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Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

Supp. To CHAPTER 4 INDEFINITENESS AND MISTAKE IN EXPRESSION

1-4 Corbin on Contracts Supp. to § 4.2

Supp. to § 4.2 Time of Performance Indefinite-Promises of ''Permanent'' Employment-At Will Employment

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The themes discussed in this section center on the problem of indefiniteness in specifying the time of performance. Claims that an employer agreed to alter the at-will basis of an employment relationship are often resisted by arguing that the promise on which they are based is indefinite. To that extent, cases involving promises of ''permanent'' employment and at-will employment fit doctrinally within this section. However, the recent spate of at-will employment litigation has also implicated other aspects of contract law. Recently litigated issues include whether employment manuals and other employer communications constitute contracts at all and the proper standard of proof required in asserting that such manuals and other communications constitute promises.

The main volume of this treatise addresses aspects of the employment-at-will doctrine primarily in §§ 674 and 684, in addition to § 4.2 of revised Volume 1, and it would be possible to allocate the recent cases according to that formula. In the interest of presenting the issues in this burgeoning field in one place, however, the relevant case law on at-will employment is collected in this section, even when the cases address issues in addition to indefiniteness.

In McClease v. RR. Donnelley & Sons Co., 226 F. Supp. 2d 695 (E.D. Pa. 2002) , the managers of the defendant company filled the work atmosphere with the harshest racial epithets. The plaintiff, Anthony McClease, an African-American employee, was among other minorities who were fired, allegedly because of their race. The plaintiff brought an action under 42 U.S.C. § 1981 (a ''1981'' action) providing that all persons shall have the same right in every state to enforce contracts as is enjoyed by white citizens. However, the fact that the plaintiff was an ''at will'' employee raised the issue of whether the term ''contract'' under the statute includes at-will employment. The absence of a stated duration and power of either party to terminate the contract at any time and, with certain exceptions such as civil rights violations, for any reason, may create doubt as to whether such an arrangement is truly contractual in nature. The court recognized state court decisions that differ on the contractual nature of at-will employment. While five federal courts of appeal have found terminable-at-will agreements to be ''contractual'' within the meaning of § 1981, the court noted that they have arrived at this conclusion in different ways. Two have defined ''contract'' by reference to state law while three declined to rely exclusively on state law though they referred to it. On the basis of Supreme Court authority and the legislative history of § 1981, the instant court concluded that it should not be dependent upon state law and that § 1981 covers employment at will. United States Supreme Court precedent is clear that, absent plain indication to the contrary, Congress does not intend a federal statute to depend upon state law. In Patterson v. McLean Credit Union, 491 U.S. 164, 182, 109 S. Ct. 2363, 2375, 105 L. Ed. 2d 132, 154 (1989) , the Solicitor General had argued that the court should rely on state law to interpret certain language in § 1981. The court declined to adopt the view that the statute had no substantive content. It was initially enacted to protect slaves from discriminatory state law and amended more than a century later (1991) as an important source of civil rights protection in employment contracts. Having concluded that it need not consider state law in determining whether an at-will employment is contractual, the court considered whether it is sufficiently contractual as a matter of statutory interpretation. Since every appellate court that had considered the legislative history of the statute as amended in 1991 concluded that such employment is contractual, the court so held.

Beyond the teaching of the court, it is useful to add that the absence of duration should have no bearing on whether parties have engaged in contractual behavior. Though either party can end a terminable-at-will contract at any time and, with certain exceptions, for any or no reason, while the employment is in progress, it is important to consider the correct characterization of the parties' relationship. It fairly bristles with offer, acceptance and consideration. Neither party intends to perform gratuitously and there is rarely any doubt as to the agreed-upon basic terms. While it lasts, if it is not contractual, what is it? The discussion as to whether a terminable-at-will employment is contractual appears to be much ado about not very much.

See also Walker v. Abbott Labs., 340 F.3d 471 (7th Cir. 2003) . Relying on dicta in an earlier Seventh Circuit opinion suggesting that an at-will employment relationship may not be sufficiently contractual to sustain a claim under 42 U.S.C. § 1981 ( Gonzalez v. Ingersoll Milling Mach. Co., 133 F.3d 1025, 1035 (7th Cir. 1998) ), the district court granted the defendant's motion to dismiss the plaintiff's § 1981 action. The instant court recognized that a number of other courts had held an at-will employment relationship to be contractual. The Restatement (Second) of Contracts, § 33, comment d, illustration 6, also contemplates such a relationship as contractual albeit lacking a duration term. However long the relationship existed, it was a contractual relationship. Holding that the dicta in the Gonzalez case were of questionable application in the instant case, the court reversed the decision below.

Domino's Pizza, Inc. v. McDonald, 2006 U.S. LEXIS 1821 . John McDonald, a black man, was the sole shareholder of JWM that entered into a contract with Domino's to construct four restaurants that would be leased to Domino's. When Domino's refused to execute estoppel certificates to facilitate JWM's financing and persuaded the local authority to change its records showing Domino's rather than JWM's ownership of the land on which the restaurants would be constructed, the relationship deteriorated and the contracts were never performed. At one point, a Domino's representative allegedly stated that she did not ''like dealing with you people'' without specifying the meaning of ''you people.'' JWM filed for bankruptcy and the trustee brought an action against Domino's for breach of contract though the trustee did not allege a violation of 42 U. S. C. § 1981. The breach of contract claim was settled and JWM gave Domino's a complete release. McDonald, however, brought a § 1981 claim against Domino's alleging that Domino's had breached its contract with JWM because of racial animus against McDonald from which he sustained damages. The trial court granted Domino's motion to dismiss the § 1981 claim because McDonald was not a party to the contract between JWM and Domino's. The Court of Appeals agreed that an injury suffered only by the corporation would not permit a shareholder to bring an action under § 1981. The court, however, reversed the decision below on the footing that where there are injuries distinct from those suffered by the corporation, a nonparty such as McDonald could bring such an action. In so holding, the court acknowledged that its holding set it apart from other circuits. On appeal, the Supreme Court of the United States reviewed the basic § 1981 language that affirms the right of all persons within the jurisdiction of the United States to make and enforce contracts without respect to race. McDonald claimed that he made and enforced contracts for JWM. He argued that if Domino's refused to deal with a salesman of a pepperoni manufacturer because he was black, it would have violated § 1981. The court answered this hypothetical, ''We think not.'' The right to make and enforce contracts does not extend to an agent for another party's contracting. The court returned to the legislative history of the original legislation, concluding that it was known that a mere general agent with no beneficial interest in a contract made for his principal could not support action for violation of the statute. While § 1981 applies where parties are prevented from entering a contract because of race as well as to the impairment of an existing contractual relationship because of race, any claim brought under § 1981 must initially identify an impaired ''contractual relationship under which the plaintiff has rights.'' The court explained that it used the language ''the plaintiff has rights'' rather than ''to which the plaintiff is a party'' since its holding neither precluded nor affirmed § 1981 coverage of the rights of a third party beneficiary. McDonald was not viewed as an intended third party beneficiary of the contract between JWM and Domino's. The fact that he negotiated, signed and attempted to enforce the contract did not make the contract his own. The contract was between JWM and Domino's. McDonald argued that wherever a party is the ''actual target'' of the discrimination and loses some benefit that would have inured to him, § 1981 should apply. The court rejected this suggested test since the statute requires the plaintiff to be the person whose right to make and enforce contracts was impaired. The court also rejected McDonald's argument that its holding would allow discriminatory acts to go unpunished since other protections against discrimination are available and § 1981 was not designed to prevent all racial injustice. The court reversed the decision of the Court of Appeals.

(A) The following cases cite this section or its predecessor, § 96:

(1) Rooney v. Tyson, 91 N.Y.2d 685, 674 N.Y.S.2d 616, 697 N.E.2d 571 (1998) . The United States Court of Appeals for the Second Circuit certified the following question to the New York Court of Appeals: Does an oral contract between a fight trainer and a professional boxer to train the boxer ''for as long as the boxer fights professionally'' establish a definite duration, or does it constitute employment for indefinite duration, so that it is presumed to be at-will? The court held that the phrase establishes a definite duration, removing Rooney's contract with Tyson from the at-will presumption.

New York presumes that an employment relationship is at-will, terminable at any time by either party, absent an agreement establishing a fixed duration. The issue was whether the presumption in favor of at-will employment applies to the determination of whether the agreement establishes a fixed duration. The majority held it does not; the dissent said it does. Thus, the majority broke the determination of whether Rooney's agreement with Tyson is at-will into two steps. First, it determined whether the duration if definite. If so, the at-will presumption is inapplicable. Second, assuming a finding that the duration was indefinite or undefined, the court applies the rebuttable at-will presumption, ''and other factors come into the equation.'' Because the Court of Appeals found that Rooney's contract with Tyson established a definite duration, it never reached the second step.

Terms that the Court of Appeals has found ''indefinite'' include: ''permanent,'' ''continue indefinitely and will follow in each succeeding year,'' ''devote the employee's whole time and attention to the employer's business,'' and ''yearly employment for a specified annual salary.'' About the term of Rooney's contract with Tyson, the court said:

New York's jurisprudence is supple and realistic, and surely not so rigid as to require that a definite duration can be found only in a determinable calendar date. Thus, although the exact end-date of Tyson's professional boxing career was not precisely calculable, the boundaries of beginning and end of the employment period are sufficiently ascertainable.

Hence, Rooney's contract with Tyson had a definite duration, and was not subject to the rebuttable at-will presumption.

Judge Smith dissented. ''By its ruling,'' he said, ''the majority heralds a new era in interpreting oral promises of potentially long-term employment.'' The dissent rejected the majority's two-step process. The at-will presumption should apply to the determination whether the parties intended the contract to be of definite duration, and not be relegated to a second stage once that determination has been accomplished. Examining New York precedents, Judge Smith did not find a single instance in which a contract whose end was determinable by an event, such as death, was upheld as a contract of definite duration. In particular, he found it impossible to distinguish a contract whose end was determined by the death of a fighter's career from a contract of ''permanent employment,'' whose end is determined by the death of the employee. Both are contracts of indefinite duration, because neither allows the end to be determined by a specific date on the calendar.

The reason for the presumption in favor of at-will employment, the dissent explained, is evidentiary. Although a contract terminable by death does not trigger the Statute of Frauds (it may terminate within a year), the same concerns animate the at-will presumption: namely, that evidence weightier than a mere oral promise should be required of parties entering into a serious undertaking. In New York, as other states, permanent employment becomes lifetime employment only when accompanied by consideration to the employer independent of the faithful performance of employment. The function of the separate consideration is evidentiary, to establish that the parties really meant the employment to be permanent. Judge Smith would not alter that requirement, and the majority apparently did. (The majority hints through a glass darkly that Rooney satisfied the separate consideration requirement: Rooney agreed that he would work as Tyson's trainer for no pay until Tyson became a professional. One could argue that Rooney's uncompensated work was independent consideration.)

We are not altogether unhappy that the majority has apparently relaxed the requirement of independent consideration. We never thought the requirement accomplished its evidentiary goal anyway (especially if the consideration need be only a peppercorn). This is one of those cases where one is inclined to say that if the legislature doesn't like the result, it ought to amend the Statute of Frauds to include permanent employment (and for the moment we take no position on whether it should).

(2) R & L Acoustics v. Liberty Mut. Ins. Co., 2001 Conn. Super. LEXIS 2854 (Conn. Super. Ct. Sept. 27, 2001) . The court cited Corbin at § 4.2 to the effect that a ''reasonable time'' is not an unlimited time. This case is fully discussed at § 31.1 note 12.

(3) Stricklin v. Flavel, 180 Or. App. 360, 43 P.3d 1116 (Ct. App. 2002) . The parties entered into a settlement agreement after the plaintiffs obtained a default judgment against the defendants. When the defendants failed to meet their obligations under the settlement agreement, the plaintiffs filed a supplemental motion to enforce the agreement. The defendants did not appear at the hearing on the motion. An amended judgment was entered at that time. In their appeal, the defendants alleged that the trial court erred by entering the amended judgment when it altered the agreement of the parties by inserting a time limit of 90 days for payment. The court found evidence in the record to support the trial court's finding that the parties intended payment be made within 90 days. Moreover, the court quoted Corbin in holding that, even if the trial judge had been mistaken concerning the intention of the parties, where an agreement is not specific as to time for performance, the promised performance must be rendered within a reasonable time. The defendants had had a reasonable time to make payment since, at the time of the hearing, almost one year had passed since the settlement agreement had been reached.

(4) Levy v. Lucent Techs., Inc., 2003 U.S. Dist. LEXIS 414 (S.D.N.Y. Jan. 13, 2003) . The plaintiff (Levy) was employed by the defendant Lucent Technologies, Inc., under a contract which included stock options. In the event of a merger, an acceleration clause would cause certain stock options to vest immediately if Levy was terminated except for cause or if his responsibilities changed. The acceleration clause, however, did not apply to other stock options. When Lucent merged and Levy was notified that his job responsibilities would change, he claimed that certain restricted stock options accelerated immediately. Lucent disagreed. Levy argued that an exchange of e-mails in which he set forth the terms under which he would remain with Lucent after the merger created a bilateral contract between the parties including the immediate vesting of certain stock options. Lucent claimed that there was no consideration for such an alleged agreement since Levy did not promise to remain for any specified period. He, therefore, remained an employee terminable at will who could have left at any time. While the court agreed that there was no consideration to support a bilateral agreement, Levy did, in fact, continue to work for Lucent. Citing Corbin, the court noted an employer is bound to pay for services rendered by an at-will employee at the promised rate. Also citing Corbin, the court held that an agreement for at-will employment is not enforceable when made, but the employee's performance creates a unilateral contract requiring the employer to perform all promises. Accordingly, the court held that a jury could find that Lucent offered employment on Levy's terms as an inducement for him to stay during the merger, which Levy accepted by doing so. Disputed issues of material fact remained as to whether Lucent intended to offer Levy acceleration of certain stock options. The court quoted Corbin with respect to the objective test to be employed in determining whether an offer was made. An act which creates a power of acceptance must be one that ''leads the offeree to reasonably believe that a power to create a contract is conferred upon him.'' Levy based its claim alleging the immediate vesting of certain options on an alleged conversation with Lucent's vice president of human resources, who denied that this matter was ever discussed. A jury could believe one version or the other. The court, however, rejected Levy's argument that Lucent was barred by the parol evidence rule from asserting that it did not agree to the terms in the e-mail since, as this treatise explains, the rule does not bar evidence on issues of contract formation. Summary judgment was inappropriate since issues of material fact remained. This case is also cited at §§ 1.11, 6.2, and 577.

(5) Kaplan v. Aspen Knolls Corp., 290 F. Supp. 2d 335 (E.D.N.Y. 2003) . The plaintiff, a former at-will employee of the defendant real estate development company, initiated suit for breach of an oral contract under which the defendant had promised to pay the plaintiff a $2,000 bonus for every house sold in a development after the sale of the 334th house. The court rejected the defendant's argument that the plaintiff was unable to establish consideration for the promise of the bonuses. Citing Corbin, the court held that performance rendered by an at-will employee in response to an offer before any notice of revocation creates a unilateral contract binding the employer to perform the promise. The employee's continued service following the oral promise constituted the consideration to support the employer's promise to pay an at-will employee bonuses based on the sale of houses beyond the 334th house. This case is also discussed at § 6.2.

(B) The following cases cite other sections of Corbin:

(1) Wyatt v. BellSouth, Inc., 18 F. Supp. 2d 1324 (M.D. Ala. 1998) (citing § 8.11 of Corbin), and 757 So. 2d 403 (Ala. 2000) (citing § 8.8 of Corbin). This case is also noted in § 8.12 and fully discussed in § 8.11 of this supplement.

(2) Lord v. Souder, 748 A.2d 393 (Del. 2000) (citing § 8.12 of Corbin). This case is fully discussed in § 8.12 of this supplement.

(3) Asmus v. Pacific Bell, 23 Cal. 4th 1, 96 Cal. Rptr. 2d 179, 999 P.2d 71 (2000) (quoting Corbin). The Ninth Circuit certified the following question of law to the Supreme Court of California:

Once an employer's unilaterally adopted policy-which requires employees to be retained so long as a specified condition does not occur-has become a part of the employment contract, may the employer thereafter unilaterally [terminate] the policy, even though the specified condition has not occurred?

The facts were these. Pacific Bell issued a ''Management Employment Security Policy'' in 1986:

It will be Pacific Bell's policy to offer all management employees who continue to meet our changing business expectations employment security through reassignment to and retraining for other management positions, even if their present jobs are eliminated. This policy will be maintained so long as there is no change that will materially affect Pacific Bell's business plan achievement.

Pacific Bell notified its managers in 1990 that industry conditions might force it to discontinue the MESP. In 1991 it announced that it would terminate the MESP on April 1, 1992, replacing it with a new layoff policy, the Management Force Adjustment Program, that provided a generous severance program fashioned to decrease management through job reassignments and voluntary and involuntary benefits.

Sixty former Pacific Bell management employees who were affected by the MESP cancellation filed an action in federal district court against Pacific Bell and its parent seeking declaratory and injunctive relief, as well as damages for breach of contract, breach of fiduciary duty, fraud, and violations of the Employee Retirement Income Security Act. The sixty chose to stay with the company for several years after the MESP termination and received increased pension benefits under the new MFAP. All but eight of them signed releases waiving their right to assert claims arising from employment under the MESP or its termination. The district court granted Pacific Bell's summary judgment motion against the 52 plaintiffs who signed releases, and the Ninth Circuit affirmed. The district court also granted summary judgment on the breach of contract claim in favor of the eight employees who did not sign releases, holding ''that even if an employer had the right unilaterally to terminate a personnel policy creating a contractual obligation, that right would not apply in cases where the original employment policy incorporated a term for duration or conditions for rescission, absent stronger evidence of the employees' assent to the policy modification than their continued employment.'' Thus Pacific Bell could not terminate its MESP unless if first demonstrated ''a change that will materially alter Pacific Bell's business plan achievement.'' Upon appeal, the Ninth Circuit certified the question to the Supreme Court of California and agreed to abide by the answer.

The Supreme Court of California split 4-3 with one judge sitting by designation, holding that an employer may unilaterally terminate an employment security policy that has become an implied-in-fact unilateral contract, so long as the policy contains a specified condition that is of indefinite duration, and so long as the termination occurs after a reasonable time, on reasonable notice and without interfering with the employee's vested benefits.

So far so good: The court has answered the certified question. But the court did more than that, over vigorous dissent by Chief Justice George: It took on the task of deciding whether the condition in Pacific Bell's MESP was of ''indefinite duration,'' and found, remarkably, that it was. The ''argument'' is worth quoting in full:

[E]ven though [Pacific Bell's] MESP contained language specifying that the company would continue the policy 'so long as' it did not undergo changes materially affecting its business plan achievement, the condition did not state an ascertainable event that could be measured in any reasonable manner. As Pacific Bell explains, when it created its MESP, the document referred to changes that would have a significant negative effect on the company's rate of return, earnings and, 'ultimately the viability of [its] business.' The company noted that if the change were to occur, it would result from forces beyond Pacific Bell's control, and would include 'major changes in the economy or the public policy arena.' These changes would have nothing to do with a fixed or ascertainable event that would govern plaintiffs' or Pacific Bell's obligations to each other under the policy. Therefore, the condition in the MESP did not restrict Pacific Bell's ability to terminate or modify it, as long as the company made the change after a reasonable time, on reasonable notice, and in a manner that did not interfere with employees' vested benefits.

As Chief Justice George complains,

[t]he majority offers no justification for its conclusion that the condition cannot be measured. As established above, Pacific Bell's intention as expressly set forth in the MESP is that the company would reassess its employment security commitment only if major changes in the economy or public policy had a significant negative effect on its rate of return, its earnings, and ultimately the viability of its business. The majority does not attempt to explain why Pacific Bell would be unable to measure in a reasonable manner negative effects on its rate of return or earnings, or would be unable to assess whether such effects would threaten the viability of its business.

The majority could defend its position by pointing to the vagueness of the condition. But courts make judgements about such conditions, equally vague, all the time. For example, a baker agrees to sell all its supplies of ''crushed toast'' to a buyer, and decides to stop supplies altogether because its losing money. Just what does the condition of good faith and fair dealing require? This and hosts of questions like it hit the courts every day. Surely it is possible to work out a standard by which a trier of fact could assess whether a change is one that has ''materially affected'' Pacific Bell's ''business plan achievement.''

The Chief Justice also took issue with the majority's answer to the certified question. The majority's position was that ''because the employer created the policy's terms unilaterally, the employer may terminate or modify them unilaterally with reasonable notice.'' It cites courts in five other states that agree (allowing the majority to describe its position as the ''majority'' position). Two other positions, the majority noted, are possible. The first, minority, position is to allow termination or modification without notice at any time before completion of the contract. The majority characterized this position as ''too harsh'' and ''obsolete in California'' (citing Drennan v. Star Paving Co., 51 Cal. 2d 409, 414, 333 P.2d 757 (1958) ). The second minority position ''would impose bilateral concepts on a unilateral contract to require mutual assent and additional consideration to support the termination.'' The majority followed Fleming v. Borden, Inc., 316 S.C. 452, 450 S.E.2d 589, 595 (1994) , which 'settled on the majority approach after recognizing that the employer-employee relationship is not static. Fleming stated that 'employers must have a mechanism which allows them to alter the employee handbook to meet the changing needs of both business and employees.' '' To which Chief Justice George replied:

[T]he majority's conclusion that an employer unilaterally may modify or terminate an employment security policy that lacks an express duration provision, simply by maintaining it for a reasonable time and giving reasonable notice of the proposed modification or termination, is contrary to basic principles of contract law. An employer may not unilaterally modify or terminate an employment security policy that has become part of the employment contract, without providing additional consideration and obtaining the employee's assent. Simply giving notice of the new policy and obtaining the employee's continued performance under the preexisting agreement are insufficient to establish a modification of the agreement.

This case is also noted in §§ 1.23 and 5.9, and 5.32 of this supplement.

(C) The following cases are noteworthy:

(1) In General Dynamics Corp. v. Superior Court, 7 Cal. 4th 1164, 32 Cal. Rptr. 2d 1, 876 P.2d 487 (1994) (in bank), the Supreme Court of California decided that an attorney employed as ''in-house'' counsel may pursue implied-in-fact contract and retaliatory discharge tort causes of action against the employer that are commonly the subject of suits by nonattorney employees who assert the same claims.

General Dynamics had argued that Fracasse v. Brent, 6 Cal. 3d 784, 100 Cal. Rptr. 385, 494 P.2d 9 (1972) , in which the Supreme Court of California appeared to give the client an unfettered, absolute right to discharge an attorney at any time and for any reason, applied to in-house attorneys as well. The court distinguished Fracasse by confining it to its facts-discharge of an attorney who entered into a contingent fee contract with a client to represent her as a plaintiff in a personal injury lawsuit. Unlike a personal injury attorney, whose relationship with the client is generally a ''one shot'' undertaking, the plaintiff in General Dynamics alleged that he was hired as a ''career oriented'' employee with an expectation of permanent employment provided his performance was satisfactory.

The court noted, without elaboration, ''that in the case of confidential corporate employees such as attorneys, an employer has wide latitude in determining the circumstances under which it has just or good cause to terminate the relationship.'' 32 Cal. Rptr. 2d at 10 .

The court confined the right of an in-house attorney to maintain a retaliatory discharge claim to cases where it can be established without breaching the attorney-client privilege or unduly endangering the values lying at the heart of the professional relationship. Trial courts ''can and should apply an array of ad hoc measures from their equitable arsenal designed to permit the attorney plaintiff to attempt to make the necessary proof while protecting from disclosure client confidences subject to the privilege.'' 32 Cal. Rptr. 2d at 18 .

The court further confined the attorney's retaliatory discharge remedy to ''those instances in which mandatory ethical norms embodied in the Rules of Professional Conduct collide with illegitimate demands of the employer and the attorney insists on adhering to his or her clear professional duty.'' 32 Cal. Rptr. 2d at 15 .

Though at least one jurisdiction has refused to permit the maintenance of retaliatory discharge suits by attorneys on the ground that such suits pose a threat to the attorney-client relationship, see, e.g., Balla v. Gambro, Inc., 145 Ill. 2d 492, 164 Ill. Dec. 892, 584 N.E.2d 104 (1991) , California's position responds realistically, in Corbin's spirit, to legal practice as it is carried on by attorney-employees in large organizations.

(2) The main treatise states that with ''some important qualifications'' employment agreements that are terminable at will are not executory contracts. Copeco, Inc. v. Caley, 91 Ohio App. 3d 474, 632 N.E.2d 1299 (1992) , appeal dismissed for want of conflict, 69 Ohio St. 3d 79, 630 N.E.2d 662 (1994) , warns us that even agreements that are terminable at will may indeed contain executory elements.

In Copeco, two salesmen had been employed at-will, when their employer told them to sign an agreement containing a covenant not to compete or be fired. The covenant bound them while they were employed and for 18 months after. They signed, quit, and breached the covenant. Copeco sued. The salesmen claimed lack of consideration. The court of appeals, reversing a judgment against the employees in a bench trial, held that a restrictive covenant may be enforceable even though it is executed in the midst of an at-will employment relationship. ''As a practical matter,'' wrote the court, ''every day is a new day for both employer and employee in an at-will relationship.'' 632 N.E.2d at 1301 . The very non-executory character of the at-will employment permitted modification of the employment agreement to include a potent executory element.

The Copeco court rejected the position taken by the Summit division of the court of appeals in Prinz Office Equipment Co. v. Pesko, 1990 Ohio App. LEXIS 367 (Ohio App. Jan. 31, 1990) , which court held that ''[w]here the restrictive covenant was not agreed to by the employee upon his or her initial hire, it must be supported by something more than a promise of continued employment.'' That very division had taken the Copeco position one year before in Nichols v. Waterfield Financial Corp., 62 Ohio App. 3d 717, 577 N.E.2d 422 (1989) , motion to certify overruled, 45 Ohio St. 3d 710, 545 N.E.2d 905 (1989) , holding that even if consideration were required to modify an at-will employment contract, continued employment is sufficient consideration. Curiously, an appeal to the Supreme Court of Ohio was dismissed for want of conflict even though the conflict between Copeco and Prinz is obvious. Perhaps the Supreme Court considered Prinz a simple error, and Nichols the true law of the Summit division.

The travails of Ohio's intermediate appellate courts on the Copeco issue shows the delicacy of the at-will employment contract's place in contract doctrine. Altogether, the position taken in Copeco and Nichols seems sensible.

In Becker v. National Educ. Training Group, Inc., 2002 U.S. Dist. LEXIS 19063 (N.D. Tex. Oct. 7, 2002) , Norman Becker was employed under a contract that was expressly terminable at will, for any cause or no cause. The contract provided that Becker would be entitled to commissions on new accounts for which he was responsible only if the contracts were formed prior to Becker's termination. Becker was notified of his termination prior to the completion of new accounts on which he would have earned commissions had he been employed when they were created. He claimed that the defendant terminated him to avoid paying these commissions, relying on the principle that, where one party, by wrongful means, makes it impossible for the other to perform, such action constitutes a breach of contract. The court found this principle inapplicable since the defendant had a right to terminate the contract ''with or without cause and with or without notice.'' Becker also claimed that the defendant was unjustly enriched at his expense since it received the benefits of these new accounts without paying his commission. The court quoted Texas precedent to the effect that recovery under a quasi-contractual theory is prohibited where the subject matter of the dispute is covered by an express contract. Becker claimed that by terminating his employment after he performed the necessary work to earn the commissions, the defendant violated the covenant of good faith and fair dealing. The court held that no cause of action exists for breach of the good faith covenant in terminable-at-will employment contracts since such an implication would alter the nature of such contracts which can be terminated for any reason or no reason. The court also denied Becker's claim for reformation of the writing evidencing the contract since he presented insufficient evidence of an intention that would indicate the writing was mistaken. The court granted the defendant's motion for summary judgment.

(3) The main treatise notes resistance by courts to the application of elementary and basic principles of contract law to personnel manuals. Talanda v. KFC National Management Co., 863 F. Supp. 664 (N.D. Ill. 1994) , is an example of the skillful use of contract principles to sort out a complicated set of issues.

Talanda was a Restaurant Training Manager for KFC, in charge of hiring, firing, training and management of KFC employees at the KFC restaurant in McHenry, Illinois. He hired a woman for the front counter who had a ''severe facial impairment,'' which is a disability under the Americans with Disabilities Act. Four days later, Talanda's supervisor told him to remove the woman from the front counter. Talanda refused, and was fired for insubordination. Talanda sued, claiming retaliatory discharge in violation of the ADA.

One of Talanda's theories was breach of contract, claiming that the manner in which the employee handbook was disseminated led him to reasonably believe that the handbook constituted an offer including the terms and conditions of his employment. KFC breached that contract, according to Talanda, by terminating him for not following the supervisor's instruction to remove the woman from the front counter, when the instruction was allegedly in direct conflict with the implied terms and conditions of Talanda's employment. In the ''Fair & Equal Treatment'' section, the handbook states:

KFC forbids treating associates or customers differently because of their race, age, sex, national origin, citizenship, disability or religion. You are required to treat all persons with respect. Your discriminatory treatment of others will result in disciplinary action up to and including losing your job.

KFC moved to dismiss for failure to state a claim on which relief can be granted, arguing that the Fair & Equal Treatment section of the handbook is merely a restatement of federal and state law prohibiting discriminatory treatment, and that anti-discrimination policies which merely restate the law do not form contracts because they are based on a pre-existing legal duty and thus lack consideration. Applying Illinois law, the district court granted KFC's motion.

In Duldulao v. Saint Mary of Nazareth Hosp., 115 Ill. 2d 482, 106 Ill. Dec. 8, 505 N.E.2d 314 (1987) , the Illinois Supreme Court held that an employee handbook may create enforceable contract rights if the traditional requirements for contract formation are present. Specifically the court required that the language of the policy statement must contain a promise clear enough that an employee would reasonably believe that an offer had been made; the statement must be disseminated to the employee in such a manner that the employee is aware of its contents and reasonably believes it to be an offer; and the employee must accept the offer by commencing or continuing to work after learning of the policy statement.

The court agreed with Talanda that KFC's anti-discrimination policy is not a mere restatement of the law because it required KFC to discipline or terminate an employee who discriminates against a fellow employee or a KFC customer-additional duties not mandated by federal law. Talanda also argued that the manual created an enforceable contract despite an at-will employment provision and a disclaimer, citing Perman v. ArcVentures, 196 Ill. App. 3d 758, 143 Ill. Dec. 910, 554 N.E.2d 982 (1st Dist. 1990) , which found an enforceable contract despite a disclaimer. The court distinguished Perman, on the ground that the provision there set out an elaborate grievance procedure that could reasonably lead an employee to believe he had an enforceable employment contract. Talando, by contrast, inferred a promise that an employee would not be terminated because he refused to discriminate against another employee from KFC's explicit promise to discipline or terminate employees who discriminate. This implicit promise was not a clear promise that could reasonably lead an employee to believe he had an enforceable employment contract.

In Leodori v. Cigna Corp., 175 N.J. 293, 814 A.2d 1098 (2003) , the plaintiff had begun work in 1995 as a lawyer for the Insurance Company of North America (INA), a sister company of Cigna Corporation. In 1996, INA sent a policy to employees identifying arbitration as the final method of resolving disputes with employees. In 1998, a handbook containing an arbitration policy was distributed to all employees together with an acknowledgment form which did not mention arbitration but only evidenced receipt of the handbook and a recitation that the handbook contained information about company policies. A month later, the company distributed another handbook, ''You and Cigna,'' together with two forms: an acknowledgment form which the plaintiff signed and an ''employee receipt and agreement'' form containing two ''important'' terms: (1) the employment is terminable-at-will, and (2) the employee will use the arbitration process in any dispute and will not go to court or to a government agency to resolve the dispute. The plaintiff did not sign this form.

When the plaintiff's employment was terminated in 2000, he brought an action in a court of law. The trial court dismissed the complaint, finding that the parties had entered into a binding agreement to arbitrate. The appellate division reversed. The supreme court held that, while the employer clearly stated its intention that all employment disputes of any kind would be subject to arbitration, the difficult question was whether an implied agreement to waive statutory and other rights should be recognized or whether an explicit, affirmative expression of the employee was necessary. The defendant argued that the plaintiff's receipt of the handbook and his decision to continue his employment should be sufficient to evidence an implied but enforceable agreement as evidenced by case law. The court held that the case law on which the defendant relied focused on employers' obligations to employees as set forth in employee handbooks. An employee, however, was not bound to an arbitration clause which he did not seek to enforce. While contracts need not be evidenced by a writing unless otherwise required by, for example, the statute of frauds, where one party presents a contract for the other party's signature, the omission of that signature is a significant factor in determining whether the parties have mutually agreed to the terms of the writing. Absent evidence of some other explicit indication that the employee intended to abide by the arbitration term, agreement to arbitration could not be enforced in the absence of the plaintiff's signature on the ''employee receipt and agreement'' form. The contract law of this jurisdiction did not allow the defendant both to require the plaintiff's signature on an agreement and then to successfully argue that the omission of that signature is irrelevant to the agreement's validity (cf. Restatement (Second) of Contracts, § 60-the offeree must comply with the offeror's prescribed manner of acceptance to create a contract). Neither the fact that the plaintiff was aware of the arbitration policy nor his status as a lawyer overcame the necessity to discover explicit agreement to the arbitration clause that would waive statutory and other rights. As to the defendant's concern that this decision would require employers to negotiate individual agreements with the entire workforce, the court stated that the arbitration provision would have been enforceable had the employer obtained the plaintiff's signature on the form it presented to manifest the employee's agreement. Similarly, if the earlier acknowledgment that the plaintiff did sign had stated that the employee agreed to the detailed arbitration term in the handbook, the provision would have been enforceable. Thus, with minimal effort, the employer could have revised its procedures to ascertain agreement to its desired arbitration policy.

(4) Goodyear Tire & Rubber Co. v. Portilla, 879 S.W.2d 47 (Tex. 1994) . Goodyear had an anti-nepotism policy in force since 1947. The related employee had to accept a transfer or be terminated, unless a specific exception to the anti-nepotism policy was granted by a Goodyear executive at headquarters. Such exceptions were rare. Goodyear hired Portilla in 1965 as an at-will employee. In 1969 or 1970 her brother was transferred from another store to her store to be trained and elevated to the position of store manager. Everyone at the store and in the first and second levels of Goodyear management knew that he was her brother. Seventeen years later an audit ''rediscovered'' that Portilla was managed by her brother. Headquarters insisted that she be transferred or discharged. She could not relocate, and was discharged.

Portilla sued for wrongful termination, claiming that Goodyear had modified its at-will employment contract with her in at least two ways: Portilla could be terminated only for ''good cause,'' and could not be discharged for violating Goodyear's anti-nepotism policy. The trial court rendered judgment for Portilla on a jury verdict, and the court of appeals affirmed. The Supreme Court of Texas affirmed on the ground that the jury found that Goodyear had expressly waived its right to fire Portilla under its anti-nepotism policy. The waiver was a specific modification of what was otherwise an at-will employment contract. Hence, Goodyear could fire Portilla for any reason at any time, but not for violating the anti-nepotism policy.

Justice Hecht dissented, arguing that the court's holding would encourage employers to have no policy at all. Furthermore, even if Goodyear had waived the policy in Portilla's case, it could always reinstitute it as a condition for continuing her at-will relationship.

A close case.

(5) Crawford Rehabilitation Services, Inc. v. Weissman, 938 P.2d 540 (Colo. 1997) (en banc). The court reviews the employment-at-will doctrine and its exceptions, including the exception for employment manuals ''containing progressive discipline procedures that the employer represents it will follow prior to terminating an employee.'' The employee fit that exception, but she had also committed r'esum'e fraud and that fraud entitled the employer to rescind the implied contract.

(6) Bakotich v. Swanson, 91 Wash. App. 311, 957 P.2d 275 (1998) (prospective at-will employee cannot recover damages for breach prior to commencement of employment).

(7) Montgomery County Hosp. District v. Brown, 965 S.W.2d 501 (Tex. 1998) . At the time she was hired and during her employment, an employee was told that she would be able to keep her job so long as she was doing her job and that she would not be fired unless there was a good reason or good cause to fire her. She sued after being fired without good cause. The court held that an employer's oral statements do not modify an employee's at-will status absent a definite, stated intention to the contrary.

(8) DePhillips v. Zolt Construction, 136 Wash. 2d 26, 959 P.2d 1104 (1998) (en banc). The issue was whether a discharged employee's action claiming that the employer violated terms in an employee handbook was an action based upon a written contract subject to a six-year statute of limitation or another kind of obligation subject to a three-year limitation statute. The court found that the handbook was not a written contract for purposes of the statute because parol evidence would have been necessary to determine its material elements, including the employee's name, work hours and duties. Nor did the employee's alternative theory of reliance turn the claim into one on a written contract for the key element of such a claim is the justifiable reliance rather than the writing itself. This case is also noted at § 573(E) of this supplement.

(9) Zenor v. El Paso Healthcare Sys., Ltd., 176 F.3d 847 (5th Cir. 1999) (applying Texas law). Zenor was a pharmacist employed by Columbia Medical Center in El Paso. He was also a drug addict. Zenor admitted to injecting himself with cocaine four to five times a week, as well as smoking marijuana, and occasionally using tranquilizers to offset the effects of the cocaine. On August 15, 1995, Zenor called the pharmacy director and stated that he could not work that day because he was under the influence of cocaine. The pharmacy director suggested that Zenor take advantage of a program instituted by the hospital that assisted employees in getting rehabilitation services. Zenor was hospitalized for nine days, after which he enrolled in a residential drug rehabilitation program. During his residence at the rehabilitation program, Zenor's employment was terminated.

Zenor sued Columbia under the federal and state versions of the Americans with Disabilities Act, and, based on statements in the company's drug-and-alcohol policy, he alleged breach of contract and promissory estoppel. The district court granted the employer summary judgment on all the claims, except for the promissory estoppel claim. The jury found for Zenor and awarded him substantial damages, including lost earnings, future lost earnings, and mental anguish. Columbia moved for judgment as a matter of law, and the district court granted its motion.

The Fifth Circuit affirmed. Addressing the breach of contract claim, the court held that Zenor had failed to meet the requirements for the limited exception to at-will employment under Texas law. To displace the at-will presumption, an employee handbook or policy manual must ''contain an explicit contractual term altering the at-will relationship and must alter that relationship 'in a meaningful and special way.' '' Zenor argued that language in the company's drug policy that stated that employees who successfully complete a rehabilitation program may return to work, created an enforceable contractual right to further employment. The court disagreed, pointing to language in the document that indicated that the decision whether to continue employment was within the discretion of the company. The company preference for rehabilitation did not create a promise of future employment: ''[t]he fact that the Policy may in general encourage or favor rehabilitation of its employees does not in itself obligate Columbia.'' Moreover, the employee handbook contained an explicit disclaimer of contractual rights beyond those of at-will employment; the court held that this disclaimer was incorporated by reference in the drug policy.

Turning to the promissory estoppel claim, the Fifth Circuit noted at the outset that ''it is questionable whether Texas law allows at-will employment to form the basis of a promissory estoppel claim.'' Citing and discussing Roberts and Collins (discussed in § 8.12 and in. 538), the court noted that it was a fair reading of Texas law to conclude that at-will employment could not form the basis of a promissory estoppel claim as a matter of law. However, the court declined to attempt to resolve the conflict between Roberts and Collins, because Zenor's reliance on the drug policy was unreasonable. Zenor argued that the policy promised to continue an employee's employment after he self-reports an addiction. In the light of the explicit discretionary power to terminate retained by the company, any interpretation of the policy as a promise of future employment was unwarranted.

More important, even if the policy were interpreted to constitute a promise, ''justice does not require the enforcement of any such 'promise.' '' The detrimental reliance induced by the policy was, in essence, Zenor's disclosure of his drug addiction. Zenor argued that he had worked for the company for two years while addicted and could have continued to fabricate reasons for his poor performance without revealing his addiction, if he had not been induced to enter the drug rehabilitation program. The Fifth Circuit cited approvingly the district court's statement that ''[a] court cannot in good conscience enforce a 'promise' which would in effect shift the blame of an employee's drug dependency on the employer rather than where responsibility for the dangerous habit rightfully lies: on the employee with the drug addiction.''

This case is also noted in § 8.12 of this supplement.

(10) Demasse v. ITT Corp., 194 Ariz. 500, 984 P.2d 1138 (1999) . ITT hired Demasse and four others as hourly workers at various times between 1960 and 1979. Although it is unclear when ITT first issued an employee handbook, it did issue five of them, the last in 1989. The first four handbooks had seniority layoff provisions, saying that layoffs within each job classification would be made in reverse order of seniority (later versions also gave more senior employees the power to ''bump'' less senior employees). The 1989 handbook was the problem. It had two new provisions. First, the first page ''Welcome'' statement added a disclaimer, providing that ''nothing contained herein shall be construed as a guarantee of continued employment... . ITT Cannon does not guarantee continued employment to employees and retains the right to terminate or layoff employees.'' Second, the Welcome statement included a new modification provision:

Within the limits allowed by law, ITT Cannon reserves the right to amend, modify or cancel this handbook, as well as any or all of the various policies, rules, procedures and programs outlined in it. Any amendment or modification will be communicated to affected employees, and while the handbook provisions are in effect, will be consistently applied.

The 1989 handbook also provided that ''specific provisions of policies, rules, procedures and programs supersede the contents of this handbook,'' allowing ITT to modify specific provisions through methods other than issuing a new handbook. ITT employees signed an acknowledgment that they had received, understood, and would comply with the revised handbook.

Four years later, ITT notified its hourly employees that its layoff guidelines for hourly employees would not be based on seniority, but on each employee's ''abilities and documentation of performance.'' Within nine months of the notification, Demasse and his four fellow employees were laid off before less senior employees but in accordance with the 1993 modification. The four employees brought an action in federal district court alleging they were laid off in breach of an implied-in-fact contract created by the pre-1989 handbook provisions requiring that ITT lay off its employees according to seniority. Both sides filed cross-motions for summary judgment. The court found the handbook disclaimer statements not clear and conspicuous enough, as a matter of law, to prevent formation of an implied-in-fact contract. The judge found that the language ''could be read to mean that termination or layoff will always be completed according to the terms provided in the handbook.'' Thus, whether an implied-in-fact contract covering layoff seniority rights had been created, remained a question of fact precluding summary judgment. The judge also ruled that even if an implied-in-fact contract had been created, only the provisions of the most recent handbook were enforceable under Arizona law. Thus when ITT modified the handbook in 1989, the newly added and amended terms automatically became part of the contract, including the modification provision authorizing subsequent unilateral changes. When ITT distributed the 1993 ''revised layoff policy'', which removed seniority rights and stated that it superseded previous handbooks, ITT validly modified the contract. The judge thus held as a matter of law that ITT did not breach the contract.

On appeal, the Ninth Circuit said that the central question was ''whether ITT could unilaterally change layoff policies which were an enforceable part of the Demasse employees' contract of employment by simply issuing the 1989 handbook declaring that it could amend its handbooks and policies-and then [implementing that provision] by modifying its layoff policy in 1993.'' Though the federal district courts had concluded that Arizona law recognized continued employment alone as sufficient consideration to modify the contract terms, no Arizona appellate court had addressed the issue. The Ninth Circuit thus certified two questions to the Arizona Supreme Court:

1. Once a policy that an employee will not be laid off ahead of less senior employees becomes part of the employment contract under Leikvold v. Valley View Community Hosp., 141 Ariz. 544, 688 P.2d 170 (1984) , as a result of the employee's legitimate expectations and reliance on the employer's handbook, may the employer thereafter unilaterally change the handbook policy so as to permit the employer to layoff employees without regard to seniority?

2. In order to sue for breach of contract on the ground that an employer is bound by representations made in its handbook, must employees exhaust the complaint procedure described in the same handbook?

Assuming that an implied-in-fact contract between ITT and the employees exists (a matter yet to be litigated in federal district court), the court answered no to both.

Regarding the first question, the court stated that while the employer can modify the terms of the employment-at-will relationship unilaterally, the same is not true once a contract ousting the at-will presumption has been implied. An implied-in-fact employment term, said the court, is governed by the same traditional contract law governing express promises, including the rule that to effectively modify a contract, whether implied-in-fact or express, there must be an offer to modify the contract, assent to or acceptance of the offer, and consideration. ITT argued (citing cases) that continued work alone manifested both the employees' assent to the modification of their implied-in-fact contract and constituted consideration for it. The court rejected both propositions (and the cases ITT cited). ''Any other result,'' said the court, ''brings us to an absurdity: the employer's threat to breach its promise of job security provides consideration for its rescission of that promise.'' Also, if continued employment alone constituted acceptance, the employees would be forced to quit in order to preserve their rights under the existing contract:

Thus, the employee does not manifest consent to an offer modifying an existing contract without taking affirmative steps, beyond continued performance, to accept... . If passive silence constituted acceptance, the employee ''could not remain silent and continue to work. Instead [he] would have to give specific notice of rejection to the employer to avoid having his actions construed as acceptance. Requiring an offeree to take affirmative steps to reject an offer ... is inconsistent with general contract law.'' ... The burden is on the employer to show that the employee assented with knowledge of the attempted modification and understanding of its impact on the underlying contract.

In order to manifest consent, said that court, the employee must have legally adequate notice of the modification (which must be more than the employee's awareness of or receipt of the new handbook), must be informed of any new term, aware of its impact on the pre-existing contract, and affirmatively consent to it to accept the offered modification. ITT did none of that, beyond supplying the employees with the new handbook, and asking them to sign for it.

Regarding the second question, the court noted that ITT's grievance procedure required the employee first to take their grievance to their supervisor in order to have a frank discussion. ''[O]nce terminated,'' said the court, ''an employee no longer has a supervisor. Thus the designated complaint avenue is cut off.'' Moreover, ITT's complaint procedure nowhere states that it is an exclusive remedy or applies to breach of contract termination grievances. The court declined to address whether a provision that provides an exclusive remedy would validly preclude a terminated employee from filing a breach of contract claim.

Justice Jones concurred in the court's response to the second question, but dissented on the first:

The response undermines legitimate employer expectations in a remarkable departure from traditional at-will employment principles. It transforms the conventional employer-employee contract from one that is unilateral (performance of an act in exchange for a promise to pay) to one that is bilateral (a promise for a promise).

He disagreed with the premise of the court's answer to the first question, that the relationship between the employees and ITT was no longer at-will.

A single contract term in a policy manual may, while it exists, become an enforceable condition of employment, but it does not alter the essential character of the relationship. In my view, ITT, as the party unilaterally responsible for inserting it into the manual may, on reasonable notice, exercise an equal right to remove it.

The continuing at-will status of the relationship, argued Justice Jones, is confirmed by at least two factors: the contract was always one of indefinite duration, and the employees had the absolute right to quit at any time. Contrary to the opinion of the court, Justice Jones believes that,

[s]uch is the nature of the at-will contract; consideration is found in the employer's offer of continuing employment, and the employee accepts the offer by his continued performance... .

The majority imposes a bilateral principle on the at-will relationship by holding that in order for ITT to eliminate the reverse-seniority layoff policy, some form of new consideration, in addition to an offer of continuing employment, is necessary to support each individual employee's assent to the amended manual. The majority's approach effectively mandates that ITT, in order to free itself of future reverse-seniority obligations, would be required to give a wage increase, a one-time bonus, or some other new benefit to the employees with the explicit understanding that such benefit was given in exchange for the amendment to the policy manual. This becomes artificial because it is foreign to the unilateral at-will relationship and, as a practical matter, it leaves the employer unable, at least in part, to manage its business. I disagree with the proposition that ''new'' consideration is necessary.

The majority further asserts that ITT's exercise of the unilateral right to amend the handbook renders the employer's original reverse-seniority promise illusory. Once again, I disagree. An illusory promise is one which by its own terms makes performance optional with the promisor whatever may happen, or whatever course of conduct he may pursue. [citation omitted] The reverse-seniority promise was not illusory because it was not optional with ITT as long as it remained a part of ITT's handbook policy. During the years of its existence, it was fully enforceable. Moreover, the promise was genuine because it was applicable to all ITT employees, not merely a select few.

The court's position would ironically give at-will employees hired before a contemplated change in a personnel manual greater protection than employees under a collective bargaining agreement: the latter can be modified by the mutual agreement of the parties, the former would have the protection of the manual in force when hired in perpetuity. The result would give such protection to employees hired under the policy, but not to employees hired thereafter. ''A collective bargaining agreement is bilateral, and to impose a bilateral relationship on simple at-will employment is, in my view, an attempt to place a square peg in a round hole. Inevitably, this will impair essential managerial flexibility in the workplace.''

Justice Martone also dissented on the court's response to the first question: ''The handbook promise here cannot reasonably be construed as a promise that runs in favor of the employee for as long as the employee is employed or else the unilateral promise turns out to be a better deal than a collective bargaining agreement. Indeed, it becomes the functional equivalent of good behavior tenure under Article III of the United States Constitution.''

(11) Schoff v. Combined Insurance Company of America, 604 N.W.2d 43 (Iowa 1999) . In which the Supreme Court of Iowa had to decide whether promissory estoppel can apply in the context of an at-will employment relationship. In deciding that it can, the court likened the enforcement of a promise based on reliance to enforcement of a promise given in exchange for an act a unilateral contract usually launched by the employer's provision of an employee handbook to the employee. Yet, Iowa had already decided that a negligent misrepresentation claim was not available to an at-will employee. Fry v. Mount, 554 N.W.2d 263, 266 (Iowa 1996) . The at-will employer, the court reasoned, is in an adversarial rather than an advisory relationship with the employee, and therefore has no duty to make representations affecting the employment relationship with due care. Promissory estoppel, in contrast, is not limited to advisory relationships, and thus applies in adversarial relationships as well. Hence, the court's refusal to permit negligent misrepresentation claims in the context of an at-will employment relationship could not prevent them from allowing a promissory estoppel claim in that context.

This case is also discussed in § 8.12 of this supplement.

(12) Slate v. Saxon, Marquoit, Bertoni & Todd, 166 Ore. App. 1, 999 P.2d 1152 (2000) . Slate received an offer to be an associate, premised on the conditions that he take and pass the Oregon bar exam, and that the firm be able to renew its juvenile court and indigent defense contracts. The offer was not for a fixed term; nor did it contain a for-cause termination provision. Slate passed the bar, and the firm got its contracts. Nonetheless, they notified Slate that they were terminating him, although he had not yet begun working for them. Slate sued the firm for breach of a contract to hire, and for promissory estoppel, arguing that because he had accepted the firm's offer, he took the bar exam when he otherwise might not have and did not seek other employment. The trial court granted the firm's motion for summary judgment, and Slate appealed.

The Court of Appeals of Oregon affirmed. Because Slate's employment was at-will, he could be terminated at any time for any reason. Yet Slate argued that the breach was a breach of an agreement for employment, not of the employment at-will contract itself, and though the firm could terminate him after he started work, they could not terminate him before. Noting that jurisdictions have split about evenly on the question, the court concluded that Slate had no cause of action in these circumstances:

In our view, it would be completely illogical to hold that an employer is exposed to liability if it invokes the right to terminate at will before the employee begins working but is absolved from liability if it defers doing so until immediately after the employee first reports for work. In addition to being illogical, such a holding would also be most undesirable in its consequences. It would serve the interests of no one least of all new professional persons in search of work to discourage putative employers from discharging them earlier rather than later, under circumstances where there is no possibility that an actual employment relationship will ever exist.

Because of the holding that the promise of employment was terminable on the same at-will basis that the employment itself would have been, the court also concluded that there could have been no reasonable basis for reliance on the promise per se.

A strong dissent characterized the case somewhat differently. The issue is not, said the dissent, whether an employer has the right to terminate an at-will employment before the employee has begun to work. After all, Slate was not yet an employee, hence could not be ''terminated.'' ''Rather, the issue is whether defendants impermissibly revoked a unilateral contract on which plaintiff had begun performance.'' Slate, it turns out, had told the firm that he did not intend to take the Oregon bar exam unless the firm made him a firm offer. Which they did. But they also conditioned the offer on his taking the Oregon bar exam. By taking the exam, Slate accepted the offer of a unilateral contract, which according to standard contract principles the firm could not then withdraw.

(13) Ulysses Walker v. Air Liquide America Corp., 113 F. Supp. 2d 983 (M.D. La. 2000) . Walker sued his employer for constructive discharge due to racial discrimination. The employer moved to dismiss or arbitration compelled pursuant to the Federal Arbitration Act. The FAA provides that written agreements to arbitrate disputes arising out of an existing contract ''shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.'' Hence, in order to be enforceable under the FAA an arbitration agreement must be in writing. Under Louisiana law the acceptance of such an agreement must also be in writing. Walker's continued employment after receipt of the employment manual which contained the Alternative Dispute Resolution policy was therefore insufficient to effect a written agreement. Yet Walker acknowledged receipt of the employment manual in writing. The court said that an acknowledgment signed by Walker does not indicate that he consented to anything. The acknowledgment provided only that ''All employees are required to sign this form as acknowledgment that they have received and read the Employee Handbook.'' ''There is no indication under the facts of this case that Walker agreed to submit any employment dispute he might have to binding arbitration by virtue of his acknowledgment that he received and read the handbook.'' Accord: Ex Parte Beasley, 712 So. 2d 338 (Ala. 1996) ; Kummetz v. Tech Mold, Inc., 152 F.3d 1153 (9th Cir. 1998) .

(14) Ford v. Trendwest Resorts, Inc., 146 Wash. 2d 146, 43 P.3d 1223 (2002) . As an at-will employee of the defendant, the plaintiff was fired because of the use of alcohol. Efforts by the wife of the employee to have him rehired induced the defendant to agree to rehire the plaintiff as an at-will employee if he successfully completed a rehabilitation program. Upon the successful completion of that program, the plaintiff was informed that he could again work for the defendant, but only in a different and less lucrative position. The plaintiff refused this position and sued, recovering damages of $235,000 for the loss of ''future earnings.''

The intermediate appellate court affirmed the trial court's holding. The Supreme Court of Washington, however, reversed, holding that the plaintiff understood that, had he been restored to his original position, as a terminable-at-will employee, he could have been fired immediately. The plaintiff did not fall within any of the narrow exceptions to the general terminable-at-will rule. Thus, the plaintiff had no reasonable expectation of future earnings. The parties to an at-will contract do not bargain for future earnings. The court was critical of decisions that would deny such damages as merely too speculative, i.e., lacking the necessary requirement of reasonable certainty. While such a rationale may provide the correct result, it is imprecise, again, because the employer does not assume the risk of future earnings and the terminable-at-will employee has no reasonable expectation of such earnings.

(15) Feifer v. Prudential Ins. Co. of Am., 306 F.3d 1202 (2d Cir. 2002) . Plaintiffs Feifer, Pocchia and Molina were employed by the New York Daily News under new management. The new company issued a benefits plan for non-union employees such as the plaintiffs. The plan was announced as a ''summary for informational purposes only and is not intended to cover all details of the plan.'' As announced in the summary, the plan did not provide for offsets due to Social Security benefits or workmen's compensation payments received by the employee. The summary was promulgated in January, 1993. In September, 1993, a detailed benefit booklet was produced which stated that long-term disability benefits were subject to Social Security and workmen's compensation offsets. Both Feifer and Pocchia took disability leaves in August, 1993. At some point in 1993 or 1994, Molina became injured and took a disability leave. The plaintiffs were informed that their disability benefits were subject to Social Security and workmen's compensation offsets. The plaintiffs' actions against the insurer (Prudential) were consolidated. Prudential moved for summary judgment, which was granted on the ground that the summary of the plan and the detailed plan did not conflict. The court of appeals held that, at least with respect to the period between January and September, 1993, the summary and the detailed plan (the Group Contract) did conflict and the district court's analysis was foreclosed by the Employee Retirement Income Security Act (ERISA), which provides that every employment retirement plan must be established and maintained pursuant to a written instrument (29 U.S.C. § 1102(a)(1)). The court held that the only written instrument that appeared between January and September was the summary, which fulfilled the requirements of a ''plan'' under the statute. The language in the summary stating that it did not intend to cover all details did not preclude the finding that it was a ''plan.'' Between January and September, the plan did not include Social Security and workmen's compensation offsets. Since the plan did not express when the benefits vested, the court recognized that ''vesting'' is typically a question for the trier of fact. The court recognized the usual theory that the announcement of such a plan may constitute an offer which employees accept by continuing to work (Restatement (Second) of Contracts, § 45). With respect to employees who have become disabled under a plan, absent explicit language to the contrary, the court concluded as a matter of law that such a disability plan vests no later than the time an employee becomes disabled. Both Feifer and Pocchia became disabled after the summary was announced and before the detailed plan was promulgated. Thus, their rights vested upon their disability and neither was subject to the Social Security and workmen's compensation offsets. The court could not apply the same analysis to Molina because the record did not establish when he became disabled. If Molina became disabled before the promulgation of the detailed plan, his rights would have vested at that time.

(16) Jenkins v. KLT, Inc., 308 F.3d 850 (8th Cir. 2002) . KLT hired Jenkins as president of its wholly-owned subsidiary, KLT Power, Inc., in 1995. He served in that capacity until 1998, when KLT sold the subsidiary and terminated Jenkins. Jenkins's employment contract included annual and long-term incentive plans. The incentive plans required payment upon Jenkins's achievement of certain goals. KLT paid Jenkins in accordance with the incentive plans through the completion of his work before the sale. Jenkins claimed that KLT prevented him from achieving future goals by selling the subsidiary, i.e., that KLT made an implied promise. The court held that an employment contract with no duration is terminable at will. Since KLT could terminate Jenkins at will, it had no obligation to alter its business strategy in deciding to sell the subsidiary to enable Jenkins to maximize his incentive awards. Other aspects of this case are noted at § 28.13.

(17) Nelson v. Long Lines Ltd., 2003 U.S. Dist. LEXIS 9960 (N.D. Iowa June 11, 2003) . The plaintiff's complaint contained allegations of various violations, including breach of the implied duty of good faith and fair dealing in a contract of employment terminable at will. The defendant claimed that Iowa rejected ''good faith and fair dealing'' as manifested in the Restatement (Second) of Contracts, § 205, in employment situations. The court held that, while Iowa does not recognize the implied duty of good faith in the context of an at-will employee's termination or discharge, Iowa courts had not been presented with the ''subtle'' issue of whether good faith and fair dealing should be recognized ''during'' employment as the complaint alleged. The plaintiff claimed that the original contract was based on 40 hours per week. Only the duration of the contract was indefinite. The plaintiff claimed that the employer had imposed additional duties on him including the duties of a personal valet requiring him to live on the premises seven days per week. He also sold his property, supplied and used his own tools and machinery, and invested $13,000 in garden and garden-related materials. The court held that, while an at-will employee could not enforce an employer's promise merely by continuing to work, if the employee provided new consideration for the employer's promise, such an employee may be entitled to relief. The court held that some ambiguity surrounded the question of whether the implied duty of good faith and fair dealing would apply ''during'' employment. On the defendant's motion to dismiss, the question was whether it was clear under the facts presented that no relief could be granted. Since it was not clear, the court denied the motion to dismiss.

In Nelson v. Long Lines Ltd., 335 F. Supp. 2d 944 (N.D. Iowa 2004) , the court held that, since the Iowa Supreme Court, like the majority of courts, had repeatedly and categorically refused to recognize a claim for breach of the implied covenant of good faith and fair dealing in employment situations, the defendants were entitled to summary judgment on this claim by Nelson.

(18) Korslund v. DynCorp. Tri-Cities Servs., 121 Wash. App. 295, 88 P.3d 966 (Ct. App. 2004) , reconsideration denied, 2004 Wash. App. LEXIS 1166 (Wash. Ct. App. May 28, 2004) . This action for wrongful retaliation and the breach of specific promises in company policies was brought by the three plaintiffs against the prime contractor (Fluor) and subcontractor (DynCorp.) for which they worked. After the plaintiffs raised concerns about safety violations and work abuses, they claimed that they were subject to various forms of retaliation including transfers of their positions. They suffered psychological and medical problems as a result of the retaliation, causing two of the plaintiffs to become disabled from further employment. Their claim for breach of specific promises in specific situations was based on company policies that assured employees that any employee engaging in retaliatory actions against employees who raised concerns ''will be subject to appropriate corrective measures.'' Moreover, company policies stated that employees were expected to report abuses. The trial court dismissed the claim. On appeal, the defendants contended that such a claim applies only where an employee has been discharged. The court held that discharge is not a necessary condition to such a claim. The defendants asserted that employees covered by a collective bargaining agreement are not entitled to assert a claim based on company policies. The court held that employees do not have to be at-will employees to resort to claims under company policies unless the policies are in conflict with specific contractual agreements. There was no apparent conflict between the policies and the collective bargaining agreement. The court found that the plaintiffs had presented circumstantial evidence of retaliation, which is often the only evidence available to employees since employers rarely reveal that they are motivated by retaliatory motives. The statement in the company policies that any employee engaging in retaliatory actions will (as contrasted with should) be subject to corrective action was promissory and there was a material issue of fact as to whether the plaintiffs had relied on company policies. The court, therefore, reversed the order of the lower court dismissing the plaintiffs' claims for breach of promises of specific treatment in specific situations.

(19) LoPresti v. Rutland Reg'l Health Servs., 865 A.2d 1102 (Vt. 2004) . The plaintiff, a primary care physician, contracted with the defendant, a ''business arrangement among a group of doctors'' providing administrative and support services to the members of the group. The contract allowed the defendant to terminate the plaintiff's services, ''with or without cause,'' upon 180 days notice. The plaintiff chose not to refer his patients to certain specialist physicians within the group because of alleged ''substandard care.'' After receiving notification of his termination, the plaintiff claimed that the termination was based on his refusal to make certain referrals and, therefore, violated public policy evidenced by the code of medical ethics. The plaintiff also claimed that the defendant breached the implied covenant of good faith and fair dealing. The trial court granted summary judgment for the defendant, holding that the alleged causal relation between the plaintiff's termination and his refusal to make referrals did not alter the right of the defendant to terminate the contract for any reason. On appeal, the instant court recognized that the contract was not strictly at-will since it included the 180 notice provision. Nonetheless, the provision allowing termination ''with or without cause'' was sufficient for the court to treat the contract as if it were terminable at-will. The court recognized that Vermont law allows such termination without cause, subject to the qualification that the termination does not violate public policy. Public policy in the employment context may be found in sources other than statutes or constitutions, including professional ethics codes. Thus, an employee is entitled to show clear and specific evidence of professional ethics standards that supercede his obligations to an employer. On this issue, the court remanded the case to permit the plaintiff to show a violation of public policy. The court, however, distinguished the claim of public policy violation from breach of the implied covenant of good faith and fair dealing. The court held that the covenant does not apply to terminable-at-will contracts. To do so would enlarge the circumstances under which an at-will employee may successfully challenge his dismissal beyond the public policy limitation.

(20) Daisley v. Riggs Bank, N. A., 372 F. Supp. 2d 61 (D.D.C. 2005) . The defendant was desirous of hiring Daisley and allegedly promised to employ him for a minimum term of six-years and to include an enhanced compensation package. Subsequently, the defendant provided an offer letter to Daisley that contained a number of terms but was silent on the duration of the contract. Daisley signed the offer and commenced work. During his third year, he was terminated. The court adhered to the general rule in employment contracts that, absent a stated duration, such contracts are deemed to be terminable-at-will. The court disallowed evidence of any prior promises or representations concerning a specified duration as violations of the parol evidence rule. Though it contained no integration clause, the letter evidencing the contract stated that it ''confirms our oral agreement'' and the court treated the writing as integrated. Daisley claimed that the employer had made oral confirmations concerning the six-year term subsequent to the signed agreement. The letter, however, stated that any modifications had to be evidenced by a signed writing. Though the court recognized District of Columbia law holding that a written contract may be modified by an oral agreement, notwithstanding a clause prohibiting oral modification, it held that this doctrine did not salvage Daisley's claim since allegations of a mere promise of fixed-term or permanent employment are insufficient to rebut the presumption of at-will employment. With respect to promises of enhanced compensation, Daisley had received a bonus after one year of employment, but was denied other additional compensation which had been promised. The offer letter contained statements concerning the possibility of such enhanced compensation. The court recognized that, notwithstanding an at-will employment relationship, an employer and employee may contract regarding other terms such as stock options or bonuses and held that, while Daisley was not entitled to any compensation for years four, five and six, he could receive additional compensation to which he could prove he was entitled from the inception of his employment until he was terminated.

(21) Tucker v. Life Line Screening of Amer., Inc., 2005 Ohio 3236 (2005) . The plaintiff signed an employment application clearly stating that employment with the defendant was terminable-at-will which the application clearly defined. Upon her employment, the plaintiff received a letter sating that her employment was at-will, again explaining what that meant. She then received an employment manual which contained the same information concerning her at-will status. The manual also contained a ''positive discipline'' statement setting forth certain steps prior to termination. The ''positive discipline'' section, however, also stated that the employee could be discharged without resorting to all of the steps because ''Positive discipline does not change the fact that employment is 'at will.' '' The plaintiff was discharged though the employer did not follow all of the steps. The trial court granted summary judgment for the defendant. On the plaintiff's appeal, the court held that the ''at-will'' language in the ''positive discipline'' section of the manual precluded any intention to enter into a contract beyond the at-will contract that allowed her discharge without regard to the ''positive discipline'' process. The court also rejected the plaintiff's promissory estoppel claim since the language of the ''positive discipline'' protocol made it unreasonable for her to rely on all of the steps in that process as a condition precedent to being terminated. The court affirmed the judgment below.

(22) Miller v. Lindsay-Green, Inc., 2005 Ohio App. LEXIS 5696 . The defendant sought the plaintiff to become the manager of his auto dealership. The plaintiff was very successfully engaged in a similar position in another city and declined the offer. The defendant persisted and orally offered a ten-year contract to the plaintiff. The defendant directed the plaintiff to draft a compensation plan. The plaintiff complied with a first draft that included base salary and bonus amounts to be paid under certain conditions, but contained no stated duration of employment. The defendant signed this document. The plaintiff's former employer then offered him a higher position if he would remain, but the plaintiff declined since he had agreed to work for the defendant. The plaintiff began working for the defendant after signing a document captioned ''Acknowledgment of Receipt of Employment Handbook'' which contained various policy statements and a clear statement that it was not a contract, but also contained a statement that the employment was ''at will.'' The plaintiff signed the acknowledgment. Though the plaintiff succeeded in his managerial functions by increasing profits for the business, some 18 months after his employment began, he was discharged. His action against the defendant included a breach of contract and a promissory estoppel claim. The defendant moved for summary judgment which the trial court denied on these claims. The jury found a ten-year employment contract was formed. On appeal, the defendant argued that the plaintiff's claim of a ten-year employment contract was based on parol evidence that preceded the writing containing terms of agreement that the defendant had signed and was, therefore, inadmissible. The court held that the writing was only partially integrated and did not contain the ten-year term. Thus, the parol evidenced did not contradict any term in the writing and it was admissible. While a court must presume that a contract without a durational term is terminable-at-will, the court emphasized that it is only a rebuttable presumption and not a rule of law. The admissible evidence could prove a contract for a ten-year term as found by the jury. The defendant claimed that the handbook terms that the plaintiff had acknowledged bound the plaintiff to an ''at-will'' contract. Having found a contract for a specific term of ten years, the court held that where an employer attempts to convert a contract for a definite term into a contract at-will, he must offer separate consideration. There was no evidence of any separate consideration to modify the ten-year contract. Moreover, the plaintiff had simply acknowledged receipt of the handbook which was not a contract by its very terms. In upholding the plaintiff's promissory estoppel claim, the trial court allowed recovery of expectancy rather than reliance damages. The defendant argued that damages for breach of an at-will contract should be relegated to reliance damages. The court held, however, that since the plaintiff was not an at-will employee, the defendant was obligated to employ the plaintiff for a definite period into the future. Thus, the jury had a sound basis on which to calculate expectancy damages. The court granted the defendant's request for a remittur of contract damages which it concluded were excessive, but affirmed the judgments below on the breach of contract and promissory estoppel claims.

(23) Thompson v. Revonet, Inc., 2005 U.S. Dist. LEXIS 29129 (D. Conn. 2005) . The plaintiff was employed by the defendant pursuant to an unsigned contract at a salary of $150,000 annually. When he began working for the defendant, he received a copy of an employee handbook containing a policy of progressive discipline. The handbook, however, also contained a general disclaimer of contractual liability as well as a disclaimer of any binding commitment to the progressive discipline policy. The plaintiff was discharged without reference to the progressive discipline policy. The plaintiff claimed that in negotiating the contract, the defendant promised to give him the benefit of the progressive discipline policy. While recognizing the binding effect of disclaimers in employee handbooks that immunize an employer from contractual liability, the court held that such handbook disclaimers do not immunize an employer from such liability based on based on alleged promises in the course of negotiations. The court, therefore, denied the defendant's motion to dismiss on this count of the complaint. This case is also noted in § 8.12 of this supplement.

(24) Wagner Enters. v. John Deere Shared Servs., 2005 U.S. Dist. LEXIS 25987 (N. D. Iowa 2005) . The defendant managed the trademark licensing program for Deere & Company. The plaintiff operated Jym Bag and produced wearable items bearing the logo of its licensors such as Deere. The parties executed a licensing agreement in 1999 under which the plaintiff could carry the Deere logo on certain items it would then sell to stores. The contract was renewable on a yearly basis subject to a thirty day notice of termination. The plaintiff was eager to extend the renewal periods beyond one year. In 2003, the parties discussed the plaintiff's desire to which the defendant responded by saying either ''I will tell you that unless you just totally screw up, it won't be cancelled,'' or ''I would tell you that unless you just totally screw up, it's an automatic thing to renew.'' When the defendant subsequently exercised the power of termination under the contract without regard to whether the plaintiff ''screwed up,'' the plaintiff brought this action claiming that the parties had orally modified the contract, converting the termination provision to termination only for cause. While recognizing the enforceability of an oral modification if supported by consideration, the court insisted that the plaintiff must present evidence of the terms of the modification to establish what duties and conditions it established. The court found that the evidence presented for the modification (''unless you just totally screw up'') was insufficiently definite and could not be enforced for that reason alone though it was also unenforceable because was no consideration to support the modification. This case is also discussed in § 7.6 of this supplement.

(25) Foster v. Federal Express Corp., 2006 U.S. Dist. LEXIS 53779 (E. D. Mich. 2006) . When the plaintiff applied for employment with the defendant, he signed an employment agreement which stated, in conspicuous print, ''I agree that my employment and compensation can be terminated with or without cause and without notice or liability whatsoever, at any time, at the option of either the company or myself.'' The agreement also stated that no manger or official of the company including the CEO or other senior officials had the authority to enter into any other kind of agreement with the employee. After he was hired, the plaintiff received an employee handbook which was updated or changed on several occasions. The handbooks contained statements that they did not evidence any contract between the company and the employee and the statements therein were only ''guidelines.'' The handbook referred to a guaranteed fair treatment procedure, but it also referred the employee to the employment agreement signed by the employee when he or she was first hired. The plaintiff was terminated for falsification of time cards. He brought this action claiming that the employee handbook and other documents created a reasonable expectation that he would not be terminated except for just cause. He claimed that he was not a terminable-at-will employee since, at his interview, he was told that he would always have a job at Federal Express as long as he was a good worker. The court considered such an expression as nothing more than one of ''optimistic hope'' rather than the kind of definite promise or commitment the plaintiff would be required to prove. The plaintiff, however, also urged an implied contract theory based on the ''handbook exception'' of termination only for just cause to the terminable-at-will (without cause) presumption. In Michigan, the court explained that this exception requires an analysis of what the employer has promised and whether whatever was promised could instill a legitimate expectation of just-cause employment. The court noted precedent where a promise to treat employees ''fairly'' was viewed as too vague to judicially enforce. Here, the plaintiff failed to point to any specific language in the handbook or policies of the defendant that could raise a legitimate expectation that he could be terminated only for just cause. Even if the plaintiff had succeeded in proving such a promise, however, he was terminated for just cause after counseling in accordance with the fair treatment policy. The plaintiff claimed racial discrimination because a white employee with less seniority had been assigned to a shift change that the plaintiff desired. The court analyzed the facts and found that there was no merit to this claim. The court granted the defendant's motion for summary judgment.

(26) Gasior v. Mass. Gen. Hosp., 446 Mass. 645, 846 N. E. 2d 1133 (2006) . For nineteen years, Richard Gasior worked as a plumber for the defendant under a terminable-at-will contract. In February, 2000, he took an authorized medical leave. In August, a physician approved his return to work, but the defendant refused to allow his return. After exhausting his administrative remedies, he brought this action in June, 2001 claiming discrimination by the defendant. One week prior to scheduled commencement of the trial in 2003, Gasior died of a terminal illness. The issue was whether the discrimination claim survived his death. The court noted that common law contract claims, including those based upon implied contracts, generally survive death. Here, the question was whether a terminable-at-will employment contract contains implied terms such the terms of a statute prohibiting invidious discrimination. The court stated that it had no difficulty in holding that a terminable-at-will relationship contains implied terms and such a relationship is a ''form of contract'' for an indefinite duration. Gasior's claim under the relevant statute which included the possible recovery of punitive damages survived his death.

(27) Youngblood v. Vistronix, Inc., 2006 U.S. Dist. LEXIS 51460 (D. D.C. 2006) . The discharged plaintiff claimed not to be a terminable-at-will employee even though he signed a pre-employment release affirming that any offered employment would be terminable-at-will and he testified that he understood that he was an at-will employee. The plaintiff's allegation that an employee handbook implied something beyond a terminable-at-will contract was contradicted by express statements in the handbook that the ''guidelines do no constitute a contract or promise,'' and ''any individual can be terminated at any time, with or without cause and with or without notice.'' The court wondered if the plaintiff intended to argue that the provisions on employee discipline in the handbook conflicted with the disclaimer an intent to enter into a contract is such a fashion as to create an ambiguity. The court found no incongruity and emphasized the permissive nature of the actual disciplinary provisions such as, ''employee may be notified'' and the employer may take disciplinary steps, as contrasted with language requiring certain action using a term such as ''shall.''

Supplement to Notes in Main Volume

6. Iowa- Harvey v. Care Initiatives, Inc., 634 N.W.2d 681 (Iowa 2001) . Where the defendant discharged the plaintiff independent contractor a few months after her employment began, the plaintiff alleged that she was terminated because she had filed a complaint about the defendant with the department of inspection and appeals. She claimed the same public policy protection against retaliatory discharge that would be afforded to an employee under a terminable-at-will contract. Holding that the public policy protection against retaliatory discharge does not apply to independent contractors, the court recognized that a terminable-at-will employee requires protection because of the inequity of the employee's bargaining position, but an independent contractor does not require the same protection since existing principles of contract law provide independent contractors with remedies not available to employees. ''An independent contractor can not only negotiate the circumstances governing the termination of a contract, but has contract remedies to enforce all expressed or implied terms of a contract. This diminishes the need for court-based remedies.'' 634 N.W.2d at 684 .

13. In Hampton Tree Farms, Inc. v. Jewett, 125 Or. App. 178, 865 P.2d 420 (1993) , the sole supplier of logs to a financially distressed milling company agreed, for an unspecified time period, to supply logs in exchange for an increase in his percentage of the miller's receivables and additional security. The court held that summary judgment for the supplier on grounds of indefiniteness was inappropriate because a jury could find that the parties intended to continue the supply agreement until the miller ''had cleared away its indebtedness and the mill had become profitable.'' On the other hand, the evidence did not provide a sufficient basis on which the supplier's liability could be fixed in respect of a separate alleged agreement under which the supplier promised to arrange to sell one of the miller's mills ''on the best possible terms.''

20. Alas.- Reust v. Alaska Petroleum Contrs., Inc., 2005 Alas. LEXIS 147 raises the interesting question of whether an employment agreement terminable-at-will is a contract if the employee never commences performance. The defendant offered the plaintiff employment as a project manager and provided an employment packet for him to complete. The plaintiff returned the completed packet the following day and the defendant instructed him to report to the field the next morning to assume his duties. That evening, however, the defendant informed the plaintiff that he was ''let go'' because he had testified adversely to the defendant in litigation several years earlier. The plaintiff brought this action for wrongful termination. The trial jury found that the plaintiff had been hired by the defendant and had been unlawfully terminated since he had been discharged for reasons against public policy (see the main volume text at note 36 et. seq.). On appeal, the defendant claimed that the trial judge failed to instruct the jury properly on contract formation. The defendant argued that, since the plaintiff did not commence work, he supplied no consideration for the defendant's promise under this terminable-at-will contract. The instant court viewed the defendant's argument as characterizing terminable-at-will contracts exclusively as unilateral contracts where the offer of employment could only be accepted by performance. The court concluded that the parties had made a bilateral contract through their exchange of promises manifesting consideration and the jury instruction was correct. The defendant conceded that, under its argument, a wrongfully terminated employee fired one minute after commencing performance for reasons against public policy would have a claim, while the same employee fired one minute before performance was to commence would have no claim. The court found no value in this distinction. The court held that, while the defendant was free to withdraw its at-will employment offer for a legitimate reason, the defendant could not rely on the plaintiff's failure to perform as a shield against liability when the non-performance was caused by the defendant's own illegal conduct.

The question whether an employment agreement terminable-at-will constitutes a contract has arisen in other contexts. For example, in Spriggs v. Diamond Auto Glass, 165 F. 3d 1015 (4th Cir. 1999) , the issue was whether a terminable-at-will employment agreement constituted a contract to qualify for inclusion under 42 U. S. C. § 1981 that guarantees to all persons the same right to make and enforce contracts as is enjoyed by white citizens. Whether a contract had been made was determinable as a matter of state law. The court stated that the lack of an agreed-upon duration does not invalidate the underlying contract and, under Maryland law, terminable-at-will employment agreements are contracts. While the court arrived at that conclusion in the principal case, its suggestion that the defendant was free to withdraw its ''at-will employment offer'' for a legitimate reason suggests a confused analysis. The offer of employment had been accepted forming a contract which included mutual powers of termination since the contract was at-will. A more precise analysis suggests that an executory at-will employment contract created by an exchange of promises may be terminated by either party at any time, even before performance begins, for a reason that does not offend public policy.

Conn.- Goldstein v. Unilever, 2004 Conn. Super. LEXIS 1126 (Conn. Super. Ct. May 3, 2004) . When the plaintiff received a written offer of employment from the defendant, the plaintiff ended her previous employment. When she reported for her first day of work, the plaintiff was informed that the defendant was rescinding its offer on the ground that the plaintiff was not qualified to perform the work. Since the offer was for an indefinite term, the trial court found and the appellate court agreed that it was an offer of employment terminable-at-will. Inter alia, the plaintiff claimed that the defendant's breach of promise was actionable under the doctrine of promissory estoppel. The court recognized the probability that a majority of jurisdictions would conclude that a cause of action does not exist where a prospective at-will employee is terminated before commencing work. Similarly, reliance on a promise of at-will employment is typically viewed as unreasonable as a matter of law since such a promise creates no enforceable right. Since such an employee terminated shortly after commencing work has no cause of action, to recognize a cause of action in an employee who never commences work would place such an employee in a better position than the employee who actually worked.

The instant court, however, was more persuaded by other courts that have recognized promissory estoppel where the employee is terminated before beginning to work. Promissory estoppel cannot assist an employee who is terminated at will after commencing work since that would undermine the terminable-at-will doctrine. The instant court, however, focused on the damages sustained by an employee because of the employer's broken promise to hire her. Where a terminable-at-will employee commences work and is then terminated, the employer has not broken any promise. Where promised employment to such a worker is denied, however, the employer has broken a promise. The court focused on an illustration in the Restatement (Second) of Contracts, § 90, involving a breached promise to provide a franchise to a dealer in radios. Based upon a famous opinion from the District of Columbia, Goodman v. Dicker, 169 F.2d 684 (D.C. Cir. 1948) (discussed in the main text in § 8.12, beginning at note 159), the spurned potential franchisee recovered damages based on the costs of preparing the franchise to sell the radios. While the dealer-franchise, terminable-at-will, could not be fully enforced, the franchisee was entitled to recover reliance damages. The court concluded that the plaintiff was entitled to be made whole for whatever damages she could prove she sustained in reliance on the employer's promise. Thus, the doctrine of promissory estoppel was ''not inapplicable'' simply because the plaintiff's contract was for employment at will.

Md.- Shapiro v. Massengill, 105 Md. App. 743, 661 A.2d 202 (1995) . An employment contract which anticipated the ''term of employment to go for at least one year'' if ''both [parties] continue working'' as expected did not create a fixed term of employment.

21. Colo.- Dorman v. Petrol Aspen, Inc., 914 P.2d 909 (Colo. 1996) (en banc). A letter from an employer to a person employed as the general manager of a gas station did not identify a term of employment, but contained provisions relating to stock options, a schedule of salaries applicable to various time periods during which the employee might be working, and references to the employee's ''long-term status'' as an employee of the employer. These provisions were sufficiently ambiguous to permit the employee to introduce extrinsic evidence concerning whether they expressed an intention to create an employment contract rather than employment at will. A dissenting judge viewed the letter as unambiguously contemplating and creating an employment at will.

Mont.- Basta v. Crago, Inc., 280 Mont. 408, 930 P.2d 78 (1996) (memorandum referring to so much for the first year and so much for the second year did not create contract for a specified term).

N.Y.- Gabriel v. Therapists Unlimited, L.P., 218 A.D.2d 614, 631 N.Y.S.2d 34 (1st Dep't 1995) . A Master of Arts degree holder sued a placement service for therapists for breach of a written offer of employment. A written offer from the defendant was made to the plaintiff in the form of a memorandum on its business letterhead, entitled ''Employment Offer,'' detailing the position, hours, salary, and benefits and lacking the slightest indication that the defendant was acting as an employment agency for a third party. The court held that a reference to a ''Clinical Fellowship Year'' permitted the introduction of parol evidence to define the program's minimum term at nine months, in satisfaction of the State license requirements. The court went so far as to decline to follow the Fourth Department's ruling in Matter of Tyson v. Hess, 109 A.D.2d 1068, 487 N.Y.S.2d 206 (4th Dep't 1985) , aff'd, 66 N.Y.2d 943, 498 N.Y.S.2d 778, 489 N.E.2d 747 , in which the term of employment ''for the 1983-1984 academic year'' was held as too vague for enforcement.

Conversely, the dissent urged that the plaintiff was aware of the defendant's status as a referral agency, unconnected to the entities with which the plaintiff would have had to interview and be accepted as an employee. Moreover, the dissent states that the alleged contract's reference to a ''Clinical Fellowship Year'' or a fixed annual salary of $43,600 does not set forth a fixed duration resulting in employment at will, but rather refers to the position or requirement which the plaintiff needs to fulfill prior to being awarded a license.

22. Haw.- Calleon v. Miyagi, 76 Haw. 310, 876 P.2d 1278 (1994) . The Supreme Court of Hawaii declined to adopt the holding and the reasoning of Pugh v. See's Candies, Inc., 116 Cal. App. 3d 311, 115 L.R.R.M. 4002 (1981) , in which a division of the California court of appeals recognized the possibility of an implied employment contract under which an employer could discharge an employee only for good cause. In Kinoshita v. Canadian Pacific Airlines, 68 Haw. 594, 724 P.2d 110 (1986) , Hawaii had refused to follow a minority of jurisdictions in implying a good faith requirement into every employment relationship.

N.M.- Bourgeous v. Horizon Healthcare Corp., 117 N.M. 434, 872 P.2d 852 (1994) (New Mexico recognizes a cause of action for breach of the implied covenant of good faith and fair dealing for all but at-will employment contracts; tort remedies are not available for breach of the implied covenant in an employment contract).

25. Kan.- Dickens v. Snodgrass, Dunlap & Co., 255 Kan. 164, 872 P.2d 252 (1994) (continued employment of an at-will employee with pay increases does not create an implied contract of continuing employment over and above written contract).

Minn.- Ruud v. Great Plains Supply, Inc., 526 N.W.2d 369 (Minn. 1995) . An owner and his vice president told an at-will employee that ''Good employees are taken care of'' and ''You are considered a good employee'' in response to questions about what would happen to him if a proposed transfer did not work out. Held: the statements were not sufficiently definite to create an offer of permanent employment. The owner and vice president did not intend to offer permanent employment, but were rather making policy statements about the goodwill of the company toward its employees. Also, the statements were vague, leaving the nature of the modification indeterminate.

N.D.- Aaland v. Lake Region Grain Cooperative, 511 N.W.2d 244 (N.D. 1994) (board resolution permitting employee to remain at his job ''until a replacement has been found and he finds another position'' construed not as promise for permanent employment but as expression of intention to employ employee ''for a reasonable time to allow him to look for a job'').

26. In Boothby v. Texon, Inc., 414 Mass. 468, 608 N.E.2d 1028 (1993) , the Supreme Judicial Court of Massachusetts applied its 1897 holding in Carnig v. Carr to a situation in which an employee was recruited away from a job he had held for 30 years and given numerous assurances that his new job would be for ''permanent employment.'' The court stated that what the parties mean when using the term ''permanent employment'' depends on the specific circumstances. It distinguished between permanent in the sense of ''not temporary'' and permanent in the sense of ''lifetime.'' The court concluded that the jury's finding that the employee had been offered an express contract for permanent employment in the lifetime sense was supported by the evidence, which included fact that employee increased his tax burden to take the job, relocated his family to Massachusetts from Thailand and repeatedly communicated his concerns about job security to the employer's agents, who in turn expressed them to the employer's board of directors.

Wyo.- Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211 (Wyo. 1994) (''a claim by an employee that the employer promised 'permanent' employment does not alter the at will presumption without additional consideration supplied by the employee or explicit language in the contract of employment stating that termination may only be for cause'').

29. D.C. & Va.- Choate v. TRW, Inc., 14 F.3d 74 (D.C. Cir. 1994) (applying principles of at-will employment applicable under Virginia and District of Columbia law) (employee must present evidence of a ''clearly expressed'' contractual intent to overcome presumption of at-will employment and letter reciting understanding that employment would be on a ''long term basis'' is insufficient, being clearly consistent with the underlying principle of at-will employment).

Mich.- Barber v. SMH (US), Inc., 202 Mich. App. 366, 509 N.W.2d 791 (1993) (sales representative did not rebut presumption of employment at will in asserting that he was promised employment ''as long as he was profitable and doing the job'' because he did not ''assert that the promise was made in response to his articulated concerns that he be terminated for just cause only'' and because court was ''unable to determine the substance of the negotiations or the context in which the alleged promise was made'').

U.S.- Dugan v. Bell Telephone of Pennsylvania, 876 F. Supp. 713 (W.D. Pa. 1994) (applying Pennsylvania law). Employer's promise not to retaliate against employees, as well as policy against retaliatory discharge, held not to result in implied-in-fact contract.

33. See Niesent v. Homestake Mining Co., 505 N.W.2d 781 (S.D. 1993) (''this court now joins the majority of jurisdictions in holding that the public policy exception to the at-will doctrine includes a cause of action for wrongful discharge if dismissal is in retaliation for filing a worker's compensation claim; a concurring judge canvassed state law on this subject throughout the United States, noting the widespread legislative expression of public policy on which the majority opinion rested'').

34. The scope of the covenant of good faith and fair dealing in the context of employment at will was held to be quite narrow in E.I. DuPont de Nemours & Co. v. Pressman, 679 A.2d 436 (Del. 1996) (termination in response to an employee's questioning the propriety of the business practices of his supervisors did not constitute violation of the covenant of good faith in the context of an at-will employment relationship). It has also been rejected outright as a basis for limiting the right of employers to terminate at-will employees. Brehany v. Nordstrom, Inc., 812 P.2d 49 (Utah 1991) .

In O'Tool v. Genmar Holdings, Inc., 387 F.3d 1188 (10[th] Cir. 2004) , the court recognized that many courts do not imply the covenant of good faith in a terminable-at-will employment contract. While Delaware does imply it in such contracts, it does so narrowly requiring an allegation and proof of fraud, deceit or misrepresentation.

This case is fully discussed at supplement Section 32.2A.

36. Ark.- City of Green Forest v. Morse, 316 Ark. 540, 873 S.W.2d 155 (1994) (police officer who drove police car at high speeds in contravention of departmental policy and endangered lives of other in order to immediately arrest a misdemeanant was not discharged for complying with a statutory duty or in violation of a substantial and well-established public policy).

Okla.- Gilmore v. Enogex, Inc., 878 P.2d 360 (Okla. 1994) (not against public policy to dismiss an at-will employee for refusing to submit to a random drug test).

Utah- Fox v. MCI Communications Corp., 931 P.2d 857 (Utah 1997) (answering ''No'' to the following certified question from a federal district court: ''Does the termination of a private sector employee in retaliation for the good faith reporting to company management of the alleged violation by one or more co-workers [of state law prohibiting fraud or embezzlement, including computer-assisted fraud] implicate a 'clear and substantial public policy' of the State of Utah'').

Wis.- Reilly v. Waukesha County, 193 Wis. 2d 527, 535 N.W.2d 51 (Wis. App. 1995) . An at-will employee was fired from a county child-care facility for ''insubordination,'' when she refused to follow her employer's unlawful order. She was instructed to violate a regulation of the Wis. Adm. Code which prohibits staff from watching juveniles in both secured and non-secure living units at the same time. The employee asked for written confirmation of the direction and a ''statement indemnifying her from any liability created by the County's violation of the State mandated staffing requirements.'' The employer refused this request. The employee alleged that this discharge was in violation of public policy. The circuit court granted defendant's motion for summary judgement. On appeal, the court held that this case did not fall into the public policy exception because the employee's refusal jeopardized significant lawful interests of either the employer or the public. It is easy to agree with the dissent, who argued that the employee should be entitled to submit to a jury the factual question of whether the rule she refused to violate was ''a fundamental and well defined public policy, she must merely prove that the discharge violated that policy.''

Larson v. City of Tomah, 193 Wis. 2d 225, 532 N.W.2d 726 (1995) . A police officer cannot state a cause of action for wrongful discipline by invoking the public policy exception to the employment at-will doctrine where the legislature had already created a statutory mechanism to handle wrongful disciplining of officers. The court noted that police officers may only be discharged for cause under that statute and are not employees at-will so the exception is simply not relevant.

40. Some courts have strained to fit employment manuals within the traditional mold of an offer by stretching the factual context in which the employee asserted his claim. In Burnside v. Simpson Paper Co., 123 Wash. 2d 93, 864 P.2d 937 (1994) , for example, the court held that an employment manual entitled the ''Management Guide to Simpson Paper Company'' could apply to a non-manager, the court reaching this conclusion by emphasizing that whether an employment policy manual issued by an employer contains a promise, whether an employee's reliance thereon was reasonable and whether a promise was breached are all questions of fact.

The court also stated that the manual ''at least arguably ... was binding on [the employee's] superiors in the company, thus binding the company in its dealing with him.'' Together with language in the manual that ''suggest[ed] termination will be for cause only, and will occur after warning,'' this led the majority to conclude that reasonable minds could differ as to whether there was a promise and whether it was made to the employee. A judge concurring on other grounds would have rejected this contract claim because, among other reasons, the manual was distributed only to management and not to employees generally.

In Ingels v. Thiokol Corp., 42 F.3d 616 (10th Cir. 1994) (applying Colorado law), Ingels, a former employee of Thiokol Corporation (''Thiokol''), claimed that two documents, an affirmative action policy and ''Exempt Employees Work Force Reduction Policy,'' created implied contracts that altered his otherwise at-will employment. These documents stated that in the event of a ''permanent reduction in the exempt work force,'' Thiokol would retain employees, such as Ingels, who had seniority, experience, and skill. Furthermore, such senior employees would receive advance notice of their termination, opportunities to transfer, and consideration for rehiring. When Thiokol terminated his employment, Ingels alleged that Thiokol breached this implied contract.

Citing an employee handbook provision that disclaimed the creation of any contract by anything in it or ''any other personnel materials which may be issued from time to time,'' the court concluded that these documents did ''not create an enforceable contract.'' Regrettably, in issuing summary judgement in favor of Thiokol, the court never considered whether or not these documents superseded the employee handbook so that Thiokol could not rely on its previous disclaimer.

In a case similar to Ingels, Frymire v. Ampex Corp., 61 F.3d 757 (10th Cir. 1995) , policies that were disclosed in a supervisor's manual were held to constitute a binding contract on the employer. Here, the employer had sent to the employees a memorandum stating the termination as exactly put forth in the manual. As proof of the acceptance of the policy, the court found that their continued employment could reasonably have been motivated by the offer.

41. Ark.- Sexton Law Firm, P.A. v. Milligan, 329 Ark. 285, 948 S.W.2d 388 (1997) (attorney hired as independent contractor received handbook containing language held sufficiently clear to constitute an offer and attorney's continued performance constituted acceptance and furnished consideration even though he was free to leave).

Del.- Crisco v. Board of Ed. of the Indian River School Dist., 1988 Del. Ch. LEXIS 120, *10-12 (Del. Ch. Aug. 29, 1988) (cited in Hitchens v. Yonker, 943 F. Supp. 408 (D. Del. 1996) as providing that an ''employee handbook can create contractual rights if: (1) the language is specific enough to constitute an offer, (2) the offer was communicated to the employee by issuance of the handbook or otherwise, and (3) the employee accepted the offer by retaining employment after he has become generally aware of the offer'').

Iowa- Anderson v. Douglas & Lomason Co., 540 N.W.2d 277 (Iowa 1995) ; Phipps v. IASD Health Services Corp., 558 N.W.2d 198 (Iowa 1997) (treating employee handbooks as creating unilateral contracts if ''(1) the handbook is sufficiently definite in its terms to create an offer, (2) the handbook is communicated to and accepted by the employee as to constitute an acceptance; and (3) the employee provides consideration'').

Ill.- Vajda v. Arthur Andersen & Co., 253 Ill. App. 3d 345, 191 Ill. Dec. 965, 624 N.E.2d 1343 (1993) (genuine issues of material fact existed with respect to existence of employment contract based on various alleged oral promises and statements in employee handbook such as employment was ''for a time of indefinite duration,'' ''no one would be discharged except for just cause,'' and matters of employment are decided ''on the basis of qualifications and merit alone'').

N.D.- Pratt v. Heartview Foundation, 512 N.W.2d 675 (N.D. 1994) (the language ''is authorized ... to implement a reduction in force policy'' is not sufficiently specific or definite to create a contractual obligation requiring defendant to implement a policy before it may terminate employees based on a reduction in force).

N.J.-In Tripodi v. Johnson & Johnson, 877 F. Supp. 233 (D.N.J. 1995) , a former employee brought a wrongful discharge action against his former employer alleging that an employment manual created an enforceable promise not to terminate plaintiff's employment under certain circumstances. Under New Jersey law, an employment manual, distributed to and relied on by employees, may contractually bind an employer to its terms, if when fairly read, it provides that certain benefits are an incident of the employment. The plaintiff relied on the following provisions of the manual: (1) employees ''must have a sense of security'' in their jobs; (2) ''employees must feel free to make suggestions and complaints;'' and (3) ''we must provide competent management, and their actions must be just and ethical.'' The court held the statements to be too general and thus did not create a contractual obligation.

See also Jackson v. Georgia-Pacific Corp., 296 N.J. Super. 1, 685 A.2d 1329 (1996) (applying the approach set forth in Woolley (n.41 in this section of the main volume) that considers the reasonable expectations of the employee as well as the manual's express provisions and the context of its preparation and distribution and holding that manual did not create implied contract where absolutely nothing in the manual would lead an employee reasonably to believe that he was not an at-will employee and especially where manual contained disclaimer provision).

Tenn.- Shelby v. Delta Air Lines, Inc., 842 F. Supp. 999 (M.D. Tenn. 1993) . Two employer documents were at issue in Shelby, an employee handbook reciting that the employer may terminate the employment relationship with any individual at any time and for any reason and a memorandum describing an anti-drug-use program and announcing a 90-day amnesty period during which employees with drug problems could volunteer for professional assistance with the understanding that they would be returned to the job following treatment. Holding that the memorandum became part of the employment contract, the court also held that because a reasonable person could not construe the memorandum as creating any fixed term of employment, the at-will employment doctrine applied.

W. Va.-In Tobin v. Ravenswood Aluminum Corp., 838 F. Supp. 262 (S.D. W. Va. 1993) , the court stated that any promises ''alleged to alter the presumption of at will employment 'must be very definite to be enforceable' '' and that claims of ''permanent employment or other substantial employment right[s]'' must be established by ''clear and convincing'' evidence. Applying these standards, the court concluded there were genuine issues of material fact regarding ''explicit promises of job security'' to employees hired as replacements for striking union workers. The promises included statements such as ''the company did not intend to agree with [the union] that replacements would lose their jobs, and that replacements would only be terminated if they quit, retired, or were fired for cause for violating company rules'' and communications stating, for example, that the company was ''firmly committed to,'' would ''stand by'' and ''be loyal'' to these ''permanent replacement workers.''

S.C.- Fleming v. Borden, Inc., 316 S.C. 452, 450 S.E.2d 589 (1994) (implied contract of employment created by an employee handbook is a unilateral contract that may be modified by a subsequent employee handbook; to be effective the employee must have reasonable notice of the modification).

42. Scott v. Pacific Gas & Electric Co., 11 Cal. 4th 454, 46 Cal. Rptr. 2d 427, 904 P.2d 834 (1995) (employee handbook provided basis for an implied agreement of employer not to demote employee except for good cause). Cf. Niesent v. Homestake Mining Co., 505 N.W.2d 781 (S.D. 1993) (while a ''for cause only'' agreement will be implied ''where an employment handbook or policy contains a detailed list of exclusive grounds for discipline or discharge and a mandatory and specific procedure which the employer agrees to follow prior to an employee's termination,'' terms of a collective bargaining agreement expressing at will employment control over such other terms and employment is at will).

U.S.- Sharpe v. American Tel. & Tel. Co., 66 F.3d 1045 (9th Cir. 1995) (applying Washington law). A disclaimer on the first page of an employee handbook stating that it ''is not a contract of employment, and it should not be interpreted to create any expressed or implied contractual rights'' effectively disclaimed all guarantees in the handbook as to how the employer would accommodate the employee.

Kay v. First Continental Trading, Inc., 966 F. Supp. 750 (N.D. Ill. 1997) (applying Illinois law) (refusing to negate employment-at-will basis of relationship, court notes that ''the company's employment handbook-as all such handbooks from informed employers tend to do these days-expressly disclaimed any contractual undertaking of employment'').

Ill.- Boll v. Hyatt Corp., 243 Ill. App. 3d 1005, 184 Ill. Dec. 870, 614 N.E.2d 71 (1993) (''disclaimer included in the manual forecloses any reasonable belief of contract formation'').

Ind.- Orr v. Westminster Village North, Inc., 689 N.E.2d 712 (Ind. 1997) (emphasizing that Indiana law still requires ''adequate independent consideration'' in order for an employee handbook to constitute a valid unilateral contract, the court notes that the handbook in this case would still fail to create such a contract even if consideration had been furnished on the grounds that (a) it contained no clear promise and (b) it contained a disclaimer stating that the manual is not a contract and that its terms can be changed at any time (applying the approach in Duldulao (n.41 in this section of the main volume)).

In McCalment v. Eli Lilly & Co., 860 N. E. 2d 884 (Ct. App. Ind. 2007) , both parties to the litigation pointed to Orr v. Westminster Village North, Inc. in support of their respective positions. The trial court held that the Orr case precluded employee handbooks from constituting unilateral contracts of employment. On appeal in the instant case, the employee claimed that although the Supreme Court of Indiana in the Orr opinion failed to adopt a new exception to the at-will doctrine, it did not foreclose that possibility and its reliance on Duldulao opinion was a harbinger of continued development of the at-will doctrine in Indiana. The court quoted extensively from the Orr opinion's discussion of Duldulao which found no clear promise to the employee as well as a disclaimer stating that the handbook was not a contract. The instant appellant argued that he Lilly handbook devoted 40 pages to how Lilly will treat its employees fairly and on merit while devoting only two paragraphs on one page to say that the handbook is not a contract. The court held that, considering the reaffirmation of the at-will doctrine in Orr and its further recognition of the importance of a disclaimer, ''we cannot say that the remaining portions of the handbook contained a promise clear enough that an employee would reasonably believe than an offer of other than at-will employment had been made.'' The court also found that there was an oral contract between Lilly and the plaintiff since the plaintiff promised nothing in return for the alleged promises made by Lilly. The plaintiff had also claimed that Lilly's promises had induced him to rely to his detriment by forbearing to pursue the Lilly grievance process over two disciplinary actions. The court concluded that, even if the plaintiff had grieved these actions, the plaintiff did not allege that these disciplinary actions would have been reversed. Moreover, as an at-will employee, the plaintiff could have been fired for any reason. Thus, the plaintiff failed to show the necessary elements to enforce any alleged promise by Lilly on the basis of promissory estoppel.

Mich.- Rood v. General Dynamics Corp., 444 Mich. 107, 507 N.W.2d 591 (1993) (''where an employer establishes a policy of discharge for cause, it may become part of an employment contract only when the circumstances (e.g., the language in the handbook itself, or an employer's oral statements or conduct) clearly and unambiguously indicate that the parties so intended'').

In Howart v. Byron Area School Dist., 2007 U. S. Dist. LEXIS 28795 (E.D. Mich. 2007) , the court cited the Rood case in holding that express agreements concerning job security must be clear and unequivocal to overcome the presumption of employment at will. The test is whether any ''promise'' (as defined in § 2 of the Restatement (Second) of Contracts) has been made to the employee and, if made, whether it was reasonably capable of instilling a legitimate expectation of ''just cause'' employment. While there were statements to the effect that the employer pursued a progressive disciplinary policy involving warnings and suspension before termination, the employee handbook did not discuss discipline at all. Discipline remained as a matter of the employer's discretion. The court granted the employer's motion for summary judgment.

Neb.- Hillie v. Mutual of Omaha Insurance Co., 245 Neb. 219, 512 N.W.2d 358 (1994) .

N.J.- Jackson v. Georgia-Pacific Corp., 296 N.J. Super. 1, 685 A.2d 1329 (1996) (applying the approach set forth in Woolley (n.41 in this section of the main volume) and finding no contract in part because of disclaimer).

N.M.- Hartbarger v. Frank Paxton Co., 115 N.M. 665, 857 P.2d 776 (1993) (numerous oral and written statements did not constitute promise that employee was anything other than at-will).

N.D.- Olson v. Souris River Telecommunications Coop., Inc., 558 N.W.2d 333 (N.D. 1997) (handbook statement that ''This written policy statement is not a contract'' demonstrates employer's intention not to create a contract and the employment remains at-will).

Vt.- Farnum v. Brattleboro Retreat, Inc., 164 Vt. 488, 671 A.2d 1249 (1995) (''mere inclusion of boilerplate language providing that the employee relationship is at will cannot negate any implied contract and procedural protections created by an employee handbook;'' successive handbooks sent sufficiently ''mixed messages'' that whether they created an implied contract was question for jury).

Wyo.- Trabing v. Kinko's, Inc., 57 P.3d 1248 (Wyo. 2002) . Two days before she began her employment with the defendant, Kathleen Trabing received the defendant's employee handbook, which implied she could not be terminated except for cause. On the day her employment began, however, she signed an employment agreement stating that her status was terminable at will. Trabing argued that the terms of the handbook prevailed. The court held that the employment documents were provided to Trabing during the same time frame making them, in essence, a part of one transaction. While the handbook lacked a conspicuous clause disclaiming any obligation by the employer to terminate only for cause, the employment agreement signed by Trabing clearly established her terminable-at-will status.

Loghry v. Unicover Corp., 878 P.2d 510 (Wyo. 1994) ; see also related case, Loghry v. Unicover Corp., 927 P.2d 706 (Wyo. 1996) .

43. U.S.- O'Loughlin v. The Pritchard Corp., 972 F. Supp. 1352 (D. Kan. 1997) (applying Kansas law) (express disclaimer not dispositive in light of other evidence including series of letters and surrounding circumstances showing sufficient evidence of intent to be bound to create genuine issues of material fact that preclude summary judgment).

45. Ill.- Vajda v. Arthur Andersen & Co., 253 Ill. App. 3d 345, 191 Ill. Dec. 965, 624 N.E.2d 1343 (1993) (trier of fact could have found sufficient evidence of detrimental reliance to justify liability based on promissory estoppel where employer allegedly promised that employee could not be fired without good cause and not unless a three-warning policy had been followed).

Wash.- Havens v. C & D Plastics, Inc., 124 Wash. 2d 158, 876 P.2d 435 (1994) (en banc). Under Washington law, in order for promissory estoppel to oust the presumption that contracts of employment are terminable at will, the promise must be ''clear and definite.'' The Supreme Court of Washington affirmed a grant of judgment n.o.v. against an employee's promissory estoppel claim. Many of the statements Havens characterized as a promise of permanent employment were typical of those often made in interviews (what it would take to get him to leave his present job to work for C & D). Others were consistent with the one-year contract found by the jury, but do not constitute a clear and definite promise of permanent employment subject only to just cause dismissal (discussion of first year's salary and bonus plus discussion about projected rates of compensation for later years of employment, without indication of the duration).

The president of C & D and its CEO told Havens during negotiations that they were looking forward to a long and prosperous future together. Havens told them that he expected to remain at the company until he retired. The officers' statements were ''consistent with the general expectation present in any such negotiation: the employer was hoping for and expecting a long-term mutually satisfactory relationship.'' 876 P.2d at 444 . Moreover, Havens' own expectations do not amount to a promise by C & D. Finally, the president told Havens that C & D was good to its employees and firing was a last resort. The court found that there was no evidence of any reliance by Havens upon this ''last resort'' statement, and that it was unclear in any case that the statement was intended to apply to him.

46. Towson Univ. v. Conte, 384 Md. 68, 862 A.2d 941 (2004) . The university hired the defendant as director of an institute for a definite term, April 1, 1996 through June 30, 1999. The contract stated that the university could terminate the employment for certain enumerated causes including ''incompetence'' and ''wilful neglect of duty'' which the university relied upon as the bases for terminating the plaintiff's employment in January of 1999. The plaintiff claimed breach of contract resulting in a jury verdict for the plaintiff on the footing that the university had failed to prove just cause for termination by a preponderance of the evidence. A court of Special Appeals affirmed the verdict. On certiorari to this court, the central issue was whether and to what extent a jury may examine or review the factual bases of an employer's decision to terminate an employee. The university argued that a jury's role in disputes involving ''just cause'' employees is not to determine whether just cause in fact existed, but rather whether the employer operated in good faith, and not arbitrarily or capriciously, in deciding to terminate the employee. In effect, the university claimed that the jury should have been relegated to determine the employer's motive or state of mind rather than on the employee's actions and whether they constituted just cause for termination. The instant court recognized that the university's position was based on the strong public policy against interfering with the business judgment of private business entities. The university relied on a clause in the contract that established a procedure for appeal from the employer's decision, a hearing before the president of the university before termination could take effect. While that provision did not expressly state that the president's decision was final, the court found no rational reason for its existence unless it was meant to preserve, to some extent, the fact-finding prerogative for the university. It also, found, however, that the contract was ambiguous in this regard and pursued its analysis by considering who the presumptive fact-finder should be in other employment contexts. While the contract at issue was not terminable-at-will since it was for a specific term and also enumerated causes for termination, absent a contravening public policy, juries may not review an employer's decision to terminate for any reason. Where an employer agrees to retain an employee so long as the services are ''satisfactory,'' the standard applied is the good faith satisfaction of the employer even where the employment is for a definite term. Here, it is not necessary that ground exist deemed adequate by a trier of fact for the employer's honest and good faith dissatisfaction. ''Just cause'' contracts logically suggest that the jury should be empowered the review the employer's decision with greater scrutiny. Notwithstanding the distinction between ''satisfaction'' and ''just cause'' employment contracts, the court held that the jury may not review whether the factual bases for termination actually occurred or whether they were proved by a preponderance of the evidence. Rather, the court held, the proper role of the jury is to review the employers objective motivation, i.e., whether the employer operated in good faith and in accordance with a reasonable employer under the circumstances in deciding whether there was just cause for termination. The jury's inquiry should focus on whether the employer's termination was based upon arbitrary, capricious or illegal reasons, or on facts not reasonably believed to be true by the employer. The court concluded that this ''balanced'' view was in accord with the majority of other jurisdictions.