Thiokol could discharge for just cause only.1
Generally, it is a question of fact as to whether the parties acted in a manner to create implied contractual terms. Brehany v. Nordstrom, Inc., 812 P.2d 49, 55-57 (Utah 1991); Lowe v. Sorenson Research Co., 779 P.2d 668, 670 (Utah 1989). Contract terms implied from the conduct of the parties ordinarily stand on an equal footing with express contract terms. Restatement (Second) of Contracts §§ 4, 19 (1981).2 Implied contract terms may arise from statements in an employee manual or from an employer’s course of conduct. Implied terms may provide that an employee will be discharged only for just cause, for particular misconduct, or after certain procedures have been followed by the employer. The actual conduct of the parties may modify an express statement in an employment manual that employment is only on an at-will basis, just as any contract term may be modified by the conduct of the parties.
The expanding sources of implied contract terms have been reviewed in Goetz & Scott, The Limits of Expanded Choice: An Analysis of the Interactions Between Express and Implied Contract Terms, 73 Calif.L.Rev. 261 (1985). The authors ob*1005serve that the traditional common law approach to interpretation of contracts focused first and foremost on the written agreement. Thus, “if the document appeared clear and unambiguous in its terms, its meaning was to be determined from the four corners of the instrument, without resort to extrinsic evidence.” Id. at 273. Now, however, the law increasingly recognizes that informal understandings and usages may be implied into contracts. This approach is typified by the Uniform Commercial Code:
The [Uniform Commercial] Code, now joined by the Second Restatement of Contracts, effectively reverses the common law presumption that the parties’ writing and the official law of contract are the definitive elements of the agreement. Evidence derived from experience and practice can now trigger the incorporation of additional, implied terms.
Id. at 274.
In Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972), the United States Supreme Court recognized that an employer’s de facto policies may give rise to a contractually enforceable employee right to be discharged for just cause only, even in the presence of an employee policy manual statement to the contrary. Id. at 600, 603, 92 S.Ct. at 2699, 2700. There are also federal and state court decisions which hold that course of conduct may negate the effect of written disclaimers designed to insulate employers from contractual liability. See, e.g., Greene v. Howard Univ., 412 F.2d 1128, 1134-35 (D.C.Cir.1969) (disclaimer asserting no contractual duty on the part of employer does not necessarily relieve employer of all obligations with respect to the observance of its regulations); Kari v. General Motors Corp., 402 Mich. 926, 282 N.W.2d 925 (1978) (reversed lower court’s grant of summary judgment, remanded to consider employee claims regarding interpretation of employee handbook and reliance thereon, notwithstanding disclaimer purporting to limit any employer contractual obligations); Schipani v. Ford Motor Co., 102 Mich.App. 606, 612-14, 302 N.W.2d 307, 310-11 (1981) (rejected for other reasons in Kostello v. Rockwell Int’l Corp., 189 Mich.App. 241, 472 N.W.2d 71 (1991)) (under appropriate circumstances, oral promises may negate the effect of disclaimers which are intended to absolve employers from liability for policies presented in employee handbook).3
This Court has held that “an employer’s internally adopted policies and procedures concerning discharge can be sufficient evidence to rebut the presumption of at-will employment and can, in effect, become part of the contractual relationship between the employer and the employee” and that “[b]reach of the terms of this contractual relationship can result in damages determined as in any other breach of contract action.” Caldwell v. Ford, Bacon & Davis Utah, Inc., 777 P.2d 483, 485 (Utah 1989) (citing Berube, 771 P.2d at 1044-46, 1050 (Durham, J., joined by Stewart, J.), at 1052-53 (Zimmerman, J., concurring in the result)). That principle may also have the effect of overcoming express assertions that a contract is at-will.
In the present case, Johnson relies on an implied-in-fact contract theory. He argues that the procedural termination policies set forth in Thiokol’s employee handbook created an implied-in-fact agreement that his employment would be terminated only for just cause. Thiokol asserts that the employment relationship was strictly at-will and, therefore, that Johnson could be terminated with or without cause. The majority places great emphasis on the disclaimer in the employee handbook which purports to preserve the at-will employment relationship, notwithstanding any contrary practices by Thiokol and notwithstanding the handbook’s procedural termination policies. This disclaimer is held to be a controlling manifestation of Thiokol’s intent as to the *1006nature of the employment relationship. I think too much weight is given that disclaimer.
If the issue were whether there is a material issue of fact as to whether the declared at-will relationship had been modified in any way at all by implied terms arising from Thiokol’s conduct and the other terms in the manual, there would be a material issue of fact, because Thiokol has indicated in its manual and in practice that it terminates employees only after certain procedures are followed. The employee handbook contains a detailed program setting forth specific rules of conduct, procedures for disciplinary actions, including discharge, and procedures for employee grievances. The handbook also sets forth types of conduct for which disciplinary action would or could be imposed and the possible consequences. Thiokol in fact followed those procedures in the past with respect to plaintiff and in the instant case by complying with the extensive grievance procedures set forth in the manual. Thus, there is clear evidence of an implied-in-fact contract term with respect to procedures to be followed when an employee is disciplined or discharged. The statement of these procedures in Thiokol’s manual and their implementation clearly could remove the employment relationship from a strict at-will relationship. To that extent, a jury certainly could find that the at-will relationship had been modified, notwithstanding the manual’s statement that employment was on an at-will basis.
Nevertheless, that is not what is critical in this case. Johnson does not argue that Thiokol failed to comply with its own procedures for termination. His complaint is that he could be discharged only with just cause and that Thiokol had no just cause. Johnson has not produced any evidence, however, that Thiokol's termination procedures, its practice of employee performance evaluations, or any of its other employee policies, provide a basis for concluding that Thiokol can terminate only for just cause.
In the abstract, it may be arguable that the logical implication of the termination procedures adopted by Thiokol could be construed to require just cause or good faith. However that may be, the evidence in this case indicates that the procedures Thiokol has adopted are intended to eliminate arbitrary conduct by Thiokol supervisors and to promote a degree of uniformity in its firing practices. That does not, on the facts of this case, impose an implied contract term on Thiokol limiting it to discharge for just cause only.. If, however, there were evidence that the disciplinary procedures were in fact utilized to ensure that an employee was discharged only for just cause, then a jury could find that Thiokol’s declaration that employment was on an at-will basis might be further modified.4
In sum, Thiokol could not be found to have breached any implied terms of an employment contract when it discharged Johnson because it followed the procedures set forth in the manual.
DURHAM, J., concurs in the concurring opinion of STEWART, J.

. The manual’s disciplinary procedures could have the effect of modifying the express disclaimer in the sense that both must be read together and harmonized in construing the effect of the manual. This is a question of contract construction rather than a subsequent modification as that term is generally used.

. Comment (a) to section 4 of the Restatement explains, "Just as assent may be manifested by words or other conduct, sometimes including silence, so intention to make a promise may be manifested in language or by implication from other circumstances.” Comment (a) to section 19 adds, ”[T]here is no distinction in the effect of the promise whether it is expressed in writing, or orally, or in acts, or partly in one of these ways and partly in others.”

. Indeed, some authorities assert that a disclaimer in an employee handbook preserving the right to at-will discharge should be recognized only when the disclaimer is consistent with the employer’s de facto employment poli-cíes. See, e.g., Note, Challenging the Employment-At-Will Doctrine Through Modem Contract Theory, 16 U.Mich.J.L.Ref. 449, 461-63 (1983).

. In passing, I note that, on the facts, this case is not altogether unlike Brehany v. Nordstrom, Inc., 812 P.2d 49, 55 (Utah 1991), in which we held that the covenant of good faith implied into every contract did not modify the terms of an at-will employment contract to require that an employer who discharges an employee have some "good faith basis for doing so.”