On certification to the Superior Court, Appellate Division.
Handler, Wilentz, Clifford, Pollock, O'Hern, Garibaldi, Stein
[136 NJ Page 404] The opinion of the Court was delivered by
In this case, a low-level supervisor was fired for the mishandling of merchandise. He filed a wrongful-discharge action against his employer. As in the companion case, Witkowski v. Thomas J. Lipton, Inc., 134 N.J. 480, 634 A.2d 527 (1994), also decided today, the employee denies that his employer had any grounds to terminate him and claims that his discharge was wrongful because the employment manual distributed by the employer constitutes an implied contract that bars termination without cause under Woolley v. Hoffmann-La Roche, 99 N.J. 284, 491 A.2d 1257, modified, 101 N.J. 10 (1985). The employer contends that the employee is "at will" and therefore can be fired without cause and, further, that its employment manual does not constitute an implied employment contract, particularly in light of its disclaimer. The employer also claims that following the employee's termination, additional evidence was discovered that indicated that other grounds for his dismissal existed and that such "after-acquired evidence" constitutes a defense to the wrongful-discharge claim.
Following a jury trial, the trial court entered judgment in favor of the employee. On appeal, the Appellate Division upheld the judgment entered on the jury's verdict. The employer filed a petition for certification, which this Court granted, 134 N.J. 476 (1993). We affirm the judgment of the Appellate Division.
Plaintiff, Anthony Nicosia ("Nicosia"), was hired by defendant, Wakefern Food Corporation ("Wakefern"), in 1971. Nicosia was promoted several times during his eighteen-and-one-half years of employment. When Nicosia was terminated, he held the position of Warehouse Shift Supervisor.
Merchandise was illegally removed from Wakefern's warehouse on at least two occasions during Nicosia's employment. Wakefern never accused Nicosia of stealing the goods. Rather, it discharged
him for failing to maintain safe storage of the merchandise and for not following appropriate procedures on discovering the thefts. Nicosia claimed that he did in fact follow proper company procedures by immediately reporting the first theft to the "Inventory Control Department" and by reporting the second theft to both that department and his immediate supervisor.
After Nicosia's discharge, Wakefern discovered merchandise in and around Nicosia's desk that Wakefern claimed amounted to conversion. Additionally, an unauthorized signed property removal pass was found in Nicosia's possession. Wakefern also claimed that Nicosia had removed Wakefern property from the warehouse without submitting a property-removal pass. Wakefern asserts that had it known of any of those "infractions," it would have immediately discharged Nicosia.
Nicosia contends that he was terminated without receiving the benefit of the progressive-discipline steps outlined in an eleven-page section entitled "Wakefern Disciplinary Procedures," which was part of a larger manual entitled "Human Resources Policies and Procedures Manual" (the "manual"). That eleven-page section did not contain a disclaimer. Nicosia maintains that either that eleven-page document or the entire 160-page loose-leaf manual creates an implied employment contract, and that Wakefern breached it by terminating him without following the manual's procedural protections.
Wakefern does not dispute that the progressive-discipline policy existed at the time of Nicosia's termination. Wakefern asserts, however, that its disciplinary policy was embodied not in the eleven-page section but in the complete manual, which includes certain immediate-termination offenses. It also argues that because its manual was not "widely distributed," the manual does not give rise to an employment contract. Wakefern further contends that even if it was widely distributed, the disclaimer, which appeared in the first paragraph on the manual's first page, negated any employment contract. Therefore, the manual was not binding, and Nicosia could be fired without cause. In addition,
Wakefern asserts that even if the disclaimer was ineffective, Nicosia was not entitled to the manual's disciplinary policy protections because he committed an immediately terminable offense. Finally, Wakefern claims that evidence discovered after Nicosia's discharge, which allegedly indicated his conversion of merchandise, constitutes a defense to plaintiff's wrongful-discharge claim.
The trial court ruled that the disclaimer contained in the manual was insufficient as a matter of law to negate Wakefern's obligations as set forth in its manual. It submitted to the jury the issue of whether the entire manual or the eleven-page section, which contained the progressive-discipline procedure, constituted an implied employment contract, and if so, whether plaintiff's discharge violated those provisions. The jury found that the eleven-page manual section received by Nicosia created an implied contract of employment that was subsequently breached by Wakefern. On defendant's counterclaim, the jury also found plaintiff not guilty of conversion. In addition, the court refused to charge the jury with respect to the after-acquired-evidence defense.
On appeal, the Appellate Division "recognized defendant's argument that even if plaintiff received only a portion of the manual, he is bound by the entire manual, including the disclaimer." However, it declined to resolve that issue because of its concurrence with the trial Judge regarding "the inefficacy of the disclaimer," implicitly holding that either the manual or the eleven-page section did create an implied contract. The court also ruled that "disputes of fact as to the contract status of an employee under a manual are properly submitted to the jury." Finally, the Appellate Division concluded that it need not consider the after-acquired-evidence defense because the jury had found Nicosia not guilty of conversion.
This Court in Woolley, supra, 99 N.J. 284, stated 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 otherwise be terminable at will." 99 N.J. at 285-86.
In the companion case, Witkowski, supra, N.J. , we revisited the standards for determining whether an employment manual constitutes a contract of employment. We noted:
In sum, under Woolley, the basic test for determining whether a contract of employment can be implied turns on the reasonable expectations of employees. A number of factors bear on whether an employee may reasonably understand that an employment manual is intended to provide enforceable employment obligations, including the definiteness and comprehensiveness of the termination policy and the context of the manual's preparation and distribution.
[ N.J. at (slip op. at 9).]
The context of the preparation and distribution of the manual in this case supports the finding that the manual was intended to constitute an enforceable employment contract. Woolley, supra, 99 N.J. at 299; see Schwartz v. Leasametric, Inc., 224 N.J. Super. 21, 31, 539 A.2d 744 (App. Div. 1988). The entire manual was distributed to a substantial number of Wakefern's workforce, although Nicosia may not have received it. See Woolley, supra, 99 N.J. at 304-05 n.10; Gilbert v. Durand Glass Mfg. Co., Inc., 258 N.J. Super. 320, 330, 609 A.2d 517 (App. Div. 1992). As was the manual in Woolley, Wakefern's manual, coincidentally, was distributed to 300 of the 3,000 person workforce. See also Witkowski, supra, N.J. at (slip op. at 12) (holding enforceable employee manual that was distributed to all employees); Preston v. Claridge Hotel & Casino, 231 N.J. Super. 81, 86, 555 A.2d 12 (App. Div. 1989) (holding employee manual binding based in part on its "widespread distribution"). In fact, because approximately 1,500 of Wakefern's 3,000-person workforce is unionized and covered by a collective bargaining agreement, the manual would apply to only those 1,500 non-unionized employees. Moreover, Nicosia did actually receive the eleven-page section of the manual covering terminations.
Wakefern's manual also includes a definite, comprehensive termination policy. See Witkowski, supra, N.J. at (slip op. at 9); Woolley, supra, 99 N.J. at 296. Its termination provision provides a three-step disciplinary procedure, which includes "employee counseling" (a first written warning), "caution" (a second written warning), and a "final warning." See Witkowski, supra, N.J. at (slip op at 13-14). The manual further provides that "all steps must be completed in order to discharge for cause." "Cause" includes: "poor job performance; excessive absenteeism/tardiness/early departures, insubordination, violation of rules and regulations, gross negligence.
The procedural protections do not, however, apply in cases of "immediate discharge." Grounds for immediate discharge include:
Theft of Company property
Theft of an employee's property
Sexual harassment of any employee
Threatening or intimidating fellow ...