Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc.

Supreme Court of Connecticut
662 A.2d 89, 234 Conn. 1, 10 I.E.R. Cas. (BNA) 1313 (1995)

ELI5:

Rule of Law:

An implied employment contract requiring termination only for cause can be formed through an employer's pre-hire oral assurances of job security combined with an employee manual's for-cause discharge policy. Such a contract cannot be unilaterally modified by the employer's subsequent issuance of a new manual that removes the for-cause provision without the employee's consent, and an employee's continued work does not, by itself, constitute consent to a modification that substantially interferes with their legitimate expectations.

Facts:

In late July 1982, Anushavan Torosyan, a chemist, interviewed for a position with Boehringer Ingelheim Pharmaceuticals, Inc.
During his interviews, Torosyan stated he was seeking long-term employment and job security before moving his family from California.
In response, Boehringer interviewers told him that if he did a good job, the company would 'take care' of him, that they hoped he would 'stay forever,' and that he could review the employee manual for guarantees.
Torosyan accepted the job offer, and on his first day of work on November 1, 1982, he received an employee manual which stated the company had the 'right to hire, discharge for cause.'
In 1984, Boehringer distributed an updated employee manual that removed the 'for cause' language and added a disclaimer that the manual was for informational purposes and subject to change.
Between October 1984 and May 1985, Torosyan raised safety concerns about a new laboratory to his supervisors.
In May 1985, after returning from a work trip, Torosyan submitted an expense request form that he believed was prepared in accordance with company practice.
On May 17, 1985, Boehringer supervisors accused Torosyan of falsifying the expense form, terminated his employment for that stated reason, and placed a memo to that effect in his personnel file.

Procedural Posture:

Anushavan Torosyan sued Boehringer Ingelheim Pharmaceuticals, Inc. in a Connecticut trial court.
The complaint alleged breach of an implied contract of employment and defamation, among other claims.
After a court trial, the trial court rendered judgment in favor of Torosyan on the implied contract and defamation counts.
The trial court awarded Torosyan $146,595 in economic damages and $45,000 in noneconomic damages.
Boehringer, the defendant, appealed the judgment to the Connecticut Appellate Court.
The Connecticut Supreme Court transferred the appeal from the Appellate Court to itself for decision.

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Issue:

Does an implied employment contract requiring termination only for cause arise from an employer's pre-hire oral assurances of job security and an employee manual specifying a 'for cause' discharge policy, and can this contract be unilaterally modified by a subsequent manual that removes the 'for cause' language?

Opinions:

Majority - Peters, C. J.

Yes, an implied contract requiring termination for cause can arise from such circumstances, and it cannot be unilaterally modified by the employer. The court found that an implied contract was formed based on the totality of the circumstances, including the oral representations made during pre-employment interviews in direct response to the plaintiff's inquiries about job security and the explicit 'discharge for cause' language in the employee manual provided upon commencement of employment. These actions constituted an offer by the employer, which the plaintiff accepted by relocating and beginning work. The court held that the 1984 manual did not modify this pre-existing contract because an employee's continued work after an employer issues a new manual that substantially interferes with legitimate contractual expectations cannot be taken as conclusive evidence of consent to the new terms. The court also affirmed the finding that the termination breached the contract because the stated reason for discharge (falsifying documents) was pretextual. Finally, the court found the defendant liable for defamation, holding that intracorporate communications constitute 'publication' and that the defendant's qualified privilege was overcome by a finding of actual malice, as the supervisors published a statement they knew to be false or acted with reckless disregard for its truth.

Analysis:

This decision significantly strengthens the implied contract exception to the employment-at-will doctrine in Connecticut. It establishes that courts will look at the totality of the circumstances, including pre-hire negotiations and initial company policies, to determine if a binding for-cause employment relationship exists. More importantly, the case sets a high bar for employers attempting to unilaterally revoke such protections, holding that continued employment is not sufficient consideration or consent for a modification that strips employees of substantial rights. This ruling provides a crucial layer of protection for employees, preventing employers from easily reneging on promises of job security after an employee has already relied on them.

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