Court Opinion

ID: 4249250
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:16:27.205272+00
Date Added: 2024-06-11T14:43:58.585391
License: Public Domain

IN THE SUPREME COURT OF IOWA
                                No. 15–0105

                           Filed October 14, 2016

                       Amended December 23, 2016

VIRGIL JOHNSON and VIRGIL JOHNSON TRUCKING,

      Appellants,

vs.

ASSOCIATED MILK PRODUCERS, INC.,

      Appellee.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Allamakee County,

Margaret L. Lingreen, Judge.

      Dairy cooperative seeks further review of decision of court of

appeals that reversed summary judgment on the terms of a milk-hauling

contract.     DECISION OF COURT OF APPEALS VACATED; DISTRICT

COURT SUMMARY JUDGMENT AFFIRMED.

      John S. Anderson and Stephen J. Belay of Anderson, Wilmarth,

Van Der Maaten, Belay, Fretheim, Gipp & Zahasky, Decorah, for

appellants.

      Matthew     C.   Berger   of   Gislason   &   Hunter   LLP,   New Ulm,

Minnesota, for appellee.
                                      2

WATERMAN, Justice.

        In this appeal, we must decide which rule of contract law applies to

resolve a standoff over a change in hauling fees paid by a dairy

cooperative to an independent contractor who transported milk from

farms to the co-op’s facilities. The parties agree their oral contract could

be terminated at will by either side upon reasonable notice. The co-op

notified the hauler it would be phasing out a $100 trip fee it had been

paying to the hauler in addition to the agreed hauling rate. The hauler

objected, but continued to transport milk and bill the co-op for the trip

fees.   The co-op continued receiving shipments and paid the agreed

hauling rate without the trip fees. Months later, the hauler sued for the

unpaid trip fees, and the co-op declared the contract terminated.

        The co-op moved for summary judgment, asserting it could modify

the terms of the at-will contract upon reasonable notice and the hauler

accepted the modification by continued performance.             The hauler

resisted and, without contesting the reasonableness of notice, argued the

co-op improperly had attempted to modify an existing contract without

consideration or consent. The district court granted summary judgment

for the co-op, concluding, based on the undisputed facts, that the change

in payment terms was a new offer the hauler accepted by performance.

The court of appeals reversed, concluding questions of fact as to

acceptance precluded summary judgment.            We granted the co-op’s

application for further review.

        For the reasons explained below, we hold that in this at-will

contract, the co-op could alter payment terms prospectively upon

reasonable notice. The co-op made it clear that it would pay according to

a new schedule. The hauler understood this. The hauler faced a choice

of accepting the new terms or ceasing performance. The hauler accepted
                                    3

by performance notwithstanding its protests. Accordingly, we vacate the

decision of the court of appeals and affirm the district court’s summary

judgment dismissing the hauler’s claims.

      I. Background Facts and Proceedings.

      The record establishes the following facts as undisputed.        On

September 1, 2000, Associated Milk Producers, Inc. (AMPI) entered into

an oral agreement with Virgil Johnson, the sole proprietor of Virgil

Johnson Trucking. AMPI is a cooperative of dairy farmers that receives

milk produced by its members, processes the milk into butter and

cheese, and sells the dairy products. AMPI contracts with independent

haulers to transport milk from the farms to its facilities.   Haulers are

paid directly by AMPI, which in turn passes through those costs to its

members. Johnson was hired as an independent contractor to deliver

milk from the dairy farms to a station in Fredericksburg, Iowa, where the

milk was transferred from the hauler trucks to a semi-tanker for

transport to AMPI’s processing facilities. For this service, AMPI agreed to

pay Johnson a “hauling rate” of $0.50 per one hundred pounds of milk

delivered, a rate based on the distance between the various farms and

Fredericksburg.

      Johnson also later offered to haul milk from Fredericksburg to

AMPI’s facilities in Arlington and Des Moines, Iowa. AMPI agreed to pay

Johnson the standard hauling rate, plus an additional “trip fee” for that

service.   The trip fee was based on the amount that AMPI had been

paying another semi-driver ($1.00 per mile) and the distance from

Fredericksburg to the facilities. Johnson and AMPI negotiated the trip

fee to be $100 for deliveries to Arlington and $340 for deliveries to

Des Moines.
                                    4

      The duration of the contract was unstated. Johnson understood

the agreement to be “for the indefinite future.” Johnson acknowledged

this was typical of hauling contracts in the milk industry because the

dairy farmers remained free to move on and sell their milk to competing

processors at any time. Neither party asserts there were any assurances

given about the duration of the contract, and Johnson stated he believed

he had the right to “retire” or “to stop[] performance under the contract”

at any time.

      The parties continued working together for twelve years.       They

modified their oral agreement several times as circumstances changed.

For example, in 2005 or 2006, the station in Fredericksburg closed, and

Johnson began delivering milk directly from the farms to AMPI’s facilities

in Arlington and Des Moines. AMPI agreed to increase Johnson’s base

hauling rate three times, from $0.50 per hundred pounds in 2000 to

$0.51 per hundred in 2006, $0.545 in 2008, and $0.565 in 2009.

Johnson purchased three more delivery routes from AMPI and other

haulers.   AMPI made no representations regarding how long Johnson

could perform hauling services on these routes.     Johnson understood

when he purchased the routes that “those patrons had the right and

were free to leave at any time.”

      On June 19, 2012, Don DeVelder, senior vice president of AMPI,

notified Johnson by letter that AMPI was commencing a study “regarding

the inconsistency of hauler payment programs” to rectify discrepancies in

how milk haulers were paid for comparable work.          Under the new

program, AMPI sought to “pay every hauler in the same way by using the

same formula, which will be based on miles driven, stops made and

pounds of milk picked up.” AMPI stated that the study might result in

“pay rate adjustments” for haulers and invited them to offer input on the
                                    5

new program.      Johnson, through his attorney, sent a letter back to

DeVelder stating Johnson was unwilling to renegotiate the terms of their

oral agreement.

      Over a year later, on July 31, 2013, the division manager of AMPI

wrote Johnson to inform him that AMPI had completed the study and

would be implementing changes to rates in several steps over the next

few months. Specifically, the $100 trip fee Johnson had been paid for

deliveries to Arlington was to be phased out: the fee would be reduced to

$75 in September, to $50 in October, to $25 in November, and

eliminated in December. Johnson responded by letter that he did not

agree to the reductions, but later admitted he understood AMPI would no

longer pay the trip fees.

      In September, AMPI began paying Johnson under the program

announced weeks earlier, thereby reducing the trip fee to $75 for

deliveries that month. On October 7, Johnson submitted an invoice to

AMPI charging $100 for trip fees and stating that he had received

insufficient payment for his September hauls. AMPI’s manager returned

the invoice with a handwritten note at the bottom, stating, “Virgil, [b]ill

paid according to the attached notice dated July 31, 2013.”       Johnson

continued to bill AMPI at $100 for the trip fees. AMPI did not return the

next several invoices with comments, but paid only the base hauling rate

and reduced trip fees as set forth on the July 31 schedule.       Johnson

understood AMPI would not pay his $100 trip charges but nevertheless

continued hauling milk from the farms to AMPI.

      On December 17, AMPI’s manager sent another letter to Johnson,

reiterating the payment policy implemented months earlier.      The letter

stated that after November, Johnson would be paid at his current

hauling rate of $0.565 per one hundred pounds delivered, but would no
                                     6

longer be receiving any trip fee. The letter concluded by stating, “If this

is not acceptable with you let me know so we can make other

arrangements to haul AMPI member’s milk.”

      On January 9, 2014, Johnson filed a civil action against AMPI in

the Iowa District Court for Allamakee County, alleging claims for breach

of contract, promissory estoppel, and unjust enrichment.           Johnson

claimed that AMPI unilaterally attempted to modify the oral agreement by

its July 31, 2013 letter and did so without consideration or acceptance.

AMPI denied liability in its answer and alleged as an affirmative defense

that the July 31, 2013 modification was effective or, alternatively, that a

new contract had been formed without the $100 trip fee.

      After filing this lawsuit, Johnson continued to deliver milk for AMPI

throughout 2014, submitting monthly invoices to AMPI that included the

$100 trip fee. Early that year, Johnson added language to his invoice

stating, “A 15% interest charge will be added on all unpaid balances

beginning January 1, 2014.”     Johnson had not charged AMPI interest

previously, nor had AMPI agreed to pay interest. Johnson continued to

submit invoices to AMPI for the $100 trip fees plus interest. Johnson

billed AMPI in this fashion until AMPI terminated the arrangement in

December.

      Meanwhile, on September 26, AMPI filed a motion for summary

judgment.     AMPI argued its July 31, 2013 memorandum effectively

operated as a notice of termination of the parties’ at-will oral agreement

and a proposal for a new contract with trip fees phased out.             By

continuing to deliver milk, AMPI argued, Johnson consented to the terms

of the new agreement.     Additionally, AMPI asserted the existence of a

contract    precluded   Johnson’s   claims   for   unjust   enrichment   and

promissory estoppel.
                                    7

      Johnson filed a resistance to the motion on October 22. Johnson

argued that AMPI failed to terminate the existing agreement and that

summary judgment was precluded by factual disputes as to whether

AMPI’s attempted unilateral modification altered the agreement’s terms.

Johnson never argued he was not given reasonable notice of the change

in terms.   On November 12, Steven Faust, division manager of AMPI,

sent Johnson a letter terminating his employment. AMPI explained the

termination was because “in the course of [the] lawsuit, [Johnson] ha[d]

attempted to spin [his] continued deliveries to AMPI as evidence that

AMPI agreed to continue paying [him] the $100.00 ‘trip charge.’ ” The

letter stated,

      AMPI’s communications to you have been clear that we were
      unwilling to continue paying the “trip charge” beginning on
      December 1, 2013.       In order to avoid any confusion
      regarding these issues, however, please be advised that the
      contractual relationship between AMPI and you is hereby
      TERMINATED effective (30) days from the date of this letter.

The division manager sent a similar letter to Johnson on December 10,

2014, again stating the contractual relationship between AMPI and

Johnson was “TERMINATED.”           Johnson’s final invoice to AMPI in
December asserted AMPI owed a total of $121,375 for hauling charges

plus interest of $14,775 for the past seventeen months of deliveries.

      AMPI deposed Johnson about his understanding of the July 31,

2013 communication phasing out the trip fees. He testified as follows:

             Q. Now, would you agree with me that in this letter
      AMPI is informing you that it is no longer going to pay the
      trip charge beginning December 1st, 2013? A. I can see
      that, yes.
           Q. You agree that’s what the letter was telling you?
      A. Yes.
             Q. And then AMPI was going to phase that out over a
      series of months leading up to that? A. Yes.
                                      8
             ....
            Q. Now, at the time you received this letter, you
      understood that AMPI was not going to pay the trip charge,
      correct? A. Yes.
             Q. Did you tell AMPI that, “If you are not going to pay
      the trip charge, I’m no longer going to deliver milk?” A. No, I
      did not.
             Q. Did you continue to deliver milk after you received
      this letter? A. I did.
             Q. When you continued delivering milk, you
      understood that AMPI was not going to pay the trip charge,
      is that correct? A. That’s correct.

Johnson also testified about his reaction to AMPI’s December 17, 2013

letter reiterating its unwillingness to pay the trip charge:

           Q. You understood, when receiving this letter, that
      AMPI was not willing to pay the trip charge, correct? A. Yes.
            Q. And that if you were going to insist on the trip
      charge, that your relationship with AMPI was going to be
      terminated? A. Yes.
            Q. Did you contact AMPI, after receiving this letter,
      and tell them that this arrangement was not acceptable?
      A. Um, we drafted two letters, and I can’t remember when
      we drafted them. I think it was before this. I don’t think we
      drafted anything after this. No.
             Q. Okay. You continued to deliver milk? A. Yes.
           Q. And you delivered that milk, knowing that AMPI
      was not going to pay the trip charge? A. Yes.

      On November 24, the district court granted AMPI’s motion for

summary judgment. The district court ruled that an at-will contract may

be terminated or modified at any time as a condition of further

performance.     Accordingly, the court concluded that Johnson, by

“continu[ing] to haul milk to AMPI’s plant in Arlington, Iowa, after having

been notified of the change in the trip charge payment and without any

other agreement having been reached with AMPI,” thereby accepted the

new terms as a matter of law. The district court also granted summary

judgment dismissing Johnson’s unjust enrichment and promissory
                                     9

estoppel claims on grounds that the law will not imply a contract when

an express contract exists. See Chariton Feed & Grain, Inc. v. Harder,

369 N.W.2d 777, 791 (Iowa 1985).

      On December 14, 2015, Johnson filed a motion to amend and

enlarge the district court’s summary judgment ruling, which the district

court denied.    Johnson appealed the summary judgment, and we

transferred the case to the court of appeals.       The court of appeals

reversed, concluding the oral agreement between AMPI and Johnson

constituted a bilateral contract that could not be modified without

mutual assent and consideration.         The court of appeals noted the

contract was at-will, but it distinguished our employment-at-will

precedent because Johnson was an independent contractor, not an

employee of AMPI. The court of appeals stated, “Although the facts are

primarily undisputed, those facts do not support Johnson’s acceptance

of [AMPI’s] proposed modification as the only, or probable, conclusion

that can be drawn from those facts.”      Thus, the court of appeals held

that questions of fact as to Johnson’s consent precluded summary

judgment. We granted AMPI’s application for further review.

      II. Standard of Review.

      Our review of an order granting summary judgment is for

correction of errors at law. Peak v. Adams, 799 N.W.2d 535, 542 (Iowa

2011).   “Summary judgment is appropriate when there is no genuine

issue of material fact and the moving party is entitled to judgment as a

matter of law.” United Suppliers, Inc. v. Hanson, 876 N.W.2d 765, 772

(Iowa 2016) (quoting Robinson v. Allied Prop. & Cas. Ins. Co., 816 N.W.2d
398, 401 (Iowa 2012)). An issue of fact is material “only if ‘the dispute is

over facts that might affect the outcome of the suit.’ ” Peak, 799 N.W.2d

at 542 (quoting Phillips v. Covenant Clinic, 625 N.W.2d 714, 717 (Iowa
                                        10

2001)).   “Summary judgment is proper if the only issue is the legal

consequences flowing from undisputed facts.”             Id. (quoting Huber v.

Hovey, 501 N.W.2d 53, 55 (Iowa 1993)). “We examine the record in the

light most favorable to the nonmoving party.”            United Suppliers, 876
N.W.2d at 772.

      III. Analysis.

      We must decide which rule of contract law governs this dispute

over one party’s change in the terms of an ongoing commercial

relationship and the other party’s objection and continued performance. 1

The district court granted summary judgment for AMPI based on the rule

that an at-will contract is terminable or modifiable by either party upon

reasonable notice. The district court concluded that Johnson accepted

AMPI’s new terms of the agreement by continuing to haul milk.                 The

court of appeals reversed, applying a different rule that modification of

an existing contract requires mutual assent and consideration.                 We

conclude the district court correctly applied the governing rule.

      Johnson and the court of appeals relied on caselaw involving

contracts that were not terminable at will. In one such case, we said

that a contract may be modified by one party only “with the consent of

the other.” Davenport Osteopathic Hosp. Ass’n v. Hosp. Serv., Inc., 261
Iowa 247, 253, 154 N.W.2d 153, 157 (1967) (“Stated conversely one party

to a contract cannot alter its terms unilaterally or without assent of the

other party.”). “[T]he requisite consent may be either express or implied

from acts and conduct.” Id. “[W]hether a contract has been modified by

the parties thereto is ordinarily a question of fact.”        Id.   In Davenport

       1Johnson does not challenge the district court’s summary judgment dismissing

his promissory estoppel or implied contract claims.
                                         11

Osteopathic Hospital Association, a hospital contracted with a health

insurer     to     treat   the   insurer’s    subscribers       under   an     agreed

reimbursement schedule. Id. at 251, 154 N.W.2d at 156. Their written

contract included a provision allowing either party to terminate the

agreement “on 90 days written notice.”            Id.        After paying under the

agreed schedule for several years, the insurer, without invoking the

termination        provision,    announced     that     it     was   changing      the

reimbursement formula, effective seventeen months later.                     Id.   The

hospital continued to provide services to the insurer’s subscribers at the

lower rate, but protested the reduction and filed suit for breach of

contract.    Id.    The district court ruled that the hospital, by failing to

terminate the contract and “by continuing to accept [the lower]

compensation . . . impliedly acquiesced in the modification.” Id. at 252,

154 N.W.2d at 156. We reversed, concluding that the hospital, which

had “openly and repeatedly voiced objection to the change,” did not

assent to the modification. Id. at 254, 154 N.W.2d at 158. We held the

hospital could continue to perform, accept payments under protest, and

sue for breach to recover the difference. Id.

      Johnson also refers to Tindell v. Apple Lines, Inc., 478 N.W.2d 428

(Iowa Ct. App. 1991). There, Joseph Tindell entered into an operating

lease to haul freight for Apple Lines. Id. at 429. Their contract “provided

it was subject to cancellation by either party upon thirty days’ written

notice.” Id. at 429–30. A year later, Apple Lines attempted to reduce the

compensation rate without canceling the contract. Id. at 430. Tindell

refused to sign an addendum and told Apple Lines he would not agree to

the lower rate, but he continued to “accept loads and cash paychecks

calculated at the [lower] rate.” Id. at 430. Tindell sued for breach, and

the district court ruled in his favor, awarding damages at the original
                                          12

contract rate. Id. at 430. The court of appeals affirmed, holding that

“[b]y accepting payments under protest and continued performance on

his part, Tindell reserved the right to recover for breach.” Id. Tindell and

Davenport Osteopathic Hospital Association are good law for the

modification of an existing contract with a termination provision neither

party elects to exercise.        When neither side invokes the termination

clause, mutual consent is required to modify the contract. See Tindell,
478 N.W.2d at 430.

       We have a different rule for modifying at-will contracts. An at-will

contractual “relationship is terminable by either party at any time, for

any reason, or for no reason at all.” Jones v. Univ. of Iowa, 836 N.W.2d
127, 144 (Iowa 2013) (quoting Berry v. Liberty Holdings, Inc., 803 N.W.2d
106, 109 (Iowa 2011)).         Contracts at will can be terminated by either

party upon reasonable notice.           C.C. Hauff Hardware, Inc. v. Long Mfg.

Co., 257 Iowa 1127, 1131, 136 N.W.2d 276, 279 (1965). A contract for

services is “terminable at will only if we cannot ascertain a durational

term.”    Shelby Cty. Cookers, L.L.C. v. Util. Consultants Int’l, Inc., 857
N.W.2d 186, 192 (Iowa 2014). 2             Johnson and AMPI agree that their

        2We find the Restatement (Second) of Contracts instructive.           Shelby Cty.
Cookers, 857 N.W.2d at 192. “When the contract calls for successive performances but
is indefinite in duration, it is commonly terminable by either party, with or without a
requirement of reasonable notice.” Restatement (Second) of Contracts § 33 cmt. d, at
94 (Am. Law Inst. 1981). We may also look to Iowa’s Uniform Commercial Code (U.C.C.)
for guidance, even though the U.C.C. does not apply to contracts for services. Semler v.
Knowling, 325 N.W.2d 395, 399 (Iowa 1982) (“Exclusion from Article 2, however, does
not foreclose the application of its policies and reasons. ‘[Courts] have recognized the
policies embodied in an act as applicable in reason to subject-matter which was not
expressly included in the language of the act.’ ”) (alteration in original) (quoting Iowa
Code Ann. § 554.1102 cmt. 1 (1981)). “Where the contract provides for successive
performances but is indefinite in duration it is valid for a reasonable time but unless
otherwise agreed may be terminated at any time by either party.”               Iowa Code
§ 554.2309 (2013).
                                       13

contract   was   at   will;   accordingly,   we   apply    the   rule   governing

modification of at-will contracts.

      Contracts terminable at will are modifiable at will. Cannon v. Nat’l

By-Prods., Inc., 422 N.W.2d 638, 641 (Iowa 1988).                 A party that

unilaterally modifies an at-will contract effectively terminates the old

agreement and offers new terms for acceptance. See id. For example, in

Cannon, James Cannon sued his former employer for wrongful

termination, relying on a personnel policy adopted after he started work

that permitted termination only for cause. Id. at 639–41. The employer

asserted that the policy did not modify Cannon’s preexisting contract of

employment because the modification was not supported by independent

consideration. Id. at 641. We disagreed, noting “the power of the parties

to a contract to rescind their agreement and enter into a new one in

many instances obviates the need for additional consideration.” Id. We

stated,

      We find it to be particularly inappropriate to require an
      independent consideration for modification of an agreement
      which is conceded to have been a mere contract at will by
      defendant. In such situations, we believe the preferable
      approach is to view the issue as if an entirely new contract is
      being formed at the time of the alleged modification.

Id. (citing Moody v. Bogue, 310 N.W.2d 655, 660–61 (Iowa Ct. App. 1981)

(per curiam)).    We     held   the   modified    policy   requiring    for-cause

termination became part of Cannon’s employment contract and, on that

basis, affirmed the judgment for wrongful termination. Id. at 641–42.

      When one party modifies an at-will contract, the other party may

choose to accept the new terms or discontinue the relationship:

      [A]n employment contract terminable at will is subject to
      modification at anytime by either party as a condition of its
      continuance. The employee’s only alternative is to accept the
      new conditions or quit; an employee’s decision to continue to
                                     14
      work, knowing the newly proposed terms, results in the
      employee’s acceptance as a matter of law.

Moody, 310 N.W.2d at 660–61 (citations omitted). The court of appeals
applied that principle in Moody.      Id.   Gary Moody’s employer advised

Moody that he was overpaid and would be denied a bonus if he refused

to take on additional management responsibilities. Id. at 657. Moody

refused extra duties and filed suit after he was denied the bonus. Id.

The court of appeals held that by continuing employment after being

notified the bonus was contingent upon extra duties, Moody accepted the

modification.    Id. at 661; see also Clasing v. Hormel Corp., 993
F. Supp. 2d 960, 977 n.8 (N.D. Iowa 2014) (recognizing that parties may

modify at-will contract upon reasonable notice); Viafield v. Engels, No.

15–1663, 2016 WL 4054175, at *2 (Iowa Ct. App. July 27, 2016) (“Given

the at-will employment relationship, Viafield could modify [its personnel

policies] at any time . . . .”); Willets v. City of Creston, 433 N.W.2d 58, 62

(Iowa Ct. App. 1988) (concluding the employer had right to change sick

leave benefits in an at-will employment contract and the “employee’s

decision to continue to work, knowing the newly proposed terms, results

in the employee’s acceptance as a matter of law”).

      We do not require formalistic language terminating an at-will

contract before a change in terms will be effective going forward.        See

Moody, 310 N.W.2d at 660 (determining that statements informing

Moody his bonus would be eliminated if he refused management

responsibilities “effectively notified” Moody of the modification); see also

DiGiacinto v. Ameriko-Omserv Corp., 69 Cal. Rptr. 2d 300, 305 (App.

1997) (noting an approach that required formalistic assent to modify at-

will agreements would “encourage[] employers to fire employees” that did

not accept the modification and hire them back immediately under
                                      15

modified terms) (quoting Stieber v. Journal Publ’g Co., 901 P.2d 201, 204

(N.M. Ct. App. 1994)). In an at-will contract, a party who gives notice of

a changed term effectively offers a new contract in place of the existing

one, which the other party may accept by continued performance. See

Cannon, 422 N.W.2d at 641.

      Johnson and the court of appeals distinguish the foregoing cases

as applying to at-will contracts with employees but not independent

contractors.   They rely on Harvey v. Care Initiatives, Inc., in which we

recognized “a long-standing distinction in the law between employees

and independent contractors.”      634 N.W.2d 681, 683 (Iowa 2001).     In

Harvey, we declined to extend the tort of wrongful discharge to

independent contractors. Id. at 686. We noted the tort was recognized to

address the “inequity of the bargaining position in a typical at-will

employer-employee     relationship”   and   concluded   that   independent

contractors, who “have greater control and flexibility in their work and in

the hiring process,” did not need the protection of a wrongful-discharge

tort. Id. at 684. We elaborated,

      The distinct differences in the nature of the relationship
      between independent contractors and at-will employees not
      only suggest a greater need to protect at-will employees, but
      existing principles of contract law provide independent
      contractors with remedies not available to employees. Thus,
      an independent contractor can not only negotiate the
      circumstances governing termination of a contract, but has
      contract remedies to enforce all expressed or implied terms
      of a contract.

Id. (footnote omitted) (citations omitted). But these differences between

employees and independent contractors cut against Johnson. He seeks

greater protection as an independent contractor, yet we reached the

opposite conclusion in Harvey favoring greater protection for employees.

Employers may modify contracts with at-will employees prospectively.
                                          16

Nothing in Harvey supports treating independent contractors more

favorably than employees.

      Moreover,     there       is    ample    authority   allowing   unilateral

modifications to at-will service contracts with independent contractors as

well as employees.     The United States Court of Appeals for the Fifth

Circuit applied this principle to a milk-hauling contract involving similar

facts in W.G. Pettigrew Co. v. Borden, Inc., in which an independent

contractor worked as a distributor for a dairy and was paid for delivering

milk to its customers. No. 97–40010, 1997 WL 589344, at *1 (5th Cir.

Sept. 8, 1997).     The dairy changed its compensation terms over the

hauler’s objection. Id. at *2. The hauler continued performing but later

sued for breach of contract. Id. The federal district court granted the

dairy’s motion for summary judgment. Id. The Fifth Circuit affirmed,

stating,

      As an at-will contract, the distributorship could be modified
      by either party as a condition to the continuation of the
      relationship. In general, when a party to an at-will contract
      notifies the other of changes in the contract terms, the other
      must either accept the terms or terminate the contract. If
      the party continues to perform under the contract with
      knowledge of the changes made by the other party, the
      former is deemed, as a matter of law, to have accepted the
      changes.

Id. at *3 (citation omitted).

      This principle was utilized in Cascade Auto Glass, Inc. v.

Progressive Casualty Insurance Co., when an insurance company

contracted with a vendor to repair its insured vehicles. 145 P.3d 1253,

1254 (Wash. Ct. App. 2006).            The contract was terminable at will by

either party.   Id. at 1255.         When the insurer initiated a new pricing

policy, the vendor argued the unilateral modification was ineffective. Id.
                                    17

at 1257.     The Washington Court of Appeals allowed the unilateral

change:

      [A] terminable-at-will contract may be unilaterally modified.
      The same rule applies in at-will employment agreements,
      where an employer may unilaterally change policies and
      procedures set forth in an employee handbook so long as the
      employee receives reasonable notice of the change. In such
      cases, a new contract is formed when the employer
      communicates the new terms (offer), the employee works
      after receiving the notice (acceptance), and the employee
      continues in employment although free to terminate
      (consideration).

Id. (citations omitted).

      Other courts agree, holding at-will contracts with independent

contractors can be unilaterally modified. See, e.g., Moholt v. Dooney &

Bourke, Inc., 63 F. Supp. 3d 1289, 1300–01 (D. Or. 2014) (concluding

independent sales representative’s contract could be modified at any time

because it was terminable at will); Builders Supply Corp. v. Shipley, 341
P.2d 940, 941 (Ariz. 1959) (holding at-will contract between independent

hauler and brick manufacturer unilaterally modifiable); Bass v. Prime

Cable of Chi., Inc., 674 N.E.2d 43, 50–51 (Ill. App. Ct. 1996) (determining

contract between cable company and customers was terminable at will,

and therefore, cable company could unilaterally modify terms by

discontinuing free cable guide); Garber v. Harris Trust & Sav. Bank, 432
N.E.2d 1309, 1314 (Ill. App. Ct. 1982) (holding that cardholder

agreements between issuers and cardholders were terminable at will, and

therefore, issuers could modify terms); Associated Petroleum Prods., Inc.

v. Nw. Cascade, Inc., 203 P.3d 1077, 1080 (Wash. Ct. App. 2009)

(concluding contract between diesel fuel supplier and construction

company was modifiable at will with reasonable notice). Johnson cites

no authority to the contrary.
                                          18

       We hold that the principle of contract law allowing unilateral

changes       to   at-will   contracts   upon     reasonable     notice    applies    to

independent contractors as well as employees. When AMPI announced

in July 2013 it was phasing out the $100 trip fees, Johnson could

“accept the new conditions or quit.”                Willets, 433 N.W.2d at 62.

Johnson’s decision to continue hauling milk, “knowing the newly

proposed terms, results in [his] acceptance as a matter of law.” Id. 3

       Johnson’s protests to AMPI’s modification phasing out the trip fee

were ineffective in light of his continued performance. In Schoppert v.

CCTC International, Inc., the plaintiff “objected continually” to an

employer’s unilateral modification of his commission. 972 F. Supp. 444,

447 (N.D. Ill. 1997). Yet the court found his actions spoke louder than

his words:

       Even crediting Schoppert’s version that he “objected
       continually” to the Modification, as we must on a motion for
       summary judgment, his actions in continuing to work for
       over two and a half years, without any demonstration that
       CCTC might reconsider its ultimatum to him, belie those
       verbal objections. Schoppert has not indicated that he ever
       told anyone at CCTC that he would only work under the pre-

       3See   also Care Travel Co. v. Pan Am. World Airways, Inc., 944 F.2d 983, 990 (2d
Cir. 1991) (recognizing that if one party imposes a unilateral modification and the other
party continues to perform, recovery for breach is precluded); Martin v. Airborne
Express, 16 F. Supp. 2d 623, 632 (E.D.N.C. 1996) (“At any rate, Martin’s decision to
remain in AMR Distribution’s employ after notification of the restructuring negates any
related breach of contract claim.”); Kauffman v. Int’l Bhd. of Teamsters, 950 A.2d 44, 48
(D.C. 2008) (“[N]either party to at-will employment is bound to continue performance,
and thus courts properly view future performance by each as valid consideration for the
change in terms.”); Geary v. Telular Corp., 793 N.E.2d 128, 133 (Ill. App. Ct. 2003)
(“Plaintiff accepted the April 1996 modifications to the compensation plan when he
accepted payment of commissions under the April 1996 plan and continued
employment.”); Brett v. City of Eugene, 880 P.2d 937, 939 (Or. Ct. App. 1994) (“By
continuing to work for an employer after the employee is aware of a change in the
employer’s policies, the employee impliedly accepts the change in his or her
employment contract.”); Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986)
(“If the employee continues working with knowledge of the changes, he has accepted the
changes as a matter of law.”).
                                    19
      1991 terms, or that his continued performance was in any
      way conditioned on the retention of his earlier commission
      structure.    Nor is there any evidence that the 1991
      Modification remained open to further negotiation after the
      December 1991 meeting.           In these circumstances,
      Schoppert’s continuing to work for over two and a half years
      while receiving commissions under the new structure must
      be seen in legal terms as an acceptance of the 1991
      Modification, grudging and protest-filled as that acceptance
      may have been. The old saw “actions speak louder than
      words” has more than a grain of truth to it, and we adhere to
      it where, as here, a party’s words are contradicted by his
      actions.

Id.; see also Gebhard v. Royce Aluminum Corp., 296 F.2d 17, 19 (1st Cir.

1961) (rejecting “Plaintiff’s explanation . . . that thereafter ‘he accepted

the checks because he had to,’ but that he never agreed to any change”).

      We reach the same conclusion.            Johnson admitted in his

deposition that he knew AMPI would refuse to pay the trip fees he

continued to bill. He understood that under the new payment program,

he would only be paid the base hauling rate.         As a matter of law,

Johnson accepted AMPI’s new terms by his conduct in continuing to

haul milk and accept payments, notwithstanding his protests.            The

district court correctly ruled that Johnson’s continued performance

accepted AMPI’s modification to their at-will contract as a matter of law.

      IV. Disposition.

      For these reasons, we vacate the decision of the court of appeals

and affirm the district court’s summary judgment dismissing Johnson’s

action.

      DECISION OF COURT OF APPEALS VACATED; DISTRICT

COURT SUMMARY JUDGMENT AFFIRMED.