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decided: November 28, 1969.


Appeal from order of Court of Common Pleas of Allegheny County, Jan. T., 1967, No. 1903, in case of Harry Schott v. Westinghouse Electric Corporation.


Lloyd F. Engle, Jr., with him Wilner, Wilner & Kuhn, for appellant.

Frank L. Seamans, with him William B. Mallin, Wm. Alvah Stewart, and Eckert, Seamans & Cherin, for appellee.

Bell, C. J., Jones, Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Pomeroy. Concurring Opinion by Mr. Justice Roberts. Mr. Justice O'Brien joins. Dissenting Opinion by Mr. Chief Justice Bell.

Author: Pomeroy

[ 436 Pa. Page 282]

During the period 1962 to 1965 (the relevant times for the purpose of this case), there was in effect at Westinghouse Electric Corporation (hereinafter "Company") a formalized suggestion program under which its employees were invited to submit to the Company any suggestions they might have for increasing production and reducing costs. The question in this case is whether the Company may have become contractually obligated to one of its employees, appellant herein, by virtue of the actions of both parties pursuant to the program. This appeal is from the sustaining of preliminary objections by the Company in the nature of a demurrer. Consequently, the facts before us are confined to the appellant's complaint, as amended, and the demurrer admits for present purposes every well pleaded material fact set forth in the pleading to which it is addressed, as well as the inferences reasonably deducible therefrom. Eden Roc Country Club v. Mullhauser, 416 Pa. 61, 204 A.2d 465 (1964); Woodyatt v. Bank of Old York Road, 408 Pa. 257, 182 A.2d 500 (1962); Mistick v. Cammack, 397 Pa. 296, 154 A.2d 588 (1959). See Goodrich-Amram ยง 1017(b)-11.

The terms of the suggestion program are set forth in the documentary exhibits attached to the complaint. In pertinent part, the basic form of the suggestion system provides as follows:

"With a view toward increasing production and reducing costs, thereby promoting employment, the Westinghouse

[ 436 Pa. Page 283]

Electric Corporation encourages practical suggestions from employes.

"Cash awards ranging from a minimum of $5.00 to a maximum of $15,000 will be paid for each suggestion adopted . . .

"Suggestions must be submitted on this form . . . All suggestions will be passed upon as soon as possible, and suggesters will be notified as to the action taken . . ."

Space was provided for the statement of the employee's suggestion. Beneath that space and immediately above the signature line where the employee-suggester was to sign was the following stipulation:

"In submitting this suggestion, I agree that the decision of the local Suggestion Committee on all matters pertaining to this suggestion, my eligibility for an award, and the amount of award, if any, will be final. I further understand that if this suggestion is rejected, I have the right to reopen it within 12 months from the date of rejection, or to re-submit it as a new suggestion at any time thereafter.

"Note: If adopted; Minimum Award -- $5.00

Maximum Award -- $15,000"

In May, 1962, the appellant, an employee of the Company, submitted a suggestion that certain panels used on circuit breakers manufactured by the Company be made from fabricated heavy gauge steel rather than the material then used, cast aluminum. Appellant submitted the suggestion, as required, on the standard form with its stipulation that the decision of the Suggestion Committee should be determinative as to all matters. Thereafter, the Suggestion Committee informed the appellant in writing that his suggestion had been rejected (Exhibit C to the complaint). This communication stated that a change of the panels would necessitate large expenditures for design work, the building of models, and laboratory tests, and that these

[ 436 Pa. Page 284]

    costs would more than offset any savings which might be realized from the proposed change. Appellant was informed that "If breaker re-design is started for other reasons in the future, this idea will be considered." He was also advised, in the same communication, that his suggestion could be reopened within a year or resubmitted after a year.

In September, 1963, appellant resubmitted his suggestion, again using the Company's prescribed form for his submission; in January, 1964, he was informed that the suggestion had again been rejected (Exhibit E to the complaint). In explaining its action, the Suggestion Committee cited its original reasons, adverted to further problems in the design of the panels resulting from the need to use nonmagnetic materials in the panel, and mentioned that redesign of the panels to include partial nonmagnetic materials was being undertaken as part of an independent cost reduction study.

At this point in the narrative, resort must be had to the complaint itself, as distinguished from the documentary exhibits. The complaint averred, in paragraph 8, that thereafter, probably in 1964, the Company "did adopt and utilize" the recommendations advanced by the suggestion, and the plaintiff (appellant) thereupon requested reconsideration of his suggestion. The Company apparently made such a review and communicated the results thereof to appellant in a letter of May, 1965 (Exhibit F to the complaint). This letter adverts to the Company's "application of the same basic idea [as that contained in appellant's suggestion] in a redesign" and confirms the Company's view that the reason given for the initial rejection of the suggestion in 1962 had ...

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