Quedado v. Boeing Co.

168 Wash.App. 363

276 P.3d 365

33 IER Cases 1444

Reynold QUEDADO, Appellant,

v.The BOEING COMPANY, a Delaware corporation, Respondent.

No. 67030–1–I.

Court of Appeals of Washington, Division 1.

May 14, 2012.

Bryan Coluccio, Cable Langenbach Kinerk & Bauer LLP, Seattle, WA, for Appellant.

James Sanders, Perkins Coie LLP, Seattle, WA, Kristina Bennard, The Boeing Company, Seattle, WA, for Respondent.

BECKER, J.

[168 Wash.App. 366]¶ 1 Appellant Reynold Quedado, a Boeing employee, was demoted out of management for exerting influence to get two of his relatives hired. In this action for wrongful demotion and breach of implied contract, Quedado contends the Boeing Code of Conduct and two company policy documents contained enforceable promises concerning how investigations of employee conduct are to be investigated and how discipline is to be imposed. The record discloses no evidence of an implied contract modifying the at-will employment relationship and no promises of specific treatment in specific situations. The trial court properly granted summary judgment dismissal of Quedado's claim.

FACTS

¶ 2 Because we review summary judgment granted in Boeing's favor, we consider the facts in the light most favorable to Quedado. Wilson Court Ltd. P'ship v. Tony Maroni's Inc., 134 Wash.2d 692, 698, 952 P.2d 590 (1998). There is no dispute as to the material facts set forth below.

¶ 3 Quedado began working at Boeing as an engineer in 1980. He was promoted into management in 1994 and into senior management in 1997. Quedado maintained a clean disciplinary record until the events underlying this case.

¶ 4 It was an established company policy that the hiring, transfer, or placement of relatives of Boeing employees “must not result in actual or perceived preferential treatment, improper influence, or other conflict.” ¹ Management employees had special responsibilities to take action to address potential conflicts and to seek assistance with understanding the requirements of the rules, where necessary.

¶ 5 In early 2006, Quedado came under suspicion of improperly using his influence to get his second cousin and his nephew hired at Boeing. An investigation ensued over a period of approximately eight weeks. The lead investigator interviewed seven employees involved in the hiring or placement of the two relatives. The investigator also interviewed Quedado. The investigator reported that Quedado had improperly used his influence to obtain positions for his relatives, and when questioned he was not forthcoming about his family relationships.

¶ 6 As a result of the investigation, Quedado was demoted to a non-management position in a different work unit. This meant a reduction in wages.

¶ 7 Quedado filed this suit on May 11, 2009. The trial court granted Boeing's motion for summary judgment on March 25, 2011. This appeal followed.

SUMMARY OF RELEVANT LAW

¶ 8 Generally, an employment contract that is indefinite as to duration is terminable at will by either the employee or employer. Roberts v. Atlantic Richfield Co., 88 Wash.2d 887, 894, 568 P.2d 764 (1977). In Washington, an employer's employment policies and procedures can alter the employment at-will relationship and form either a binding implied employment contract or create enforceable promises regarding terms of employment. Burnside v. Simpson Paper Co., 123 Wash.2d 93, 104, 864 P.2d 937 (1994). “This rule rests on the principle that by using a manual or handbook, an employer secures promises from the employees which create a loyal, orderly and cooperative work force, such that the employer should be equally bound to its promises to the employee, which are designed to create an atmosphere of job security and fair treatment.” Drobny v. Boeing Co., 80 Wash.App. 97, 101, 907 P.2d 299 (1995), citing Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 229–30, 685 P.2d 1081 (1984). By making written promises, the employer creates an expectation in the employee, “and thus an obligation of treatment in accord with those written promises.” Thompson, 102 Wash.2d at 230, 685 P.2d 1081.

¶ 9 An employer may be bound by its written materials in either of two ways. Duncan v. Alaska USA Fed. Credit Union, Inc., 148 Wash.App. 52, 60, 199 P.3d 991 (2008). First, the written materials may createan implied contract modifying the at-will relationship. Second, the written materials may create an atmosphere of job security and fair treatment with promises of specific treatment in specific situations, whereby an employee is induced to remain on the job and not actively seek other employment. Duncan, 148 Wash.App. at 60, 199 P.3d 991;Thompson, 102 Wash.2d at 230, 685 P.2d 1081. The second avenue is based on an equitable theory of justifiable reliance. Korslund v. DynCorp Tri–Cities Servs., Inc., 156 Wash.2d 168, 185, 125 P.3d 119 (2005).

¶ 10 To prove the existence of an implied contract, the employee must establish the basic requisites of contract formation. These are an offer of new or different employment terms; acceptance; and consideration. Thompson, 102 Wash.2d at 228, 685 P.2d 1081;Kuest v. Regent Assisted Living, Inc., 111 Wash.App. 36, 51, 43 P.3d 23 (2002), review denied,149 Wash.2d 1023, 72 P.3d 762 (2003). These elements may be established by showing that the employer provided a policy manual and explained it to the employee, the employee signed the policy and agreed to abide by it, and the employee continued to work for the employer. Gaglidari v. Denny's Restaurants, Inc., 117 Wash.2d 426, 433, 815 P.2d 1362 (1991).

¶ 11 To establish an equitable reliance claim, the employee must prove

(1) that a statement (or statements) in an employee manual or handbook or similar document amounts to a promise of specific treatment in specific situations, (2) that the employee justifiably relied on the promise, and (3) that the promise was breached.

Bulman v. Safeway, Inc., 144 Wash.2d 335, 340–41, 27 P.3d 1172 (2001).

¶ 12 If the written terms amount only to “general statements of company policy,” then the document does not create an implied contract modifying the at-will relationship, nor does it support an equitable claim of reliance on a specific promise. Thompson, 102 Wash.2d at 231, 685 P.2d 1081;Drobny, 80 Wash.App. at 101, 907 P.2d 299. “Only those statements in employment manuals that constitute promises of specific treatment in specific situations are binding.” Stewart v. Chevron Chem. Co., 111 Wash.2d 609, 613, 762 P.2d 1143 (1988). An employer may also escape obligation if it states “in a conspicuous manner” in the written materials that “nothing contained therein is intended to be part of the employment relationship” (i.e., the materials contain a conspicuous “disclaimer”), or if the employer specifically reserves a right to modify the policies, or writes them “in a manner that retains discretion to the employer.” Thompson, 102 Wash.2d at 230–31, 685 P.2d 1081.

¶ 13 Whether or not an employer has made a promise specific enough to create an obligation and to justify an employee's reliance thereon is a question of fact. Burnside, 123 Wash.2d at 104–05, 864 P.2d 937. However, “if reasonable minds cannot differ as to whether language sufficiently constitutes an offer or a promise of specific treatment in specific circumstances, as a matter of law the claimed promise cannot be part of the employment relationship.” Swanson v. Liquid Air Corp., 118 Wash.2d 512, 522, 826 P.2d 664 (1992).

BOEING'S DOCUMENTS

¶ 14 Quedado contends his demotion either violated an implied contract that arose from the Boeing Code of Conductand two more detailed documents, PRO–1909 and BPI–2616, or violated specific promises contained in those documents.

¶ 15 The code is a one-page document that every employee must sign every year, certifying understanding and compliance. It begins with a general statement of high ethical aspirations:

The Boeing Code of Conduct outlines expected behaviors for all Boeing employees. Boeing will conduct its business fairly, impartially, in an ethical and proper manner, and in full compliance with all applicable laws and regulations. In conducting its business, integrity must underlie all company relationships, including those with customers, suppliers, communities and among employees. The highest standards of ethical business conduct are required of Boeing employees in the performance of their company responsibilities. Employees will not engage in conduct or activity that may raise questions as to the company's honesty, impartiality, reputation or otherwise cause embarrassment to the company.

The code then enumerates eight specific employee obligations and encourages employees to report violations. It concludes by stating, “Every employee has the responsibility to ask questions, seek guidance and report suspected violations of this Code of Conduct. Retaliation against employees who come forward to raise genuine concerns will not be tolerated.”

¶ 16 The code makes no “offer” of new employment terms or entitlements. Nor does it extend any specific promises as to how employees will be treated in specific situations. The statement that Boeing will conduct its business fairly, impartially, and in full compliance with all laws and regulations can be read only as a general promise that fits squarely within what the Thompson court called “merely ... general statements of company policy, and thus, not binding.” Thompson, 102 Wash.2d at 231, 685 P.2d 1081. In Thompson, the Supreme Court examined a similar statement in an employee manual, stating that “terminations will be handled in a fair, just and equitable manner.” Thompson, 102 Wash.2d at 224, 685 P.2d 1081. The court held that this language “merely implements a company policy to treat employees in a fair and consistent manner,” and did not constitute a specific, binding promise. Thompson, 102 Wash.2d at 224, 685 P.2d 1081;see also Hill v. J.C. Penney, Inc., 70 Wash.App. 225, 235, 852 P.2d 1111 (rejecting theory that employer's “general...