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Linn v. Beneficial Commercial Corp.

Decided: April 4, 1988.


On appeal from Superior Court of New Jersey, Law Division, Morris County.

Petrella and Baime. The opinion of the court was delivered by Baime, J.A.D.


This is an appeal from a summary judgment in favor of defendant, dismissing plaintiff's claim for wrongful discharge.*fn1 Citing Woolley v. Hoffman-La Roche, Inc., 99 N.J. 284 (1985), mod. on other grounds 101 N.J. 10 (1985), plaintiff contends that he was fired without good cause contrary to an implied promise of indefinite employment contained in a personnel manual distributed by defendant to management employees. The same argument was considered and rejected by the trial court on the basis that neither the employment contract nor the personnel manual precluded defendant from making a good faith business decision to eliminate plaintiff's management position during the course of an extensive corporate restructuring designed to combat severe financial problems. We agree that defendant's decision to eliminate plaintiff's position for valid economic reasons did not violate any express or implied promise contained in either the employment contract or the personnel manual. We affirm essentially for the reasons expressed by Judge Conforti in his oral opinion rendered on May 28, 1987.

The facts are not in dispute. Plaintiff commenced his employment with defendant on March 17, 1980, under a pre-printed contract which set forth his yearly salary and bound him to certain post-employment disclosure restrictions. The contract contained the following clause, regarding termination of employment:

This contract may be terminated at any time by either party hereto upon five days written notice to the other, or in lieu of such notice when terminated by the Employer upon payment of five days salary to the Employee at the rate of salary in effect at the time of such notice; except that where the Board of Directors or Executive Committee of the Employer shall have fixed a definite period of time for the continuance of the Employee's services, this contract shall not be terminated, except for good cause, by either party hereto prior to the expiration of such period.

The contract contained no fixed term of employment. Under its terms, plaintiff's employment could be terminated for any reason.

Plaintiff consistently received excellent job performance reviews. On this basis, he was permitted to execute a "golden parachute agreement," guaranteeing him three years of employment in the event of a "hostile takeover"*fn2 and was accorded the right to participate in defendant's stock option program for "key employees." Ultimately, plaintiff was promoted to the position of controller, requiring him to transfer from defendant's New York City offices to its headquarters in Peapack, New Jersey. In accepting the promotion, plaintiff moved his residence to this state, defendant paying the requisite expenses and assisting in the mortgage obligation.

During this period, plaintiff was aware of defendant's precarious financial condition. Indeed, plaintiff participated in preparing plans for restructuring the corporation and "cutting back" expenses. In February 1984, defendant decided to eliminate the position of controller as a part of the general reorganization of the company. In the corporate restructuring, the duties of controller were consolidated with those of the chief financial officer or were delegated to others. The position itself was eliminated. On April 6, 1984, defendant advised plaintiff that his employment was terminated. Plaintiff was granted accrued vacation pay and 60 days severance compensation.

In effect at the time of plaintiff's employment was a "Managerial Policies Manual" which was distributed to all "key employees." It provided that employee terminations fell "into three basic categories," resignations, releases and retirements. It further contained a section entitled "Discipline and Release Policy," which specified the procedure to be followed in the event of poor employee performance. The manual was silent on the subject of elimination of positions for economic reasons.

Plaintiff argues here, as he did in the trial court, that the policy manual contained an implied promise of indefinite employment and modified the terms of the "at-will" provision set forth in the pre-printed contract. Because reorganization for business reasons was not expressly provided as a basis for job termination, plaintiff claims that he was wrongfully discharged. He contends alternatively that defendant was barred from terminating his employment under the doctrine of "equitable" or "promissory" estoppel. We reject both contentions.

Initially, we find no merit in plaintiff's argument that the managerial personnel manual precluded defendant from eliminating his position and terminating his employment. Plaintiff's reliance on Woolley v. Hoffmann-La Roche, Inc., supra, is clearly misplaced. The issue presented in Woolley was whether a personnel manual constituted a contract enforceable against an employer, where it purported to define the causes of termination and set procedural guidelines in cases of discharges for cause. The Supreme Court held that "absent a clear and prominent disclaimer, an implied promise contained in an employment manual that an employee will be fired only for cause may be enforceable against an employer even when the employment is for an indefinite term and would ...

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