Kenyon v. Applied Technologies CA2/6 ( 2014 )

Filed 9/2/14 Kenyon v. Applied Technologies CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
MARK KENYON, 2d Civil No. B249735
(Super. Ct. No. CV128052)
Plaintiff and Respondent, (San Luis Obispo County)
v.
APPLIED TECHNOLOGIES
ASSOCIATES, INC.,
Defendant and Appellant.
Applied Technologies Associates, Inc. (ATA) hired Mark Kenyon in 1983,
with no specific agreement about the length of his employment. In 1986, Kenyon
acknowledged receipt of the company's policy and procedure manual (manual). The
manual stated that the employment relationship between ATA and an employee could be
terminated by either party at any time. In 1992, Kenyon received an updated manual and
signed a document which stated, "I understand that employment with the company is not
for a specified term and is at the mutual consent of the employee and the Company.
Accordingly, either the employee or the Company can terminate the employment
relationship 'at will', with or without cause, at any time." Here we are asked to decide if
the conduct of the company over the ensuing decades gave rise to an implied contract that
changed Kenyon's employment status.
ATA appeals from the judgment entered after a jury awarded Kenyon
$500,671 in damages for breach of an implied contract that his employment would not be
terminated without good cause, and breach of the implied covenant of good faith and fair
dealing. ATA contends that, as a matter of law, Kenyon was an at-will employee, that
the trial court erred by denying its motions for nonsuit and judgment notwithstanding the
verdict (JNOV), and the jury's findings are not supported by substantial evidence. We
agree that, as a matter of law, Kenyon was an at-will employee and therefore reverse the
order denying the motion for JNOV and the judgment in favor of Kenyon.
FACTUAL AND PROCEDURAL BACKGROUND
ATA and its affiliate, Scientific Drilling International (SDI), have offices in
California and Texas. Its founder, Don Van Steenwyk, owned ATA along with his wife,
Elizabeth Van Steenwyk. Don Van Steenwyk hired Kenyon in 1983. Kenyon reported to
and worked closely with Don Steenwyk for about 25 years.1
In May 1986, ATA provided Kenyon a manual which included its
termination policy. That policy opened with the following paragraph: "It should be
remembered that employment at [ATA] is at the mutual consent of the employee and
employer. Consequently, either the employee or the employer can terminate the
employment relationship at any time." The termination policy also discussed voluntary
and involuntary terminations, including terminations for cause. Kenyon signed a
document acknowledging he received the manual and understood he was responsible for
becoming familiar with its contents, which described the general personnel policies of
ATA which governed his employment. The document also stated that "[s]ince
information, policies, and benefits described are necessarily subject to change, I
understand and agree that any such changes can be made by [ATA] in its sole and
absolute discretion, and that material changes will be made known to employees through
the usual channels of communication within a reasonable period of time."
1
Unless otherwise indicated, subsequent references to ATA include its
predecessors in interest and its affiliates.
2
In 1992, Kenyon received an updated manual. He signed a document
acknowledging his understanding that an "employee or [ATA] [could] terminate the
employment relationship 'at will', with or without cause, at any time." The updated
manual restated the termination policy in the same language as the 1986 manual,
including the at-will provision.
In mid-2009 Don Van Steenwyk retired. Fred Watson became ATA's
President, and Kenyon reported to him. Don Steenwyk passed away in late 2009.
Elizabeth Van Steenwyk and her family retained ownership of ATA, which continued to
grant Kenyon salary increases, cash awards and bonuses. In 2010, ATA named Kenyon
Vice President of Operations of Stoneway Properties, a new division for vineyards and
other non-oil field operations. He moved his office to Stoneway's winery.
In July 2011, Fred Watson retired, and Kenyon reported to Elizabeth Van
Steenwyk. In September 2011, Elizabeth Van Steenwyk and Kenyon recruited Shari
Gundrum to do bookkeeping for Stoneway. Gundrum began working at the winery on
September 6. Gundrum reported to Elizabeth Van Steenwyk, but Kenyon supervised her
work.
Gundrum had an accounting degree and 15 years' experience in accounting.
Her duties required that she communicate with ATA employees in multiple locations.
Gundrum became increasingly uncomfortable with the way Kenyon "was micro-
managing [her] beyond what [she] felt was normal." Kenyon monitored her, followed
her and sometimes blocked her path.
In early November, Gundrum discussed Kenyon's style with a manager in
Houston. He arranged for Rob McKee, ATA's sole senior vice president in Paso Robles,
to meet with Gundrum. They met on November 7, 2011, and Gundrum discussed
Kenyon's micro-management style. She did not complain of any intimidation because
she feared retaliation from Kenyon.
On November 9, 2011, Kenyon confronted Gundrum angrily several times.
He spoke of her communications with other ATA employees, and his need to stay "in the
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loop at all times." Gundrum described the confrontations as stressful and intimidating.
Gundrum had an asthma attack at home that night, and could not work the following day.
She returned to work on November 11. Kenyon's conduct again upset her. She spoke
with Jessica Kollhoff, the general manager of the winery. Gundrum told her how Kenyon
hovered around her, blocked her path, followed her, and waited for her outside the
women's restroom. Kollhoff notified ATA's human resources personnel.
On Monday, November 14, a human resources representative met with
Gundrum, while Kenyon was away. Later that week, Daniel Carter, Vice President and
General Counsel of ATA and SDI, met with Gundrum. He also gathered information
from other employees, and concluded it was Gundrum's perception that a hostile work
environment existed. Carter recommended that management issue a written warning to
Kenyon. Elizabeth Van Steenwyk, McKee and the human resources manager agreed.
On November 17, 2011, Carter sent Kenyon a text message suggesting they
meet. They exchanged messages and met at a Starbucks coffee shop. Carter gave
Kenyon an employee warning notice which includes the following description of his
"infraction:" "A hostile work environment claim was alleged against [Kenyon]. . . .
Based on conversations with the employee and further inquiry of [McKee, Cook and
Kollhoff], it appears that a hostile work environment may indeed exist, if not in fact at
least by perception." The notice included a "Plan for Improvement" which requested that
Kenyon "refrain from 'hovering' over . . . [and] 'following' employees, and . . . invading
the private space of employees." It also stated that further complaints would be
immediately investigated, and if the complaint were proven accurate, Kenyon would be
disciplined, and "a written warning, suspension, or termination" might result.
Carter's meeting with Kenyon lasted about ten minutes. Before he left,
Kenyon told Carter he had not harassed anyone, and that he would submit a written
response. That night Elizabeth Van Steenwyk sent Kenyon an email. Her email said she
would not be in the office on November 18, she would speak with him on Monday, and
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he should obtain duplicate copies of his office and desk keys for her, and give all blank
company checks in his possession to Gundrum.
On Friday, November 18, 2011, Kenyon called in sick. Later that day,
Carter emailed Kenyon, and said that "effective immediately," he was suspended with
pay for two weeks, for a "cooling off" period, when Carter would "conclude all facets of
[his] investigation." He instructed Kenyon that he must not communicate with winery or
ranch employees or visit the winery or ranch during his suspension.
Carter continued gathering information and documentation from other ATA
employees. On November 30, 2011, Carter submitted a report describing recent and old
complaints about Kenyon's conduct. ATA had not demoted or suspended Kenyon, or
issued him a written warning as a result of any incidents described in the report. Carter
recommended that Kenyon "be terminated immediately" and "offered the opportunity to
resign and provide [ATA] a full release," in exchange for 28 weeks of severance pay. He
further recommended that Kenyon should "be discharged for cause" if he did not resign.
After speaking with Elizabeth Van Steenwyk, management approved Carter's
recommendations and instructed Kenyon to come to its office on December 1, 2011.
Kenyon met with McKee, Carter, and the human resources manager on
December 1, and presented written requests for his payroll, personnel, and human
resource records. He also offered Carter his written response to the harassment claim.
Carter gave Kenyon a termination letter dated December 1, 2011, which was signed by
Carter. The letter stated that "[f]ollowing [his] investigation . . . a pattern of subordinate
abuse emerged;" and Kenyon was released from "all future work responsibilities"
effective December 1. The letter further advised Kenyon he could not visit ATA's winery
or ranch locations, including his office, or have contact with winery or ranch employees.
The letter enclosed a severance agreement and release. Kenyon never signed it.2
2
At the time of his termination, Kenyon's annual salary was $102,816. ATA also
paid him benefits and awards. His 2009 and 2010 cash awards were $17,069.47 and
$3,709.31, respectively.
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After ATA terminated his employment, Kenyon filed a complaint against
ATA. He alleged claims for breach of an implied contract that his employment would
not be terminated without good cause, breach of the implied covenant of good faith and
fair dealing, wrongful termination in violation of public policy, age discrimination, and
intentional infliction of emotional distress.
ATA filed a motion for summary judgment seeking dismissal of Kenyon's
claims. The trial court ruled in its favor as to the non-contract claims. The court rejected
ATA's argument that, as a matter of law, Kenyon was an at-will employee. In doing so,
the court appeared to believe a jury might find there were "oral representations and
conduct or custom" that modified Kenyon's status as an at-will employee. At trial,
Kenyon testified about his employment history. He also testified that ATA terminated
employees only for cause, and its supervisors and managers disciplined employees with
warnings, and suspensions before terminating their employment. There was not,
however, any testimony concerning representations or promises made to Kenyon after he
signed the 1992 agreement and acknowledgement.
At the conclusion of Kenyon's case in chief, ATA moved for a nonsuit on
the ground that, as a matter of law, Kenyon was an at-will employee. The court denied
the motion. The jury returned a special verdict and made the following findings:
(1) Kenyon was an employee of ATA; (2) Kenyon was not "an at-will employee of ATA
such that his employment could be ended, at any time, for any reason, or for no reason at
all;" (3) ATA promised, "by words or conduct, not to discharge . . . Kenyon except for
good cause;" (4) Kenyon substantially performed his job duties; (5) ATA did not "have
good cause to discharge" him, or act in good faith in doing so; (6) Kenyon was harmed
by the discharge; and (7) his total economic loss was $500,671. The court denied ATA's
subsequent motion for JNOV, and awarded Kenyon $4,752.51 in costs.
DISCUSSION
Kenyon was an At-Will Employee
ATA contends that, as a matter of law, Kenyon was an at-will employee
who could be terminated without cause, and that any evidence purporting to show an
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implied contract not to terminate except for cause has no legal significance. We agree.
Kenyon claims that ATA's conduct and representations modified its at-will relationship
with him. The record lacks any evidence that ATA or any of its officers or supervisors
suggested that it had modified that relationship.
An employment having no specified term may be terminated at the will of
either party. (Lab. Code, § 2922; Foley v. Interactive Data Corp. (1988) 47 Cal. 3d 654,
678.) The plaintiff has the burden of rebutting the statutory presumption that his
employment is at will. (Haycock v. Hughes Aircraft Co. (1994) 22 Cal. App. 4th 1473,
1489.) The existence of an implied promise to discharge for cause is generally a question
of fact for the jury. However, if the facts are undisputed and permit only one conclusion,
the issue may be resolved as a matter of law. (Eisenberg v. Alameda Newspapers, Inc.
(1999) 74 Cal. App. 4th 1359, 1386-1387.)
The trial court's denial of ATA's motions for nonsuit and JNOV were
premised on its interpretation of the parties' agreement. The interpretation of an
agreement, and the admissibility of evidence concerning the parties' intent, are questions
of law. (Hayter Trucking, Inc. v. Shell Western E & P, Inc. (1993) 18 Cal. App. 4th 1, 14.)
When reviewing a JNOV which presents solely a question of law we apply a de novo
standard of review. (Trujillo v. North County Transit Dist. (1998) 63 Cal. App. 4th 280,
284.)
The terms of employment are often promulgated in personnel handbooks,
policy manuals, and memoranda disseminated to employees. (Guz v. Bechtel National,
Inc. (2000) 24 Cal. 4th 317, 339 (Guz).) At-will provisions in such documents "do not
bar, or necessarily overcome, other evidence of the employer's contrary intent." (Id. at p.
339.) However, "most cases applying California law . . . have held that an at-will
provision in an express written agreement, signed by the employee, cannot be overcome
by proof of an implied contrary understanding." (Id. at p. 340, fn. 10.) "[A] clear and
unambiguous at-will provision in a written employment contract, signed by the
employee, cannot be overcome by evidence of a prior or contemporaneous implied-in-
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fact contract requiring good cause for termination." (Dore v. Arnold Worldwide, Inc.
(2006) 39 Cal. 4th 384, 389.) "[T]he more clear, prominent, complete, consistent, and all-
encompassing the disclaimer language set forth in handbooks, policy manuals, and
memoranda disseminated to employees, the greater the likelihood that workers could not
form any reasonable contrary understanding." (Guz, at p. 340, fn. 11.)
Kenyan asserts that manuals and his acknowledgements did not constitute
an express at will agreement encompassing grounds for termination. We disagree. "To
be enforceable a written agreement need not be entitled 'contract.' 'A contract is an
agreement to do or not to do a certain thing' (Civ. Code, § 1549), and the elements of a
contract include parties capable of contracting, their mutual consent, a lawful object and
sufficient consideration (id., §§ 1550, 1565)." (Agosta v. Astor (2004) 120 Cal. App. 4th
596, 604-605.) The termination policy, including its at-will provision, was "clear,
prominent, complete, consistent, and all-encompassing." (Guz, supra, 24.Cal.4th at p.
340, fn. 11.) Kenyan's continued employment after he signed the acknowledgement
"constituted [his] acceptance of the . . . employment term" regarding termination.
(Asmus v. Pacific Bell (2000) 23 Cal. 4th 1, 15.)
The trial court concluded it could not rule as a matter of law that Kenyon
was an at-will employee. The court based that conclusion in large part on what it
described as "some ambiguity in the [ATA manual] concerning cause for termination,"
and it stressed that the termination policy itself discussed terminations for cause. We do
not agree that references to terminations for cause in that policy rendered ATA's at-will
provision ambiguous. ATA's termination policy opens with its at-will provision, and
reminds employees that "employment at [ATA] is at the mutual consent of the employee
and employer," and "either the employee or the employer can terminate the employment
relationship at any time." That prominent placement emphasized ATA's right to
terminate employees at will. (Guz, supra, 24 Cal.4th at p. 341.)
In ruling against ATA, the trial court also cited Kenyon's long-term
employment, with salary increases and promotions. Those factors did not limit ATA's
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right to terminate Kenyon without cause. "[A]n employee's mere passage of time in the
employer's service, even where marked with tangible indicia that the employer approves
the employee's work, cannot alone form an implied-in-fact contract that the employee is
no longer at will." (Guz, supra, 24 Cal.4th at pp. 341-342.) "[S]uch events are but
natural consequences of a well-functioning employment relationship, and thus have no
special tendency to prove that the employer's at-will implied agreement, reasonably
understood as such by the employee, has become one that limits the employer's future
termination rights." (Id. at p. 341.) Rather, "[t]he issue is whether the employer's words
or conduct, on which an employee reasonably relied, gave rise to that specific
understanding" (id. at p. 342) that seniority and longevity of employment created rights
against termination at will. Such reliance was not reasonable in Kenyon's case. He
demonstrated his acceptance of the ATA's right to terminate his employment at will by
continuing to work there after acknowledging that ATA could terminate his employment
relationship "with or without cause, at any time." (Asmus v. Pacific Bell, supra, 23
Cal.4th at p. 15.)
At trial, Kenyon testified that ATA followed a practice of terminating
employees only for cause. Even assuming that is true, it merely reflects good employer
practice, not ATA's intent to limit its power to terminate at will. "Otherwise, an employer
would be forced purposely to terminate employees for any and every infraction-or none
at all-in order to maintain the presumption of at-will employment. The law does not
require such caprice to avoid creating an implied in fact contract." (Davis v.
Consolidated Freightways (1994) 29 Cal. App. 4th 354, 366.)
Because the at-will provision allowing ATA to terminate Kenyon's
employment without cause was in effect at the time of his termination, his contract
action, based upon an implied in fact contrary agreement, fails as a matter of law. The
trial court therefore erred by denying ATA's motions for nonsuit and JNOV. Having
reached that conclusion, we need not address ATA's claim that the jury's findings are not
supported by substantial evidence.
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DISPOSITION
The order denying the JNOV and judgment in favor of Kenyon are
reversed, and the trial court is directed to instead enter judgment in favor of ATA. Each
party shall bear its own costs.
NOT TO BE PUBLISHED.
PERREN, J
We concur:
GILBERT, P.J.
YEGAN, J.
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Jac A. Crawford, Judge
Superior Court County of San Luis Obispo
______________________________
Kinman & Curry, Barry Alan Kinman and Marilyn P. Curry, for Plaintiff
and Respondent.
Gordon & Rees, Don Willenburg; Gordon & Rees, Mollie Burks-Thomas
and Marc A. Holmquist, for Defendant and Appellant.
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