Boothby v. Texon, Inc.
608 N.E.2d 1028, 8 I.E.R. Cas. (BNA) 674, 414 Mass. 468 (1993)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An oral contract for "permanent employment" is enforceable and not barred by the Statute of Frauds when the surrounding circumstances, including substantial consideration given by the employee, demonstrate the parties' intent to create a lifetime agreement terminable only for just cause. The standard for determining just cause is whether a reasonable employer, acting in good faith, would be dissatisfied with the employee's performance.
Facts:
- Colin E. Boothby had worked for Bata Corporation for thirty years, achieving a high-level management position with significant job security.
- Texon, Inc., through its president Lee Asseo, repeatedly attempted to recruit Boothby.
- Texon's board of directors authorized Asseo to do 'anything that you can do to get him' to hire Boothby.
- Boothby told Asseo he would not leave his secure position at Bata unless he received an offer for a 'permanent' position with 'absolute security.'
- Asseo assured Boothby he would spend 'the rest of your professional career' at Texon, which Boothby relied upon in accepting the job and relocating from Thailand.
- After Boothby had worked at Texon for approximately three years, his new superior, A. Peter Clackson, ordered him to fire a longtime employee.
- Boothby refused to carry out the order, believing it was improper.
- Shortly thereafter, Clackson informed Boothby that his position was being eliminated and terminated his employment.
Procedural Posture:
- Colin E. Boothby sued Texon, Inc., and several of its officers in a state trial court for, among other claims, breach of an express contract for permanent employment.
- At the first trial, the jury found for Boothby, concluding that a contract for permanent employment existed and had been breached.
- The trial judge denied Texon's motion for judgment notwithstanding the verdict (JNOV) but granted its motion for a new trial, finding the verdict was against the weight of the evidence.
- A second trial was held solely on the breach of contract claim, and the second jury also returned a verdict for Boothby.
- The second trial judge denied Texon's subsequent motions for JNOV and a new trial.
- Texon, as appellant, appealed the denials of its motions from both trials to the state's highest court, and Boothby, as appellee and cross-appellant, appealed the earlier dismissal of a related claim.
- The Massachusetts Supreme Judicial Court granted direct appellate review.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an oral promise of 'permanent employment,' made by a corporate president with board authorization to induce a highly sought-after manager to leave a secure, long-term job, create an enforceable contract for employment until retirement, terminable only for just cause?
Opinions:
Majority - Abrams, J.
Yes. An oral promise of permanent employment creates an enforceable contract for employment until retirement, terminable only for just cause, when the circumstances show the parties intended such a binding agreement. The term 'permanent employment' must be interpreted based on the context of the agreement, the relationship of the parties, and the consideration exchanged. Here, Boothby's willingness to forgo thirty years of seniority and security at Bata constituted substantial consideration for Texon's promise of a permanent position. The Texon board's instruction to Asseo to do 'whatever necessary' to hire Boothby was sufficient to grant him the authority to make such a promise. This type of contract is not barred by the Statute of Frauds because it is capable of being performed within one year, as Boothby could have died, resigned, been terminated for cause, or Texon could have ceased business operations. The court also held that the standard for determining if an employer had 'just cause' for termination is objective—whether a reasonable employer would have been satisfied—not merely the subjective opinion of the employer. The jury was entitled to find that Boothby's performance was satisfactory and that his refusal to fire another employee did not constitute insubordination sufficient to justify termination.
Analysis:
This case reaffirms the principle from Carnig v. Carr that 'permanent employment' can mean a lifetime contract under specific factual circumstances, pushing back against the strong presumption of at-will employment. It clarifies that such a promise is enforceable when an employee provides substantial consideration, such as relinquishing a secure, long-term position in reliance on the promise. The decision also establishes an objective 'reasonable employer' standard for determining 'just cause' for termination under such contracts, which provides greater protection for employees by preventing employers from terminating them based on arbitrary or capricious dissatisfaction. This precedent is significant for high-level employees who negotiate special terms of employment security outside of formal written agreements.
