Lewis v. Equitable Life Assurance Society of the United States

361 N.W.2d 875
CourtCourt of Appeals of Minnesota
DecidedMarch 29, 1985
DocketC8-84-1065
StatusPublished
Cited by11 cases

This text of 361 N.W.2d 875 (Lewis v. Equitable Life Assurance Society of the United States) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lewis v. Equitable Life Assurance Society of the United States, 361 N.W.2d 875 (Mich. Ct. App. 1985).

Opinions

OPINION

CRIPPEN, Judge.

Respondents, four former employees of appellant, brought suit against appellant for breach of an employment contract and defamation. The trial court jury found that an employee handbook was sufficient to create an employment contract, and that appellants violated this contract and defamed respondents by stating grounds of “gross insubordination” when terminating their employment. The jury assessed compensatory and punitive damages. The employer contends the verdict was not supported by sufficient evidence and was based on erroneous trial court instructions. We remand to exclude future damages for breach of contract, and we affirm on other issues.

FACTS

Respondents, Carole Lewis, Mary Smith, Michelle Rafferty and Suzanne Loizeaux, are former employees of appellant, The Equitable Life Assurance Society of the United States. Respondents were hired by appellant between March and June of 1980, and were terminated in January 1981.

Respondents accepted positions as dental claims approvers. They did not execute written contracts of employment, but were employed pursuant to oral agreements for an indefinite period of time. Each was assured that her job was secure as long as her production stayed at a satisfactory level.

[878]*878At the time of hiring, each employee received a personnel policy handbook entitled “You and the Equitable.” Together with a statement of employee “responsibilities,” the handbook points out:

The Equitable takes seriously its responsibilities for communicating and carrying out the personnel policies described in this book.

The Equitable handbook contains the following provisions on job terminations:

The Equitable seeks to ensure the job security of all salaried employees performing satisfactorily in essential positions.
Dismissals usually come about because of an individual’s indifference to work quality or attendance standards. Except for misconduct serious enough to warrant immediate dismissal, no employee will be discharged without previous warning and a period in which to bring performance up to a satisfactory level. When a dismissal is necessary and the employee has been with The Equitable for six months or longer, severance pay may be granted, depending on the reasons for the dismissal.

The production and performance of the four employees was satisfactory at all times.

In late 1980, the four respondents were sent to Equitable’s Pittsburgh office to provide assistance in handling dental claims. They were briefed on expenses, but were neither given copies of Equitable’s expense guidelines nor advised they would be required to file a written expense report.

Upon returning to St. Paul, the four employees were commended for their superior performance in Pittsburgh. At the same time, each employee was asked to reconstruct her expenses and submit an expense report. An Equitable manager indicated the completed reports were unacceptable. The manager asked each respondent to change items in the reports for maid tips, either by burying them in other categories or listing them on a separate sheet of paper. Each employee did as she was asked. However, Equitable refused to accept the changed reports. The management asked that the respondents again alter the reports to reflect lower totals. Then a memo was distributed explaining the “acceptable” amount for each category. Respondents decided to keep the expense reports as they were because they reflected the actual expenses incurred on the trip to Pittsburgh.

Neither at the time nor at trial did Equitable claim that any expenses listed by the employees were not incurred. Still, in January 1981, respondents received a letter from another member of the management team. This letter set out new guidelines and lower totals than the letter issued in November. The company again demanded that the employees alter the reports to reflect lower expenditures. The management prepared a revised expense report for one of the employees, Michelle Rafferty, with totals roughly $130 less than her original report. Rafferty did not sign the report because it did not honestly reflect her expenses.

An additional employee, Linda McBee, had also done work in the Pittsburgh office. Upon receipt of the January 1981 letter, McBee agreed to alter her expense report in order to keep her job. In addition to signing the revised report, she was forced to pay Equitablé over $200, the difference between the expense advance and expenses listed on the revised report.

On January 23, 1981, an Equitable vice-president ordered that the four respondents be terminated for gross insubordination. The officer asked, however, that $50 be obtained from one respondent and $70 from another before they were told of the firing. The payments represented the excess of Pittsburgh expense advances over actual amounts the employees spent. The employees refunded the money as requested, and later the same day each was asked again to alter her expense report and then was terminated after deciding to stand on the accurate report.

Following their termination, the employees sought other positions of employment. [879]*879While filling out applications and interviewing, each of the respondents admitted (in response to inquiries) that her termination was for gross insubordination.

In August 1981, the employees commenced an action against Equitable for breach of an employment contract, wrongful termination and defamation. The trial court dismissed the tort claim of wrongful termination. A trial court jury found that Equitable had breached employment contracts, and defamed respondents. The jury assessed breach of contract damages of $22,100 for respondent Lewis, $43,000 for respondent Smith, $49,500 for respondent Rafferty, and $10,500 for respondent Loiz-eaux. Defamation damages of $75,000 were assessed for each respondent. In addition to compensatory damages, the jury awarded each respondent $150,000 punitive damages based on its finding of willfulness in appellant’s defamation conduct.

This appeal is on denial of Equitable’s motion for a new trial, or, alternatively, for judgment notwithstanding the verdict.

ISSUES

1. Could the jury lawfully find that provisions of the Equitable employee handbook constituted a contract of employment?

2. Did the trial court err in instructing the jury that respondents’ publication of a statement can form the basis for a defamation claim against Equitable?

3. Did the trial court err in instructing the jury that the truth of a statement should be measured by its actual implications?

4. Did the trial court err in its instructions to the jury regarding the qualified privilege of an employer in a defamation case?

5. Was the jury’s award of compensatory and punitive damages supported by the evidence?

ANALYSIS

1. Breach of contract.

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Lewis v. Equitable Life Assurance Society of the United States
361 N.W.2d 875 (Court of Appeals of Minnesota, 1985)

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