Court Opinion

ID: 9738985
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:06:49.976679+00
Date Added: 2024-06-11T07:24:09.116068
License: Public Domain

Griffin, J.
(concurring in part and dissenting in part). I concur that plaintiff’s claim is not preempted by the National Labor Relations Act. Since the majority concludes that remand is required, I join in the observation that to the extent that plaintiffs claim is based upon "legitimate expectations grounded in an employer’s written policy statements,”1 guidelines for resolution are provided by In re Certified Question, Bankey v Storer Broadcasting, 432 Mich 438; 443 NW2d 112 (1989), also decided today. However, I disagree with the majority’s conclusion that summary disposition would be premature on the basis of this record.
Plaintiffs claim of a termination-for-cause agree*511ment hangs on his assertion that at the time of hire he was orally promised "a lifetime job as long as he did not steal.”
I conclude that it simply is not reasonable to construe such an assertion as an enforceable agreement to discharge only for cause. Subjective expectancies of continued employment do not constitute a termination-for-cause contract under Toussaint, and plaintiffs claim should fail as a matter of law.
i
It is still the general rule that employment for an indefinite term is presumed to be terminable at the will of either party.
Contracts for permanent employment or for life have been construed by the courts on many occasions. In general it may be said that in the absence of distinguishing features or provisions or a consideration in addition to the services to be rendered, such contracts are indefinite hirings, terminable at the will of either party. [Lynas v Maxwell Farms, 279 Mich 684, 687; 273 NW 315 (1937).]
See also anno: Right to discharge allegedly "at-will” employee as affected by employer’s promulgation of employment policies as to discharge, 33 ALR4th 120. The underlying rationale for this rule is that "[b]ecause the parties began with complete freedom, the court will presume that they intended to obligate themselves to a relationship at will.” Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579, 600; 292 NW2d 880 (198Q).2 (Emphasis added.)
*512In Michigan, however, this general rule has been in danger of being swallowed up by the "narrow exception” carved out and announced by this Court in Toussaint. In that case the Court held:
(1) a provision of an employment contract providing that an employee shall not be discharged except for cause is legally enforceable although the contract is not for a definite term—the term is "indefinite,” and
(2) such a provision may become part of the contract either by express agreement, oral or written, or as a result of an employee’s legitimate expectations grounded in an employer’s policy statements. [Id. at 598.]
The Toussaint decision neither vitiated the employment-at-will presumption nor did it create new or special rights. As explained in Valentine v General American Credit, Inc, 420 Mich 256, 258-259; 362 NW2d 628 (1984),
Toussaint makes employment contracts which provide that an employee will not be dismissed except for cause enforceable in the same manner as other contracts. It did not recognize employment as a fundamental right or create a new *513"special” right. The only right held in Toussaint to be enforceable was the right that arose out of the promise not to terminate except for cause.
Employers and employees remain free to provide, or not to provide, for job security. Absent a contractual provision for job security, either the employer or the employee may ordinarily terminate an employment contract at any time for any, or no, reason. The obligation that gave rise to this action is based on the agreement of the parties; it is not an obligation imposed on the employer by law. [Emphasis added.]
At one point the Toussaint Court emphasized the limits of its ruling:
We hold only that an employer’s express agreement to terminate only for cause, or statements of company policy and procedure to that effect, can give rise to rights enforceable in contract. [Toussaint, supra, at 610. Emphasis supplied.]
However, it cannot be denied that Toussaint pushed heavily against and through the boundaries of employment contract law with such language as:
It is enough that the employer chooses, presumably in its own interest, to create an environment in which the employee believes that, whatever the personnel policies and practices, they are established and official at any given time, purport to be fair, and are applied consistently and uniformly to each employee. The employer has then created a situation "instinct with an obligation.”
We hold that employer statements of policy . . . can give rise to contractual rights in employees without evidence that the parties mutually agreed that the policy statements would create contractual rights in the employee, and, hence, although *514the statement of policy is signed by neither party, can be unilaterally amended by the employer without notice to the employee, and contains no reference to a specific employee, his job description or compensation, and although no reference was made to the policy statement in preemployment interviews and the employee does not learn of its existence until after his hiring. [Id., pp 613, 614-615.]
When mutual assent is replaced by the "expectations” of one party as the measure of contract viability, an invitation to litigate is heralded, loud and clear. We need look only at the stampede to the courts which has followed in the wake of Toussaint to realize, nine years later, that some lines of reasonable limitation must be drawn. A reasonable limit was recognized today in In re Certified Question with the holding that a termination-for-cause policy set forth in a manual may be changed, even though the employer had not expressly reserved the right to do so.
The case at hand presents a further important opportunity to provide reasonable definition for what has come to be known as the Toussaint doctrine. Plaintiff claims to have an employment contract for the rest of his life, on the basis of an oral statement allegedly made at hiring that he would "have a lifetime job as long as he did not steal.” Plaintiff contends that a jury should now be allowed to decide whether such a purported assurance gave rise to an enforceable contract terminable only for the single cause of thievery.
To be sure, in some situations lower courts and federal courts have held that rather general statements may go to the jury as the basis of a termination-for-cause contract. See, e.g., Cowdrey v AT Transport, 141 Mich App 617; 367 NW2d 433 (1985) (the employee testified that he was promised *515that he "would never have to worry” as long as he did his job), Hetes v Schefman & Miller Law Office, 152 Mich App 117, 119; 393 NW2d 577 (1986) (the employee would "[have] a job as long as [she] did a good job”), Walker v Consumers Power Co, 824 F2d 499, 503 (CA 6, 1987) (the employer promised that the employee would not be fired as long as he "performed adequately” and "did a good performance on [his] job”), and Ritchie v Michigan Consolidated Gas Co, 163 Mich App 358; 413 NW2d 796 (1987).
However, other courts have held, sensibly, that not all oral assurances merit jury consideration. In Broussard v Caci, Inc, 780 F2d 162, 163 (CA 1, 1986), the court distinguished between "puffery and promise”:
Employment negotiations resulting in employment are by definition conducted in an atmosphere of optimism and mutual hope. The air is redolent with expectation of duration on the part of the employee and of satisfactory performance by the employer. But to equate general expressions of hope for a long relationship with an express promise to discharge only for good cause would effectively eliminate [the rule] . . . that contracts for indefinite employment are, without more, terminable at will.
Yet another court has made this distinction:
Since Toussaint, the Court has been faced with a number of cases where the plaintiff has claimed a Toussaint contractual obligation arising out of the employer’s hiring agent telling plaintiff at the time of employment that plaintiff could be employed "as long as he did the job” or similar expressions such as "as long as there is work to do,” "as long as your work is satisfactory,” "as long as you want,” etc. When you examine these *516statements, each, standing alone, simply does not constitute a contract or agreement with any specific duration. Each was clearly within the policy of the Lynas case where an employment agreement for an indefinite term such as each of these was held to be an employment at will. After all Lynas as well as reality compels recognition of the fact that neither party to the beginning of an employment relationship expects it to be unsatisfactory, and both hope it will have a significant duration. This hope and noncontractual wish is expressed in terms of language such as "as long as you do the job.” Hence, the Toussaint exception to Lynas must mean more than merely this language. While it is true that as the economy and society change, we can expect employment durational rules will be altered. That was probably the basis for the specific recognition in Toussaint that the employer will be held accountable for allowing a hiree to reasonably believe that there was a specific durational term to the employment; but it must be based on more than the expression of an optimistic hope of a long relationship. [Carpenter v American Excelsior Co, 650 F Supp 933, 936, n 6 (ED Mich, 1987).]
Such an admonition is warranted. Caution should be exercised in judging the viability of a breach of contract action based solely on an alleged oral representation recalled with remarkable specificity long years after the time of hiring.
The present case presents an intriguing example. Plaintiff claims a "lifetime job ... as long as he did not steal.” If we take the employer at his word, this precatory phrase sets forth an inherently indefinite term of employment (a lifetime); yet it simultaneously provides for discharge only for a single cause (thievery). As plaintiff would have it, he could be inefficient, absent, tardy, slovenly, reckless, nonproductive and even violent —to mention only a few undesirable traits; how*517ever, he could not be terminated unless he committed the one cognizable cause for ending the relationship—stealing.
Surely, a modicum of realism and common sense is needed. An assurance such as that alleged in the instant case simply cannot be separated from the realities of the working world. It should be recognized that "lifetime” employment contracts are extraordinary and, being so, "must be expressed in clear and unequivocal terms before a court will conclude that an employer intended to enter into such a weighty obligation.” Chastain v Kelly-Springfield Tire Co, 733 F2d 1479, 1484 (CA 11, 1984). See also Naz Agency, Inc v US Fidelity & Guaranty Co, 277 F2d 640, 641 (CA 6, 1960). Otherwise stated, "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 such a contract.” Brown v Safeway Stores, Inc, 190 F Supp 295, 299-300 (ED NY, 1960).
Whether or not Bullock carried a subjective expectancy that he would work for this employer for the rest of his life, it is difficult to believe that any reasonable person would rely on such an oral assurance as the basis of an interminable employment contract "as long as he did not steal.” I would hold that the allegations put forth in the instant case are insufficient as a matter of law to provide the basis for an employment contract that is not terminable at will.
Furthermore, the rule of construction set forth in Lynas, which is preserved by Toussaint,3 provides that a lifetime employment contract, even if agreed to, is generally construed as an indefinite hiring, terminable at the will of either party, in *518the absence of distinguishing features or special consideration in addition to the services to be rendered. I am compelled to disagree with a suggestion in the majority opinion that special consideration sufficient to satisfy Lynas might exist in the instant case. Ante, p 482, n 9. As I read the pleadings, plaintiff does not aver that any particular benefit inured to the defendant, or that any particular hardship was incurred by plaintiff, distinguishable from that expected from the normal performance of all commissioned salespersons.
Accordingly, in conformity with Lynas, the motion for summary disposition should have been granted.
n
Although the majority opinion appropriately focuses only upon plaintiff’s claim of wrongful discharge, ante, p 477, n 5, plaintiff’s complaint includes claims that reach into other areas of the employment relationship. For example, he contends that he was orally assured at hiring that he "would work as a commission salesman for Defendant and enjoy the benefits of a seven (7%) percent commission for sales . . . ,” and that "if he worked hard and built up his 'book of business,’ he would be able to earn large sums of money . . . and could enjoy his later working years . . . .”
I address these ancillary claims for the purpose of explaining why they also fail as a matter of law, and to emphasize that the Toussaint rationale has been confined by this Court to claims of wrongful discharge.
Plaintiff began his employment with defendant in 1968. Ten years later, in 1978, defendant changed the method by which it compensated sales personnel, replacing the straight seven percent *519commission with a "unit compensation plan,” whereby sales representatives were paid commissions calculated as a specified dollar amount, rather than as a percentage of the insurance premiums. This change in the method of compensation applied across the board to all of aaa’s commission sales representatives, and not just to plaintiff. Plaintiff continued to work for nearly four years thereafter, and was compensated under the new plan until he was terminated as a sales representative in 1982.
Plaintiff now complains that by modifying its method of compensation in 1978, and by instituting production standards in 1981, defendant breached an oral contract purportedly entered into when he was hired. Specifically, plaintiff alleges that defendant "breached said promises and changed its policies without advising Plaintiff when Plaintiff came into the employ of Defendant that Defendant was reserving the right to do so 99
Of course, a promise to pay commissions on sales actually made is enforceable, even when the underlying agreement is for an indefinite duration. Reed v Kurdziel, 352 Mich 287, 295; 89 NW2d 479 (1958). Depending on the terms agreed upon, commissions on sales originally procured could continue to accrue even after an employee is terminated. Accordingly, plaintiff might have a valid claim concerning defendant’s obligation to pay commissions accruing from the book of business established by the plaintiff prior to defendant’s change in the method of compensating its sales staff. However, the assertions in plaintiffs complaint do not support a claim that defendant abrogated its managerial prerogatives to modify the method of compensating its sales personnel.
An employer’s intention to give up permanently *520a right so fundamental as the ability to make changes in its method of compensation is not to be lightly inferred. In his complaint, plaintiff reveals that the assurances on which he relies were expressed in terms of a company policy "which had been in effect for many years.” There was no express statement that the policy would continue for a fixed period of time or that the policy could not be changed in the future.
Furthermore, there is no basis for an inference that the compensation method in effect at hire would forever remain unchanged. On the contrary, the fact that policies set out in distributed manuals were later modified rebuts such an inference.
Since I would conclude under part i that plaintiff was an employee at will, it logically follows that the right of an employer to terminate the relationship "necessarily includes the right to insist upon changes in the compensation arrangements as a condition of continued employment.” Green v Edward J Bettinger Co, 608 F Supp 35, 42 (ED Pa, 1984), afFd 791 F2d 917 (1986), cert den 479 US 1069 (1987). Thus, an employee in a termination-at-will relationship, once informed of a change in compensation rates, can either accept the new rates or exercise his own right to terminate the relationship. Hathaway v General Mills, Inc, 711 SW2d 227 (Tex, 1986); Facelli v Southeast Marketing Co, 327 SE2d 338 (SC, 1985). If an employee continues to work with knowledge of the changes, he impliedly accepts the modification. Hathaway, supra; Alhrant v Sterling Furniture Co, 85 Or App 272; 736 P2d 201 (1987).
Surely, where an employee continues to work under a revised compensation system for nearly *521four years, as in the case at bar, acceptance by the employee should be implied as a matter of law.4
Furthermore, In re Certified Question, supra, decided today, supports the proposition that an employer may unilaterally make such a policy change although the right to do so has not been expressly reserved. If even a just-cause termination policy can be modified or revoked, surely policies of lesser import may also be changed.
It is noteworthy that during a period of more than nine years since Toussaint, its rationale has been confined by this Court to claims of wrongful discharge. The point was reiterated in Valentine, supra, p 258, where this Court stated: "[t]he only right held in Toussaint to be enforceable was the right that arose out of the promise not to terminate except for cause.”
Our lower courts, whose experience with Toussaint-based claims is extensive, have shown understandable reluctance to extend Toussaint beyond wrongful discharge disputes. For example, see Dyer v Dep’t of State Police, 119 Mich App 121; 326 NW2d 447 (1982) (rejecting the plaintiffs’ claim that department policy and practice had given rise to a contractual right to nonduty use of state vehicles, on the basis that rights and duties of the parties relative to vehicle use were not regulated by implications), and Engquist v Livingston Co, 139 Mich App 280; 361 NW2d 794 (1984) (rejecting the plaintiffs claim that a fourteen-year history of step increases had given rise to a Toussaint-based entitlement to step increases).
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 *522encountered 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.
iii
Defendant has argued in this Court that plaintiffs claim of lifetime employment based on an oral promise should be barred as in violation of the Michigan statute of frauds.5 Because Bullock’s assertion of a "lifetime contract” is exactly the sort of promise that courts should generally decline to enforce unless it is in writing, I feel compelled to make the following observations.
It is one of the curiosities of the common law that contracts for permanent or lifetime employment have been held to fall outside the scope of the statute of frauds. On its face the statute appears to require that promises contemplating long-term commitments, such as that alleged in the instant case, be validated by written evidence in order to be enforceable:
In the following cases an agreement, contract or promise shall be void, unless that agreement, contract, or promise, or a note or memorandum thereof is in writing and signed by the party to be charged therewith, or by a person authorized by him:
*523(a) An agreement that, by its terms, is not to be performed within 1 year from the making thereof. [MCL 566.132(a); MSA 26.922(a). Emphasis supplied.]
Since enactment of the original English statute in 1676,6 however, courts have chafed under its restrictions.7 The undisputed trend of authority has been to interpret the "one year” provision as applying only to contracts that have no possibility of being completed within a year, even if the parties to the contract in fact contemplated a longer period.8 Michigan’s case law has followed that trend by applying the nonstatutory "capable of performance” exception to the one-year provision of the statute of frauds.9
Significantly, the primary reason used to explain the result in the case of an oral contract for permanent or lifetime employment is that such contracts are terminable at will. See, for example, Sax v Detroit, G H & M R Co, 125 Mich 252, 255-256; 84 NW 314 (1900). This rationale was typified in Adolph v Cookware Co of America, 283 Mich 561, 568; 278 NW 687 (1938):
Plaintiffs proofs, taken as true, showed a contract for permanent employment. Such a contract is for an indefinite period and, unless for a consid*524eration other than promise of services, the employment was terminable at the will of either party. Lynas v Maxwell Farms, 279 Mich 684, and cases there cited.
Prior to Toussaint, the implications of such an interpretation were not ominous. Although an employment contract for an indefinite period fell outside the statute of frauds, the well-established termination-at-will doctrine had the counter-balancing effect of providing protection from fraudulent allegations of oral promises.
It is not surprising that, faced with the problems of proof presented since Toussaint by erosion of the employment-at-will doctrine, some courts have begun to question the wisdom of exempting employment contracts from the requirement that they be in writing where it is clear that performance beyond a year is contemplated. See, for example, Molder v Southwestern Bell Telephone Co, 665 SW2d 175 (Tex App, 1983); Evans v Floor Distribution Co, 799 F2d 364 (CA 7, 1986); Hodge v Evans Financial, 262 US App DC 151, 163; 823 F2d 559 (1987) (MacKinnon, J., dissenting).
In Michigan, a trial court recently found that several wrongful discharge claims brought against the instant defendant, alleging promises virtually the same as Bullock’s, were barred by the statute of frauds. However, the Court of Appeals reversed, relying on the "capable of performance” exception as expressed in Adolph, supra, p 568. Dumas v Auto Club Ins Ass’n, 168 Mich App 619, 631; 425 NW2d 480 (1988).
In California, an appellate court has recognized that the statute of frauds issue can no longer be routinely avoided given recent developments in employment law:
The traditional view is that such a contract could conceivably be performed within one year by termination of the employment agreement by one *525party or the other. Since such an employment agreement has long been interpreted as being for an indefinite period, it is terminable at will by either party. . . .
Appellant alleges that respondent did not have the option of terminating him at will without good cause. . . .
Appellant cannot have it both ways. Either his employment relationship was a contract in which both parties had equal rights to terminate at will (in which case it was not in violation of the statute of frauds), or it was a contract where the employer did not have the right to terminate at will, and there was a reasonable expectation of employment for more than one year (in which case the statute of frauds does apply, barring this action). [Newfield v Ins Co of the West, 156 Cal App 3d 440, 446; 203 Cal Rptr 9 (1984). Emphasis supplied.][10]
The statute of frauds "reflects a judgment that parol evidence of certain types of agreements is so inherently suspect that it should not even be presented to a jury, an institution otherwise generally considered capable of distinguishing fact from invention.” Thompson v Stuckey, 300 SE2d 295, 298 (W Va, 1983).
The oral promise of a lifetime job alleged in this case by Bullock certainly falls within that category. As I see it, the time has come to revisit this antiquated interpretation of the statute of frauds which makes no sense in the post-Toussaint era. If this Court does not do so, it is hoped the Legislature will see the wisdom of making needed adjustments of the statute.
*526I would reverse the decision of the Appeals. Court of
Riley, C.J., concurred with Griffin, J.

 Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579, 598; 292 NW2d 880 (1980).

 Contracts at will are not the exception, but the rule, perhaps for the following reason:
*512The contract at will is also a sensible private adaptation to the problem of imperfect information over time. In sharp contrast to the purchase of standard goods, an inspection of the job before acceptance is far less likely to guarantee its quality thereafter. The future is not clearly known. More important, employees, like employers, know what they do not know. They are not faced with a bolt from the blue, with an "unknown unknown.” Rather they face a known unknown for which they can plan. The at-will contract is an essential part of that planning because it allows both sides to take a wait-and-see attitude to their relationship so that new and more accurate choices can be made on the strength of improved information. [Epstein, In defense of the contract at will, 51 U Chi L R 947, 969 (1984).]

 Toussaint, supra at 596-597, 632.

 Plaintiff does not contend that he was not fully compensated for services rendered.

 MCL 566.132; MSA 26.922. The majority declines to address this issue since it was not raised at the trial level. Ante, p 481, n 8.

 29 Car n, c 3. Comparisons between present time and the late seventeenth century should be made cautiously, if at all. Nevertheless, one scholar’s observation about the conditions which gave rise to the statute is so strikingly familiar that it demands reflection: "Litigation indeed came close to a form of sanctioned aggression, and it was an aggressive age.” Simpson, A History of the Common Law of Contract, p 599.

 Farnsworth, Contracts, § 6.1, p 373.

 Corbin, Contracts, § 446, pp 553-554.

 The earliest Michigan case to apply the "capable of performance” exception appears to be Smalley v Mitchell, 110 Mich 650, 652; 68 NW 978 (1896). See also Toussaint, supra, p 612, n 24, and the cases cited therein.

 The California Supreme Court in Foley v Interactive Data Corp, 47 Cal 3d 654; 254 Cal Rptr 211; 765 P2d 373 (1988), recently rejected the reasoning of Newfield and instead deferred to the majority approach by applying the "capable of performance” approach to the statute of frauds.