Burnside v. Simpson Paper Co.

864 P.2d 937, 123 Wash. 2d 93, 9 I.E.R. Cas. (BNA) 108, 1994 Wash. LEXIS 1, 66 Fair Empl. Prac. Cas. (BNA) 165

• Court: Washington Supreme Court
• Decided: January 6, 1994
• Docket: 59754-5
• Status: Published

Opinions

Utter, J.

Simpson Paper Company appeals from a Court of Appeals decision affirming a judgment against it in favor of A. Deane Burnside, a former employee. Simpson Paper assigns error to the trial court’s application of Washington law, its admission of Simpson’s management guide to support the breach of implied contract claim, the admission of evidence of other terminations, and the sufficiency of the evidence supporting the jury verdict. Simpson Paper also asserts lack of subject matter jurisdiction. We affirm the trial court and Court of Appeals.

Burnside worked for Simpson Timber and Simpson Paper Companies from 1966 until he was fired in November 1984. He worked out of Seattle for most of these years and received excellent job evaluations. Report of Proceedings vol. 3, at 485-92. As pulp marketing manager, Burnside traveled extensively overseas. In 1982 he was transferred from Simpson Timber to its wholly owned subsidiary, Simpson Paper. With this transfer, John Fannon, president of Simpson Paper, became Burnside’s immediate supervisor. Burnside was a member of the company’s senior management staff. After his transfer, Burnside continued to work out of Seattle, but in 1983, at Fannon’s insistence, he moved to San Francisco, where Simpson Paper is headquartered. Burnside’s wife, Carol Burnside, remained in Washington, where she worked for a consulting business she owned with Burnside, Evergreen Consulting.

A significant portion of Burnside’s work involved the marketing in Japan of pulp from a California mill. Simpson Paper employed Price & Pierce International as agents to help with this marketing. Price & Pierce in turn employed Katsumi Sasaki, a Japanese national, to work on Simpson’s behalf in Japan. Burnside traveled to Japan two or three times a year and communicated, through a Price & Pierce agent in the United States, with Sasaki by Telex. In the early 1980’s, Price & Pierce hired Carol Burnside and Evergreen Consulting to handle communications between Simpson and Sasaki.

In 1983, Fannon and Burnside traveled together to Japan on a business trip. Fannon would later testify that during this trip he became concerned about Burnside’s performance and decided to return to Japan without Burnside. Fannon did so in November 1984. Fannon testified at trial that Sasaki and others told Fannon that Burnside was hurting Simpson’s image and business. There were also complaints about Carol Burnside’s attendance at business meetings. Fannon returned from the trip to San Francisco on Saturday, November 17, 1984. He spoke with the chairman of Simpson Paper, Furman Mosley (who was also vice-chairman of Simpson Timber) on Sunday. Report of Proceedings vol. 3, at 494, 497. When Burnside came to work on November 19, Fannon met with him and summarily terminated his employment. Burnside testified he had always received excellent evaluations and received no warning that his behavior or skills were lacking.

Simpson Paper subsequently worked out a severance package for Burnside. Burnside submitted a letter of resignation, and the company continued his salary and medical benefits for 6 months, paid his move back to Seattle, and purchased his San Francisco condominium. Deposition of Burnside exhibits 2, 3 (Apr. 15,1987); Clerk’s Papers, at 998-99. At the end of the 6-month period, Burnside took early retirement. Deposition of Burnside exhibits 17-21 (Apr. 15, 1987). At the time of his termination, Burnside was 58 years old and had been earning approximately $7,000 a month.

Burnside was replaced by Robert Anderson, who was then 33. Anderson had been the company’s manager of marketing services and product development. He took on the pulp sales portion of Burnside’s job, helping to complete Burnside’s work after the dismissal. In his new position, Anderson initially earned $4,900 a month. In 1989 his salary was $90,000, and he received a $59,000 bonus. Report of Proceedings vol. 10, at 1622, 1624. Another employee, Robert Millard, vice-president of operations, took over the portion of Burnside’s duties which involved purchasing pulp for use in Simpson Paper’s own mills. Report of Proceedings vol. 8, at 1288-89. Millard was 53 years old at the time. Report of Proceedings vol. 8, at 1288-89.

On July 18, 1986, Burnside filed suit against Simpson Paper and Simpson Timber,¹ alleging wrongful termination and age discrimination. Clerk’s Papers, at 1. Simpson Paper moved for summary judgment on the basis that Burnside had failed to exhaust his administrative remedies in California. Clerk’s Papers, at 15. Burnside filed a cross motion for summary judgment on his breach of contract claim. Clerk’s Papers, at 1000, 1506. Simpson made various other motions for partial summary judgment, some of which were granted by the trial court. The court denied the company’s motion to dismiss the age discrimination and implied contract claims, however. Clerk’s Papers, at 1617-20.

After a monthlong trial, the jury found for Burnside on both of his alternate theories at trial, age discrimination and breach of implied contract. Clerk’s Papers, at 1008. He was awarded a verdict of $993,627. On Burnside’s motion, the court also awarded him $158,393 in prejudgment interest, and attorney fees and costs of $152,922. Clerk’s Papers, at 2426, 2430. On June 18, 1990, the court entered a $1,752,781 judgment against Simpson Paper. Clerk’s Papers, at 2449. The Court of Appeals affirmed, Burnside v. Simpson Paper Co., 66 Wn. App. 510, 832 P.2d 537 (1992), and Simpson now seeks review in this court.

I

Subject Matter Jurisdiction

Simpson Paper maintains that Washington’s age discrimination statute, RCW 49.60, provides no subject matter jurisdiction in this case. More specifically, it maintains the Legislature’s use of the word "inhabitant” in the purpose section of RCW 49.60.010 denies Washington courts subject matter jurisdiction over persons who are not Washington residents.

Simpson cites no authority for the proposition RCW 49.60 is a jurisdictional statute. As the Court of Appeals indicated, the Washington State Constitution confers on the superior courts broad original jurisdiction. Const. art. 4, § 6 (amend. 65). Exceptions to that jurisdictional grant are narrowly construed. Orwick v. Seattle, 103 Wn.2d 249, 251, 692 P.2d 793 (1984); Burnside, 66 Wn. App. at 517.

The Court of Appeals also reasoned, soundly, that limiting the statute’s application to Washington inhabitants would effectively allow Washington employers to discriminate freely against non-Washington inhabitants, thus undermining the fundamental purpose of the act, deterring discrimination. See Burnside, 66 Wn. App. at 519. The court therefore interpreted the Legislature’s use of the term "inhabitants” as a general reference not intended to impose a residency requirement as a jurisdictional prerequisite to bringing suit. Burnside, at 518.

We affirm the Court of Appeals’ disposition of this issue because it comports with the purpose underlying the statute, to deter discrimination. Statutes should be interpreted to further, not frustrate, their intended purpose. See Wichert v. Cardwell, 117 Wn.2d 148, 151, 812 P.2d 858 (1991). The declaration section of Washington’s Law Against Discrimination emphasizes the statute is to be liberally construed. RCW 49.60.020. See also Phillips v. Seattle, 111 Wn.2d 903, 908, 766 P.2d 1099 (1989). Similarly, RCW 49.60.030(2) provides "any” person injured by any act in violation of the chapter shall have a civil cause of action. Simpson Paper’s assertion there was no subject matter jurisdiction is thus without merit.

II

Governing Law

Simpson Paper also challenges the trial court’s choice of Washington over California law on the employment discrimination claim.² Our examination of pertinent case law and the respective policies underlying California and Washington law persuade us the application of Washington law was proper in this case.

A

The Presumptive Law

A scholar in the field of conflict of laws, Professor Currie, suggests several principles that serve as a useful starting point in choice of law analysis:

1. The normal business of courts being the adjudication of domestic cases, and the normal tendency of lawyers and judges being to think in terms of domestic law, the normal expectation should be that the rule of decision will be supplied by the domestic law as a matter of course.

2. The court should ordinarily depart from this procedure only at the instance of a party wishing to obtain the advantage of a foreign law.

3. The law of the forum, as the source of the rule of decision, should normally be displaced only by the interested party’s timely invocation of the foreign law. The interested party invokes foreign law by calling attention to its relevance and its superior claim to be applied, and by informing the court of its tenor.

(Italics ours.) Brainerd Currie, Selected Essays on the Conflicts of Laws 75 (1963).

B

Washington’s Approach to Choice of Law Questions:

The "Most Significant Relationship” Standard

In an ordinary conflict of laws case, the applicable law is decided by determining which jurisdiction has the "most significant relationship” to a given issue. Johnson v. Spider Staging Corp., 87 Wn.2d 577, 580, 555 P.2d 997 (1976); Barr v. Interbay Citizens Bank, 96 Wn.2d 692, 697, 635 P.2d 441, 649 P.2d 827 (1981); Southwell v. Widing Transp., Inc., 101 Wn.2d 200, 204, 676 P.2d 477 (1984). See generally Philip A. Trautman, Evolution in Washington Choice of Law — A Beginning, 43 Wash. L. Rev. 309 (1967-1968).

In this case, however, we do not reach the choice of law question because when California’s interest is examined, it does not prove fundamentally incompatible with Washington’s. To that extent, this is a "false” conflict case,³ rendering the trial court’s application of the presumptive local law — Washington law — proper.

C

A False Conflict: California and Washington Law Compared

Simpson Paper’s argument that California law applies is premised on the assumption that Washington law conflicts with California’s preference for the administrative resolution of discrimination disputes, and that California’s interest outweighs, and therefore should displace, Washington law. The argument is unpersuasive.

First, Simpson has failed to show a conflict between the purposes of Washington and California law. The Legislatures of both California and Washington deem employment free from discrimination to be a civil right. Compare Cal. Gov’t Code § 12921 (Deering 1982) with RCW 49.60.030(1). Both states seek to promote the same fundamental interest, deterring discrimination by businesses operating within their borders.

The Washington Legislature has declared in the purposes section of RCW 49.60:

The legislature hereby finds and declares that practices of discrimination against any of its inhabitants because of race, creed, color, national origin, sex, marital status, age, or the presence of any sensory, mental or physical handicap are a matter of state concern, that such discrimination threatens not only the rights and proper privileges of its inhabitants but menaces the institutions and foundation of a free democratic state.

Former RCW 49.60.010.

Similarly, the California Legislature has declared under the public policy section of its California Fair Employment and Housing Act (FEHA):⁴

It is hereby declared as the public policy of this state that it is necessary to protect and safeguard the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or abridgment on account of race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, sex, or age.

Former Cal. Gov’t Code § 12920 (Deering 1982).

It can hardly be said that California and Washington law are in conflict of purpose.

Second, Simpson exaggerates California’s interest in the administrative resolution of employment discrimination suits. California law does not compel the administrative resolution of such suits. California law does provide a statutory administrative procedure for resolving such • claims, see Snipes v. Bakersfield, 145 Cal. App. 3d 861, 865-69, 193 Cal. Rptr. 760 (1983), but it does not reflect as compelling an interest as Simpson Paper maintains. Under California law, an employee may file a claim under California’s Fair Employment and Housing Act. A state commission will investigate the claim and seek resolution "in confidence — by conference, conciliation, and persuasion”. Snipes, at 866. If the commission does not pursue the claim or take action within 150 days of filing, it must issue a "right to sue” letter to the employee. Snipes, at 866. Only then may the employee sue in superior court under the act. Snipes, at 866. Employees, however, must file their complaints within 1 year of the claimed discrimination. Snipes, at 867. Simpson Paper maintains that Burnside’s claim is time barred because he did not file his claim under the statute.

Although Burnside’s cause of action may be time barred under the statute, Simpson Paper has not shown the claim would be barred under California law. Despite the apparently mandatory procedure under FEHA, the California Supreme Court has held failure to pursue a complaint under the act does not preclude suit. Rojo v. Kliger, 52 Cal. 3d 65, 801 P.2d 373, 276 Cal. Rptr. 130 (1990); cf. Strauss v. A.L. Randall Co., 144 Cal. App. 3d 514, 194 Cal. Rptr. 520 (1983), called into doubt by Rojo.

The Rojo court held California’s Fair Employment and Housing Act does not establish the exclusive avenue of recovery for employment discrimination. The act supplements, rather than supplants, remedies that would otherwise be available to plaintiffs in California. Thus, an employee may proceed against an employer under the act, or outside the act, at his or her election. The court explained:

The act expressly disclaims any intent to repeal other state laws relating to employment discrimination. Subdivision (a) of section 12993 provides: "The provisions of this part shall be construed liberally for the accomplishment of the purposes thereof. Nothing contained in this part shall be deemed to repeal any of the provisions of the Civil Rights Law or of any other law of this' state relating to discrimination because of race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, sex, or age.”

Rojo, at 73.

Rojo dealt with a sex discrimination claim, but its rationale extends to other forms of discrimination, including age discrimination. Since Rojo, at least one California appellate court has held that age discrimination claims may be brought outside the act.⁵ See Soules v. Cadam, Inc., 2 Cal. App. 4th 390, 3 Cal. Rptr. 2d 6 (1991) (tortious discharge in violation of public policy can be brought whenever basis of discharge violates a public policy, such as the public policy against age discrimination), review denied (Mar. 12, 1992).⁶

Simpson Paper’s contention that California’s interest requires dismissing Burnside’s suit is thus without merit. Simpson has shown neither that California and Washington law are substantively in conflict, nor that California law compels the dismissal of Burnside’s claim on procedural grounds.

An actual conflict between the law of Washington and the law of another state must be shown to exist before Washington courts will engage in a conflict of law analysis. International Tracers of Am. v. Estate of Hard, 89 Wn.2d 140, 144, 570 P.2d 131 (1977) (citing B. Currie, Selected Essays on the Conflict of Laws 176 (1963)). Simpson Paper fails to show a conflict between Washington and California law. Absent such a showing, the forum may apply its own law. See International Tracers, 89 Wn.2d at 144; B. Currie, at 176. Because this is a false conflict case, the trial court’s application of Washington law does not constitute error.

Ill

Breach of Implied Contract⁷

Simpson Paper maintains the trial court erred in holding the Simpson management guide could modify the nature of the employment relationship. The company contends that because the guide was designed for managers it could not as a matter of law operate to alter the employment relationship between Simpson and Burnside.

The argument is without merit. Generally, employment contracts indefinite as to duration may be terminated by either the employer or the employee at any time, with or without cause. Thompson v. St. Regis Paper Co., 102 Wn.2d 219, 223, 685 P.2d 1081 (1984). A terminable-at-will relationship can, however, be contractually modified by an employee policy manual. Thompson, 102 Wn.2d at 229-30; Swanson v. Liquid Air Corp., 118 Wn.2d 512, 520, 826 P.2d 664 (1992). A promise contained in an employee manual of specific treatment in specific situations may be enforceable if an employee relies thereon. Thompson, 102 Wn.2d at 223; Swanson, 118 Wn.2d at 520; Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980).

We have recently emphasized that whether an employment policy manual issued by an employer contains a promise of specific treatment in specific situations, whether the employee justifiably relied on the promise, and whether the promise was breached are questions of fact. Swanson, 118 Wn.2d at 522 (citing Thompson v. St. Regis Paper Co., 102 Wn.2d 219, 222, 685 P.2d 1081 (1984)). Only if reasonable minds could not differ in resolving these questions is it proper for the trial court to decide them as a matter of law. Swanson, 118 Wn.2d at 522.

The language in the guide, entitled "Simpson’s Management Guide”, at least arguably supports the notion it was binding on Burnside’s superiors in the company, thus binding the company in its dealings with him. The guide suggests terminations will be for cause only, and will occur after warning.⁸ It states in its "Introduction”:

This is the Management Guide to Simpson Paper Company. It is an authoritative source of information on organization, policy and procedures for all levels of management, including foremen, staff supervisors and plant managers.

(Italics ours.) Clerk’s Papers, at 637.

Under "Authority”, it provides:

The statements contained in this guide constitute orders of the president to be observed throughout the company until a modification or withdrawal is properly authorized.

(Italics ours.) Clerk’s Papers, at 639. Because reasonable minds can differ as to whether the language can be construed to apply to Burnside, and whether under the circumstances it constituted a promise upon which he could reasonably rely, it would have been error for the trial court to pass on it as a matter of law.

Simpson relies on two Division Three cases for the proposition the management guide could not as a matter of law provide the basis for a breach of an implied contract claim. Adler v. Ryder Truck Rental, Inc., 53 Wn. App. 33, 765 P.2d 910 (1988), review denied, 112 Wn.2d 1013 (1989); Hatfield v. Columbia Fed. Sav. Bank, 57 Wn. App. 876, 790 P.2d 1258 (1990). The cases are not sound authority.

In Adler an employee brought an action for wrongful discharge. The trial court directed a verdict in the employer’s favor. The Court of Appeals reversed and remanded for trial, holding that whether an employer had created an expectation of job security was a question of fact. In the course of its opinion the court stated in dictum, "In this case, the personnel manual does not create any specific expectations for employees with respect to termination because the manual was written specifically for supervisory personnel.” (Italics ours.) Adler, 53 Wn. App. at 36.

A later Division Three case, Hatfield, 57 Wn. App. at 883, cites Adler for this principle. To avoid possible confusion about the authority of Adler and Hatfield, we take this opportunity to specify that the mere fact a handbook is labeled "management guide” is not dispositive of whether a cause of action for breach of an implied contract will lie. Instead, the relevant inquiry is whether reasonable minds could differ as to whether a specific promise was made, whether the promise was justifiably relied on by the employee, and whether the promise was breached. Swanson, 118 Wn.2d at 524; Thompson, 102 Wn.2d at 233. These are questions for the trier of fact unless reasonable minds could reach but one conclusion. Thompson, 102 Wn.2d at 233; see also Kohn v. Georgia-Pacific Corp., 69 Wn. App. 709, 850 P.2d 517 (1993). Language to the contrary in Hatfield and Adler is incompatible with Washington State Supreme Court precedent, and thus without effect.

IV

Admissibility of Evidence

Simpson Paper claims the trial court erred in admitting evidence of other firings by Burnside’s supervisor.⁹

Admission of evidence lies within a trial court’s discretion. Davis v. Globe Mach. Mfg. Co., 102 Wn.2d 68, 76, 684 P.2d 692 (1984); ER 403. As such, it is reviewed for abuse of discretion. Davis, 102 Wn.2d at 76 (citing Goodell v. ITT-Federal Support Servs., Inc., 89 Wn.2d 488, 493, 573 P.2d 1292 (1978)). Discretion is abused when it is exercised in a manifestly unreasonable manner, or based on untenable grounds or reasons. Davis, 102 Wn.2d at 77 (citing State ex rel. Carroll v. Junker, 79 Wn.2d 12, 482 P.2d 775 (1971)).

Here the evidence of two former Simpson employees was admitted to show Fannon had terminated others under similar circumstances as Burnside was alleging. The court permitted one employee to testify he was fired at age 53, without warning, after 25 years of employment at Simpson. Clerk’s Papers, at 1868-70. The trial court also permitted Fannon to be questioned about the termination of another employee, to show the proffered reasons for his termination were untrue. See Report of Proceedings vol. 2, at 183.

Although the testimony may not have been highly probative, its admission was relevant to Burnside’s claim of employment discrimination and breach of an implied contract. As such, its admission does not constitute an abuse of discretion.

V

Sufficiency of The Evidence

Finally, Simpson Paper maintains the evidence was insufficient to support a finding that Simpson discharged Burnside because of his age. Overturning a jury verdict is appropriate only when it is clearly unsupported by substantial evidence. This court has explained:

. . . This court will not willingly assume that the jury did not fairly and objectively consider the evidence and the contentions of the parties relative to the issues before it. Phelps v. Wescott, 68 Wn.2d 11, 410 P.2d 611 (1966). The inferences to be drawn from the evidence are for the jury and not for this court. The credibility of witnesses and the weight to be given to the evidence are matters within the province of the jury and even if convinced that a wrong verdict has been, rendered, the reviewing court will not substitute its judgment for that of the jury, so long as there was evidence which, if believed, would support the verdict rendered. Burke v. Pepsi-Cola Bottling Co., 64 Wn.2d 244, 391 P.2d 194 (1964).

(Italics ours.) State v. O’Connell, 83 Wn.2d 797, 839, 523 P.2d 872, 77 A.L.R.3d 874 (1974).

Fannon testified Burnside’s behavior was rude and unprofessional. Burnside testified this was untrue, and testified his evaluations had always been excellent. Both Fannon and Burnside had their testimony corroborated by others. The case, then, turned primarily on the credibility of the witnesses. Although there was no direct evidence Burnside was terminated because of his age, Burnside did present circumstantial evidence which, if believed, supports the verdict. Under these circumstances, Simpson Paper’s challenge to the sufficiency of the evidence must fail.

The trial court and Court of Appeals are affirmed.

Andersen, C.J., and Brachtenbach, Dolltver, Durham, Smith, Guy, and Johnson, JJ., concur.

1 Simpson Timber was ultimately dismissed as a party.

2 Simpson Paper does not challenge the application of Washington law on the contract claim.

3 A "false” conflict refers to a situation where the laws or interests of the concerned states are not in conflict. See Pacific Gamble Robinson Co. v. Lapp, 95 Wn.2d 341, 345 n.1, 622 P.2d 850 (1980). See generally Robert A. Leflar, et al., American Conflicts Law § 92, at 270-71 (4th ed. 1986).

4 The California Fair Employment and Housing Act (FEHA), ch. 992, § 4, 1980 Cal. Stat. 3138, 3140-65 (codified as amended at Cal. Gov’t Code § 12900-12996 (Deering 1982 & Supp. 1988), is a reenactment of the Fair Employment Practices Act (FEPA).

5 Cf. Dean v. Jet Servs. West, Inc., 782 F. Supp. 498, 500-01 (S.D. Cal. 1991).

6 Even before Rojo, it was possible for an age discrimination claimant to circumvent the administrative scheme by requesting a right-to-sue letter, which the Department overseeing FEPA granted at the employee’s request as a matter of course when settlement appeared unavailing. See Rojo, at 84 n.11. See also Snipes v. Bakersfield, 145 Cal. App. 3d 861, 868 n.3, 193 Cal. Rptr. 760, 764 (1983).

7 The jury found in favor of Burnside on both of his alternative theories, violation of RCW 49.60 and breach of an implied contract created by the terms of the management guide. It is therefore possible to avoid reaching the contract question since the trial court and Court of Appeals can be affirmed on the statutory cause of action. We nevertheless reach the contract question in order to dispel confusion in the lower appellate courts.

8 Under "Types of Terminations”, the following list appears. The categories seem to be exhaustive, and indicate only terminations "for cause”:

"1.2 Terminations will be classified as:

"(a) Resignations, if initiated by the employee.

"(b) Releases, if initiated by the company for cause.

"(c) Curtailment, if initiated by the company for reduction of work force.

"(d) Retirement, when an employee commences to receive normal, early or disability retirement benefits.

“(e) Deceased, upon death of employee.” (Italics ours.)

Under "Release”:

"Release will constitute an immediate termination of employment, and may be considered in instances such as misconduct, failure to return without notice on schedule from an absence . . ., or incompetence or otherwise unsatisfactory work performance, if previous warnings have been given and employee has had the opportunity to resign.

“All releases will be reviewed with the supervisor’s superior and the personnel manager to determine justification for the release and final action to be taken.” (Italics ours.) Clerk’s Papers, at 774-75.

9 For this argument Simpson relies on Roberts v. ARCO, 88 Wn.2d 887, 893, 568 P.2d 764 (1977). That reliance is misplaced. Our disposition in ARCO was to affirm the trial court’s exercise of discretion. There, the trial court excluded the testimony of two former ARCO employees because there was no showing they held similar positions, worked under similar circumstances, or were terminated in like manner.