Opinion
CV 00-579-BR
April 9, 2001
MICHAEL R. SEIDL, STEVEN V. RIZZO Seidl Rizzo LLP Portland, OR., Attorneys for Plaintiff.
ROBERT LANE CAREY, BRADLEY TELLAM Barran Liebman LLP Portland, OR., Attorneys for Defendant.
OPINION AND ORDER
Plaintiff Bland, a former employee of Defendant Blount, Inc., brings this action for damages Plaintiff allegedly suffered when Defendant terminated his employment. Plaintiff's First Amended Complaint includes nine claims: 1) defamation; 2) false light invasion of privacy; 3) statutory claim for failure to pay wages; 4) breach of contract for failure to pay severance wages; 5) statutory claim for unlawful employment practices; 6) common-law wrongful discharge; 7) breach of an implied contract that permitted Defendant to terminate employees only for cause; 8) intentional infliction of emotional distress; and 9) punitive damages. Defendant filed a Motion for Summary Judgment (#12) against the first six claims, which comprised Plaintiff's original Complaint. Plaintiff then filed a First Amended Complaint in which he added the seventh, eighth, and ninth claims. On March 2, 2001, Defendant filed a supplemental Motion to Dismiss or for Summary Judgment (#39) against the latter three claims.
This Court heard oral argument on Defendant's Motions on April 2, 2001. As reflected in the Court's Minute Order issued April 2, 2001, the Court denied some of Defendant's Motions in part, granted others in part, and also requested further briefing on several issues raised in the Motions. The only matter presently under advisement is Defendant's Motion to Dismiss or for Summary Judgment as to Plaintiff's seventh claim.
For the following reasons, Defendant's Motion is GRANTED as to Plaintiff's seventh claim.
THE SEVENTH CLAIM FOR RELIEF IN PLAINTIFF'S AMENDED COMPLAINT
Plaintiff worked for Defendant as a machinist for 25 years. Plaintiff alleges he filed a complaint with the Oregon Bureau of Labor and Industries (BOLI) in April 1998 in which he claimed Defendant required Plaintiff and another employee to report to work 10 minutes before their shift started without compensating them for the time worked. Plaintiff contends his supervisors and other managers became aware of his complaint to BOLI and began to treat him badly, criticizing him and calling him "lazy." As a result of the BOLI complaint, Defendant stopped requiring the workers to report to work early.
Another person who worked for Defendant, Jason Madden, allegedly was the victim of workplace harassment by an unknown person over a period of several years. In 1999, Defendant installed a surveillance camera near Madden's work station in an effort to identify Madden's harasser(s). In November 1999, the camera recorded Plaintiff placing a disfigured teddy bear on Madden's workbench. The parties dispute the nature of that incident. Plaintiff claims he acted innocently and thought the teddy bear would amuse Madden. Defendant characterizes the incident as part of a pattern of serious harassment as a result of which Defendant terminated Plaintiff's employment in November 1999.
In his seventh claim, Plaintiff contends he had an implied contractual right to be terminated only for just cause and that Defendant breached the employment contract by terminating him without just cause. While Plaintiff incorporates by reference his allegations that Defendant fired him in retaliation for his complaint to BOLI, the gravamen of Plaintiff's seventh claim is that Defendant did not have just cause to fire him "because of the teddy bear incident."
DEFENDANT'S MOTION
Defendant moves for summary judgment against Plaintiff's seventh claim on the grounds Plaintiff was an at-will employee and no contract existed that gave Plaintiff a right to be terminated only for cause.
I. Summary Judgment Standard
Under Fed.R.Civ.P. 56:
Summary judgment should be granted if "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." If the moving party shows that there are no genuine issues of material fact, the non-moving party must go beyond the pleadings and designate facts showing an issue for trial. A scintilla of evidence or evidence that is merely colorable or not significantly probative does not present a genuine issue of material fact. The underlying substantive law governing the claims determines whether or not it is material. Reasonable doubts as to the existence of material factual issue[s] are resolved against the moving parties and inferences are drawn in the light most favorable to the non-moving party. There must be enough doubt for a "reasonable trier of fact" to find for plaintiffs in order to defeat the summary judgment motion.
Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000) (citations omitted).
II. Defendant Is Entitled to Summary Judgment on Plaintiff's Claim for Breach of an Implied Contract to Terminate Employees Only for Cause
Viewing the evidence in the light most favorable to Plaintiff for purposes of this portion of Defendant's summary judgment motion, the Court must assume Defendant terminated Plaintiff's employment merely because Plaintiff innocently placed the teddy bear on Madden's work station rather than "for cause." The question is whether such a termination breached any contractual obligation Defendant owed Plaintiff.
Plaintiff does not allege the existence of an explicit contract that required Defendant to terminate its employees only for cause. Plaintiff, however, contends Defendant breached an implied employment contract when it terminated Plaintiff without just cause and without giving Plaintiff notice, counseling, or a warning. Plaintiff argues a factfinder could infer the existence of an implied contract to terminate only for cause from Plaintiff's testimony that he did not understand Defendant could terminate his employment at will.
Plaintiff's subjective understanding is not sufficient to overcome Defendant's Motion for Summary Judgment against the breach of contract claim. "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." Koepping v. Tri-County Metro. Transp. Dist., 120 F.3d 998, 1002 (9th Cir. 1997). Plaintiff's belief he could be terminated only for cause does not rebut that presumption. "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." Id. Plaintiff's alleged misunderstanding regarding the nature of his employment does not create a contractual relationship in the absence of evidence Plaintiff and Defendant engaged in overt acts that manifested an intent to change the presumption of at-will employment.
Defendant's argument that it employed Plaintiff at will is bolstered by several statements in its employee handbook. "Oregon courts have consistently held that a disclaimer in an employee handbook or personnel policies is sufficient to retain an employee's at-will status." Lawson v. Umatilla County, 139 F.3d 690, 693 (9th Cir. 1998). Undisputed evidence establishes Defendant's employee manual included repeated statements that Defendant reserved the right to terminate its employees at will:
These policies and procedures are not intended to be a contract of employment or a guarantee to any person to continue employment for any specified length of service.
As the needs of the company and the needs of employees change, these policies and procedures may be revised by management to better meet those needs.
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As with any guidelines, exceptions to these policies and procedures may be made as appropriate for individual situations.
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[E]mployment will remain on an at-will basis with the employer or employee having the right to terminate employment at any time.
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AT WILL
OCS intends to offer employment on at-will basis. This means that employment may be terminated by the employee or by the company at any time.
(Emphasis in original). These statements provide additional support for Defendant's argument it did not enter into an agreement with Plaintiff to terminate his employment only for cause.
Plaintiff also contends Defendant's alleged long-standing practice of firing employees only for cause is evidence from which a factfinder could infer the existence of a contract to terminate only for cause. Plaintiff is mistaken. An employer is not required to fire an employee occasionally at random to retain its ability to terminate other employees at will in the future. Most rational employers will terminate only those employees whose performance is inadequate, who present other problems in the workplace, or whose continued employment is not economically feasible for the employer. An employer's general adherence to good business practices does not create a binding contractual obligation always to terminate employees only for cause. Cf. Wooten v. Viking Distrib. Co., 136 Or. App. 56, 60 (1995) (employer's intention and hope to retain good employees for long periods of time does not transform at-will employment into a contract for extended employment), rev. denied, 322 Or. 613 (1996).
Plaintiff also argues Defendant was required to engage in progressive discipline before it terminated Plaintiff's employment. Plaintiff points to a handbook titled "Coaching and Discipline" and subtitled "Responsibilities of Supervisors, Managers Employers." That handbook describes a progressive discipline model that involves coaching, counseling, caution, final warning, and termination. Plaintiff argues the handbook created a contract that Defendant breached when it terminated Plaintiff's employment without first engaging in the disciplinary steps outlined in the model.
Plaintiff's argument fails for several reasons. First, the handbook was addressed to Defendant's managers rather than to Defendant's employees. Plaintiff has not identified any evidence that suggests Defendant distributed this handbook to its employees or Plaintiff was aware of the handbook before Defendant terminated his employment. Consequently, the handbook cannot form the basis of a contractual agreement between Plaintiff and Defendant. Cf. Araujo v. General Elec. Info. Servs., 82 F. Supp.2d 1161, 1168 (D.Or. 2000) ("policies set out in management manuals do not create binding terms of a contract with an employee"); Lakeside v. Freightliner Corp., 612 F. Supp. 10, 13 (D.Or. 1984) ("The fact that general policies for managers are written into a manual does not create an offer to employees that is the foundation for a contractual relationship").
Plaintiff's argument could be construed as raising a claim of promissory estoppel under which a party may "enforce some promises that would otherwise be too indefinite to form a binding contract. . . ." Staley v. Taylor, 165 Or. App. 256, 261 (2000). Plaintiff's adherence to an estoppel theory is, however, misplaced. Promissory estoppel applies only when the plaintiff actually relies on a promise made by the promisor. Plaintiff has not proffered any evidence he relied to his detriment on the progressive discipline model outlined in the Coaching and Discipline handbook for managers.
Even if the handbook could form the basis of a binding obligation, however, it would not prevent Defendant from terminating an employee without first utilizing the progressive discipline system. An Oregon employer may provide a framework for discipline without disturbing the "at-will" nature of the employment relationship. See Lawson, 139 F.3d at 693-94. See also Mobley v. Manheim Servs. Corp., 133 Or. App. 89, 93-94, rev. denied, 321 Or. 47 (1995); Zacker v. North Tillamook County Hosp. Dist., 107 Or. App. 142, 145-46, rev. denied, 312 Or. 151 (1991). Moreover, the handbook outlines exceptions to the progressive disciplinary model of coaching, counseling, caution, final warning, and termination. The handbook provides: "Exceptions to this track could include extreme conduct, such as falsification of records, stealing, sexual harassment, etc." Even under the provisions of the handbook, Defendant was entitled to determine the teddy bear incident constituted "extreme conduct" that justified immediate termination. See Zacker, 107 Or. App. at 145-46 n. 2 (manual setting out progressive disciplinary policy did not change at-will nature of employment relationship in part because manual permitted the employer to skip the progressive steps and terminate an employee immediately "depending upon the severity and circumstances surrounding the action"). In sum, Defendant's guidelines regarding the general use of a progressive discipline system did not create a binding contract with Plaintiff.
Finally, Plaintiff argues Defendant breached its obligation to administer the progressive disciplinary system in good faith. The duty of good faith and fair dealing does not apply to at-will employment agreements. Mobley, 133 Or. App. at 94. An employer that restricts its ability to terminate employees at will, however, must determine whether termination is warranted in good faith. Gilbert v. Tektronix, Inc., 112 Or. App. 34, 37, rev. denied, 313 Or. 299 (1992). As explained above, Defendant employed Plaintiff at will and did not bind itself to following a progressive disciplinary system. The duty of good faith and fair dealing, therefore, did not apply to Defendant's termination of Plaintiff's employment.
CONCLUSION
Defendant's Motion to Dismiss or for Summary Judgment (#39) is GRANTED as to Plaintiff's seventh claim.
IT IS SO ORDERED.