Ross v. May Company ( 2007 )

Second Division
November 13, 2007
No. 1-06-0239
GARY ROSS, ) Appeal from the
) Circuit Court
Plaintiff-Appellant, ) of Cook County.
)
)
v. ) No. 04 L 005796
)
MAY COMPANY d/b/a ) Honorable
Marshall Field'S and Company, ) Abishi C. Cunningham
) Judge Presiding.
Defendant-Appellee. )
JUSTICE HALL delivered the opinion of the court:
Plaintiff-employee Gary Ross appeals from the trial court's
order dismissing his third amended complaint pursuant to sections
2-615(a) and 2-619(a)(9) of the Illinois Code of Civil Procedure
(Code) (735 ILCS 5/2-615(a), 2-619(a)(9) (West 2002)). Plaintiff
argues that defendant-employer, May Company, d/b/a Marshall
Field's and Company, breached his employment contract when it
wrongfully terminated him by failing to discharge him in
accordance with terms set forth in defendant's 1968 employee
handbook, which, he maintains, created an implied-in-fact
employment contract between him and defendant. He also argues
that his termination was in violation of certain oral
representations made by an agent of defendants.
The pleadings, affidavit, and other documentary information
presented to the trial court reveal the following facts relevant
to this appeal. Plaintiff was suspended and later terminated
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apparently as a result of drawing pictures depicting a female
coworker in various violent situations.
Plaintiff drew stick figures depicting the coworker being
electrocuted, boiled, guillotined, run over by a train, shot out
of a canon, tied to a rocket, and standing precariously under a
10,000 pound weight. The coworker's son brought the pictures to
the attention of defendant. Defendant suspended plaintiff and
told him to see a psychologist.
Plaintiff alleged that after two visits, the psychologist
found he was not a threatening individual and determined that he
required no treatment other than perhaps treatment for suffering
from depression as a result of the suspension and possible loss
of a job he had held for nearly 40 years. Shortly thereafter,
defendant terminated plaintiff.
Plaintiff claimed he was terminated without cause and was
not afforded an appeal or review of the decision. Plaintiff
sought recovery under a theory of breach of contract based upon
the 1968 employee handbook. Plaintiff also sought recovery under
a theory of promissory estoppel, contending that he reasonably
relied on promissory language contained in the employee handbook
and on certain oral representations made by defendant's agent.
The overriding issue in this appeal is whether, even if the
1968 employee handbook defendant issued to plaintiff gave rise to
an employment contract altering plaintiff's status from an at-
will employee to an employee who could only be terminated through
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the use of progressive discipline as articulated in the handbook,
did disclaimers inserted in revised handbooks modify the
employment contract and convert him to an at-will employee. Our
review convinces us that the disclaimers did not modify
plaintiff's employment contract because he received no
consideration.
Under Illinois law, an employee hired without a fixed term
is presumed to be an at-will employee whose employment may be
terminated for any cause or reason, provided the employer does
not violate clearly mandated public policy. Duldulao v. Saint
Mary of Nazareth Hospital Center, 115 Ill. 2d 482, 489, 505
N.E.2d 314 (1987). Our supreme court crafted an exception to
this rule where " 'an employee handbook or other policy statement
creates enforceable contractual rights if the traditional
requirements for contract formation are present.' " Vickers v.
Abbott Laboratories, 308 Ill. App. 3d 393, 407, 719 N.E.2d 1101
(1999), quoting Duldulao, 115 Ill. 2d at 490.
Three requirements must be met for an employee handbook or
policy statement to form an employee contract. "First, the
language of the policy statement must contain a promise clear
enough that an employee would reasonably believe that an offer
has been made. Second, 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. Third, the
employee must accept the offer by commencing or continuing to
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work after learning of the policy statement." Duldulao, 115 Ill.
2d at 490. When these requirements are met, "then the employee's
continued work constitutes consideration for the promises
contained in the statement, and under traditional principles a
valid contract is formed." Duldulao, 115 Ill. 2d at 490.
In this case, the trial court determined that promissory
language set forth in the 1968 employee handbook defendant issued
to plaintiff along with oral assurances of job security by
defendant's agent created an employment contract between
defendant and plaintiff, altering plaintiff's at-will status and
binding defendant to certain procedures before it could terminate
plaintiff's employment. However, the court went on to dismiss
plaintiff's breach of contract claim pursuant to section 2-
619(a)(9) of the Code, finding that disclaimers contained in
revised employee handbooks issued to plaintiff served to
invalidate his previously existing employment contract. The
trial court also dismissed plaintiff's promissory estoppel claim
pursuant to sections 2-615(a) and 2-619(a)(9) of the Code,
concluding that disclaimer language set forth in revised employee
handbooks issued to plaintiff made it impossible for him to
establish that his reliance on defendant's agent's oral
assurances of job security was reasonable.
Review of the record and relevant case law indicates the
trial court erred in dismissing plaintiff's breach of contract
claim pursuant to section 2-619(a)(9) of the Code. A motion to
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dismiss brought under this section of the Code admits the legal
sufficiency of the claim but asserts an affirmative matter that
defeats the claim or operates to avoid its legal effect. Smith v.
Waukegan Park District, 373 Ill. App. 3d 626, 629, 869 N.E.2d
1093 (2007). Affirmative matter in this context "encompasses any
defense other than a negation of the essential allegations of the
plaintiff's cause of action." Kedzie & 103rd Currency Exchange,
Inc. v. Hodge, 156 Ill. 2d 112, 116, 619 N.E.2d 732 (1993). If a
cause of action is dismissed pursuant to a section 2-619(a)(9)
motion, the question on appeal is whether the "existence of a
genuine issue of material fact should have precluded the
dismissal or, absent such an issue of fact, whether dismissal is
proper as a matter of law." Kedzie & 103rd Currency Exchange,
Inc., 156 Ill. 2d at 116-17. Our standard of review is de novo.
Adams v. American International Group, Inc., 339 Ill. App. 3d
669, 673, 791 N.E.2d 26 (2003).
The affirmative matter defendant raises in this case is
disclaimer language inserted in revised handbooks issued to
plaintiff in 1987 or 1989. Defendant maintains that disclaimers
set forth in employee handbooks issued to plaintiff in the late
1980s unilaterally modified plaintiff's employment contract,
converting him to an at-will employee. Plaintiff counters that
the disclaimers did not modify his employment status because they
were not supported by consideration.
The trial court determined that new benefits defendant
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offered to plaintiff and his coemployees in 1990 constituted
consideration for the unilateral modification of plaintiff's
employment contract. The new benefits consisted of paid personal
days, short, and long-term disability, an insurance reimbursement
plan, and a supplemental retirement savings plan. Plaintiff
accepted the new benefits and enrolled in the new long-term
disability plan and in the enhanced supplemental retirement
savings plan. The trial court found that plaintiff benefitted
from the new employee benefits while there was a detriment to
defendant in that it incurred costs in implementing the new
benefits.
Plaintiff acknowledges that he experienced a benefit by
receiving the enhanced pension and other new benefits. However,
he maintains that the new benefits he received from defendant did
not serve as consideration supporting the unilateral modification
of his employment contract because they were offered to all
eligible employees and there was never any bargained-for exchange
between him and defendant in which he agreed to modify or
terminate his contract rights in exchange for the benefits. We
agree.
"[M]odification of a contract is a change in one or more
respects that introduces new elements into the details of the
contract and cancels others, but leaves the general purpose and
effect undisturbed." Nebel, Inc. v. Mid-City National Bank of
Chicago, 329 Ill. App. 3d 957, 964, 769 N.E.2d 45 (2002). "[N]o
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contract can be modified [or amended] in ex parte fashion by one
of the contracting parties without the knowledge and consent of
the remaining party to the agreement." Schwinder v. Austin Bank
of Chicago, 348 Ill. App. 3d 461, 469, 809 N.E.2d 180 (2004). "A
valid modification must satisfy all criteria essential for a
valid contract, including offer, acceptance, and consideration."
Nebel, Inc., 329 Ill. App. 3d at 964; Doyle v. Holy Cross
Hospital, 186 Ill. 2d 104, 113, 708 N.E.2d 1140 (1999).
The essential element of consideration is a bargained-for
exchange of promises or performances that may consist of a
promise, an act, a forbearance, or the creation, modification, or
destruction of a legal relation. Restatement (Second) of
Contracts §71 (1981); Martin v. Federal Life Insurance Co., 109
Ill. App. 3d 596, 601, 440 N.E.2d 998 (1982). A bargained-for
exchange exists if one party's promise induces the other party's
promise or performance. Boomer v. AT & T Corp., 309 F.3d 404, 416
(7th Cir. 2002) (applying Illinois law).
"A performance or return promise is bargained for if it is
sought by the promisor in exchange for his promise and is given
by the promisee in exchange for that promise." Hartbarger v. SCA
Services, Inc., 200 Ill. App. 3d 1000, 1012, 558 N.E.2d 596
(1990), quoting Restatement (Second) of Contracts §71, at 172
(1981). In the employer-employee context, consideration will be
found when an employer and its employees make a "bargained for
exchange to support [the employees'] *** relinquishment of the
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protections they were entitled to under the existing contract."
Doyle v. Holy Cross Hospital, 289 Ill. App. 3d 75, 80 (1997),
aff'd, 186 Ill. 2d 104, 708 N.E.2d 1140 (1999).
Here, defendant does not contend that it bargained for
plaintiff to modify his employment status and become an at-will
employee. In this case, there was no bargained-for exchange, and
no promises were made where plaintiff agreed to relinquish his
contractual rights in exchange for the new benefits. The
additional benefits, which were offered in 1990, were in no way
related to, bargained for, or referenced to any preexisting
contractual rights; the benefits were offered to all eligible
employees whether or not they possessed contractual rights.
Defendant acted unilaterally, not in a bargained-for
exchange, when it offered the additional benefits to its
employees. No consideration flowed from defendant to plaintiff
to compensate him for relinquishing the protections he enjoyed
under the 1968 employee handbook. Under these circumstances, the
additional benefits defendant offered plaintiff and his
coemployees did not constitute consideration for the unilateral
modification of plaintiff's employment contract. See Robinson v.
Ada S. McKinley Community Services, Inc., 19 F.3d 359 (7th Cir.
1994) (employer's issuance of a revised employee handbook
containing a disclaimer did not have the effect of modifying an
original employment contract in the absence of a bargained-for
exchange).
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"In the typical bargain, the consideration and the promise
bear a reciprocal relation of motive or inducement: the
consideration induces the making of the promise and the promise
induces the furnishing of the consideration." Restatement
(Second) of Contracts §71, Comment b, at 173 (1981). Here, there
was no reciprocal agreement or consideration.
When defendant distributed the 1987/1989 revised handbooks
containing the disclaimers allowing for the unilateral
modification or termination of plaintiff's employment contract,
it did not bargain with him or other pre-1987 employees who had
contractual rights under the old employee handbooks, did not ask
for or obtain their assent, and did not purport to provide any
consideration other than their continued employment. However,
our courts have determined that mere continued employment,
standing alone, does not constitute consideration supporting the
unilateral modification of an existing employment contract.
Doyle, 186 Ill. 2d at 113-14. In sum, the trial court erred in
dismissing plaintiff's breach of contract claim pursuant to
section 2-619(a)(9) of the Code.
Before leaving this issue, we note that defendant has
expressed concern that adopting plaintiff's arguments would lead
to a logistical nightmare for employers where they would be
required to individually bargain with each employee any time they
wished to change policies or give better benefits. Defendant's
concerns are exaggerated.
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Our decision is not novel. It is well settled that a
contract, once made, must be performed according to its terms and
that any modification of those terms must be made by mutual
assent and for consideration. Lindsey v. Rosen, 255 Ill. App. 21,
26 (1929). In addition, we find instructive the approach taken
by another jurisdiction that has considered the issue. See Brodie
v. General Chemical Corp., 934 P.2d 1263, 1268 (Wyo. 1997)
(employer's concern about negotiating employment contracts on an
individual basis not significant enough to risk employees losing
their valuable contract rights if employer were allowed to
unilaterally modify handbook provisions and restore employees to
at-will status without additional consideration to employees).
In regard to plaintiff's promissory estoppel claim, review
of the record and relevant case law indicates the trial court did
not err in dismissing this claim pursuant to sections 2-615(a)
and 2-619(a)(9) of the Code. "A motion to dismiss brought
pursuant to section 2-615(a) of the Code attacks the legal
sufficiency of the complaint based on defects apparent on the
face of the complaint." W.W. Vincent & Co. v. First Colony Life
Insurance Co., 351 Ill. App. 3d 752, 756, 814 N.E.2d 960 (2004).
The question to be decided when ruling on such a motion is
whether the allegations of the complaint, when viewed in the
light most favorable to the plaintiff, are sufficient to state a
cause of action upon which relief can be granted. W.W. Vincent &
Co., 351 Ill. App. 3d at 757. "A cause of action should be
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dismissed pursuant to a section 2-615 motion only if it is
clearly apparent that no set of facts can be proven which will
entitle the plaintiff to recovery." Byung Moo Soh v. Target
Marketing Systems, Inc., 353 Ill. App. 3d 126, 129, 817 N.E.2d
1105 (2004). Again, our standard of review is de novo. Adams,
339 Ill. App. 3d at 673.
Promissory estoppel is "an equitable device invoked to
prevent a person from being injured by a change in position made
in reasonable reliance on another's conduct." Kulins v. Malco, a
Microdot Company, Inc., 121 Ill. App. 3d 520, 527, 459 N.E.2d
1038 (1984). To establish a claim based upon promissory
estoppel, a plaintiff must allege and prove that "(1) defendants
made an unambiguous promise to plaintiff, (2) plaintiff relied on
such promise, (3) plaintiff's reliance was expected and
foreseeable by defendants, and (4) plaintiff relied on the
promise to its detriment." Quake Construction, Inc. v. American
Airlines, Inc., 141 Ill. 2d 281, 310, 565 N.E.2d 990 (1990). A
plaintiff's reliance must be reasonable and justifiable. Quake
Construction, Inc., 141 Ill. 2d at 310.
In his promissory estoppel claim, plaintiff alleged that he
detrimentally relied on a manager's statements that he would
remain employed as long as he wanted to work. The trial court
determined that based upon these allegations, plaintiff had not
sufficiently alleged the elements for promissory estoppel because
he could not establish that he reasonably relied upon the
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statements in foregoing other possible employment opportunities,
where every employee handbook issued to plaintiff since 1990
contained an explicit disclaimer informing employees that the
only person who could alter their employment status was the
senior vice president of human resources. The trial court also
held that plaintiff was unable to satisfy the third element of
promissory estoppel because he could not establish that
defendants would have expected or foreseen that he would rely on
the statements where disclaimers in every handbook plaintiff
received since 1990 contained an explicit disclaimer informing
employees that the only person who could alter their at-will
employment status was the senior vice president of human
resources. The record indicates the trial court did not err on
this issue.
Accordingly, for the reasons set forth above, we affirm that
portion of the circuit court's order dismissing plaintiff's
promissory estoppel claim pursuant to sections 2-615(a) and 2-
619(a)(9) of the Code; we reverse that portion of the circuit
court's order dismissing plaintiff's breach of contract claim
pursuant to section 2-619(a)(9) of the Code, and we remand the
cause for further proceedings consistent with this order.
Affirmed in part and reversed in part; cause remanded.
HOFFMAN, P.J., and SOUTH, J., concur.
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