Tomlinson v. NCR Corporation

This opinion is subject to revision before final
publication in the Pacific Reporter
2014 UT 55
IN THE
S UPREME C OURT OF THE S TATE OF U TAH
MITCH TOMLINSON ,
Appellee,
v.
NCR CORPORATION ,
Appellant.
No. 20130195
Filed November 25, 2014
On Certiorari to the Utah Court of Appeals
Third District, Salt Lake
The Honorable Vernice S. Trease
No. 090905865
Attorneys:
Mitch Tomlinson, appellee pro se
Michael E. Blue, Liesel B. Stevens, Salt Lake City, for appellant
JUSTICE PARRISH authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE NEHRING ,
JUSTICE DURHAM , and JUSTICE LEE joined.
JUSTICE PARRISH , opinion of the Court:
INTRODUCTION
¶1 Following his termination from NCR Corporation, Appellee
Mitch Tomlinson brought suit challenging his termination on a
variety of grounds. The district court dismissed most of Mr.
Tomlinson’s claims pursuant to rule 12(b)(6) of the Utah Rules of
Civil Procedure. Two of Mr. Tomlinson’s claims survived NCR’s
motion to dismiss: (1) wrongful termination in breach of an
employment contract and (2) breach of the implied covenant of good
faith and fair dealing. The district court subsequently granted
NCR’s motion for summary judgment on both claims, reasoning that
Mr. Tomlinson had failed to present any evidence of an employment
contract between the parties sufficient to overcome the presumption
of at-will employment under Utah law.
TOMLINSON v. NCR CORP.
Opinion of the Court
¶2 Mr. Tomlinson timely appealed. The court of appeals
affirmed the rule 12(b)(6) dismissal but reversed the district court’s
grant of summary judgment. NCR filed a petition for writ of
certiorari, which we granted. On certiorari, we examine “[w]hether
the court of appeals erred in holding that NCR’s Corporate
Management Policy Manual could be read to create an implied
contract rebutting the presumption that Mr. Tomlinson was an at-
will employee and also permitting a claim for breach of the covenant
of good faith and fair dealing.”
¶3 We reverse the court of appeals because the language
contained in NCR’s policy manual does not evidence an intent to
form an implied-in-fact contract sufficient to overcome the
presumption of at-will employment.
BACKGROUND
¶4 Mr. Tomlinson was employed by NCR as a customer
engineer, a position in which he was responsible for servicing and
repairing ATMs at customer locations. NCR terminated Mr.
Tomlinson’s employment for “failure to properly manage [his] time
reporting and improve [his] call management procedures.” At the
time of his termination, Mr. Tomlinson had been employed by NCR
for approximately ten years.
¶5 Mr. Tomlinson, appearing pro se, filed suit against NCR,
alleging thirteen causes of action. NCR moved to dismiss eleven of
Mr. Tomlinson’s claims pursuant to rule 12(b)(6) of the Utah Rules
of Civil Procedure. After briefing and a hearing, the district court
granted NCR’s motion to dismiss. Following the court’s order, Mr.
Tomlinson’s only surviving claims were for wrongful discharge
based on an alleged breach of contract and breach of the implied
covenant of good faith and fair dealing.
¶6 The parties commenced discovery, after which NCR moved
for summary judgment on Mr. Tomlinson’s remaining claims. The
district court granted NCR’s motion for summary judgment, and
Mr. Tomlinson filed a motion to alter or amend the judgment
pursuant to rule 59 of the Utah Rules of Civil Procedure. The court
denied Mr. Tomlinson’s motion, and he timely appealed.
¶7 Before the court of appeals, Mr. Tomlinson argued that the
district court erred when it dismissed his claims under rule 12(b)(6)
of the Utah Rules of Civil Procedure. Tomlinson v. NCR Corp., 2013
UT App 26, ¶ 5, 296 P.3d 760. He also argued that the district court’s
grant of summary judgment on his remaining two claims was
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Opinion of the Court
improper. Id. ¶ 6. Specifically, Mr. Tomlinson argued that NCR’s
Corporate Management Policy Manual (Manual) created an implied
contract that rebutted the presumption of at-will employment under
Utah law. Id. ¶ 31.
¶8 The court of appeals affirmed the rule 12(b)(6) dismissal of
Mr. Tomlinson’s claims, but reversed the district court’s grant of
summary judgment on his claims for wrongful discharge and breach
of the implied covenant of good faith and fair dealing. Id. ¶ 47. The
court of appeals concluded that Mr. Tomlinson had raised an issue
of material fact as to whether NCR intended to limit its right to
terminate Mr. Tomlinson at will. Id. ¶ 45. Because the court of
appeals concluded that Mr. Tomlinson had raised a factual dispute
as to the existence of an implied contract, it also reversed summary
judgment on his claim of breach of the implied covenant of good
faith and fair dealing. Id. ¶ 46.
¶9 We granted certiorari on the issue of “[w]hether the court
of appeals erred in holding that [NCR’s] Corporate Management
Policy Manual could be read to create an implied contract rebutting
the presumption that [Mr. Tomlinson] was an at-will employee and
also permitting a claim for breach of the covenant of good faith and
fair dealing.” We have jurisdiction pursuant to section 78A-3-
102(3)(a) of the Utah Code.1
1
Following oral argument, Mr. Tomlinson filed a motion to
compel arbitration. We hereby deny the motion because Mr.
Tomlinson waived his right to arbitrate. A party who has agreed to
an arbitration clause waives the right to arbitrate “if the opposing
party can demonstrate (1) that the party seeking arbitration substan-
tially participated in the underlying litigation to a point inconsistent
with the intent to arbitrate; and (2) that this participation resulted in
prejudice to the opposing party.” Educators Mut. Ins. Ass’n v. Evans,
2011 UT App 171, ¶ 65, 258 P.3d 598 (internal quotation marks
omitted). In this case, Mr. Tomlinson has actively participated in
litigation since 2009, including filing a complaint, conducting
discovery, pursuing his case through summary judgment, and
appealing the trial court’s judgment. NCR will suffer prejudice if
Mr. Tomlinson is allowed to compel arbitration because of the
wasted expense incurred in the last five years of litigation and
additional expense of arbitration.
NCR seeks an award of attorney fees under rule 33(a) of the Utah
(continued...)
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TOMLINSON v. NCR CORP.
Opinion of the Court
STANDARD OF REVIEW
¶10 On certiorari, “we review the decision of the court of
appeals, not the decision of the district court.” Bangerter v. Petty,
2009 UT 67, ¶ 10, 225 P.3d 874 (internal quotation marks omitted).
“We review the court of appeals’ decision for correctness, with
particular attention to whether [it] reviewed the [district] court’s
decision under the correct standard.” Id. (alterations in original)
(internal quotation marks omitted). Summary judgment is
appropriate when “there is no genuine issue as to any material fact
and . . . the moving party is entitled to a judgment as a matter of
law.” UTAH R. CIV . P. 56(c). We view all of the facts and any
reasonable inferences drawn therefrom “in the light most favorable
to the nonmoving party.” Massey v. Griffiths, 2007 UT 10, ¶ 8, 152
P.3d 312 (internal quotation marks omitted). But “the district court’s
legal conclusions and ultimate grant or denial of summary judgment
are reviewed for correctness.” Id.
ANALYSIS
I. MR. TOMLINSON FAILED TO OVERCOME THE
PRESUMPTION OF AT-WILL EMPLOYMENT
¶11 NCR argues that the court of appeals erred when it reversed
the district court’s grant of summary judgment. The district court
granted NCR’s motion for summary judgment because Mr.
Tomlinson failed to present “evidence that . . . the intent of NCR in
this case was to enter into an agreement” sufficient to overcome
Utah’s presumption of at-will employment. An employment
relationship for an indefinite term gives rise to a presumption that
the employment relationship is at will. Fox v. MCI Commc’ns Corp.,
931 P.2d 857, 859 (Utah 1997); Johnson v. Morton Thiokol, Inc., 818 P.2d
997, 1000 (Utah 1991). Such a relationship allows “both the
employer and the employee to terminate the employment for any
reason and allows the employer to do so without extending any
procedural safeguards to an employee.” Fox, 931 P.2d at 859; see also
Hansen v. Am. Online, Inc., 2004 UT 62, ¶ 7, 96 P.3d 950 (noting that
an at-will employment relationship may be terminated by either
1
(...continued)
Rules of Appellate Procedure, which provides that the court may
award reasonable attorney fees if a motion is either “frivolous or for
delay.” While we deny the motion to compel arbitration, we decline
to award fees.
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Opinion of the Court
party “for any reason (or no reason) except where prohibited by
law”). But a “plaintiff/employee may overcome this presumption
by showing that the parties created an implied-in-fact contract,
modifying the employee’s at-will status.” Hodgson v. Bunzl Utah,
Inc., 844 P.2d 331, 333 (Utah 1992). In the absence of an express
employment agreement, the employee bears “the burden of
establishing the existence of an implied-in-fact contract provision.”
Johnson, 818 P.2d at 1001.
¶12 “The existence of such an agreement is a question of fact
which turns on the objective manifestations of the parties’ intent. . . .
[and] is primarily a jury question.” Id. But we may properly
determine the existence of an implied contract as a matter of law if
no reasonable jury could find such a contract and if the evidence
relied on by the parties presents no triable issues of fact. Cabaness v.
Thomas, 2010 UT 23, ¶ 56, 232 P.3d 486. Relevant evidence of the
parties’ intent may include announced personnel policies,
employment manuals, the course of conduct between the parties,
and relevant oral representations. Id. ¶ 57; see also Hodgson, 844 P.2d
at 333–34; Berube v. Fashion Centre, Ltd., 771 P.2d 1033, 1044 (Utah
1989).
¶13 Evidence of an implied contract “must meet the
requirements for an offer of a unilateral contract.” Johnson, 818 P.2d
at 1002. This is because the employer’s promise of employment
consistent with certain provisions for an indefinite term constitutes
the employer’s consideration for the contract and the terms of the
contract itself. Id. In return, the employee’s performance of his job
consistent with the promised provisions constitutes the employee’s
acceptance of the contract terms, as well as his consideration. Id.
Accordingly, the employer must communicate a manifestation of
intent to the employee that is sufficiently definite to constitute a
contract provision. Id.; see also Cabaness, 2010 UT 23, ¶ 55.
¶14 We have consistently held that “an employer’s internally
adopted policies and procedures concerning discharge can be
sufficient evidence to rebut the presumption of at-will employment
and can, in effect, become part of the contractual relationship
between the employer and the employee.” Caldwell v. Ford, Bacon &
Davis Utah, Inc., 777 P.2d 483, 485 (Utah 1989); see also Brehany v.
Nordstrom, Inc., 812 P.2d 49, 54 (Utah 1991); Berube, 771 P.2d at
1044–46. In Caldwell, we recognized that the existence of an internal
policy manual detailing procedures required before an employee
could be terminated for cause may be sufficient to raise a factual
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TOMLINSON v. NCR CORP.
Opinion of the Court
question as to whether the presumption of at-will employment had
been rebutted. 777 P.2d at 485–86.
¶15 In this case, Mr. Tomlinson points to NCR’s Corporate
Management Policy Number 422 (Policy 422) and Policy Number
210 (Policy 210) in support of his contention that NCR was required
to comply with internal procedures prior to terminating his
employment.2 Mr. Tomlinson argues that Policy 422 and Policy 210
both evidence NCR’s intent to create an implied-in-fact contract with
its employees.
A. Policy 422 Does Not Constitute an Implied-in-Fact Contract
¶16 NCR argues that the court of appeals erred when it drew a
negative inference from Policy 422’s distinction between tactical and
core workforce employees to support its conclusion that Policy 422
constituted an implied-in-fact employment contract. Policy 422
specifically designates NCR’s tactical workforce employees as at
will, but it is silent as to the status of NCR’s core workforce.
Tomlinson v. NCR Corp., 2013 UT App 26, ¶¶ 34, 36, 296 P.3d 760.
Mr. Tomlinson asserts that Policy 422’s silence regarding the at-will
status of core employees gives rise to an inference that NCR
intended to limit its ability to terminate those employees without
cause. Id. The court of appeals relied on our ruling in Cabaness to
support its conclusion that the limited at-will designation of tactical
employees was sufficient to raise a factual dispute as to the at-will
status of core employees. Id. We conclude that any negative
inference to be drawn from Policy 422 is insufficient to overcome the
presumption of at-will employment under Utah law. Accordingly,
the court of appeals erred.
¶17 Policy 422 distinguishes between NCR’s “core workforce
who perform ongoing work which is necessary for the continuing
operation of the business and a workforce buffer that sets the
staffing arrangements that will allow for expansion and
2
At oral argument, Mr. Tomlinson also relied on Policy Number
706, arguing that Policy 210 must be read in conjunction with NCR’s
internal dispute resolution processes contained in Policy 706.
However, this argument was not preserved at the district court, nor
mentioned in Mr. Tomlinson’s briefs. Accordingly, we do not
address this argument. “We generally will not consider an issue
unless it has been preserved in the court below.” Baird v. Baird, 2014
UT 8, ¶ 20, 322 P.3d 728 (internal quotation marks omitted).
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Opinion of the Court
contraction.” Id. (internal quotation marks omitted). Supplement A
to Policy 422 describes the tactical workforce, which consists of
temporary employees who are employed with NCR on an as-needed
basis. These employees are distinguished from those in the core
workforce, who are expected to work a certain number of hours per
pay period. Section 5 of Supplement A, which specifically governs
tactical employees, states, “[E]mployment at NCR is AT WILL. No
statement in this policy implies any guarantee of employment or
length of employment.” But Policy 422 does not contain any similar
statements regarding full-time or core employees. NCR conceded
that Mr. Tomlinson was a member of NCR’s core workforce, but
nevertheless contends that he was an at-will employee. Mr.
Tomlinson argues that the “limited at-will statement” contained in
Policy 422 is evidence to the contrary.
¶18 In Cabaness, an employee brought a wrongful termination
claim against his employer, Bountiful City, alleging that an
employee manual created an implied contract. 2010 UT 23, ¶¶ 15,
47. The language in the employee manual contained affirmative
promises that certain policies would be followed in the event an
employee complained of harassment. For example, the policy
manual stated, “City policy will not tolerate verbal or physical
conduct by any employee which harasses.” Id. ¶ 59 (emphasis
added). It also stated that harassment “shall not be tolerated by the
City,” harassment and violence was “strictly prohibited,” and “[a]ny
such form of reprisal will render the official or employee subject to
disciplinary actions.” Id. We held that the definitive statements in
the employee manual were evidence of an implied-in-fact contract
because they displayed the City’s intent to voluntarily undertake
additional duties beyond an employer’s normal obligations to its
employees. Id. ¶¶ 59–60.
¶19 The City relied on a disclaimer that stated, “No contract
exists between [the City] and its employees with respect to salary,
salary ranges, movement within salary ranges, or employee
benefits.” Id. ¶ 58 (emphasis added). We held that this statement
did not absolve Bountiful City of all contractual liability because the
express language limited the disclaimer to the specifically listed
items related to salary. Id. Because there was an express restriction
limiting the disclaimer to certain items, we inferred that Bountiful
City “intended to create a contract with its employees with respect
to the items in the Employee Manual that are not specifically listed
in the disclaimer.” Id.
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TOMLINSON v. NCR CORP.
Opinion of the Court
¶20 The court of appeals incorrectly relied on Cabaness in
holding that a negative inference can overcome the presumption of
at-will employment. The court of appeals stated that the “limited at-
will statement” contained in Policy 422 was comparable to the
“limited” disclaimer contained in Cabaness. Tomlinson, 2013 UT App
26, ¶¶ 34–36. But in Cabaness, it was definitive language in Bountiful
City’s employment manual that created the implied-in-fact contract.
2010 UT 23, ¶ 59. While the “limited” disclaimer failed to disclaim
liability created by these implied contract terms, it was not the
“limited” disclaimer itself that gave rise to an implied-in-fact
contract. Id. ¶ 58. In contrast, Policy 422 does not contain any
definitive provisions creating an implied-in-fact contract. Instead,
the policy contains a broad statement, “[e]mployment at NCR is AT
WILL,” when referencing the tactical workforce. The policy is
simply silent as to the status of core workforce employees. And
mere silence is not sufficient evidence to rebut the presumption of
at-will employment. Accordingly, we hold that Policy 422 does not
raise a factual dispute as to the existence of an implied-in-fact
contract.
B. Policy 210 Disclaimed Any Contractual Liability
¶21 We next consider whether Policy 210 can be the basis of an
implied-in-fact contract between NCR and its employees. The court
of appeals held that Policy 210 contains definitive command
language regarding termination procedures on which an employee
could reasonably expect to rely. Tomlinson, 2013 UT App 26, ¶ 39.
It further held that this definitive language created a mandatory
policy to be followed for employees in need of performance
improvement, and thus “a reasonable jury could find an implied
contract limiting NCR’s right to terminate Tomlinson at-will.” Id.
¶ 45. The court of appeals also held that the disclaimer contained in
Policy 210 was insufficient as a matter of law to prevent the
formation of an implied-in-fact contract because the language “does
not specifically state that employment at NCR is ‘at-will,’ nor does
it define the voluntary nature of the employment relationship.” Id.
¶ 44.
¶22 Mr. Tomlinson argues that NCR was required to comply
with the internal procedures articulated in Policy 210 prior to
terminating his employment. Policy 210 contains NCR’s procedures
for addressing both employee misconduct and deficient
performance. It indicates that incidences of misconduct “may result
in a range of responses from a written warning up to termination.”
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Opinion of the Court
But it states that issues involving deficient performance will “result
in a Performance Improvement Plan (PIP) with stated requirements
for improvement.” It then details a series of phases that managers
are instructed to initiate “immediately” whenever an employee’s
performance falls below expectations.
¶23 Policy 210 also requires NCR managers to review an
employee’s performance to assess the performance gap, prepare a
PIP with clear goals and a timetable for improvement, deliver the
PIP to the employee with detailed instructions, and conduct routine
follow-up sessions to assess the employee’s progress. If an
employee meets all of the performance goals, managers are
instructed to “formally close out the ‘PIP’ with the employee.” In
the event that an employee fails to maintain satisfactory
performance, managers are instructed to issue a “Final Warning”
letter.
¶24 In addition to offering Policy 210, Mr. Tomlinson argues
that the parties’ course of conduct over the ten years in which he was
employed at NCR corresponded to NCR’s Manual. For example,
Mr. Tomlinson asserts that he had successfully completed a PIP in
June of 2004. Mr. Tomlinson also offers his 2004 annual performance
review as evidence that NCR was following its own internal
employee evaluation procedures.
¶25 Even if Mr. Tomlinson is correct that the terms of Policy 210
and NCR’a course of conduct may have created an implied-in-fact
contract between NCR and its employees, Utah law allows
employers to disclaim any contractual relationship that might
otherwise arise from employee manuals. We have recognized that
a “clear and conspicuous disclaimer, as a matter of law, prevents
employee manuals or other like material from being considered as
implied-in-fact contract terms.” Johnson, 818 P.2d at 1003. “[W]hen
an employee handbook contains a clear and conspicuous disclaimer
of contractual liability, any other agreement terms must be
construed in the light of the disclaimer.” Hodgson, 844 P.2d at 334.
¶26 We will “interpret any conduct, oral statement, or written
sentence asserted to be a term in a contract in a manner harmonious
to the overall meaning of the contract,” taking into account the
disclaimer language. Id. The prominence of the text, the placement
of the disclaimer, and the language of the disclaimer are all relevant
factors in determining whether a disclaimer is clear and
conspicuous. Hamilton v. Parkdale Care Ctr., Inc., 904 P.2d 1110, 1112
(Utah Ct. App. 1995).
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TOMLINSON v. NCR CORP.
Opinion of the Court
¶27 Policy 210 contains a disclaimer in bold text, set off by a text
box, which states:
These guidelines are not intended to be contractual in
nature, nor should they be interpreted as strict rules for
responses to individual activity. The appropriate
response to each unique situation may differ. For
example, some circumstances may call for immediate
action, either in the way of written warning or
termination, depending upon the frequency or
severity of the offense.
(Emphasis added.) NCR argues that this text is sufficient, as a
matter of law, to disclaim any contractual requirement that NCR
comply with the requirements of Policy 210. We agree.
¶28 Mr. Tomlinson argues that Policy 210’s disclaimer is
insufficiently prominent to disclaim a contractual relationship. We
acknowledge that this case differs from our previous cases because
NCR did not place its disclaimer at the beginning of the entire policy
manual. See Ryan v. Dan’s Food Stores, Inc., 972 P.2d 395, 401 (Utah
1998); Johnson, 818 P.2d at 999. Instead, NCR’s disclaimer is located
at the top of Policy 210. But we have never required that an
employer place disclaimers in any particular location. Rather, the
focus of the analysis is on whether the placement of the disclaimer
is sufficiently prominent to place a reasonable employee on notice
that the employer was disclaiming any contractual relationship.
Because the disclaimer at issue here is conspicuously located at the
top of the relevant policy and is prominently bolded and set apart by
a text box, we conclude that it was sufficiently prominent to put
employees on notice of its terms. Thus, the only remaining question
is the extent to which the language in the disclaimer limited NCR’s
contractual liability.
¶29 Mr. Tomlinson argues that Policy 210’s disclaimer fails to
limit NCR’s contractual liability because it lacked explicit at-will
language. Whether a disclaimer must contain explicit at-will
language is a question of first impression for this court, but the
federal district court for the District of Utah found that a disclaimer
lacking specific at-will language was nevertheless sufficient as a
matter of law to disclaim a contractual relationship. Johnson v. City
of Murray, 909 F. Supp. 2d 1265, 1297 (D. Utah 2012). In Johnson, the
employee signed an employment application with the following
disclaimer:
I understand that this employment application and
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Opinion of the Court
any other City documents are not contracts of
employment and that any oral or written statements to
the contrary are hereby expressly disavowed and
should not be relied upon by any prospective or
existing employee.
Id. at 1273. The district court concluded that the “clear and
conspicuous” disclaimer did not “evince an intent by the [employer]
to create a contract with its employees.” Id. at 1297.
¶30 The disclaimer language of Policy 210 is similar to the
disclaimer language in Johnson. Both disclaimers convey an express
intent that the provisions of the company employment policies do
not give rise to an enforceable contract. The language of a disclaimer
need not employ the magic words “at-will” if it otherwise clearly
conveys the employer’s intention not to enter into a contract or to
create mandatory procedures for employment terminations. And
NCR’s disclaimer clearly conveyed such an intent. Without
evidence that NCR intended to create a contract, a reasonable jury
could not have determined that NCR agreed to limit its ability to
terminate its employees. In short, given the clear and unambiguous
language of the disclaimer, no reasonable jury could conclude that
NCR intended Policy 210 to give rise to an implied contract.
¶31 We hold that NCR’s policy manual did not create an
implied-in-fact contract limiting NCR’s ability to terminate Mr.
Tomlinson at will. The court of appeals erred in concluding that the
lack of express at-will language in Policy 422 gave rise to an implied-
in-fact contract. And Policy 210’s disclaimer was sufficient as a
matter of law to disclaim any contractual liability arising from
NCR’s failure to follow the procedures contained therein. We
accordingly reverse the court of appeals and affirm summary
judgment in favor of NCR.
II. MR. TOMLINSON FAILED TO ESTABLISH A BREACH OF
THE IMPLIED COVENANT OF GOOD FAITH AND
FAIR DEALING
¶32 “An implied covenant of good faith and fair dealing inheres
in every contract.” Eggett v. Wasatch Energy Corp., 2004 UT 28, ¶ 14,
94 P.3d 193. But we have consistently rejected the notion of a free-
standing implied covenant of good faith and fair dealing in the
absence of a contract. Brehany v. Nordstrom, Inc., 812 P.2d 49, 55
(Utah 1991). And the implied covenant cannot “establish new,
independent rights or duties not agreed upon by the parties.” Id.
Because we conclude that Mr. Tomlinson failed to establish the
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Opinion of the Court
existence of an implied contract, he cannot establish a violation of
the covenant of good faith and fair dealing. We accordingly reverse
the court of appeals and affirm summary judgment on this claim as
well.
CONCLUSION
¶33 The court of appeals erred in holding that NCR’s Corporate
Management Policy Manual could be read to create an implied
contract rebutting the presumption that Mr. Tomlinson was an at-
will employee. Summary judgment in favor of NCR was
appropriate on Mr. Tomlinson’s claim of an implied contract and on
the related claim for breach of the implied covenant of good faith
and fair dealing.
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