Rowe v. Montgomery Ward & Co.
6 I.E.R. Cas. (BNA) 1185, 473 N.W.2d 268, 437 Mich. 627 (1991)
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Rule of Law:
Oral statements of job security must be clear and unequivocal to overcome the legal presumption of at-will employment. An employer may unilaterally change its written employment policies from termination-for-cause to termination-at-will by giving affected employees reasonable and uniform notice of the change.
Facts:
- In August 1976, Mary Rowe applied for and was offered a commission-based sales position at a Montgomery Ward & Co. store.
- During her interview, the hiring manager, Vern Harryman, told Rowe that she would have a job at Montgomery Ward as long as she achieved her sales quota.
- Upon being hired, Rowe signed a 'Rules of Personal Conduct' form which listed specific acts, such as theft and dishonesty, that would result in immediate dismissal.
- In January 1982, Montgomery Ward issued a handbook to all employees that included an 'at-will' employment statement on a sign-off sheet.
- Rowe received this handbook and sign-off sheet but refused to sign it, stating she did not believe the company could fire someone for no reason.
- Montgomery Ward issued subsequent handbooks in August 1982 and May 1983, which Rowe received, that also contained explicit at-will employment policies.
- On March 8, 1984, Rowe left her shift for approximately four hours without supervisory permission and without punching her time card as required by company policy.
- Two days after the incident, Montgomery Ward terminated Rowe's employment for her unauthorized absence.
Procedural Posture:
- Mary Rowe filed a complaint against Montgomery Ward & Co. in Kent Circuit Court, a state trial court, alleging wrongful discharge and breach of contract.
- At trial, the court denied Montgomery Ward's motion for a directed verdict.
- The jury returned a verdict in favor of Rowe, awarding her $86,500 plus interest.
- The trial court denied Montgomery Ward's post-trial motions for judgment notwithstanding the verdict (JNOV), a new trial, or remittitur.
- Montgomery Ward, as appellant, appealed the judgment to the Michigan Court of Appeals, with Rowe as the appellee.
- The Court of Appeals reversed the trial court's judgment, finding that Rowe was an employee at will.
- Rowe, as appellant, sought and was granted leave to appeal to the Supreme Court of Michigan.
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Issue:
Does an employer's oral statement that an employee would have a job 'as long as she sold' and its written disciplinary guidelines create an employment contract terminable only for just cause?
Opinions:
Majority - Riley, J.
No, the employer's statements and policies did not create a contract terminable only for cause. The oral statement 'as long as I sold, I would have a job' was not a clear and unequivocal promise sufficient to overcome the presumption of at-will employment; rather, it was an expression of optimistic hope. The court found no objective evidence of mutual assent to a just-cause term, noting the lack of pre-employment negotiations on job security and the non-executive nature of Rowe's position. Furthermore, any prior expectations Rowe may have had were superseded by the company's subsequent handbooks, particularly the 1983 manual, which clearly and unambiguously established an at-will employment policy and provided Rowe with reasonable notice of that policy. Her refusal to sign the at-will disclaimers did not negate their effect, as her assent was not required to modify a company policy when no prior express contract existed.
Concurring - Boyle, J.
No, the plaintiff's evidence was insufficient to overcome the presumption of at-will employment. The oral phrase 'as long as she sold' is ambiguous and can be interpreted in a qualitative sense (as long as performance is satisfactory) rather than as a definite durational term. In the absence of a clear durational term supplied by the parties, the court correctly supplies the inferred term of at-will employment. Objective indications of assent, such as specific negotiations or special consideration, were lacking, making it unreasonable to infer a promise of termination only for just cause.
Dissenting - Levin, J.
Yes, the evidence was sufficient to support the jury's finding that an express contract terminable only for cause existed. The majority mischaracterizes Rowe's claim as one based on an implied promise when it is based on an express oral contract. The phrase 'as long as I sold' provides a specific and enforceable durational term under established principles of contract law, including the Restatement of Contracts. The majority improperly acts as a fact-finder, ignoring the jury's verdict and applying a subjective standard of intent rather than the correct objective standard of what a reasonable person in Rowe's position would have understood the promise to mean.
Dissenting - Cavanagh, C.J.
Yes, the evidence was sufficient for a jury to find a contract terminable only for cause, and the majority errs in overturning the jury's verdict. The majority's focus on whether the terms were 'negotiated' is irrelevant, as an employer can offer a standard just-cause contract. Its requirement for 'objective support' from a policy manual misapplies the precedent set in Toussaint, which upheld an oral contract in its companion case Ebling without such support. By re-weighing the evidence, the majority has impermissibly usurped the jury's role as the finder of fact.
Analysis:
This decision significantly narrowed the scope of wrongful discharge claims under the Toussaint doctrine in Michigan, strengthening the presumption of at-will employment. It raised the evidentiary bar for employees claiming an oral contract for job security, requiring 'clear and unequivocal' promises and emphasizing objective factors like negotiation. The ruling also robustly affirmed an employer's power to unilaterally implement or modify an at-will employment policy for its existing workforce, provided it gives reasonable and uniform notice, thereby reducing employer liability for claims based on earlier, more ambiguous policies or statements.
