Adcox & Graef v. SCT Products ( 1997 )

IN THE COURT OF APPEALS OF TENNESSEE
WESTERN SECTION AT NASHVILLE
ROBERT E. ADCOX and )
DONALD F. GRAEF, )
)
Plaintiffs/Appellants, ) Robertson Circuit No. 7987
)
VS. ) Appeal No. 01A01-9703-CV-00123
)
SCT PRODUCTS, )
)
Defendant/Appellee. )
APPEAL FROM THE CIRCUIT COURT OF ROBERTSON COUNTY
AT SPRINGFIELD, TENNESSEE
THE HONORABLE JAMES E. WALTON, JUDGE
FILED
October 17, 1997
CHARLES R. RAY Cecil W. Crowson
Nashville, Tennessee Appellate Court Clerk
Attorney for AppellantS
RICHARD R. PARKER
WILLIAM S. RUTCHOW
Nashville, Tennessee
Attorneys for Appellee
AFFIRMED
ALAN E. HIGHERS, J.
CONCUR:
DAVID R. FARMER, J.
HOLLY KIRBY LILLARD, J.
Plaintiffs Robert E. Adcox and Donald F. Graef (collectively, the Employees) appeal
the trial court’s order dismissing their actions for breach of employment contract,
promissory estoppel, and fraudulent inducement against Defendant/Appellee SCT
Products. For the reasons hereinafter stated, we affirm the trial court’s dismissals.
According to their complaint, both Employees worked as grinders for SCT Products.
In February 1996, the Employees were discharged by SCT on the stated ground of
“irreconcilable differences.” Graef’s termination followed a meeting with plant manager
Phillip Lomas in which they discussed Graef’s opposition to recent work rule changes
unilaterally initiated by Lomas. Adcox’s termination also followed a meeting with Lomas,
in which Adcox questioned Lomas’s decision not to pay Adcox additional money for training
an employee as Adcox had been promised by his supervisor.
The Employees subsequently filed this action against SCT Products in which they
asserted claims for breach of employment contract, promissory estoppel, and fraudulent
inducement. In asserting these claims, the Employees alleged that they had relied on
representations made by SCT that the Employees had the right freely and candidly to
discuss problems with members of management without any fear of retaliation. According
to the Employees, these representations appeared in the SCT Products Employee
Handbook and in the Code of Ethics and Business Conduct Guidelines of SCT’s parent
company, Saint-Gobain Corporation. The Employees contended that these documents
created a contract which SCT breached when it discharged the Employees merely for
having candid discussions with SCT’s plant manager.
SCT responded to the complaint by filing a motion to dismiss for failure to state a
claim upon which relief could be granted pursuant to rule 12.02(6) of the Tennessee Rules
of Civil Procedure. Specifically, SCT contended that, as a matter of law, the provisions of
the Employee Handbook and the Code of Ethics and Business Conduct Guidelines did not
constitute an employment contract. The trial court granted SCT’s motion to dismiss, and
this appeal followed.
2
This court recently summarized the applicable law for determining when an
employee handbook distributed by an employer constitutes part of an employment
contract:
We begin our analysis of this issue with the well-
established rule “that a contract for employment for an
indefinite term is a contract at will and can be terminated by
either party at any time without cause.” Bringle v. Methodist
Hosp., 701 S.W.2d 622, 625 (Tenn. App. 1985); accord
Graves v. Anchor Wire Corp., 692 S.W.2d 420, 422 (Tenn.
App. 1985); Whittaker v. Care-More, Inc., 621 S.W.2d 395,
396 (Tenn. App. 1981). Because Tennessee continues to
adhere to the foregoing “employee-at-will” rule, a presumption
arises in this state that an employee is an employee at will.
Davis v. Connecticut Gen. Life Ins. Co., 743 F. Supp. 1273,
1280 (M.D. Tenn. 1990). . . .
Even in the absence of a definite durational term, an
employment contract still may exist with regard to other terms
of employment. Williams v. Maremont Corp., 776 S.W.2d 78,
80 (Tenn. App. 1988); accord Hooks v. Gibson, 842 S.W.2d
625, 628 (Tenn. App. 1992). In this regard, this court has
recognized that an employee handbook can become a part of
an employment contract. Smith v. Morris, 778 S.W.2d 857,
858 (Tenn. App. 1988) (citing Hamby v. Genesco, Inc., 627
S.W.2d 373 (Tenn. App. 1981)); accord Davis v. Connecticut
Gen. Life Ins. Co., 743 F. Supp. 1273, 1278 (M.D. Tenn.
1990). In order to constitute a contract, however, the
handbook must contain specific language showing the
employer’s intent to be bound by the handbook’s provisions.
Smith v. Morris, 778 S.W.2d at 858. Unless an employee
handbook contains such guarantees or binding commitments,
the handbook will not constitute an employment contract.
Whittaker v. Care-More, Inc., 621 S.W.2d 395, 397 (Tenn.
App. 1981). As stated by one court, in order for an employee
handbook to be considered part of an employment contract,
“the language used must be phrased in binding terms,
interpreted in the context of the entire handbook, and read in
conjunction with any other relevant material, such as an
employment application.” Claiborne v. Frito-Lay, Inc., 718 F.
Supp. 1319, 1321 (E.D. Tenn. 1989).
Rose v. Tipton County Pub. Works Dep’t, No. 02A01-9608-CV-00189, 1997 WL 188803,
at **1-2 (Tenn. App. Apr. 18, 1997) (perm. app. pending) (footnote omitted).
In accordance with the foregoing principles, we examine the provisions of the SCT
Products Employee Handbook, as well as the other document upon which the Employees
based their claims of breach of contract. In maintaining their claims, the Employees relied
upon the following provisions contained in the Code of Ethics and Business Conduct
Guidelines:
3
Saint-Gobain Corporation is committed to maintaining the
highest business ethics and standards. In order to preserve
the integrity of Saint-Gobain Corporation’s business and the
manner in which we are perceived by co-workers, customers,
suppliers, competitors, and the communities in which we live
and work, it is imperative that each employee conduct his or
her business and personal affairs in compliance with Saint-
Gobain Corporation’s Code of Ethics and Business Conduct
Guidelines.
....
All managers are responsible for seeing that Company policies
are followed. Every manager is responsible for communicating
Company policies to his or her employees, including those
dealing with legal and ethical behavior. Managers and
supervisors also are responsible for maintaining a work
environment where constructive, frank, and open discussion is
encouraged and expected, without fear of retaliation.
The Employees also relied upon the following policies set forth in the SCT Products
Employee Handbook:
TO assure each employee the right to discuss freely with
management any problem concerning either their own welfare
or the company’s welfare.
....
TO develop competent supervisory personnel who understand
and meet the objectives of the company and who accept with
open-mindedness the ideas, suggestions, and constructive
criticism of fellow employees.
....
TO do all these things in a spirit of friendliness and cooperation
so that our company will continue to be known as “a good
place to work.”
In addition, the Employee Handbook contained a provision stating that the
handbook was not an employment contract and that the company reserved the unilateral
right to revise its policies and procedures:
Please understand that this handbook cannot anticipate every
situation or answer every question about employment. It is not
an employment contract. The company reserves the right to
change or revise policies and procedures whenever such
action is warranted.
4
After carefully reviewing the foregoing provisions, we affirm the trial court’s order
dismissing the Employees’ actions against SCT. This court has repeatedly held that,
where an employee handbook specifically provides that it is not a contract and reserves
to the employer the unilateral right to amend the handbook’s provisions, such handbook
does not, as a matter of law, constitute part of the employment contract between the
employer and the employee. In Guekel v. Cumberland-Swan, Inc.,
No. 01A01-9410-CV-00482, 1995 WL 386558 (Tenn. App. June 30, 1995), for example,
the employee handbook contained the following provision:
This Handbook is intended as a guide for policies, benefits,
and general information. These guidelines should not be
interpreted as a contract of any kind. The company reserves
the right to make changes in the guidelines [or] their
application as it deems appropriate, and these changes may
be made with or without notice. . . .
Guekel, 1995 WL 386558, at *3. In Gaines v. Response Graphics, Inc.,
No. 01A01-9204-CV-00181, 1992 WL 319441, at *2 (Tenn. App. Nov. 6, 1992), the
handbook similarly provided that it was not a contract, that it should not be relied on as
such, and that the provisions therein could be revised without notice. In Crigger v.
Columbia Power & Water Sys., No. 01A01-9001-CV-00036, 1990 WL 121570 (Tenn. App.
Aug. 24, 1990), perm. app. denied (Tenn. Jan. 28, 1991), the employee handbook
contained these provisions:
The statements contained in this manual regarding
Columbia Power and Water Systems’ policies, its employee
benefits, and services are in summary form and do not
represent a contract between Systems and its employees.
The policies, employee benefits and services outlined
in this manual are intended to be a convenient and helpful
source of information and may be changed by Systems as it
deems necessary.
Crigger, 1990 WL 121570, at *1. Finally, in Blalock v. Hecks Discount Stores, 1986 WL
4591 (Tenn. App. Apr. 18, 1986), the employee signed the following statement when
receiving the employer’s handbook:
. . . I further understand that this handbook is intended as a
guide for personnel policies, benefits and general information
and that these guidelines should not be construed as a
contract.
I understand the company reserves the right to make changes
in the guidelines or their application as it deems appropriate.
5
Blalock, 1986 WL 4591, at *1. In all of these cases, this court concluded that the
handbook’s provisions were insufficient to overcome the presumption of at-will employment
and, thus, that the employees could not maintain actions for breach of contract against
their employers.
We can conceive of no clearer way for an employer to express its intent not to be
bound by an employee handbook’s provisions than the employer’s specific statement that
the handbook is not a contract or that the handbook should not be construed as a contract.
Even without such a statement, however, the employer’s reservation of a unilateral right
to modify the provisions of its employee handbook generally would preclude the handbook
from being considered part of the employment contract. Claiborne v. Frito-Lay, Inc., 718
F. Supp. 1319, 1321 (E.D. Tenn. 1989); see also Gregory v. Hunt, 24 F.3d 781, 786 (6th
Cir. 1994); Davis v. Connecticut Gen. Life Ins. Co., 743 F. Supp. 1273, 1279 (M.D. Tenn.
1990); Smith v. Morris, 778 S.W.2d 857, 858 (Tenn. App. 1988) Bringle v. Methodist Hosp.,
701 S.W.2d 622, 624 (Tenn. App. 1985). Inasmuch as the handbook at issue contained
both such provisions, we conclude that the trial court properly dismissed the Employees’
claims for breach of employment contract against SCT.1
The judgment of the trial court is hereby affirmed. Costs of this appeal are taxed
to Appellants, for which execution may issue if necessary.
HIGHERS, J.
1
In citing the Code of Ethics and Business Conduct Guidelines, the Employees relied primarily on the
provision regarding “maintaining a work environment where constructive, fra nk , and open discussion is
encouraged and expected, witho ut fear of retaliation.” By its te rm s, th is provision applies only to SC T’s
m anagers and supervisors. Moreover, even if this provision and other provisions of the Code are not viewed
in the conte xt of the Em ployee Ha ndbook , the pro visions fail to conta in binding language which would
overcome this sta te’s presu m ption o f at-will emp loym ent. See Gre gory v. Hunt, 24 F.3d 781, 787 (6th Cir.
1994); Davis v. Conn ecticut Gen. Life Ins. Co., 743 F. Su pp. 1273 , 1280-81 (M.D. T enn . 1990); W hittaker v.
Care-More, Inc., 621 S.W .2d 395, 397 (T enn . App . 1981); Rose v. Tipton County Pub. W orks Dep’t,
No. 02A 01-9608 -CV-00 189, 1997 W L 18880 3, at *3 (Tenn. App. Ap r. 18, 1997).
W e likewise conclude that the Employees’ allegations of promissory estoppel and fraudulent
inducement are insufficient to overcome the presum ption o f at-will emp loym ent. See Ram py v. ICI Acrylics,
Inc., 898 S.W .2d 196, 211 (T enn. App. 199 4); Price v. Mercury Supply Co., 682 S.W .2d 924, 934 (Tenn. App.
1984).
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CONCUR:
FARMER, J.
LILLARD, J.
7