Opinion
No. 5-438 / 04-0991
Filed October 12, 2005
Appeal from the Iowa District Court for Sioux County, John D. Ackerman, Judge.
The plaintiff, who sued her former employer for an alleged breach of an employment contract, appeals from an adverse jury verdict. AFFIRMED.
Joe Cosgrove, Sioux City, and Thaddeuss Cosgrove, Holstein, for appellant.
James R. Villone and Sharese Manker of the Klass Law Firm, Sioux City, for appellee.
Heard by Vogel, P.J., and Zimmer and Miller, JJ.
The plaintiff, who sued her former employer for an alleged breach of an employment contract, appeals from an adverse jury verdict. We affirm.
Background Facts and Proceedings.
Jacki Poeckes was hired by the City of Orange City in March of 1998 to do clerical work in the office of the City Clerk. The application for employment, filled out by Poeckes, contained a clause noting that "my employment and compensation can be terminated, with or without cause, and with or without notice, at any time. . . ." Although the signature line beneath this provision was left unsigned, Poeckes did admit at trial that she "probably skimmed over it." At no time during her interview or later during her employment was Poeckes given an employee handbook. However, within a week after her hiring, she found a copy of the City's handbook in her desk drawer. She did not read it and never looked at it again during her employment.
The handbook Poeckes located had been adopted by the city council in 1974 and encompassed all employees except those specifically excluded. The handbook provided for certain disciplinary procedures in Article XIX. Prior to 1993, the handbook was provided to all employees; however, in 1993 the City started collective bargaining with some employees and thereafter adopted a new employment application with the at-will language. After 1993, the City discontinued distributing and using the handbook, but it did not officially rescind it.
On February 16, 2001, Poeckes was called to a meeting with the City Administrator and the City Attorney. There, she was given a letter signed by the City Administrator, which detailed the City's dissatisfaction with numerous areas of Poeckes's job performance. The letter noted, among other things, Poeckes's excessive use of the phone and email for personal reasons, her failure to properly process parking tickets, her failure to account for funds received for parking tickets, certain inaccuracies in her employment application, and her failure to maintain a proper working relationship with her supervisors. The following Monday, shortly after reporting for work, she was asked to leave. Poeckes requested and received a hearing with the City Council. At that hearing, in which she was represented by counsel, Poeckes did not present any evidence. The City Council later deliberated in a closed session and in an open session held on March 19, 2001, terminated Poeckes's employment.
Poeckes thereafter commenced an action against the City, contending her termination was a breach of the parties' employment contract. In particular, she asserted the employee handbook adopted by the City in 1974 was contractual and in effect both when she was hired and when she was fired. She believed the City did not follow the disciplinary procedures contained therein and that the contract was thus breached. Following the close of evidence, Poeckes moved for a directed verdict in which she claimed, among other things, that as a matter of law the handbook had been "communicated" to her. The court denied the motion. The court later instructed the jury that in order to find for Poeckes, it had to find the employment handbook was both "communicated" to her and breached by the City. The jury returned a special interrogatory finding that Poeckes had not "proven her claim for breach of the employment contract." Poeckes appeals.
Scope of Review.
Our scope of review for all issues in this appeal challenging the trial court's grant of the motion for directed verdict is for correction of errors at law. Rife v. D.T. Corner, Inc., 641 N.W.2d 761, 766 (Iowa 2002). We consider the evidence in the light most favorable to the non-moving party. Id. If reasonable minds could reach different conclusions based upon the evidence presented, the issue must be submitted to the jury for determination. Id. Employee Handbook.
The doctrine of employment-at-will, well-established in Iowa law, permits an employer or employee who is not under contract to terminate employment at any time for any lawful reason. Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198, 202 (Iowa 1997); Fogel v. Trustees of Iowa Coll., 446 N.W.2d 451, 455 (Iowa 1989). Iowa has recognized an exception to this rule: where an employee handbook specifically limits termination of employment except under certain conditions or for cause, a contract of employment may be created. Phipps, 558 N.W.2d at 202; Fogel, 446 N.W.2d at 455.
Liability of the employer based on promises made in an employee handbook is based on the legal theory of unilateral contract. Anderson v. Douglas Lomason Co., 540 N.W.2d 277, 281 (Iowa 1995). "A unilateral contract consists of an offeror making a promise and an offeree rendering some performance as acceptance." Id. at 282. An employee handbook creates an implied contract if: (1) the handbook is sufficiently definite in its terms to create an offer; (2) it is communicated to and accepted by the employee so as to create an acceptance; and (3) the employee provides consideration. Id. at 283; see also McBride v. Sioux City, 444 N.W.2d 85, 91 (Iowa 1989) (citing Hoffman La Roche, Inc. v. Campbell, 512 So.2d 725, 734 (Ala. 1987) ("[i]t is axiomatic that an offer must be communicated before it may be accepted.")). The party relying on the unilateral contract carries the burden to prove its existence. Anderson, 540 N.W.2d. at 281.
Here, the district court instructed the jury that in order to recover for her claim for breach of an employment contract, Poeckes had to prove "the handbook was communicated to the employees." Poeckes's first claim on appeal is that the court erred in submitting to the jury the question of whether the handbook was communicated to her.
Iowa cases consistently cite the above law requiring a communication to the employee when a claim is made that an employee handbook created a contractual relationship. See Id. at 283. Despite this, Poeckes argues that in the limited context of employee handbook cases, the traditional unilateral contract concept of communication is not required. She notes that in Anderson, the employee had not actually read the handbook and believes a logical extension of that rule is that we should overlook the fact she was never given the handbook.
First, we find no reported case in Iowa in which a unilateral contact was found to have been created where the handbook in question was not given or communicated to the employee in some way. Even in Anderson, on which Poeckes relies heavily for the claim a communication is not needed, the employer provided the handbook in question to all employees. Id. at 280. There, the "communication" issue was only in question because the employee had not actually read the handbook. In admittedly altering the "traditional" unilateral contract rule that the employee seeking to enforce a promise made in an employee manual must have knowledge of the promise, the Anderson court purported to only carve out a "narrow divergence." Id. at 284. That "divergence" states that where a contract is claimed to have been created upon an employee handbook distributed to all employees, "it is unnecessary that the particular employee seeking to enforce a promise made in an employee manual have knowledge of the promise." Id. at 285. We are unwilling to expand the reach of that narrow divergence to encompass a situation where, as here, the handbook had not been given to any employee for a number of years, the City did not consider the handbook to be in effect, and the employee in question was never affirmatively provided a copy of that handbook so as to create an acceptance of its provisions. Accordingly, we affirm the trial court's decision to submit to the jury the question of whether the handbook containing disciplinary procedures was communicated to Poeckes.
Breach of the Handbook's Disciplinary Procedures.
Poeckes next maintains the court erred in submitting to the jury the issue of whether the City breached the disciplinary procedures of the handbook. In making her motion for a directed verdict on this issue, Poeckes maintained "the evidence is undisputed and, in fact, admitted by . . . the city administrator . . . that the handbook terms were breached and not followed in [her] dismissal. . . ." The court concluded that under the language of the disciplinary procedure section, the meaning was sufficiently in question that a jury question was engendered.
In the previous division of this opinion, we concluded communication of the handbook to the employee was preliminary to forming the basis of a unilateral employment contract. We thus find it unnecessary to reach this issue. Because the employee handbook was not communicated to Poeckes, a unilateral contract was not formed and there could have been no breach.