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ROBERT W. BANAS v. MATTHEWS INTERNATIONAL CORPORATION (12/20/85)

SUPERIOR COURT OF PENNSYLVANIA


filed: December 20, 1985.

ROBERT W. BANAS
v.
MATTHEWS INTERNATIONAL CORPORATION, APPELLANT

Appeal from the Judgment in the Court of Common Pleas of Allegheny County, Civil No. G.D. 80-9221

COUNSEL

Eric P. Reif, Pittsburgh, for appellant.

Robert C. Gallo, Pittsburgh, for appellee.

Spaeth, President Judge, and Cavanaugh, Wickersham, Rowley, Olszewski, Montemuro, Beck, Tamilia and Johnson, JJ. Rowley, J., files a concurring and dissenting Statement. Beck, J., files a concurring and dissenting opinion in which Johnson, J., joins.

Author: Spaeth

[ 348 Pa. Super. Page 466]

This is an action for defamation and breach of contract. The action arises out of appellee's dismissal as an employee of appellant. Appellant is engaged in the business of making, among other things, bronze grave markers. When appellee was dismissed, in July 1979, he was a tooler. In late June 1979, the Resurrection Cemetery, one of appellant's customers, notified appellant that contrary to the settled practice between the cemetery and appellant, a grave marker made at appellant's plant had been placed on

[ 348 Pa. Super. Page 467]

    a grave in the cemetery without having first been purchased through the cemetery. Appellant engaged a private investigator to determine who had removed the marker from its plant. The investigator's report disclosed that appellee had, and that the marker had been placed on his nephew's grave. On July 31, 1979, following a meeting with several of appellant's officers during which appellee admitted having made and removed the marker, appellee was dismissed. Appellee's action for defamation is based on certain remarks concerning his dismissal made by two of appellant's officers. His action for breach of contract alleges breach of a section of appellant's employee handbook that provided that employees could do personal jobs with their supervisor's permission. A jury awarded appellee $15,000 for defamation, $25,000 punitive damages for defamation, and $10,000 for breach of contract. We affirm the award of $15,000 for defamation but otherwise reverse and enter judgment in favor of appellant. Appellee did not prove the sort of conduct on the part of appellant's officers that would entitle him to punitive damages for defamation. Neither did he prove the existence of an employment contract that could provide the basis of an action for breach of contract. The trial court should therefore have granted appellant's motion for judgment notwithstanding the jury's verdicts for punitive damages and damages for breach of contract.

I

The Defamation Claim

Appellant has argued two issues: whether the trial court erred in charging the jury that appellant's conditional privilege could be abused, and therefore lost, by a defamatory communication that was made negligently; and whether the trial court erred in charging the jury on punitive damages.

-A-

Appellant argues that its conditional privilege could be abused, and therefore lost, only by a defamatory communication

[ 348 Pa. Super. Page 468]

    made with malice -- not simply negligently, as the trial court charged the jury. This argument may be disposed of summarily.

In Rutt v. Bethlehems' Globe Publishing Co., 335 Pa. Super. 163, 484 A.2d 72 (1984), we stated:

Matus [v. Triangle Publications, Inc., 445 Pa. 384, 286 A.2d 357 (1971) cert. denied, 408 U.S. 930, 92 S.Ct. 2494, 33 L.Ed.2d 343 (1972)], . . . declare[s] quite unequivocally, that under Pennsylvania law, once the issue of conditional privilege is raised by a defendant who has been sued by a private figure for defamatory communications concerning matters which are not of public concern, the burden of proof of the plaintiff in order to establish abuse of the conditional privilege is 'want of reasonable care and diligence to ascertain the truth' or more simply put, negligence. Id. 445 Pa. at 398, 286 A.2d at 365 (quoting Purcell v. Westinghouse Broadcasting Co., supra, 411 Pa. [167] at 179, 191 A.2d [662] at 668 [(1963)].

335 Pa. Super. at 185, 484 A.2d at 83.

We made this statement in the course of discussing the effects of the United States Supreme Court's decisions in Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974) ("so long as they do not impose liability without fault, the states may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual"), and Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971) (private figure plaintiff must prove 'actual malice') (plurality opinion), on Pennsylvania defamation law. The issue in Rutt was not the burden of proof to establish abuse of a conditional privilege but rather the burden to establish liability in a private figure defamation case, but our conclusion that Gertz and Rosenbloom had not altered the burden to establish liability compels the conclusion here that neither did those decisions alter the burden to establish abuse of a conditional privilege, and the latter burden is settled. The Pennsylvania Supreme Court has long held that "[w]ant of reasonable

[ 348 Pa. Super. Page 469]

    care and diligence to ascertain the truth, before giving currency to an untrue communication, will destroy the privilege." Montgomery v. Dennison, 363 Pa. 255, 262, 69 A.2d 520, 524 (1949), quoting Hartman v. Hyman & Lieberman, 287 Pa. 78, 83-84, 134 A. 486, 487-488 (1926). See also Baird v. Dun & Bradstreet, Inc., 446 Pa. 266, 275, 285 A.2d 166, 171 (1971) (negligence establishes abuse of conditional privilege). And see Hepps v. Philadelph Newspapers, Inc., 506 Pa. 304, 314, 485 A.2d 374, 380 (1984), appeal pending U.S. , 105 S.Ct. 3496, 87 L.Ed.2d 628 (1985) ("privilege is abused if the defamatory statement is negligently published").*fn1

[ 348 Pa. Super. Page 470]

Here, too, the trial court should have withdrawn the issue of punitive damages from the jury. Having failed to do that, the court should have granted appellant's motion for judgment n.o.v. as to the award of punitive damages.

Two statements served as the basis of appellee's defamation claim. The first statement was made at a meeting on July 31, 1979, preceding appellee's dismissal for having made a grave marker for his nephew's grave. The meeting was attended by Francis Donnelly, Vice President in charge of manufacturing, Charles Krepp, Vice President and Plant Manager, and Alfred Lee, Vice President and Director of Personnel. Appellee was shown a photograph of the grave marker and was asked whether and how he had made it. He admitted having made and removed the marker. N.T. 53. Then, according to appellee, Donnelly stated: "We can't have thieves around here, because we have a lot of valuable stuff in here." Id. The second statement was by Krepp. In response to the "uproar" that followed appellee's dismissal, Krepp met with employees in small groups to explain the reasons for the dismissal. At trial Krepp testified that "[p]eople were very concerned, because their security had been shaken." N.T. 159-60. He told the employees that appellee had been dismissed for the "unauthorized removal of company property." N.T. 161. He "may have" told "one or two employees" that appellee could have been "indicted because of this action." Id. He also stated that appellee "not only violated the company rules, but he also violated the rules of the municipality." Id. (quotation from Krepp's deposition as read into trial transcript).

Appellee's case hinged upon whether he had received permission to make the grave marker. He claimed that he

[ 348 Pa. Super. Page 472]

    had received permission in compliance with the following provision in appellant's employee handbook:

Personal Jobs

Employees are not generally permitted to work on personal jobs during company time or on company premises. However, supervisors will often cooperate by giving permission for you to use our equipment and waste material for your personal work.

In support of this claim, appellee testified that he asked for and received permission to make the marker from Jack Campbell, his immediate supervisor. N.T. 42-43, 333. Appellee also testified that William Donatelli, the general foreman of the plant, gave him permission to take the piece of bronze scrap that he used in making the marker, N.T. 37, and that Betty Desport, a nonsupervisory receiver, gave him permission to take a scrap bronze vase used in making the marker, N.T. 76-77, 330. (Campbell, Donatelli and Desport denied having given the permission that appellee claimed they had. N.T. 333-34, 325, 330.) Appellee also testified that some seven to eight years previously he had made a marker for the grave of Donatelli's father as a personal job. N.T. 32. (Donatelli testified that he had not. N.T. 324.)

Appellant introduced a written policy statement, entitled "Bronze Division Procedures", that provided in part: "For the good of all concerned it should be thoroughly understood that we cannot run the risk of offending our customers by permitting employees to buy direct from Matthews. Every employee who desires to purchase a bronze memorial should contact the cemetery office and arrange for said purchase." N.T. 274-75. Appellee testified, however, that he did not become aware of this policy until after he had been dismissed. N.T. 81.

Also in regard to appellant's policy, appellant's witnesses testified that making a grave marker did not come within the handbook provision covering personal jobs. For example, Donatelli testified that under company policy, "you weren't allowed to make a memorial" for personal purposes.

[ 348 Pa. Super. Page 473]

N.T. 324. He also stated that he had become aware of the policy before he became a supervisor. Campbell testified that "[w]e never classified a [c]emetery memorial as a 'government job'" N.T. 325.*fn3 He stated that he had learned of the policy when he first became employed in 1946. N.T. 333-34. Donnelly testified that he considered personal jobs as "favor type projects that people request, such as house numbers, identification plates for the front of automobiles, perhaps initials for car doors . . ." N.T. 344. Removing a marker from the plant, he said, is "an obvious violation of company policy." N.T. 345. Ralph West, Vice President and manager of memorial and architectural systems, testified that company policy was not to "give cemetery memorials to employees . . . because it offends our customers." N.T. 275. He described typical personal jobs as projects like "house numbers, license plates, numbers, desk plates, things like that, . . ." N.T. 276. Krepp testified that "the company was more than happy to allow people to use scrap or waste material for small personal jobs. It's in our handbook." N.T. 148. He further testified that "[a] license plate with initials 'RAB' on it is something that could very well be a bona fide order, but more likely it is a personal job. That is totally different than a memorial." N.T. 150.

When Krepp and West learned that a marker had been removed from the plant, they reported to Donnelly as their superior. West had received a telephone call from one of the plant managers "indicating that the cemetery had called and was quite concerned that we had changed our policy and were supplying memorials directly to our customers." N.T. 281. The matter was then turned over to James Parker, Vice President and General Counsel. N.T. 282. Parker ordered a private firm, Universal Security Consultants, Inc., to conduct an investigation to determine who had removed the marker. N.T. 192. Meanwhile, Krepp held a meeting of the plant foremen, including Campbell and Donatelli.

[ 348 Pa. Super. Page 474]

Krepp testified that he "asked them the specific question, were memorials ever approved for personal jobs, and the answer was a resounding no." N.T. 150. (Campbell testified that he did not recall Krepp or anyone else asking him "if Bob Banas had permission to do a 'government job.'" N.T. 135. Donatelli was not asked about the foremen meeting.) The private investigator's report concluded that appellee had removed the marker from the plant.*fn4 When Krepp told Donnelly the results of the report, Donnelly called the July 31 meeting at which, after reviewing the report, with appellee present, he said, "We can't have thieves around here . . . ." The testimony on the issue whether during that meeting appellee was asked whether he had received permission to make the marker is at variance. Appellee testified that he told those attending the meeting that Campbell had given him permission. N.T. 86. Krepp testified that appellee said he had received permission from Donatelli. N.T. 304. According to Lee, appellee was asked whether he had received permission but he "did not . . . name anyone at that time." N.T. 309. Donnelly testified that appellee said that he had not received permission. N.T. 347.

Of course, in considering the sufficiency of this evidence, we must view it in the light most favorable to appellee:

[ 348 Pa. Super. Page 475]

In reviewing an order denying judgment n.o.v., we must view the evidence, together with all reasonable inferences therefrom, in the light most favorable to appellee as the verdict winner. See, e.g., Lynch v. Metropolitan Life Insurance Co., 427 Pa. 418, 423, 235 A.2d 406, 409 (1967). See also, Atkins v. Urban Redevelopment Authority of Pittsburgh, 489 Pa. 344, 414 A.2d 100 (1980). Judgment n.o.v. should be entered when the facts are such that no two reasonable persons could disagree that the verdict was improper. See, e.g., Cummings v. Page 475} Borough of Nazareth, 427 Pa. 14, 25-26, 233 A.2d 874, 880-81 (1967); Bottorf v. Waltz, 245 Pa. Super. 139, 142-44, 369 A.2d 332, 334 (1976). Accordingly, when the lower court would be warranted in giving binding instructions to the jury, see, e.g., Connelly v. Ziegler, 251 Pa. Super. 521, 523-24, 380 A.2d 902, 903 (1977); Albright v. Metropolitan Life Insurance Co., 143 Pa. Super. 158, 164, 17 A.2d 709, 711 (1941), or when the evidence is insufficient to sustain a verdict against the losing party, see, e.g., Fitzgerald v. McCutcheon, 270 Pa. Super. 102, 105-06, 410 A.2d 1270, 1271 (1979); Szumski v. Lehman Homes, Inc., 267 Pa. Super. 478, 480-81, 406 A.2d 1142, 1143 (1979); Trawick v. Nationwide Mutual Insurance Co., 242 Pa. Super. 271, 274-75, 363 A.2d 1265, 1266-67 (1976), the court should enter a judgment n.o.v.

McCloskey v. New York Life Insurance Company, 292 Pa. Super. 1, 5, 436 A.2d 690, 691-92 (1981).

By this test, there can be no question that the evidence was sufficient to show that the two statements in question were false and defamatory. The jury was entitled to accept appellee's testimony that he had been given permission to make the grave marker, and to reject the testimony of Campbell, Donatelli, and Desport that he had not been, from which it follows that the jury was entitled to find that appellee was not a thief. This conclusion, however, does not dispose of the issue of punitive damages. On that issue, the dispositive questions are: What was Donnelly's state of mind, when he charged appellant with being a thief, and what was Krepp's, when he told other employees that appellee had taken company property without authority and could be indicted? Did either man make his statement "with knowledge of the falsity of its content" or "with reckless disregard of the truth of its content"? Hepps v. Philadelphia Newspapers, Inc., supra, 506 Pa. at 331, 485 A.2d at 389. And was the evidence of either man's state of mind "clear and convincing"? Id.

To answer these questions we must focus our attention on the evidence of how matters stood as of the July 31st

[ 348 Pa. Super. Page 476]

    meeting, when Donnelly charged appellee with being a thief. The evidence on this point is substantially uncontradicted: Donnelly knew that a grave marker had been taken; that this was against both company policy and practice of many years standing; and that a private investigator, engaged on the advice of company counsel, had reported that appellee had taken the grave marker. In addition, Donnelly had received a report from Krepp, his immediate subordinate and the person in charge of the plant's operations; Krepp had met with the foremen and had been told by them that they had never given approval for a grave marker to be made as a personal job. According to appellee's testimony, which we take as true because the jury accepted it, he told Donnelly that Campbell, his foreman, had given him permission to make the marker. Obviously, Donnelly did not believe appellee, or else he would not have rejoined that "[w]e can't have thieves around here . . . .; (stating, in effect, "I don't believe you had permission; I think you stole the marker.") We find no basis for concluding, however, either that Donnelly knew that what he had said was false, or that he said it with reckless disregard of whether it was false.

Appellee contends that "management" -- presumably referring to Donnelly and Krepp -- should have asked Campbell whether he had given appellee permission to make the grave marker. Supplemental Brief for Appellee at 22. This argument, however, is not persuasive.

It cannot be maintained that Donnelly's failure to ask Campbell shows that he knew that his statement to appellee was false. Thus what appellee evidently contends is that Donnelly made his statement recklessly. But the evidence refutes, or at least does not support, that contention. An executive who relies on settled company policy, an investigator's report, and the plant manager's report is not acting recklessly. The fallacy of appellee's argument is the assumption -- which appellee either does not recognize or does not acknowledge -- that if Donnelly had asked Campbell whether he had given appellee permission to make the

[ 348 Pa. Super. Page 477]

    grave marker, Campbell would have said that yes, he had. Nothing supports this assumption. To the contrary, Campbell testified on cross-examination that appellee had never asked him for permission to make a grave marker. N.T. 127.

Nor can it be maintained that Krepp's failure to ask Campbell whether he had given appellee permission to make the grave marker warrants punitive damages. When Krepp met with the plant foremen, including Campbell, it had not been determined that appellee had taken the marker. It is therefore hardly surprising that Krepp only asked the foremen whether they had given anyone permission to take the marker; he had no reason to ask whether appellee had been given permission. Appellee argues that after he was dismissed by Donnelly, at the July 31st meeting, "Charlie Krepp, the plant superintendent, without talking to Campbell, then went onto the plant floor and called [appellee] a thief and stated that he could be indicted in front of most all of his colleagues." Supplemental Brief for Appellee at 22. This evidence, however, could not show that Krepp knew that what he was saying was false. As for whether he said it with reckless disregard of whether it was false: Again, as is the case with regard to Donnelly's statement, appellee assumes that if, after receiving the private investigator's report, Krepp had asked Campbell whether he had given appellee permission to take the grave marker, Campbell would have said that yes, he had, and there is no basis in the evidence for that assumption.*fn5

[ 348 Pa. Super. Page 478]

What appellee has done is to confuse his claim for punitive damages for defamation with his claim for compensatory damages for breach of an alleged employment contract. This confusion is manifest in his brief. Thus he contends that he was "made a scapegoat because the [cemetery company] threatened to cancel its business with [appellant]." Supplemental Brief for Appellee at 6. And see id. at 18. Whether appellant acted wrongfully in dismissing appellee is a separate issue, which will be discussed next; it has nothing to do with whether Donnelly's and Krepp's defamatory utterances were made in such a way as to warrant an award of punitive damages.

II.

The Contract Claim

As was noted at the outset, in describing this appeal, appellee's action alleges breach of a section of appellant's employee handbook that provided that employees could do personal jobs with their supervisor's permission. Appellant argues that appellee's "theory of recovery is simply not applicable to the facts in this case under the law of Pennsylvania." Brief for Appellant at 29. We agree. As will become apparent, what appellee has argued, -- apparently without recognizing the fact -- is that an employee handbook that does not provide job security may be contractually enforced as if it did provide job security. Appellee refers to no authorities in support of this proposition, and we are aware of none. Indeed, the proposition is contrary to the

[ 348 Pa. Super. Page 479]

    employment-at-will rule, which still is the rule in Pennsylvania.

-A-

The Employment-at-Will Rule

In Pennsylvania the settled rule is that "[a]bsent a statutory or contractual provision to the contrary, the law has taken for granted the power of either party to terminate an employment relationship for any or no reason." Geary v. United States Steel Corp., 456 Pa. 171, 175, 319 A.2d 174, 176 (1974). This rule, which is often referred to as the employment-at-will rule, originated in the late nineteenth century.*fn6 The rule has been sharply criticized in recent years by commentators arguing that it gives employers too much discretion and allows them to take unfair advantage of employees. See, e.g., Blades, Employment at Will Vs. Individual Freedom: On Limiting the Abusive

[ 348 Pa. Super. Page 480]

Exercise of Employer Power, 67 Colum.L.Rev. 1406 (1967); Summers, Individual Protection Against Unjust Dismissal: Time for a Statute, 62 Va.L.Rev. 481 (1976); Note, Protecting At-Will Employees Against Wrongful Discharge: The Duty to Terminate Only in Good Faith, 93 Harv.L.Rev. 1816 (1980); Note, Implied Contract Rights to Job Security, 26 Stan.L.Rev. 335 (1974). In response to such criticism, the courts in some States have in effect abrogated the rule by implying into all employment contracts a term imposing on the employer the duty to dismiss an employee only in good faith and for just cause. See, e.g., Gates v. Life of Montana Insurance Co., 196 Mont. 178, 638 P.2d 1063 (1982); Monge v. Beebe Rubber Co., 114 N.H. 130, 316 A.2d 549 (1974) modified in Howard v. Dorr Woolen Co., 120 N.H. 295, 414 A.2d 1273 (1980); Cleary v. American Airlines, Inc., 111 Cal.App.3d 443, 168 Cal.Rptr. 722 (1980).*fn7 Other courts have declined to imply a just cause term into employment contracts. See, e.g., Parnar v. Americana Hotels, Inc., 65 Hawaii 370, 652 P.2d 625 (1982); Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081 (1984); Brockmeyer v. Dun & Bradstreet, 113 Wisc.2d 561, 335

[ 348 Pa. Super. Page 481]

N.W.2d 834 (1983). A recent and especially helpful discussion and collection of authorities appears in Woolley v. Hoffmann-LaRoche, Inc., 99 N.J. 284, 491 A.2d 1257 (1985).

We need not decide whether to align ourselves with the critics or defenders of the employment-at-will rule. Appellee concedes -- as under the evidence he must -- that he had no definite term of employment with appellant. He might have argued that even though he had no definite term of employment, we should not apply the employment-at-will rule but should instead decide to abrogate the rule. We need not decide whether Geary would preclude such a decision, for appellee has not so argued. Accordingly, his claim must be dismissed -- unless he has pleaded and proved that he is within one of the exceptions to the rule.

-B-

Exceptions to the Employment-at-Will Rule

In recent years both the Congress and State legislatures have created statutory exceptions to the employment-at-will rule.*fn8 In addition, the Supreme Court and this court have developed as a matter of common law a public policy exception to the rule.

[ 348 Pa. Super. Page 482]

In Geary v. United States Steel Corporation, supra, the Supreme Court stated that "there are areas of an employee's life in which his employer has no legitimate interest", and that "[a]n intrusion into one of these areas might plausibly give rise to a cause of action, particularly where some recognized facet of public policy is threatened." 456 Pa. at 184, 319 A.2d at 180. Relying on Geary, we have held that a public employer may not deny employment on the basis of a conviction for which the offender has been pardoned, unless the conviction was reasonably related to fitness for the job, Hunter v. Port Authority of Allegheny Page 482} County, 277 Pa. Super. 4, 419 A.2d 631 (1980), and that an employer may not discharge an employee because he accepts jury service, Reuther v. Fowler & Williams, Inc., 255 Pa. Super. 28, 386 A.2d 119 (1978). See also Yaindl v. Intersoll-Rand Co., supra, 281 Pa. Super. at 577, 422 A.2d at 620 (in reviewing order dismissing claim for wrongful discharge, "we must weigh several factors, balancing against appellant's interest in making a living, his employer's interest in running its business, its motive in discharging appellant and its manner of effecting the discharge, and any social interests or public policies that may be implicated in the discharge.").*fn9

Appellee neither pleaded nor proved that his case is within any statutory exception to the employment-at-will rule, or that it is within the public policy exception. We must therefore inquire whether he has shown that for some other reason the rule is inapplicable.

When, as in this case, an employment arrangement does not contain a definite term, it will be presumed that the employment-at-will rule applies. The employee may, however, be able to overcome the presumption:

The burden is on the plaintiff . . . to overcome the presumption by showing facts and circumstances establishing some tenure of employment. The intention of the parties governs. One relying on the contract as providing

[ 348 Pa. Super. Page 483]

    for a reasonable length of time must establish something in the nature and circumstances of the undertaking which would create the inference that a definite or reasonable period of employment was contemplated.

Cummings v. Kelling Nut Co., 368 Pa. 448, 451-52, 84 A.2d 323, 325 (1951) (citations omitted).

The question therefore arises whether appellee carried his burden of proof.

Sometimes proof of consideration, when added to proof of services to be rendered, has been sufficient to establish that the employment was not at-will but for a term. Compare Lucacher v. Kerson, 158 Pa. Super. 437, 45 A.2d 245, aff'd 355 Pa. 79, 48 A.2d 857 (1946), (plaintiff's resigning former position in New York to join Philadelphia firm and his plans to move his family to Philadelphia supports promise of "permanent employment") with Cummings v. Kelling Nut Co., supra (when after nine years' employment employee claims that he and employer had agreed that his employment would continue for as long as necessary to compensate him for expenditures made in the business during the first years of employment, employment nevertheless held to have been at-will, Court noting that plaintiff's claim might have been "more plausible" if he had been required to give up another business activity).

Appellee, however, neither pleaded nor proved any consideration other than his services to appellant. Thus, if he is to escape the employment-at-will rule, he must look elsewhere.

In recent years some courts have held that the employment-at-will rule is inapplicable where the employer has issued an employee handbook containing a provision that commits the employer to dismiss an employee for just cause only, and that an action will lie for breach of such a provision. See, e.g., Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980); Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn.1983); Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 443 N.E.2d 441, 457 N.Y.S.2d 193 (1982). It would, however, be

[ 348 Pa. Super. Page 484]

    improper for us to decide whether we agree with the reasoning of these decisions. Indeed, it would be mere dictum, for nowhere in the employee handbook issued by appellant is there a provision that commits appellant to dismiss an employee for just cause only -- nor did appellee plead or argue any such provision. The employee handbook cases, therefore, are irrelevant to this case. In another case we may, or may not, decide to permit recovery for breach of a commitment made by the employer in an employee handbook, but this case does not present that issue.

The evidence and the theory of appellee's case have already been discussed at some length, in examining the issue of punitive damages for defamation. At this point it is enough to recall that the basis of appellee's breach of contract action is that the employee handbook issued by appellant contained a provision stating that an employee could "use our [appellant's] equipment and waste material for your [the employee's] personal work" if given permission by a supervisor. Appellant's evidence was that making a grave marker was not "personal work", but the jury accepted appellee's evidence that it was; appellant's evidence also was that Campbell, one of appellee's supervisors, had not given appellee permission to make the grave marker, but the jury accepted appellee's evidence that he had. Appellee's argument, accepted by the trial court, is that to dismiss him for doing what he was given permission to do was unjust: "he [was] made a scapegoat because the Resurrection Cemetery threatened to cancel its business with [appellant]." Supplemental Brief for Appellee at 6.

There is no merit to this argument. To be sure, according to appellee, and according to the jury, Campbell gave appellee permission to make the grave marker. But according to appellant, Campbell did not give permission. Given the jury's verdict, we may take it as fact that Campbell did give permission. But that fact is irrelevant. Appellant's handbook nowhere provided that an employee would be dismissed only if the facts warranted it. If the

[ 348 Pa. Super. Page 485]

    handbook had contained, if not expressly at least by clear implication, a just cause provision, then appellee's claim might have merit;*fn10 indeed, it would have merit if this court were to decide to accept and follow the reasoning of cases such as Toussaint v. Blue Cross & Blue Shield of Michigan, supra. But as we have said, that is a decision that must await a case in which the action is brought for breach of a just cause provision.*fn11 Since here the handbook did not contain, expressly or by clear implication, any just cause provision, appellee has shown nothing to take his case out of the settled employee-at-will rule. As an employee-at-will, he could be dismissed, as he was dismissed, because appellant believed that he had made the grave marker without permission and knowing that to make it was against long-settled company policy. Whether appellant's belief was

[ 348 Pa. Super. Page 486]

BECK, J., concurring and dissenting:

Factual Background

Banas began his employment with Matthews as a sandblaster (Record at 6a) and advanced to the position of tooler, which he held for 14 or 15 years preceding his discharge (Record at 17a). It was undisputed that Banas was a skilled craftsman and his job performance was good (Record at 120a). In fact, Banas had been selected to work on an important job for Matthews, the making of Elvis Presley's grave marker (Record at 19-20a).

After he was hired, Banas received from Matthews a copy of a booklet entitled "Matthews -- You and Your Company." This employee handbook contained the following provision relating to personal jobs:

Employees are not generally permitted to work on personal jobs during company time or on company premises. However, supervisors will often cooperate by giving permission for you [the employee] to use our equipment and waste material for your personal work.

There was testimony at trial that doing personal jobs, euphemistically called "government jobs," was a commonplace event at the Matthews plant. Banas' immediate supervisor, Jack Campbell, testified that he had never turned down a request for permission to do a "government job."

Banas asked for and received permission to do a personal job using a sheet of scrap bronze from the company shop. There is conflicting testimony on whether Banas told his supervisors, when making the request, that the personal job in question was a grave marker. Campbell, the immediate supervisor, who acknowledges that the request was made, maintains that he did not know that Banas intended to make a grave marker. He stated that he believed, when granting permission, that Banas had in mind a small item such as a license plate or house numbers which were the customary items made by employees for their own use, after permission was obtained. Banas maintains that he told Campbell that he wanted to make a grave marker. Banas acknowledges that he also used a bronze vase from company stock

[ 348 Pa. Super. Page 488]

    as part of the marker. He asked a secretary (one in a nonsupervisory position) for permission to use the vase.

At trial the vice-president of the company, the plant manager, and the general foreman testified that Matthews employees may not make grave markers for personal use. The company policy is to sell grave markers only to cemeteries, not to individuals. Record at 272a, 275a, 294a, 299a, 324a. A document, "Bronze Division Procedures," offered in evidence by Matthews, stated:

There has been some vagueness and misunderstanding about our policy in connection with the sale of bronze memorials to employees. If we permit employees to purchase bronze memorials directly from Matthews for the installation at any cemetery it presents difficulties and misunderstandings with our customers [cemeteries]. For the good of all concerned it should be thoroughly understood that we cannot run the risk of offending our customers by permitting employees to buy direct from Matthews. Every employee who desires to purchase a bronze memorial should contact the cemetery office and arrange for said purchase. There is no objection if the employee indicates to the cemetery that he or she is an employee of Matthews. The employee should also make certain that the official order is being placed through the cemetery.

Record at 274-75a.

This document was distributed only to those in managerial and supervisory positions at Matthews and not to personnel on Banas' level. Record at 299a.

Matthews learned from Resurrection Cemetery that a Matthews grave marker had been installed without sale through the cemetery. Matthews then conducted a private investigation and determined that while at work, Banas had made the marker from company materials and had then removed the marker from the company premises. During a meeting between Banas and Matthews supervisory personnel involved with the investigation of the grave marker's manufacture and removal, a Matthews supervisor, Francis

[ 348 Pa. Super. Page 489]

Donnelly, said, "We can't have thieves around here." Record at 53a. Based upon the investigation, Banas' employment with Matthews was terminated.

Following Banas' termination, the plant superintendent, Charles Krepp, spoke with Banas' former co-workers who were concerned because of Banas' sudden departure. Krepp told them that Banas had been fired for unauthorized taking of company property, that Banas violated the law as well as company rules, and that Banas could have been indicted on criminal charges.

Punitive Damages

I dissent from the majority because I find that a review of the record reveals that more than enough evidence was adduced under the clear and convincing test to create a question for the jury as to whether Banas should have been awarded punitive damages.*fn1

Applying the actual malice standard to the present case, I find sufficient evidence of record which, believed by the jury, would establish Matthews' actual malice by clear and convincing proof and entitle Banas to punitive damages. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974); Hepps v. Philadelphia Newspapers, Inc., 506 Pa. 304, 485 A.2d 374 (1984), appeal pending, U.S. , 105 S.Ct. 3496, 87 L.Ed.2d 628 (1985). Hence, I would affirm the trial court's denial of Matthews' motion for a judgment n.o.v. which alleged that there was inadequate evidence upon which to submit the punitive damages

[ 348 Pa. Super. Page 490]

    issue to the jury. See Heffernan v. Rosser, 419 Pa. 550, 215 A.2d 655 (1966).

Preliminarily, I note that the question is not whether as thirteenth jurors, our court would have found actual malice but rather, whether there was evidence in the record from which a rational jury could have found clear and convincing proof of actual malice. See Hepps; Heffernan; Delahanty v. First Pennsylvania Bank N.A., 318 Pa. Super. 90, 464 A.2d 1243 (1983).

Because in addressing this question our court is deciding whether the trial court erred in denying Matthews' motion for a judgment n.o.v. on punitive damages, the record must be reviewed in the light most favorable to Banas as the verdict-winner below. Dambacher v. Mallis, 336 Pa. Super. 22, 485 A.2d 408 (1984). "[A]ny doubts should be resolved in favor of the verdict." Tyus v. Resta, 328 Pa. Super. 11, 17, 476 A.2d 427, 430 (1984). Accordingly, our court must accept as fact that which the jury obviously found in holding Matthews liable for defamation, namely, that Banas was given permission to make the grave marker and that Matthews supervisory personnel made false statements about Banas' being a thief.

With respect to the award of punitive damages, the inquiry must focus on the knowledge and state of mind of the Matthews supervisors (Messrs. Krepp and Donnelly) who uttered the defamatory remarks about Banas. Because at worst the Matthews supervisors received conflicting information on whether Banas had received permission to make a marker, I conclude that the jury could not have found that the Matthews supervisors knowingly made false statements about Banas. See New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964). However, because the contradictory information about Banas' having permission raised serious doubts concerning Banas' being a thief, and because despite such conflicting data, Matthews did not question Banas' immediate supervisor (Jack Campbell) about whether he gave Banas permission to make a grave marker, I also conclude that the jury

[ 348 Pa. Super. Page 491]

    could reasonably have found that the Matthews supervisors exhibited a reckless disregard for the truth by avowing that Banas was a thief. See St. Amant v. Thompson, 390 U.S. 727, 88 S.Ct. 1323, 20 L.Ed.2d 262 (1968).

The majority reasons that Donnelly could not have been acting with actual malice when he made the "We can't have thieves around here" statement because he must have disbelieved Banas' protestations that he had permission. But I view Donnelly's state of mind when he made the statement as a question for the jury. Clearly, Donnelly's words are consistent with disbelief of Banas, but the jury would have to determine whether that apparent disbelief was a reckless disregard of evidence indicating that Donnelly's statement was false.

Central to my analysis are the following salient background facts established by the record: (1) Banas was a good and reliable employee with a twenty-year, unblemished employment record with Matthews; (2) the performance of personal jobs was commonplace within the Matthews plant; (3) there was evidence that the alleged Matthews' policy ("Bronze Division Procedures") prohibiting the construction of a cemetery marker as a personal job was communicated only to supervisory personnel, not to employees like Banas, and finally, (4) when Banas was questioned, he did not deny making the marker with company material.

A discussion of the significance of these facts is required. Since Matthews' supervisors had been instructed that Matthews' employees were to obtain grave markers only by purchasing them from cemeteries, any supervisor who gave an employee like Banas permission to make a marker as a personal job would be acting improperly. The jury could infer that a supervisor who gave such permission would be motivated to deny it to protect himself. Since this inference is a matter of common-sense reasoning, the jury could charge Krepp and Donnelly with a like understanding of the circumstances.

[ 348 Pa. Super. Page 492]

Krepp and Donnelly knew that Banas did not deny making the marker. The jury could have inferred that they acted recklessly in defaming Banas and that they were in part motivated to select Banas as an example for other employees as part of a general crackdown on personal jobs.

With regard to Matthews' investigation of the specific Banas marker incident, although the record contains conflicting evidence, the jury could have found that Banas' immediate supervisor (Campbell) was never asked whether he had given Banas permission to make the marker. Moreover, the testimony of the private investigator hired by Matthews to investigate the incident, Nicholas Domek, supports Banas' side of the story. Domek testified at trial that he was asked to determine who made the marker and in the course of his investigation he spoke with Mr. Logue, Banas' brother-in-law and father of the deceased. Logue then called Banas on the telephone and allowed Domek to speak to him. Banas, speaking directly to Domek, admitted making the marker, stated he had permission and said he had no objection to the use of his name in Domek's report to Matthews.*fn2 See Record at 206a-13a. The jury could have found that Matthews' supervisory personnel (Krepp and Donnelly) were aware of Domek's report and therefore knew that Banas freely admitted making the marker with the knowledge that his employer would receive the report. There was also evidence in the record that Banas did not attempt to conceal the marker in the plant while he was making it, that it was left in plain view on his workbench, and that he carried it out of the plant under his arm covered only with some brown paper to prevent scratching. From these facts the jury could infer first that Banas clearly felt

[ 348 Pa. Super. Page 493]

    he had nothing improper to hide and second that the Matthews supervisors could be charged with the knowledge that Banas had acted in a manner totally inconsistent with his having stolen the marker.

In holding that Banas has not made a case for punitive damages sufficient to go to the jury, the majority finds that the trial judge erred in not granting Matthews' motion for judgment n.o.v. The case law is clear that judgment n.o.v. should be entered only when the facts are such that no two reasonable persons could disagree that the verdict was improper. Cummings v. Nazareth Borough, 427 Pa. 14, 233 A.2d 874 (1967). In light of the litany of evidence produced at trial supporting the inference that Matthews' supervisory personnel (Donnelly and Krepp) acted recklessly in defaming Banas, the majority's conclusion that the question of punitive damages should not be presented for jury consideration is in my view untenable.

The majority states that Banas' claim is predicated upon the assumption that Campbell, Banas' immediate supervisor, would have admitted giving Banas permission to make a marker as a personal job. I maintain that such an assumption is irrelevant to the question whether Krepp and Donnelly acted with reckless disregard for the truth (Sullivan actual malice) when they labeled Banas a thief. The resolution of the question does not depend on what Campbell would have said but on whether Donnelly and Krepps could be viewed as acting with reckless disregard for the truth because they defamed Banas without first asking Campbell whether Banas had permission to make a marker.

The majority acknowledges that the evidence of record could support a finding that Campbell was never asked if he had given Banas permission to make a marker as a personal job.*fn3 Yet the majority argues that such evidence is insufficient

[ 348 Pa. Super. Page 494]

    to raise a jury question as to the reckless publication of the defamatory remarks concerning Banas. The jury could have found that when confronted with conflicting stories about Banas' having permission for a marker, Krepp and Donnelly acted with reckless disregard for the truth by branding Banas a thief without having first inquired of Campbell whether Banas had received permission to make the marker.

Consequently, I would hold that there existed sufficient evidence in the record to allow the jury to decide whether, by clear and convincing proof, defamatory statements about Banas were uttered with reckless disregard for their truth or falsity.*fn4 Accordingly, I would not disturb the punitive damages award.

Like the majority I would hold that Sullivan actual malice is the appropriate standard for gauging whether a plaintiff in a defamation action is entitled to punitive damages. Geyer v. Steinbronn, (Nos. 02639-02641 Philadelphia 1982, filed December 6, 1985). However, I find the majority's punitive damages analysis incomplete because the majority

[ 348 Pa. Super. Page 495]

    fails to consider the recent United States Supreme Court decision, Dun & Bradstreet v. Greenmoss Builders, 472 U.S. , 105 S.Ct. 2939, 86 L.Ed.2d 593 (1985).

Because an award of punitive damages in a defamation action in effect penalizes speech,*fn5 the determination of the appropriate criterion for such an award necessarily mandates an examination of the United States Supreme Court's opinions discussing the dynamic tension between the First Amendment guarantee of free expression and the States' interest in allowing private individuals to protect their reputations.

In Gertz the United States Supreme Court declared that "the States may not permit recovery of presumed or punitive damages . . . when liability is not based on a showing of knowledge or falsity or reckless disregard for the truth," i.e., on a showing of Sullivan actual malice. Id., 418 U.S. at 349, 94 S.Ct. at 3011. But in a later opinion, Dun & Bradstreet, the United States Supreme Court restricted the scope of Gertz by stating that "recovery of presumed and punitive damages in defamation cases absent a showing of 'actual malice' does not violate the First Amendment when the defamatory statements do not involve matters of public concern."*fn6 Dun & Bradstreet, 472 U.S. at , 105 S.Ct. at 2948, 86 L.Ed.2d at 605. The majority's opinion in the case sub judice neither cites Dun & Bradstreet nor addresses the punitive damages standard delineated in Dun & Bradstreet.

[ 348 Pa. Super. Page 496]

Since the present appeal does not involve speech on a matter of public concern, our court is not constitutionally required to gauge the award of punitive damages in the case sub judice by application of the Sullivan actual malice test. Dun & Bradstreet. Nevertheless, I conclude that actual malice is the proper standard for awarding punitive damages.

To date, Pennsylvania defamation law on punitive damages in non-public interest cases has been inconsistent. For example, in a case involving a private plaintiff and a private defendant, Laniecki v. Polish Army Veterans Association, 331 Pa. Super. 413, 423, 480 A.2d 1101, 1106 (1984), we "observe[d] that Pennsylvania has embraced Section 908 of the Restatement (Second) of Torts" which allows punitive damages upon proof of "outrageous conduct," i.e., an act done with an evil motive or with reckless indifference to the rights of others. See Feld v. Merriam, 506 Pa. 383, 485 A.2d 742 (1984) (non-defamation case in which the Pennsylvania Supreme Court resolved the punitive damages issue according to Section 908 of the Restatement (Second) of Torts). Thereafter, in Walder v. Lobel, 339 Pa. Super. 203, 488 A.2d 622 (1985), we departed from the Restatement approach and cited Hepps for the proposition that punitive damages are justified in defamation cases only upon a demonstration of actual malice.

In the present appeal, the majority also quotes Hepps as controlling authority for use of the Sullivan actual malice standard for punitive damages. Although I regard Hepps as instructive on the punitive damages question, I do not believe Hepps is entirely apposite to the case sub judice. The Pennsylvania Supreme Court's decision in Hepps predates the United Supreme Court's opinion in Dun & Bradstreet. Hepps is explicitly based on the United States Supreme Court's Gertz opinion which required proof of actual malice to justify a punitive damages award to a private figure plaintiff in a suit against a media defendant. Hepps, 506 Pa. at 329, 485 A.2d at 388. Neither Gertz nor Hepps distinguishes for purposes of punitive damages between

[ 348 Pa. Super. Page 497]

    defamation actions involving public concerns and those involving private concerns. See Dun & Bradstreet. Moreover, the defamatory speech in Hepps involved a matter of public interst*fn7 (five investigative articles printed in a newspaper of general circulation) whereas the defamatory remarks in the instant case, like those in Dun & Bradstreet (defamatory statements made in a credit report issued to five Dun & Bradstreet subscribers), concern a matter of solely private interest.

Despite inconsistent Pennsylvania precedent and the freedom under Dun & Bradstreet to establish a standard other than actual malice, I nevertheless conclude that punitive damages cannot be obtained without proof of Sullivan actual malice. Geyer.

I endorse the actual malice norm because I am convinced that the goals sought to be achieved through defamation law are better served by the Sullivan actual malice standard than by the common-law malice standard of Section 908 of the Restatement. See Geyer.

Both the Restatement common-law malice (ill-will malice, outrageous conduct) and Sullivan actual malice delineate behavior more egregious than the ordinary negligence needed to establish the underlying tort liability in private plaintiff-private defendant defamation cases. See Delahanty. Common-law malice of the type described by Section 908 of the Restatement refers to the defendant's attitude toward the plaintiff whereas actual malice as outlined in Sullivan refers to the defendant's attitude toward the truth. See Hepps; Note, Punitive Damages and Libel Law, 98 Harv.L.Rev. 847 (1985).

Therefore, the inquiry becomes which type of conduct to punish and deter through the vehicle of punitive damages, i.e. whether to punish a defendant because he publishes outrageously or with ill will or whether to punish a defendant because he lacks respect for the truth and thereby

[ 348 Pa. Super. Page 498]

    harms the plaintiff. See Delahanty. The common-law malice of the Restatement connotes intent to harm the plaintiff and involves behavior which is morally blameworthy. See J. Sales, Punitive Damages: The Doctrine of a Bygone Era at 5-6 (1984), citing Ellis, Fairness and Efficiency in the Law of Punitive Damages, 56 S. Cal.L.Rev. 1, 21-22 (1982). Sullivan actual malice centers on the defendant's awareness of the falsity or probable falsity of his defamatory utterance and the defendant's choice to publish defamatory remarks despite recognized risks.

In the context of actual malice, a defendant makes a defamatory statement with a reckless disregard for the truth or falsity of his statement if the defendant entertains serious doubts about the truth of his statement. St. Amant. Therefore, the defendant's knowingly or recklessly publishing a defamatory falsehood, i.e. the defendant's exhibiting Sullivan actual malice, requires a high level of scienter and evidences the defendant's deliberate decision to publish defamatory remarks for his own advantage regardless of the high risk of harming the plaintiff's reputation.

Whereas common-law malice may result from an irrational hatred, actual malice may stem from a choice to proceed despite risks. Courts and laws cannot realistically deter a defendant from disliking a plaintiff, but they can encourage a defendant to exercise sufficient care in making public pronouncements about a plaintiff.

Therefore, I agree with the majority that actual malice is the appropriate standard for awarding punitive damages in a defamation action that does not involve a matter of public concern. Geyer.

The Contract Claim

Unlike the majority, I conclude that Banas placed squarely before the Superior Court the issue of whether the Matthews handbook modified his at-will employment status. Banas argued that it did and that Matthews discharged him in breach of the handbook for making, with permission, a grave marker as a personal job.

[ 348 Pa. Super. Page 499]

I find the majority's opinion lacks clarity. On the one hand, the opinion appears to hold that Banas was an at-will employee who could be fired for any reason or no reason and that the question of the handbook is not before the court. The majority opinion concludes, "The employer handbook cases, therefore, are irrelevant to this case." At 484.

On the other hand, the majority's opinion examines the effect of the handbook by stating,

"Appellant's [Matthews'] handbook nowhere provided that an employee would be dismissed only if the facts warranted it. If the handbook had contained, if not expressly at least by clear implication, a just cause provision, then appellee's [Banas'] claim might have merit; indeed, it would have merit if this Court were to decide to accept and follow the reasoning of cases such as Toussaint v. Blue Cross & Blue Shield of Michigan, supra. But as we have said, that is a decision that must await a case in which the action is brought for breach of a just cause provision."

At 484-485 (emphasis in original) (footnotes deleted). I do not understand the majority's injection of just cause dismissal language. The majority introduces the just cause issue sua sponte. I can only conclude that the majority's just discussion is purely advisory. The parties never raised the issue of a just cause dismissal and the majority has found that the employee handbook is not before the court and therefore refuses to determine if the handbook in any way modified Banas' at-will status. Since the majority declines to rule on the effect of the handbook in the instant appeal, I assume that in a later case if this court decides the issue whether a handbook can modify conditions of employment, the court would not be bound by the advisory just cause dicta in the majority's present opinion.

Contrary to the majority's analysis, I hold, as did the trial court, that the Matthews' employee handbook is clearly an issue in this case. It is only the majority's unique interpretation

[ 348 Pa. Super. Page 500]

    of the facts in this case that excludes the majority's consideration of the handbook.

Although the Matthews' employee handbook does not establish job security for Banas with respect to a specified tenure (length) of employment, the handbook acts as a framework in which to examine Banas' at-will-employment status. Just as prior court decisions have carved out public policy exceptions to the at-will-employment doctrine, see, e.g., Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980); Nees v. Hocks, 272 Or. 210, 536 P.2d 512 (1975); Yaindl v. Ingersoll-Rand Co., 281 Pa. Super. 560, 422 A.2d 611 (1981), this court could, if it chose, permit at-will-employment status to be modified on the basis of the contractual effect of an employee handbook. I believe that Banas has today presented this court with the precise question whether provisions in an employee handbook can alter at-will-employment status so that an employer cannot discharge an employee for actions that complied with the provisions of the employee handbook.*fn8

Matthews contends that Banas could be discharged at any time, for any reason irrespective of the provisions of the Matthews' employee handbook. For this reason, Matthews contests the propriety of the trial court's following jury instructions:

If an employer puts out a book and tells a fellow he can do a personal job, even though they say work must be performed on company orders, they do have an exception. If the employee goes and gets permission he's permitted to do the particular job and then he turns around and is fired, even though this isn't part of any contract signed by anybody the company as a matter of right cannot put

[ 348 Pa. Super. Page 501]

    that man out on the sidewalk, there's a breach of contract created by estoppel . . . .

Record at 436a. The court further charged the jury:

Now let's assume that you believe there is indeed a breach of contract here. Now, to apply the doctrine of equitable estoppel, . . . [w]e have no written contract here, but as a matter of equity a contract is created in the law if these certain conditions exist: That is Matthews made the statement concerning personal jobs, which was a condition of employment, . . . and that [Banas] establishes to your satisfaction that Banas could reasonably rely on that.

Record at 440a.

Banas concedes that he was generally an at-will employee in the sense that he had no contractual right to a specified duration of employment. But he argues that this status should not place him at the caprice of his employer. I agree with Banas and would hold that his at-will status was modified by the Matthews' employee handbook provisions which formed the basis of a unilateral contract limiting the employer's power to terminate the employee.

The Employee Handbook as Unilateral Contract

It is hornbook law that when a party makes a promissory offer which invites acceptance by performance rather than by return promise, the rendering of the requested performance creates a completed unilateral contract. See Restatement (Second) of Contracts ยง 45 and Comment (a) thereunder (1981). In the employment context, the distribution to an employee or employees of a handbook detailing certain rights, policies and procedures constitutes a unilateral offer of an employment contract with those conditions. The employee supplies the necessary acceptance of the offer and consideration by continuing to perform the duties of his job. See, e.g., Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d 261 (1983) ("Her continued employment after formal delivery of the handbook provides sufficient consideration for modifying the employment agreement by inserting the

[ 348 Pa. Super. Page 502]

    handbook provisions."); Comment, Employment-at-Will in Pennsylvania: Employee Manuals Provide Contract Remedies for Discharged Employees, 58 Temple L.Q. 243 (1985).

The same considerations of fairness and equity which have led many of our sister states*fn9 to reject the position that "an employee handbook on personnel policies and procedures is a corporate illusion 'full of sound . . . signifying nothing,'" Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 462, 443 N.E.2d 441, 443, 457 N.Y.S.2d 193, 195 (1982), likewise compel me to conclude that employers' statements of policy and procedure contained in handbooks distributed to employees should be accorded contractual significance.

[ 348 Pa. Super. Page 503]

Employers derive substantial benefits in personnel relations from the use of employee handbooks. Comment, supra, at 262. "The employer secures an orderly, cooperative and loyal work force, and the employee the peace of mind associated with job security and the conviction that he will be treated fairly." Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 613, 292 N.W.2d 880, 892 (1980); see also Weiner, 57 N.Y.2d at 465-66, 443 N.E.2d at 445, 457 N.Y.S.2d at 197 (plaintiff rejected other job offers relying on job security provisions of handbook and was instructed to follow handbook when dealing with employees he supervised); Thompson v. St. Regis Paper Page 503} Co., 102 Wash.2d 219, 685 P.2d 1081 (1984) ("[W]e hold that if an employer . . . creates an atmosphere of job security and fair treatment with promises of specific treatment in specific situations and an employee is induced thereby to remain on the job and not actively seek other employment, those promises are enforceable components of the employment relationship."). Improved employee relations and better morale increase productivity which in turn increases profitability. Therefore, it is just to require the employer to fulfill the expectations of fair treatment he has created.*fn10

Characterizing an employee handbook as a unilateral offer of employment, takes into account the employer's concern to augment, modify and even withdraw the offer contained in the handbook in response to the employer's changing needs and circumstances. When an employer distributes a new handbook or portion thereof, the employer makes a new offer of employment. The terms of the new offer are defined by the contents of the new handbook, and the new offer becomes effective on the date the new handbook is distributed. Or, when a handbook is withdrawn, i.e. revoked, the new offer becomes effective on the date that the employer notifies the employee of the revocation of the handbook. Employees accept the new offer and provide consideration by continuing their employment. See Pine River State Bank v. Mettille, Minn., 333 N.W.2d 622 (1983). The Minnesota court viewed this procedure as offering an advantage to employers who can thereby avoid the transaction costs of contracting separately with each employee. Id. Moreover, under this analysis an employer remains free to issue statements which are not contractually binding, so long as such statements are accompanied with an appropriate, conspicuous disclaimer. See Woolley v. Hoffmann-LaRoche, Inc., 99 N.J. 284, 491 A.2d 1257 (1985)

[ 348 Pa. Super. Page 504]

("All that need be done is the inclusion in a very prominent position of an appropriate statement that there is no promise of any kind by the employer contained in the manual.").

I conclude that the provisions of a handbook distributed to employees can constitute an offer of a unilateral contract which an employee may accept by remaining on the job, and that once accepted, the provisions of the handbook are binding on both parties as conditions of employment until modified by a subsequent offer and acceptance of new conditions. Therefore, I would hold that the trial court did not err in instructing the jury that the Matthews' employee handbook could be construed as part of an employment contract between Banas and Matthews, and that the conduct of Matthews could be considered a breach of contract. The trial court described the contract arising from the handbook as a "contract by estoppel." Although it would have been preferable if the trial court had conceptualized the handbook as a unilateral contract, the trial court's charge does not constitute reversible error. In determining on appeal whether a trial court's instructions are erroneous, the appellate court must examine the charge as a whole, and isolated inaccuracies are not grounds for reversal if the charge as a whole is not misleading or prejudicial. Ackerman v. Delcomico, 336 Pa. Super. 569, 486 A.2d 410 (1984). Since the charges on the significance to be accorded the employee handbook were predicated on a contract theory, and were thus correct as a whole, the jury's verdict need not be disturbed on these grounds. Since Matthews raises no other challenges to that portion of the jury's verdict which awarded Banas damages for breach of contract, I would affirm that portion of the judgment.

Conclusion

I find no merit in any of Matthews' allegations of error. Consequently, I would affirm the trial court.


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