Texas Employers: Rest Assured--Your Employees Serve At Will (unless otherwise provided by written agreement, oral agreement, federal law, state law, public policy . . . .)
Karlene S. Dunn(1)
I. Introduction
II. Contractual Agreements Affecting the At Will Relationship
A. The Written Employment Contract
1. Provisions Modifying the Right to Discharge Employees Without Cause
2. Satisfaction Clauses and the Duty of Good Faith and Fair Dealing
3. "Illusory" Contracts with At Will Employees
B. The Employment Handbook
C. Other Writings
D. Oral Agreements--Contracts and Modifications
1. The Statute of Frauds
2. Oral Contracts Modifying the At Will Employment Relationship
III Statutory Limitations on the At Will Doctrine
A. Federal Statutes
B. State Statutes
IV. Judicial Limitations on the At Will Doctrine
A. Public Policy
B. Promissory Estoppel
C. Torts
1. Fraud
2. Negligent Misrepresentation
3. Intentional Infliction of Emotional Distress
4. Defamation
V. Conclusion
Texas Employers: Rest Assured--Your Employees Serve At Will (unless otherwise provided by written agreement, oral agreement, federal law, state law, public policy . . . .)
Karlene Dunn
Most Texas employers are familiar with the premise that their employees serve "at will"--subject to termination for "good cause, bad cause, or no cause at all."(2) However, the maze of exceptions that have developed to the at will employment doctrine in Texas has made it difficult for employers to understand when an employee's termination could actually subject them to liability for wrongful discharge. Much of this confusion is caused by the scattered nature of the exceptions to this doctrine.(3) For example, through traditional contract principles, an employer can inadvertently modify its right to terminate an employee with provisions in an employment handbook, or even in a conversation with an employee.(4) There are also a myriad of federal and state legislative protections against discharge.(5) To add to the confusion, the Texas Supreme Court has created a category of judicial exceptions to the doctrine for discharges that violate "public policy."(6) Finally, many traditional common law and tort actions may support or accompany a wrongful discharge suit in Texas.(7)
Thus, the purpose of this article is to provide Texas employers with an overview of these exceptions, as well as some practical insight into their scope and application. Specifically, each of the following sections identifies recognized exceptions to the at will doctrine, with some explanation of the their treatment by Texas courts. Section II chronicles contractual modifications to the doctrine, including those found in written contracts and oral agreements. Section III then identifies both Texas and Federal statutory limitations on an employer's right to terminate at will employees. Finally, Section IV discusses judicially created causes of action that can give rise to wrongful termination actions by at will employees.
II. Contractual Agreements Affecting the At Will Relationship
Perhaps one of the most misunderstood areas of employment law, from both the employer and employee prospective, involves basic contract principals. The at will doctrine is a default rule.(8) As such, it does not restrict an employer's or employee's absolute right to contract for specific terms of employment.(9) However, while most understand that an explicit employment contract can control an employment relationship, many employers do not understand that contractual obligations can arise under many other agreements, in the form of employment manuals, memorandum, or even oral assurances.(10) Conversely, employees may believe that they are assured some level of job security based on illusory promises or misunderstandings.(11) As a result, many discharged employees are left with a sense that they have been "wronged" or have been deprived of a proprietary right in their job. Likewise, many an employer has been stunned when the termination of an employee leads to service of a wrongful discharge suit.
To contractually modify the employer's ability to discharge an employee at will, there simply must be an agreement, either written or oral, that "specifically provide[s] and directly limit[s] the employer's right to terminate the employment contract at will."(12) Further, the agreement must limit the right to discharge "in a meaningful and special way."(13) To determine if such a contract exists, "it [is] only necessary to apply to the employment relationship the same basic contract rules . . . that are applied to other forms of legal relationships."(14)
Thus, while some employment contract litigation centers around traditional interpretation of express contracts, more often the issue is whether an employment contract existed at all--i.e. whether there is an agreement that modifies the relationship "in a meaningful and special way."(15) In essence, the question is whether the employer, acting through an authorized agent,(16) has made a binding commitment to employ the employee--for either a stated period of time or indefinitely--subject to specific conditions.(17) The most common of these are provisions providing for discharge only for good cause (or genuine dissatisfaction), or with notice, or only after adherence to certain procedures.(18)
The following sections explore the specific treatment of claims for breach of employment contracts by the Texas courts in a variety of situations. As a practical matter, these cases illustrate the problems that arise when employers make agreements or policy decisions without properly taking into account the legal consequences of their actions. The result of poor planning is often costly and time consuming for both the employee and employer--with neither parties' expectations being adequately met.
Sections II.A-C addresses only written agreements, which encompass express employment contracts, employment handbooks, and other writings such as letters, proposals, and memorandums. Section II.D discusses oral agreements and modifications, which includes both independent oral agreements and the effect of collateral oral agreements on written contracts. Finally, it addresses the applicability of the statute of frauds on the enforceability of independent and collateral oral promises.
A. The Written Employment Contract
At will employment terms can most easily be modified by an express written employment contract.(19) Clear employment agreements setting forth terms of employment are always honored by Texas courts so long as the proper contract formalities are met.(20) However, looking to Texas cases interpreting employment contracts reveals that express employment contracts can present two unique problem for employers. Specifically, if an employer is not careful, provisions in an employment contract can do either more or less than the employer intends. On one hand, an employer can unintentionally modify its at will relationship with an employee by committing to employ an employee for a certain term, thereby restricting its ability to discharge the employment without cause.(21) Conversely, an employer can do less than intended by creating an "illusory" agreement that does not modify the at will relationship at all, thus depriving itself of adequate consideration given to support a collateral promise from the employee it wishes to enforce.(22)
1. Provisions Modifying the Right to Discharge Employees Without Cause
One of the most common express provisions contained in an employment contract is a promise that an employee will only be terminated for "good cause." In an express written employment contract, this language is generally sufficient to alter an employer's right to terminate employment in a meaningful way.(23) However, employers should be aware that several situations exist where Texas courts have held that employment contracts which do not contain this "for cause" language nonetheless modifies an at will employment relationship.
First, an employment contract which specifies a "term of years" has consistently been held to alter the employer's right to terminate an employee in a "meaningful and special way."(24) Thus, if an employment contract provides specific dates of employment, the employee cannot be discharged during that term, absent a showing of good cause.(25) For example, in Evan's World Travel Inc. v. Adams, the Texarkana Court of Appeals held a provision providing a three-year "term of employment" sufficient to modify an at will relationship and restrict the employer's right to terminate the employee without cause during that period.(26) The court reached this conclusion despite arguably contrary language in the same contract providing that the employee could be terminated during the first ninety days of employment "without cause" and for the remainder of the term "for any reason, including, but not limited to" dishonest acts, death, or failure to perform required duties.(27)
Similarly--and probably more surprising to some employers--the mere recital of a base salary in an employment contract can be enough to modify an at will relationship.(28) While seemingly inconsistent with the at will presumption, Texas courts still generally adhere to the "English Rule" that employment "at a stated sum per week, month, or year, is a definite employment for the period named and may not be arbitrarily concluded."(29) Thus, the El Paso Court of Appeals in Demunbrun v. Gray held that contract language providing that an employee "SHALL BE SALARIED . . . AT AN ANNUAL BASE OF $50,000.00" was sufficient to create a fact question as to whether the contract created a one-year term that could only be terminated for cause.(30) In Ronnie Loper Chevrolet-Geo, Inc. v. Hagey, the Fourteenth District Court of Appeals in Houston likewise held that a provision providing for compensation of "$10,000 per month thru September (June prorated at $400 per day including Saturday)" sufficient to create a term of employment that restricted the employer's right to discharge the employee.(31)
Adherence to this English Rule by Texas courts has not been entirely consistent. For example, the San Antonio Court of Appeals, in Saucedo v. Rheem Manufacturing Co., held that an employment contract providing that an employee was to be "paid a base salary of $36,000 annually" was sufficient to create a one year term of employment within which the employer could not terminate the employee without just cause.(32) However, Justice Green wrote a strong dissent arguing that the English Rule was inconsistent with the supreme court's "insistence that such an agreement be specific."(33) On rehearing, the court reversed its prior position and held that the salary provision was insufficient because it was not specific enough to manifest the employer's intent to be bound to an agreement not to terminate the employee except under clearly specified circumstances.(34)
The reasoning in Saucedo is sound in that it recognizes that the English Rule is, in most cases, inconsistent with the parties' intentions. This is apparent from looking at the nature and content of the agreements under which these claims usually arise. Oftentimes salary terms are committed to writing where there is a multi-leveled compensation scheme for a position. This was the case in Ronnie Loper Chevrolet-Geo, Inc., where the agreement at issue recited a "base" annual compensation amount and then an "incentive plan" range, outlining the productivity requirements for incentive pay. (35) Logic dictates that it is advantageous, and probably necessary, for the employer and employee to commit these details to writing. Given this reality, it would seem apparent that an employer creating this type of writing would not intend to abrogate its right to terminate its employees for cause. But, this is exactly what application of the English Rule does.
However, while the reasoning in Saucedo may be persuasive, employers should not place too much reliance on it. Since it was decided, numerous courts have continued to follow the English Rule, illustrating the importance of employers having an understanding of Texas law when they enter into express written employment agreements.(36) Some guidance in drafting agreements can be gleaned from the analysis and results in cases where employees have argued that a term of years or stated salary modified their at will employment status.
First, it has been at least implied by courts that express language reserving the at will status in an agreement can be sufficient to overcome the presumption that a stated term or salary creates an obligation to only terminate for cause.(37) For example, in Demunbrun, where the court recognized that the recital of an annual base salary created employment for a term, the court also noted that: "There is no language in the contract reserving the right of either party to terminate the contract at will despite the annual salary reference. Accordingly, [the recital of an annual salary] at the very least creates an issue of fact on the 'at-will' status" of the employee.(38) Thus, as a starting point, the simplest thing an employer can do for protection is to include explicit at will language in its agreements when it wants to rebut these presumptions.
However, the indication from courts is also that this intention to retain the at will status must be surprisingly clear. For example, in both Ronnie Loper and Dallas Hotel Co. v. Lackey, there were disclaimers in writings separate from the agreements at issue that specifically reserved the at will status of the relationship.(39) In Lackey, the employee signed an "employment card" that contained an at will employment clause.(40) Likewise, in Ronnie Loper, the employee signed an application form containing an at will disclaimer.(41) Despite these disclaimers, both courts rejected the argument that the employers had effectively preserved the at will relationship.(42) The Lackey court reasoned that where there are conflicting writings, the one that comprehends "the immediate language and terms selected by the parties themselves as setting forth their intention, [rather than] . . . the printed form" should control.(43) Thus, employers should be certain that any disclaimer is present in the same writing as any term of employment or salary information.
Finally, even if an employer intends for the recital of a term of employment or base salary to create an obligation to discharge only for cause during that period, it should be aware that it may obligate itself for a much longer period. According to the Saucedo court, if "at the expiration of a [term of employment] the employee continues to perform his services, the contract implied renews itself" for the same term.(44) Thus, for example, it seems that a written contract setting forth an employee's duties and providing that he or she will be paid $50,000 a year is conceivably enough to create an ongoing year-to-year obligation where the employee may only be terminated without cause at the expiration of each yearly interval. If this is not the intended result, an employer must expressly disclaim its desire to create an ongoing obligation or take affirmative steps to modify the agreement at the expiration of the initial term.
2. Satisfaction Clauses and the Duty of Good Faith and Fair Dealing
A similar issue that arises in employment contracts is the duty of good faith. Texas courts have repeatedly refused to imply a general duty of good faith and fair dealing to at will employment relationships.(45) However, "satisfaction" clauses in an express written employment contract can modify an at will relationship by imposing a duty to only "discharge the employee whenever the employer, acting in good faith, is actually and honestly dissatisfied with the work."(46) A satisfaction clause modifies the at will relationship by requiring that there be either "cause" for termination or a "bona fide dissatisfaction" with an employee's performance.(47)
Use of the word "satisfaction" in a written employment agreement appears to be all that is necessary to transform an at will agreement to a satisfaction contract.(48) For example, in Zep Manufacturing Co. v. Harthcock, the employment agreement in issue provided: "If the President of Zep, in his sole discretion, determines that Employee's performance of duties hereunder is unsatisfactory, Employee's employment hereunder may be terminated."(49) The Dallas Court of Appeals held this language sufficient to modify the at will relationship and impose a duty of good faith on the employer.(50) In Golden Rod Mills v. Green, a salary clause providing that an employee would be paid "$3,000 per year for 5 years . . . for satisfactory service as superintendent of a peanut plant" was likewise held to impose a duty on the employer to only discharge for "honest[] and good faith" dissatisfaction.(51)
Satisfaction contracts are less restrictive on an employer's right to terminate than for cause agreements.(52) Really, they only give rise to two obligations which employers should note. First, the employer's "dissatisfaction" giving rise to termination must be with the performance of the work contracted for, and not with some "collateral" performance or matter. This was illustrated in Noa Spears Co. v. Inbau, where an employee was discharged after the parties entered an agreement binding the employee "to perform the duties of his said employment as laboratory man . . . according to his ability and to the satisfaction" of his employer.(53) In addressing the employer's claim that it was dissatisfied with the employee's performance, the court rejected the evidence showing that the employee had been unfaithful to his wife and that he was overpaid.(54) Specifically, the court noted that the only duty the employee was to perform was that of a "laboratory man," and that it was "clear . . . [that] did not include the duty of domestic fidelity by appellee to his wife . . . [or the duty to] perform his duties as laboratory man for a less salary in order to satisfy appellant."(55) Thus, because the president of the employer's company testified that the employee "was a good workman [and] . . . did first class work," the court held that the employee was wrongfully discharged.(56) This point was emphasized by the Texas Supreme Court in Maxwell v. Cardinal Petroleum Corp., where an employee sued for wrongful discharge under a satisfaction contract and the sole justification given by the employer for his dissatisfaction was the employee's failure to increase the volume of business in his region.(57) The court remanded the case to determine if the satisfaction contract at issue required the employee to solicit new business for his employer.(58) The court reasoned that this could not be an honest and good faith reason for dissatisfaction if the contract did not impose a duty on the employee to solicit new business.(59)
The other obligation imposed by a satisfaction contract is that the employer's dissatisfaction with the employee's performance be genuine. This is not to say that an employer's reasons for dissatisfaction must be reasonable--just that "feigned dissatisfaction is not sufficient justification to avoid the continuation of a contract of employment."(60) The reasoning is that if the dissatisfaction is not genuine, cancellation of the agreement would be tainted with "fraud."(61) This subjective satisfaction of an employer is a question of fact, and the employee has the burden of showing that the employer acted in bad faith.(62) While this seems like a very high burden, Texas courts have been receptive to these claims and have sometimes accepted jury findings of bad faith by gauging the genuineness of the dissatisfaction by whether the performance "would induce action on the part of a reasonable person."(63)
For example, the plaintiff met this burden in Kree Institute of Electrolysis, Inc. v. Fageros, where an employee was discharged under an agreement providing that she could be terminated "in the event the services . . . shall prove to be unsatisfactory or detrimental to the business of the Employer, of which the Employer shall be the sole judge."(64) The employer failed to put forth evidence of unsatisfactory performance or detriment to its business.(65) The employee, on the other hand, put forth evidence indicating she was not told that her performance was unsatisfactory.(66) Rather, she was informed that the reason she was discharged was that the store where she worked was closing, and then, two weeks later, she discovered she was instead replaced.(67) The court held that, based on the record, it could "reasonably be inferred that [the employee] was terminated not because of any performance that was unsatisfactory or detrimental to the business, but to make a place for [a] more experienced electrologist."(68)
In contrast, in Coker v. Wesco Materials Corp., the Eastland Civil Court of Appeals affirmed the granting of summary judgment in favor of an employer defending its decision to discharge several employees under a satisfaction contract.(69) The employees had engaged in an undercover investigation which the court acknowledged called their "loyalty" into question.(70) The court rejected the employee's justifications for their actions, instead summarily concluding that the employer's dissatisfaction "concern[ed] the matter of appellants['] loyalty as employees of the corporation . . . [and that a]ny employer has the right to expect loyalty from its employees."(71)
The Coker court provided some helpful guidance in determining the factors that courts will look to in gauging an employer's good faith in making satisfaction decisions.(72) Depending on the type of position, the court recognized that several elements properly bear upon this determination.(73) "In some types of work the personal taste, feeling, sensibility and individual judgment of the employer is highly material. In other types of employment mechanical ability and utility in relation to which recognized standards are available is the principal consideration."(74) The court in Golden Rod Mills also emphasized this distinction and seemed to imply that more deference is really given to employers in the first situation, where "the matters are of such a personal character as not to need a jury to determine" the subjective motivation.(75) In contrast, the court noted that where an "employee contracts and obligates himself to perform in general terms satisfactory service . . . the employee is entitled to have the good faith of such act determined through the intervention of the courts."(76)
Other courts have additionally noted that the inquiry must be limited to the level of satisfaction at the time of discharge.(77) Thus, evidence showing prior satisfaction with work, such as merit raises and promotions, do not suffice to negate a current honest dissatisfaction.(78) In any case, it is clear that the employee must put forth some evidence showing that, in discharging the employee, the employer "act[ed] fraudulently, or so arbitrarily as to amount to fraud."(79)
In sum, employers should be aware that "satisfaction" language in an express written employment contract gives rise to a duty of subjective good faith in discharging an employee. This does not create an obligation to only discharge for good cause--or even a reasonable ground for discharge. It merely requires honest dissatisfaction with an employee's work. In addition, it appears that the Texas courts will give more deference to the employer's judgment about satisfaction when the employee's position requires more individual judgment and skill.(80) However, in other, more mechanical positions, courts are willing to look to objective standards and criteria to gauge the genuineness of an employer's dissatisfaction.(81) In either case, it is the employee's burden to negate the existence of good faith.(82)
3. "Illusory" Contracts with At Will Employees
In contrast with most situations discussed in this article, there are also circumstances where the employer wishes to assert that an express written contract modified its at will relationship with its employee--only to discover that the agreement has only created illusory obligations. Specifically, this arises when the employer seeks to later enforce a collateral restriction contained in the employment agreement, such as an anti-competition or arbitration clause.(83) Covenants not to compete are only enforceable if they are "ancillary to or part of an otherwise enforceable agreement."(84) Likewise, a promise to arbitrate is only enforceable if it is part of an agreement and made in exchange for consideration.(85) In these cases, even though the at will status of the relationship is not the direct subject of the litigation, the question of whether the employment contract modified the at will employment relationship is a primary issue because the employer must argue that there was an "otherwise enforceable agreement" to support the enforcement of collateral provisions.(86)
The risk to an employer of assuming that the mere existence of an employment contract modifies the employment relationship in a meaningful way was illustrated in Light v. Centel Cellular Co. of Texas.(87) In Light, the parties entered an employment contract licensing Light to sell cellular mobile communications products that included, among other things, a covenant not to compete provision.(88) The employment contract did not specify a term of employment or restrict either parties' right to terminate the relationship at will.(89) Light later resigned and then argued that the anti-competition provision was unenforceable because it was not "ancillary to or part of an otherwise enforceable agreement."(90)
The Texas Supreme Court, in holding the covenant not to compete unenforceable, provided an insightful discussion on the illusory nature of even express contracts entered into with at will employees.(91) Specifically, the court explained that "[a]ny promise made by either employer or employee that depends on an additional period of employment is illusory because it is conditioned upon something that is exclusively within the control of the promisor."(92) This type of promise "would be illusory because it fails to bind the promisor who always retains the option of discontinuing employment in lieu of performance."(93) By way of example, the court explained that the promise of a raise would be illusory because an employer could just fire the employee and then be under no obligation to perform.(94) As the court summarized: "There cannot be 'an [otherwise enforceable] agreement' which 'obligate[s]' a promisor 'at will.' Describing something as an at-will obligation is nonsensical."(95) While this might seem to state the obvious, employers and employees often enter just such agreements, without understanding that the obligations created are illusory because at will employment cannot furnish the consideration for reciprocal promises.(96)
This is not to say that there cannot be other promises--promises that do not address the at will status of the employment relationship--that can provide adequate consideration to support a non-compete or arbitration provision.(97) However, employers should be conscious, when drafting employment contracts, of the principles governing contractual modifications of the at will doctrine if this is what they intend to rely on to support other agreements.(98) Tenet Healthcare Ltd. v. Cooper is illustrative of the problem an employer can face with inadequate planning.(99) In Tenet, the employer sought to enforce an arbitration provision contained in its handbook by arguing that the handbook was an enforceable employment contract that had modified its at will relationship with the employee.(100) However, the employer had included a disclaimer in the handbook, expressly preserving the at will status of the employment relationship.(101) The court held that the disclaimer effectively negated any argument that the handbook created a valid contract.(102) In essence, the employer was diligent on the one hand in including the disclaimer, but then failed to effectuate an enforceable agreement to arbitrate, which could have been achieved by providing for some other type of consideration. Thus, if an employer intends to limit its ability to terminate an employee in a meaningful way, it should include language sufficiently clear to ensure that a court will not find the agreement illusory.(103) Otherwise, it should provide for another clear form of consideration to support any promises from its employees that it wishes to enforce.
In addition to express written employment contracts, many other writings can contractually modify the at will relationship. For example, one of the most frequently litigated areas of employment contracts is the employment handbook. Increasingly, discharged employees have sued claiming that their employment manuals constitute employment contracts which limit the employer's right to terminate at will. As one commentator has noted, this causes a dilemma for employers.(104) This is especially true in large companies operating under complicated internal structures and procedures, where employment manuals are desirable tools--both for the employer and employee.(105) Manuals provide an inexpensive forum for outlining various procedures and policies governing a wide variety of employment terms, such as hours, pay, benefits, probationary terms, promotions, vacation time, grievance procedures, discipline and discharge policies, to name just a few.(106) This is of obvious benefit to employees because it provides a level of certainty and insight into their employer's expectations.(107) Likewise, employers may benefit from increased employee morale resulting from the employee's knowledge that he or she is treated the same as other employees.(108)
If fact, many employers make the conscious choice to adopt policies altering the at will relationship with their employees and memorialize these choices in their manuals.(109) Policies providing that employees will be guaranteed a definite term of employment, or policies providing that employees will not be discharged without good cause or before certain grievance procedures are followed can attract better employees or provide existing employees with an incentive to remain with the employer.(110) Likewise, standardized pay, grievance, and disciplinary procedures applicable to all employees in a particular class can help protect large employers' from claims of discrimination and unfair treatment by reducing the opportunity for differing treatment of employees for impermissible reasons.(111)
However, oftentimes procedures outlined in employment manuals are not intended by the employer to modify its or the employee's right to terminate employment at will. Rather, the employer's intention is only to provide a statement of its existing procedures without an eye towards the completeness of the policies or giving thought to the possible legal obligations that might be created. Unfortunately though, if the manual is unclear, employees may interpret the provisions as promises that they will not be discharged under certain circumstances. In these situations, employers may be faced with a breach of contract suit over an agreement that they did not knowingly negotiate or enter. Hereinlies the benefit--to both employers and employees--of careful drafting of employment manuals with an understanding of their treatment by the Texas courts.
The Supreme Court of Texas has explicitly recognized that an employer "may modify the employment terms of the at-will status of its employees" through its employment manual.(112) Texas courts applying traditional contract principals to suits alleging breach of contract based on employment manuals have reached varying results depending on the contents of the manual.(113) However, a few clear principles have emerged and are discussed here.
First, general statements in a manual about working conditions, disciplinary procedures, or termination rights are not sufficient to alter the at will relationship.(114) As with any agreement, the manual must restrict the relationship in a "meaningful and special" way.(115) Employees often argue that manuals do this by: (1) providing employment for a specific term, during which an employee may only be terminated for cause,(116) (2) providing employment for an undefined term, during which an employee may only be terminated for cause,(117) or (3) providing employment for an undefined term that cannot be terminated without adherence to certain procedures.(118)
Despite these arguments, Texas courts have shown much greater reluctance to find language modifying the at will relationship in employment handbooks than they have in express employment agreements.(119) The general and oft quoted rule is that: "Employee handbooks, unaccompanied by an express agreement dealing with procedures for discharge of employees, do not create contractual rights regarding those procedures."(120) To modify the at will relationship, "the employer, acting through an agent authorized to bind it, [must] expressly agree[] that the handbook modifies the at-will employment relationship."(121) Applying these principals, courts usually reject breach of contract claims based on employment manuals.(122)
The cases where courts have recognized modification of the employment relationship through an employment manual involve clear modification.(123) The leading case often cited as an example is Vida v. El Paso Employees' Federal Credit Union, where the El Paso Court of Appeals reversed the granting of summary judgment against an employee who claimed that her employer's policy and procedure manual contractually limited its right to discharge her and that her termination was in violation of the manual's stated policies.(124) Specifically, she was discharged after filing a grievance complaining that another employee was promoted who she believed was unqualified.(125) The manual in dispute contained a clause providing that "[n]o employee shall be penalized for using the grievance procedure."(126) The court held that this provision sufficiently "limit[ed] the employer's termination rights in a narrow, clearly delineated way."(127)
Another frequently cited opinion is Aiello v. United Air Lines, Inc., where the Fifth Circuit found an employment manual created the obligation to only discharge for cause because it contained a provision that "employees would be discharged only for good cause, and provided an internal grievance procedure ending in a final decision by a company executive."(128) The court noted that the employee handbook was detailed and that the phrase "good cause" was used several places elsewhere in the manual.(129) It concluded that there was sufficient evidence to support the jury's finding of a "specific contract with binding disciplinary standards and disciplinary procedure."(130)
In contrast with these cases, wrongful discharge claims based upon provisions merely setting forth disciplinary or grievance procedures have been uniformly rejected.(131) For example, in Benoit v. Polysar Gulf Coast, Inc., an employee brought suit claiming his termination did not comply with the disciplinary procedures set forth in his employment manual.(132) The manual contained an attendance policy which stated: "Employees who establish irregular attendance will be subject to the following Corrective Action Program: 1st offense--Counseling[;] 2nd offense--Written reprimand[;] 3rd offense--3-day suspension[; and] 4th offense--Discharge."(133) The employee had been counseled several times after excessive absences and had received a written reprimand, but was then discharged without first receiving a 3-day suspension.(134) The Beaumont Court of Appeals rejected his claim, holding that the employment manual did "not amount to an agreement or contract in writing that would limit Polysar from terminating Benoit at will."(135)
Likewise, in McAlister v. Medina Electric Cooperative, Inc., the San Antonio Court of Appeals rejected a claim that an employee was discharged outside the procedures set forth in an employment manual.(136) The manual stated several causes for dismissal and provided that, "qualifications being equal," employees would be laid off in the order of seniority.(137) The court held that the at will relationship was not modified, noting that "the handbook states several reasons for dismissal, but it does not say these are the exclusive reasons or qualify the employer's common-law right to terminate an employee at will. A fair reading of the handbook is that it [only] highlights for the employee certain forbidden conduct."(138)
While Texas courts are reluctant to construe employment manuals as modifying at will relationships, employers should still be aware, when drafting manuals, of the factors which courts do look to in determining the possible rights and obligations that may arise from their content.
First, from a traditional contract prospective, some courts find that the employer's right to unilaterally amend a manual negates any implied contractual obligation arising from its contents.(139) These courts generally reason that this right to amend shows that the manual serves "as nothing more than a general guideline."(140) However, this is not dispositive, as other courts ignore this factor altogether,(141) and at least one court has rejected this argument entirely, holding that the right to unilaterally alter a manual "did not prevent . . . [the] agreements [within] from becoming a binding contract."(142)
Another factor considered by courts is the existence of a disclaimer expressly reserving the employer's right to terminate at will.(143) Absent extraordinary circumstances, courts treat this as dispositive, rendering this the easiest and most effective way for employers to avoid inadvertently creating contractual obligations when promulgating policies and procedural guidelines.(144)
Finally, and probably most troublesome for employers, courts look for any evidence of an express representation, outside the employment manual, demonstrating the employer's intent to limit its ability to terminate without cause.(145) For example, in United Transportation Union v. Brown, the Texarkana Court of Appeals held that a supervisor's representation to an employee that she could only be disciplined or discharged within the procedures contained in an employment manual bound the employer to follow those procedures.(146) The court reached this result despite its acknowledgment that the manual itself could be unilaterally modified by the employer at any time.(147) Employers can do two things to protect themselves from this result. First, they should attempt to educate supervisors and agents on the purpose and intended effect of provisions in their manuals to discourage unintentional or erroneous misrepresentations. In addition, they should include express language in the manual setting forth who has the authority to contractually bind the employer. At least one court has relied on this type of express limitation as a factor in deciding that a handbook did not modify the at will relationship with an employee.(148)
While the express written employment contracts and employment handbooks discussed above are common subjects of dispute, a significant amount of employment litigation involves claims asserting that other forms of writings give rise to contractual obligations. In general, so long as contract formalities exist, any form of writing can amount to an employment contract. Because employers should be conscious of this, some examples are mentioned here.
Letters between employers and potential employees have been the subject of much litigation.(149) Generally, courts interpret claims based on letters utilizing the same contract principles as with other contracts, placing emphasis on the amount of detail embodied in the writing and the intent of the parties.(150) Several cases have held letters which memorialize terms of employment agreed upon by the parties to be contracts, when they were sufficiently detailed.(151) In W. Pat Crow Forgings, Inc. v. Casarez, an employee claimed that his at will employment status was modified by a letter from his supervisor, which stated:
Confirming our discussion on August 13, 1981, you accepted the position of Forge Shop Supervisor on June 22, 1981. We have the understanding that in the event you find the job unsuitable, or the Company finds your performance substandard, you have the right to revert back to a Hammer Operator."(152)
The court held that the letter was clear and detailed enough to modify the right of the employer to discharge or demote the employee.(153) The Texas Supreme Court in Maxwell v. Cardinal Petroleum Corp., likewise recognized a letter memorializing an agreement for employment was an enforceable employment contract.(154) The letter stated:
This letter will evidence the agreement of Cardinal Petroleum Corp. to employ you at a minimum salary of $24,000 per year, payable in equal monthly installments at the end of each month. Your employment will be effective December 1, 1967 and continue at the above salary for a period of five years from that date, providing that you are able and satisfactorily perform the necessary services.(155)
This letter was sufficiently detailed to ascertain the dates of employment, salary, and the employer's duty to only terminate for unsatisfactory performance.(156)
In contrast, mere offers of employment or letters memorializing incomplete agreements are not sufficient to modify the at will relationship. For example, in Rios v. Texas Commerce Bancshares, Inc., the court rejected an employee's argument that a letter from his employer created a binding contract where the letter clearly indicated that it was confirming an offer and recited a salary and benefits, but did not specify a beginning date or state a specific time period upon which the salary was based.(157) The court also relied, in part, on the fact that the letter did not embody many of the terms of the agreement that the employee alleged were previously reached by the parties.(158)
Courts have treated memorandums and proposals in much the same way. In Ronnie Loper Chevrolet-Geo, Inc. v. Hagley, the court found a proposal which resulted from negotiations between the employer and employee that contained the employee's start date, details about his job description, details about his benefits, and a recitation of an annual salary to be sufficient to modify the at will relationship.(159) The court held that the recitation of an annual salary created a term of employment that restricted the employer's right to terminate the employee for a year without cause.(160) In contrast, the court in Dobson v. Metro Label Corp., rejected the argument that a memorandum memorializing some terms of a negotiated agreement was enough to modify the at will relationship.(161) At issue was a dated memorandum stating: "Offer today for General Manager @ $60,000 base salary per year with no bonus arrangement initially."(162) The court held that this writing alone, without outside testimony as to the agreement, was not sufficient to modify the at will relationship.(163)
While these cases interpreting letters and memorandum do not really differ from the analysis applied to express contracts or employment manuals, employers should just be aware that these other writings can give rise to the same types of contractual obligations. Memorializing the results of negotiations on paper can be useful, but it can lead to unintended consequences if the parties do not contemplate the legal effect, especially when the full terms of the agreement might not be included.
D. Oral Agreements--Contracts and Modifications
Probably the most confusing and thus most litigated area of employment contracts are oral agreements.(164) As a preliminary matter, it should be noted that the Supreme Court of Texas has never squarely recognized an oral agreement as modifying an at will relationship. In Goodyear Tire & Rubber Co. v. Portilla, the court granted writ to answer the question of "whether oral statements assuring job security could constitute some evidence of a modification of at-will employment to a contract requiring 'good cause' for termination."(165) The court then stated: "After reviewing the record, we have concluded it is unnecessary to reach this broad legal issue."(166) Instead, the court accepted the jury finding that the employer had "waived" its right to discharge the employee.(167) Significantly, the court went on to reintegrate that it "express[ed] no opinion on whether oral modification is sufficient" to alter the at will relationship.(168) Likewise, it clarified that its "citation to cases holding oral modifications sufficient should only be taken as approval of their holdings and language that specific modification is allowed, without reaching the 'oral or written' issue."(169)
In 1998, the court sidestepped directly addressing this issue again in Montgomery County Hospital District v. Brown, where it held that an employer's oral assurances that an employee "whose work is satisfactory will not be terminated without good cause" was not specific enough to modify an at will employment relationship.(170) The decision focused on the uncertainty of the employer's assurances, explaining that the general statements made in this case "simply do not justify the conclusion that the speaker intends by them to make a binding contract of employment."(171) However, the court did not specifically exclude the possibility that an oral contract could be formed, instead holding that "an employer's oral statements do not modify an employee's at-will status absent a definite, stated intention to the contrary."(172) Unfortunately, the court did not provide any guidance as to what it would consider a "definite, stated intention to the contrary."(173) Thus, the lower courts have been left to address oral contract claims based on the traditional principals which govern other employer agreements. Because of the great number of cases, overlapping issues, and complexity of the law, the results do not always seem entirely consistent. Further, because most of the cases interpreting oral agreements were decided before Brown, the effect of the court's admonishment that agreements must be specific remains to be seen.
Employment disputes surrounding oral agreements usually arise in three contexts. The first is where an employee or employer asserts that their employment relationship is governed by an express oral agreement modifying the at will relationship.(174) The second is where there is a written agreement, but the employee or employer asserts that an oral agreement is the basis of the writing--i.e. the writing just memorializes or supplements the terms of the (often more complete) oral agreement.(175) Finally, the third is where there is a written agreement, but the employee or employer asserts that an oral promise either modifies or amends the writing.(176) Thus, there is significant overlap in the case law interpreting written and oral contracts.(177)
In each of these contexts, courts must apply traditional contract principals to determine if there is an agreement, either oral, in writing, or a combination of both, that modifies the at will relationship in a "meaningful way." In addition, the effect of the statute of frauds, which requires "any agreement not to be performed within one year" to be in writing, must be determined.(178)
This section begins by explaining the applicability of the statute of frauds to oral employment agreements and modifications. It then discusses the different contexts in which oral promises can modify the at will doctrine, with specific examples of treatment of these claims by the Texas courts.
Oftentimes courts or commentators will state that an employment contract must be in writing and signed by both parties to be valid.(179) This "requirement" stems from the statute of frauds.(180) However, the statute of frauds does not really govern the "validity" of agreements. Rather, it governs their "enforceability" by providing that certain promises and agreements "are not enforceable unless the promise or agreement, or a memorandum of it, is (1) in writing; and (2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him."(181) One category of agreements covered by this statute is "an agreement which is not to be performed within one year from the date of making the agreement."(182)
Thus, when an employee argues that his or her at will relationship is modified by an oral agreement, oftentimes the employer asserts that, even if there is a valid oral agreement, its enforcement is precluded by the statute of frauds. Accordingly, when faced with a claim based on an alleged oral agreement, courts must undertake a two-step process.(183) First, the court must apply traditional contract principles to determine if a valid agreement exists.(184) This is followed by a separate inquiry to determine if the statute is applicable as an affirmative defense to enforcement.(185) Here, the real question is when an agreement is "to be performed within one year."(186)
With an employment contract for a definite term,(187) the applicability of the statute of frauds is usually simple to ascertain.(188) If the term extends beyond one year from the date of the agreement, the statute of frauds applies and the agreement must be in writing and comply with the statutory formalities or it is unenforceable.(189) This is generally true even when there are contingencies, such as death, that could theoretically terminate or excuse performance under the contract within one year.(190) Really, the issue here is the parties' intentions in entering the agreement.(191) The question is whether the parties intended any contingency to satisfy performance under the contract or whether the hypothetical occurrence of that condition would just serve to excuse further performance by terminating the contract.(192)
The applicability of the statute of frauds to indefinite period contracts requires more analysis. A contract is considered to be for an "indefinite" period if the term of the contract is "unascertainable at the time of making of contract."(193) When the term is considered indefinite because it provides for an act that could "conceivably be performed within one year" the statute of frauds "does not apply, however improbable performance within one year may be."(194) Thus, in cases where there is not an express or implied term of employment, the courts must look to the parties' intention at the time the contract was made in order to gauge what they actually contemplated. Consequently, the types of contracts falling within the statute of frauds are not necessarily categorical.(195)
The following section discusses the different situations where oral agreements and assurances are claimed as the basis for modification of the at will employment doctrine and the treatment of these claims by Texas courts. Specifically, it explains the level of specificity the courts have required in order to find a valid oral agreement and then the courts' application of the statute of frauds to these different situations.
2. Oral Contracts Modifying the At Will Employment Relationship
An express oral employment agreement may modify the at will relationship, so long as the terms are express and specific enough to manifest an express intention to modify the relationship.(196) Texas courts have expressed a willingness to recognize clear promises restricting an employer's right to discharge employees, so long as they do not violate the statute of frauds.(197) Claims for oral contracts usually take the form of (1) promises to employ for a either a definite or indefinite term, during which the employee can only be discharged for cause,(198) (2) promises to employ for an indefinite term, during which an employer can only discharge for good faith dissatisfaction,(199) (3) promises to employ for the employee's lifetime,(200) (4) promises to employ until retirement age,(201) and (5) promises not to discharge for specific acts.(202)
Claims based on oral promises to discharge only for cause take two forms. Either the employee asserts that the employer has promised employment for a certain term or sum (thereby invoking the presumption that the employee cannot be discharged during that period without cause)(203) or the employee asserts that the employer made express assurances that the employee could not be discharged without cause for an indefinite term.(204)
It seems clearly established that Texas courts will recognize the validity of an oral agreement to hire for a "term."(205) For example, in Molnar v. Engles, Inc., the San Antonio Court of Appeals reversed a summary judgment on the grounds that there was some evidence to support the employee's claim of an "oral employment contract . . . for one year."(206) Likewise, in Hoffrichter v. Brookhaven Country Club Corp, the Dallas Court of Appeals reversed a directed verdict against employee who "alleged an oral contract" for a three month period.(207) When interpreting these oral agreements, courts simply apply the same analysis as with written agreements to determine if the oral agreement was specific enough to show that the parties had agreed to employment for a definite term.(208)
However, enforcement of a valid oral agreement for a definite term may be barred by the statute of frauds.(209) If the oral contract cannot be performed within a year of contract formation it cannot be enforced because the statute requires it to be in writing.(210) For example, in Dobson v. Metro Label Corp., the Dallas Court of Appeals held that the statute of frauds barred enforcement of a one-year employment contract because it could not "be performed within one year from the date it was made."(211) This was because the oral agreement was made on July 14, 1987 for employment that was to begin on August 3, 1987 and end on August 2, 1988. August 2 was more than one year after July 14th, the date the contract was made.(212)
Texas courts have also correctly rejected the argument that definite term oral contracts fall outside the statute of frauds because there are contingencies that could end the contractual relationship within a year.(213) For example, in Collins v. Allied Pharmacy Management, Inc., several employees argued that an alleged oral contract for a term of three years did not fall within the statute of frauds because "they could be terminated for cause, making the agreement performable within a year."(214) The court held that the statute of frauds applied, explained that the mere possibility of termination within a year did not mean that the contract could be performed within a year.(215)
As with oral contracts for a definite term, it appears Texas courts will recognize the validity of indefinite term oral "for cause" agreements, so long as there is a "definite, stated" intent to modify the at will relationship by the employer.(216) As mentioned above, the Texas Supreme Court, in Montgomery County Hospital District v. Brown, seemed to recognize the validity of such agreements, while admonishing that they must be "clear and specific."(217) There, the court held that an employer's assurances to its employee that she "would be able to keep [her] job . . . as long as [she] was doing [her] job and that [she] would not be fired unless there was a good reason or good cause to fire [her]" was insufficient to modify the at will relationship because there was no agreement on what "good cause" encompassed.(218) Interestingly, the court did not overrule any prior cases interpreting for cause oral agreements--instead only disapproving of three "satisfaction" cases where the court "did not consider whether the statements made were definite enough to constitute an enforceable contract."(219) If anything, this case appears to interpose a new requirement that there be an agreement between the parties as to the meaning and scope of "cause." At least one court has interpreted it this way, holding that an oral promise that an employee "would only be fired for good cause" did not modify the at will relationship because "there [was] no evidence in the record of an agreement on what 'good cause' encompasses."(220) However, despite this language in Brown, employers should be cautious relying upon this new "requirement" until there is more guidance from the court on what it means. Requiring an express agreement, in addition to the one to terminate only for cause, that sets out exactly what "cause" is, would have the drastic effect of overruling almost every case in Texas history interpreting all (at least oral) for cause agreements, including those based on terms of years and the English Rule. The opinion just does not seem to indicate that the court intended this drastic result. More likely, the court would approve of other evidence indicating that the parties had some common understanding of the meaning of cause.
Oral "satisfaction contracts" have traditionally been treated much the same way as for cause agreements, with courts finding oral promises to employ employees for so long as their work is "satisfactory" sufficient to modify the at will relationship by creating an obligation to only terminate for genuine dissatisfaction.(221) However, as with for cause agreements, the Texas Supreme Court has cast uncertainty in this area with its decision in Brown, where it stated that "[g]eneral comments that an employee will not be discharged as long as his work is satisfactory do not in themselves manifest" an intent to be "bound not to terminate the employee except under clearly specified circumstances."(222) The court then disapproved of three lower court cases(223) upholding the validity of oral satisfaction contracts "[t]o the extent [they could be read] . . . to reach a result contrary to our holding here," because they "did not consider whether the statements made were definite enough to constitute an enforceable contract."(224) The Amarillo Court of Appeals, in Welch v. Doss Aviation, Inc., relied on Brown when holding that statements to an employee that he was "hired for life, as long as I performed my duties in a satisfactory manner" and that "the Employee Handbook contained all the employee's [sic] rights and limitations, and to follow it with strict adherence" were not sufficient to modify the at will doctrine.(225) Other courts will likely follow and hold that the use of the word "satisfaction" in an oral agreement is not enough, absent other evidence of intent, to modify the at will relationship. Here again, the question remains exactly what types of oral satisfaction agreements will show an employer's "definite intent to be bound not to terminate . . . except under clearly specified circumstances."(226)
One thing the Brown court did make clear is that these types of indefinite term for cause and satisfaction agreements generally do not fall within the statute of frauds because an "employment contract for an indefinite term is considered performable in one year."(227) The court indicated that there would have to be some other evidence that the parties' intended the relationship to last for a definite term that exceeded a year, or the statute would never be applicable to these types of agreements.(228) Courts are free to use "any reasonably clear method of ascertaining the intended length of performance . . . at the time of contracting."(229) Thus, determining the applicability of the statute of frauds to oral satisfaction contracts will almost always require a case by case inquiry as to intent. Employers seeking to assert the statute of frauds as a defense should make sure the record contains adequate evidence of this intent when it exists.
Another common area of litigation based on oral employment contracts is for promises to employ for the employee's lifetime or until the employee's retirement.(230) Courts seem willing to recognize the validity of these contracts, and instead focus their analysis on whether the statute of frauds precludes enforcement, reaching different results depending on the facts of the particular case.(231) Generally, a promise of lifetime employment falls squarely within the category of contracts "performable" within one year, because, by the very nature of these agreements, the obligation to perform is tied directly to the death of one of the parties, which can always occur within one year of making a contract.(232) Thus, death is not a contingency that may terminate the contract--rather, the death of the employee would necessarily complete the employer's performance under the contract. Consequently, some courts simply hold that a lifetime oral employment agreement is outside the statute of frauds. This is the approach taken in Young v. Ward, where the Waco Court of Appeals held that an oral agreement to pay an employee $2,000 per month for the rest of the employee's life was not barred by the statute of frauds.(233) The court, after conducting an exhaustive analysis of case law interpreting the statute of frauds, concluded that the contract was "one of an indefinite duration . . . [that] could have been fully performed within one year of its making" because the employee "could have died anytime after he ceased working for" his employer.(234) The court correctly recognized that death within a year would amount to performance, not termination, because the employee's "death was intended by the parties to be the defining event which would determine when the agreement was fully performed."(235)
In contrast, several other courts have looked to the parties' intent and "the nature of the performance expected" in lifetime agreements and concluded that they were barred by the statute.(236) For example, in Royle v. Tyler Pipe Industries, Inc., the Tyler court of appeals applied these factors to conclude that "when an oral contract for lifetime employment is made, the understanding and intention of the parties is for the term of such a contract to last beyond one year."(237) Whether this is correct under a proper reading of the statute or not, many courts follow this same reasoning to hold that parties' expectations in a lifetime employment agreement are that the performance will not take place within a year and thus are unenforceable.(238)
Oral contracts promising employment until retirement likewise usually fall within the statute, mainly because the retirement date is usually ascertainable.(239) For example, the Texas Supreme Court in Schroeder v. Texas Iron Works, Inc. held a promise to be unenforceable because the employee's own testimony established that he did not intend to retire for another eight to ten years.(240) Most courts, when looking to the parties' intent, reach this same result and hold that the statute of frauds governs promises of employment until retirement.(241)
Finally, employees have met with success arguing that oral agreements to not discharge an employee for a specific act are enforceable.(242) These actions are usually successful because there is not uncertainty about the specificity of the agreement. For example, in Miksch v. Exxon Corp., an Exxon employee was discharged because her husband operated a Chevron station, which violated Exxon's conflicts policy.(243) She sued for wrongful discharged, based upon oral assurances she had received indicating that her husband's operation of the other shop "would not be a problem at all."(244) The court explained that this case was distinguishable from Brown, where the court was concerned with the specificity of agreements, because the employer's statement here did not "contain ambiguous terminology or require one to speculate as to the parameters of the parties' purported agreement."(245) These types of agreements are likewise outside the statute of frauds because an agreement not to discharge for a particular act can always be performed within one year.(246)
As illustrated by the preceding sections, Texas courts recognize contractual modifications to the at will employment doctrine in a variety of scenarios. While there appears to be a trend by the courts to look more to the parties' intentions and require clearer manifestation of an intent to modify the doctrine from the employer, employers should be aware of and heed the above guiding principles when drafting contracts and handbooks--and even when training managers--to prevent misunderstandings by employees that can be both detrimental to company morale and costly to defend.
III Statutory Limitations on the At Will Doctrine
In addition to the freedom that employers and employees have to contract around the at will doctrine, there are a number of legislatively created restrictions on a private employer's right to discharge its employees at will. This article does not attempt to identify all of these restrictions nor analyze any of them exhaustively. (As discussion on some of these individual statutes could fill treatises!) Rather, this section identifies some of the more relevant statutes that might affect employers in Texas, with a brief synopsis of the statutes content, to provide an overview and make employers aware of the rather random and scattered sources of legislative restrictions.
Many federal statutes are applicable to private employers and specifically limit their ability to terminate their employees at will. Employers are probably most familiar with Title VII of the Civil Rights Act of 1964, which prohibits certain discriminatory practices in employment.(247) Specifically, it prohibits discrimination based on "race, color, religion, sex or national origin."(248) Discriminatory practices under this section include refusing to hire, discharging, or "otherwise discriminating in compensation, terms, conditions, or privileges of employment."(249) Most employers are probably not aware that "discrimination" also includes limiting, segregating, or classifying employees or applicants for employment in a way that deprives, or would tend to deprive, the individual of "employment opportunities or otherwise adversely affect his status as an employee."(250) Finally, employers are prohibited from retaliating against an employee or applicant for opposing, reporting, or assisting in an investigation of violations of this prohibition against discriminatory practices.(251) The Age Discrimination Act extends these same protections to discrimination based on age(252) and the Americans with Disabilities Act likewise extends protection against discrimination based on disabilities.(253)
Other federal statutes prohibit employers from taking retaliatory actions in response to employees exercising various legal rights. These include statutory prohibitions on discrimination against employees for their military service,(254) partaking in jury duty,(255) participating in an Employee Retirement Income Security Program,(256) or membership or participation in a labor union.(257) The Family & Medical Leave Act also now grants protection to employees from adverse employment actions based on absenteeism when the leave is taken because the employee is ill or is needed to care for certain family members.(258)
There are also several Texas state statutes limiting an employer's right to terminate its employees at will. Many of these cover the same subject matter as the federal statutes.(259) For example, the Texas Commission on Human Rights Act,(260) mirrors Title VII and the federal Age Discrimination Act. Likewise, Texas law also protects employees from discrimination based on their participation in state military service,(261) serving on a jury,(262) and participation or membership in a union.(263)
In addition to these overlapping areas, Texas has several other statutes placing obligations on employers and prohibiting retaliation against employees for the exercise of certain acts. For example, Texas employers are required to allow employees to leave work to vote(264) or attend a political convention as a delegate.(265) In addition, it is a third degree felony for an employer to "subject or threaten[] to subject the voter to a loss or reduction of wages or another benefit of employment" in retaliation for voting a certain way or refusing to reveal how the voter voted.(266)
Other Texas statutes target specific occupations. For example, health care providers may not be required to participate, directly or indirectly, in an abortion procedure.(267) Physicians cannot be retaliated against for reporting other physicians who pose a threat to public welfare.(268) Nurses likewise cannot be retaliated against for reporting other nurses that pose risks to patients.(269) All hospital employees are protected against retaliation for reporting illegal acts to their supervisors.(270) Agricultural workers have the right to receive information about chemicals they work with and cannot be retaliated against for exercising this right, or for participating in an investigation of compliance or violations of regulations.(271) Nursing home employees cannot be retaliated against for reporting violations of the law.(272) Lastly, an employee cannot be coerced into dealing with certain persons, or be coerced into making purchases from a particular person or store by his employer.(273)
Finally, other unrelated protections include shielding employees from retaliation for filing a worker's compensation claim in good faith(274) and prohibiting mandatory HIV or AIDS testing except in very narrow circumstances.(275) Even the Family Code contains a provision prohibiting discrimination against someone subject to a child support withholding order.(276) Also worthy of mention here, although it deals specifically with public employees and is thus outside the scope of this article, is the Whistleblower Statute, which prohibits "adverse personnel action against, a public employee who in good faith reports a violation of law" by his public employer or another public employee to the proper law enforcement authorities.(277)
If nothing else, this hodgepodge of statutory protections should strike employers as curiously random. This is because these exceptions have largely evolved over time as a result of specific and narrow policy choices by the Legislature.(278) A more natural and orderly evolution of exceptions to the at will doctrine might be the result if the Texas Supreme Court were charged with (or charged itself with) the duty to evaluate the need for exceptions as cases came before it.(279) However, with only two exceptions, the Texas Supreme Court has left the Legislature to the task of making these policy decisions as it sees fit.(280) As Justice Doggett observed in his concurrence in Winters v. Houston Chronicle Publishing Co., this practice of deference can sometimes lead to disturbing results as the Legislature does not always respond to the courts' and public urging, or at least not in a timely way.(281)
Thus, employers should just be aware that there is a body of rather random, constantly evolving, legislative restrictions on the at will doctrine. Compliance with many of these statutes should be intuitive, as they only prohibit retaliatory conduct. However, particular close attention should be paid to provisions such as the Family & Medical Leave Act that actually place affirmative obligations on the employer.
IV. Judicial Limitations on the At Will Doctrine
In addition to the legislative modifications to the at will doctrine discussed above, there is a body of judicially created exceptions of which employers should be aware. This section identifies and explains the "public policy" exception created by the supreme court and the more common tort causes of actions that can affect an employer's right to discharge its employees at will.
In 1985, the Supreme Court of Texas created an exception to the at will employment doctrine. In Sabine Pilot Service, Inc. v. Hauck, the court held that "public policy, as expressed in the laws of this state and the United States which carry criminal penalties, requires a very narrow exception to the employment-at-will doctrine announced in East Line & R.R.R. Co. v. Scott."(282) This decision represented the first judicially created exception to the at will doctrine in its history.(283) And, to date, it remains the only one.
The plaintiff in Sabine was a deckhand.(284) One of his duties was to "pump the bilges of the boat on which he worked" into the water.(285) He alleged that he discovered that this was an illegal act, refused to perform it, and was discharged.(286) The only issue before the supreme court was whether a termination for failure to commit an illegal act stated a cause of action.(287) In holding that the employee stated a cause of action, the court carefully noted that the new "narrow exception covers only the discharge of an employee for the sole reason that the employee refused to perform an illegal act."(288)
One court of appeals has interpreted this decision to protect an employee who alleged that her termination was based upon her inquiry as to whether an act she was instructed to perform by her supervisors was legal.(289) In Johnston v. Del Mar Distributing, an employee was told to ship a semi-automatic weapon to a grocery store in a box labeled "fishing gear."(290) She contacted the Bureau of Alcohol Tobacco and Firearms to determine if shipping the gun in this manner was legal.(291) When her employer found out about the call, she was fired.(292) Her employer argued that Sabine Pilot was not applicable because the act she was asked to do was not illegal.(293) The Corpus Christi Court of Appeals rejected this argument, holding that "it is implicit that in order to refuse to do an illegal act, an employee must either know or suspect that the requested act is illegal."(294) However, the Fourteenth Court of Appeals in Houston strongly questioned this extension, characterizing it as outside of well-established Texas precedent and the supreme court's holding in Sabine.(295)
Other attempts to expand this "illegal activity" public policy exception have been rejected by courts.(296) For example, in Casas v. Wornick Co., an employee argued that she was fired because she "possessed information which could implicate [her employer] in criminal misconduct."(297) The court stated that even "if we take this information as true, Casas still has not stated a cause of action under Sabine Pilot."(298) Thus, it appears that the lower courts are inclined to heed the supreme court's admonishment in Sabine Pilot and restrict its application to situations where "the sole reason" for termination is the refusal to "perform an illegal act."(299)
There has been one other occasion where the Texas Supreme Court sought to create an exception to the at will doctrine on public policy grounds.(300) In McClendon v. Ingersoll-Rand Co., the court was faced with an employee who was terminated after nine years and eight months of service with his employer.(301) The employee alleged that the sole reason for his termination was that his employer wanted to avoid his pension vesting at the end of ten years of service.(302) The court held that "public policy favors the protection of integrity in pension plans and requires in this case an exception . . . [that] allows recovery when the plaintiff proves that the principal reason for his termination was the employer's desire to avoid contributing to or paying benefits" under the plan.(303) However, the United States Supreme Court reversed the decision, holding that the employee's claim was preempted by the Employee Retirement Income Security Act of 1974.(304) This case is still viewed as significant, though, as it shows a willingness by the court to create limited exceptions "when public policy interests are implicated."(305)
There is an area where the court has frequently been urged, but declined, to extend the public policy exception--"whistleblower" protection for private employees. In Winters v. Houston Chronicle Publishing Co.(306) and then again in Austin v. Healthtrust, Inc.-The Hospital Co.,(307) the supreme court rejected the opportunity to create a private employer whistleblower cause of action. The court's 1990 decision in Winters had created much speculation because, while the court rejected the employee's wrongful termination claim based on retaliation for reporting illegal activity, at the same time it foreshadowed a possible later change with the additional statement that it "decline[d to extend the exception] at this time on these facts."(308) However, in 1998, the court revisited the issue in Austin, stating that since "the Legislature has been so proactive in promulgating statutes that prohibit retaliation against whistleblowers in many areas of the private sector, we decline to recognize a common-law cause of action."(309)
It is difficult to predict how the supreme court will treat future claims premised on "public policy" interests because this is a source of tension between the Legislature and judiciary.(310) For example, as previously noted, the United States and Texas Legislatures have created statutory exceptions to the at will doctrine based on the notion that an employee should not have to choose between employment and violation of a stated "public policy."(311) The court in Austin placed great emphasis on the piecemeal retaliation and whistleblowing legislation that had been passed in Texas "[p]rior to Winters and in the eight years that followed."(312) In declining to create a new cause of action, the court explained that its "review of legislative action in the employment-at-will area leads us to conclude that it would be unwise for this Court to expand the common law because to do so would essentially eclipse more narrowly-crafted statutory whistleblower causes of action."(313) Thus, in the whistleblowing context, the court seems very cognizant of and deferential to the legislative decision to create statutes that protect specific classes of employees and provide "divergent remedies and varying procedural requirements" rather than a "one-size-fits-all" exception.(314)
There are many other sources of public policy that can be raised in a wrongful discharge suit.(315) In other jurisdictions, public policy causes of action have been recognized for retaliation for the exercise of a constitutional right,(316) refusal to violate a statute,(317) pursuing statutory rights,(318) performing an important public obligation,(319) private employee whistleblowing,(320) and complying with a code of ethics. (321) Also recognized are suits for outrageous discharges(322) and discharges contrary to public interest(323) or those inconsistent with a legislative scheme.(324) Based on the supreme court's historically conservative approach, it does not seem likely that it will venture into these other areas in creating common law exceptions to the at will doctrine based on public policy, absent compelling facts and a complete lack of action by the Legislature. The lower courts share this reluctance.(325) Thus, despite the courts' power to create exceptions in the area of public policy, employers' efforts are best spent ensuring compliance with the body of "public policy" legislation that has emerged in recent years rather than looking to the common law developments.(326)
Another judicially created concept frequently pleaded in wrongful discharge suits by discharged at will employees is "promissory estoppel."(327) Section 90(1) of the Restatement (Second) of Contracts provides: "A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise."(328) From this, the Supreme Court of Texas has articulated the requisites as "(1) a promise, (2) foreseeability of reliance thereon by the promisor, and (3) substantial reliance by the promisee to his detriment."(329)
Increasingly, this reliance-based doctrine is applied in employment disputes, although the courts have used different terminology to express the concept, such as "estoppel,"(330) "equitable estoppel"(331) and "detrimental reliance."(332) The Texas Supreme Court has recognized and applied the "equities" served by this doctrine for over a hundred years.(333) However, while the doctrine in theory is firmly rooted, the proper application and its scope in the employment context is not entirely clear.
There are two employment situations in which promissory estoppel is raised: (1) promises to employ, and (2) promises not to discharge.(334) Because the at will presumption does not attach until an employee is hired, this second situation is technically the only one with the potential to modify the at will doctrine.(335) However, because both situations are of importance to Texas employers, cases involving both situations are discussed here.
Where the confusion lies is in the application of this doctrine. Historically, because it arose from the "defensive doctrine of equitable estoppel," the use of promissory estoppel seemed to be restricted to defensive use. (i.e. it could only be asserted as an affirmative defense to estop the denial of a contractual duty).(336) In fact, the supreme court has characterized promissory estoppel as a "defensive" plea that "does not create a contract where none existed before."(337) Rather, the court explained, the doctrine "estops a promisor from denying the enforceability of the promise."(338) This language has been interpreted by some lower courts as restricting employees' use of the doctrine to a "defensive plea in confession and avoidance."(339) In contrast, there is a trend with some courts to recognize promissory estoppel as an independent cause of action, providing employees with an additional recognized ground for wrongful termination suits.(340) This split has yet to be resolved by the supreme court.
As a defensive doctrine, promissory estoppel is most often raised in cases where the employee asserts that an oral contract modifying the at will employment doctrine exists and, in response, the employer asserts that the claim is barred by the statute of frauds.(341) However, in Texas, the doctrine of promissory estoppel does not actually offer much protection to employees in this situation.(342) This is because the Texas Supreme Court has limited use of the doctrine to counter the statute of frauds to where there is an additional promise by the employer to reduce the employment contract to writing that is never fulfilled.(343) In other words, promissory estoppel cannot overcome a statute of frauds defense to the enforcement of the underlying promise--only to an additional agreement to reduce the agreement to writing.(344)
For example, in Collins v. Allied Pharmacy Management, Inc., several employees sued their employer for breach of contract.(345) The employer argued that the employees' claims were barred by the statute of frauds because the alleged "contracts," in the form of letters and stock agreements, did not specifically set forth the term of employment.(346) The court agreed, holding the writings were insufficient to satisfy the statute of frauds.(347) The employees then argued that the employer was "estopped from exercising their employment at will rights and from claiming the statute of frauds as a defense to their breach of contract claim."(348) The court rejected this argument, noting that "[w]hen seeking to estop the assertion of an otherwise valid statute of frauds defense, the promise relied upon must be to sign a written agreement which complies with the statute, or there must be substantial reliance upon a misrepresentation that the statute has been satisfied."(349) Because there was no evidence that the employer had made promises to further commit the agreements to writing, promissory estoppel could not bar the use of the statute of frauds defense.(350) This same result has been consistently reached by other Texas courts addressing the applicability of promissory estoppel to cases where the statute of frauds is pleaded as an affirmative defense by employers.(351)
Some courts limit the use of promissory estoppel to this defensive posture, refusing to recognize it as an independent affirmative cause of action.(352) Under this view, the employers' risk is narrow. The doctrine can only be asserted if there is an alleged oral contract modifying the at will employment doctrine, and (1) the agreement can be performed within one year, or (2) the promise to be enforced is an additional promise by the employer to reduce the employment contract to writing that is never fulfilled.(353) The Collins court limited the use of the doctrine in just this way, rejecting the view of other courts that promissory estoppel can be used as an independent cause of action.(354) Specifically, the court noted that promissory estoppel "is a shield, not a sword" and thus can only be used as "a defensive plea in confession in avoidance."(355) There is real practical significance to this approach for employer's involved in a wrongful discharge suit. Namely, in courts that limit the doctrine's use, the employer does not have the burden of negating promissory estoppel on a motion for summary judgment once the applicability of the statute of frauds has been established.(356)
In contrast, other Texas courts have recognized promissory estoppel as a separate cause of action that can be affirmatively asserted without implicating the statute of frauds.(357) Often, employees will plead this as an alternative to a breach of contract claim.(358) Perhaps the most far-reaching and most cited example of this affirmative use is Roberts v. Geosource Drilling Services, Inc..(359) In Roberts, a prospective at will employee sued Geosource, claiming he had quit his job in reliance on oral promises and a written contract promising him employment with Geosource.(360) Specifically, he alleged that Geosource enticed him to quit his job and then decided to hire someone else.(361) The court denied Geosource's motion for summary judgment, placing the burden of negating promissory estoppel on the employer.(362) Likewise, in Central Texas Micrographics v. Leal, a jury awarded an employee damages for breach of an oral contract to pay certain bonuses.(363) The court held that there was sufficient evidence to support an award of damages under promissory estoppel "as an alternative theory."(364) Even though this approach has been strongly criticized by some courts, employers should be aware that the acceptance of promissory estoppel as an independent cause of action is increasing.(365) Thus, when it is raised in a wrongful discharge suit, employers should always argue that the doctrine is only defensive and raise facts negating its application as a cause of action.(366)
An examination of Texas cases shows that, once promissory estoppel is pled (either offensively or defensively), an employee still has significant hurtles to overcome. At this point, it is the employee's burden to prove three elements: (1) that a promise was made, (2) that the employee's reliance on the promise was foreseeable, and (3) that there was substantial detrimental reliance by the employee.(367) All three of these elements can cause proof problems for an employee.
Showing that a "promise was made" is most difficult where promissory estoppel is limited to defensive use to overcome the statute of frauds. As previously noted, regardless of the existence of proof of the underlying promise the employee seeks to enforce, Texas courts require proof of either "a misrepresentation" by the employer to the effect that the statute of frauds has been complied with, or "an additional promise to reduce the first promise to writing . . . before promissory estoppel may apply."(368) As a practical matter, most of these cases are disposed of summarily because the employee simply lacks evidence of this type of promise.(369) In addition, even when the employee submits this type of proof, courts require surprisingly explicit evidence of the employer's intent. For example, in Gilmartin v. KVTV-Channel 13, the court rejected an employee's defensive use of this doctrine where the employer promised an employee that "a writing was not necessary and that a commitment to more than one year was 'doable.'"(370) Even though arguably the assertion that "a writing was not necessary" is a representation that the statute of frauds has been complied with, the court held that this was not a specific enough promise to "permit an estoppel cause[] of action."(371)
In contrast, courts generally accept employees' allegations "that a promise was made" without discussion in cases permitting the affirmative use of promissory estoppel as a cause of action, so long as the promise is reasonably clear.(372) Here, an employee must just provide evidence of the underlying promise on which the suit is premised--there is no requirement that an additional agreement be shown, as required with defensive use.(373) Consequently, in these cases the focus is generally on whether the employee has shown foreseeable and reasonable reliance on the promise.
Generally, courts analyze the "foreseeability" and "reasonable reliance" elements of promissory estoppel together, oftentimes skipping the foreseeability discussion if they do not find evidence of detrimental reliance.(374) However, looking to cases where the courts have found adequate proof of "foreseeability of reliance" shows that this element is generally satisfied when the employer has taken affirmative steps to induce action by the employee. For example, in Vida v. El Paso Employees' Federal Credit Union, an employee sued for breach of contract and promissory estoppel after being terminated for utilizing an internal grievance procedure, where her employer's handbook contained a provision stating that "[n]o employee shall be penalized for using the grievance procedure."(375) The court held that she alleged sufficient facts to support promissory estoppel as an alternative theory to breach of contract because the employer included this language in its handbook, "not merely foreseeing that its workers would rely upon it, but with the specific intent of encouraging use of this process rather than other external measures."(376) Likewise, in Central Texas Micrographics v. Leal, the court found evidence that the employee's reliance on an employer's promise of a bonus foreseeable, where the employer asked an employee to accept an employment contract at a lower salary than the employee would have otherwise earned, while promising to share the proceeds from the litigation on which the employee was working.(377) Here again, the employee's reliance was more than just foreseeable--the employer had taken affirmative action to induce the employee to accept a reduced salary.(378)
In both Vida and Leal, the courts held that the third element of promissory estoppel was also met--that the employees detrimentally relied upon the employers' promises.(379) However, many promissory estoppel cases fail when an employee cannot show detrimental reliance on the employer's promise.(380) These holdings are usually predicated on one of two things--lack of evidence that the employee actually relied,(381) or lack of a definite enough promise for any reliance to be reasonable.(382) Both of these basis are illustrated in Ryan v. Superior Oil Co., where thirty-nine terminated employees sued for breach of contract and promissory estoppel to recover accrued, but unpaid, vacation time.(383) The employees were subject to a "voluntary policy of compensating terminated employees for vacation time they had accrued but not used, so long as they were not terminated because of dishonesty."(384) They were actually terminated under a severance agreement, where they each received severance pay (exceeding their accrued vacation pay), in exchange for an signed agreement that the "settlement payments will constitute full and final satisfaction of Superior's compensation, benefit and other employment obligations to you."(385) The court noted that one employee was promised that he would still receive his vacation pay, with "details to be worked out later," but still concluded that "[n]one of the appellants can in good faith contend they would have refused the benefits of the severance package in order to receive less money for vacation time they had accrued but not used."(386) In other words, there was no evidence that they had relied on the promise of vacation pay, and, even if they had, it was not reasonable.
On a final note, one thing the Texas courts seem to be in agreement on is that it is never reasonable to rely on a promise of at will employment to establish a promissory estoppel claim.(387) Without a careful reading, the holding in Roberts v. Geosource Drilling Services, Inc. can cause confusion in this area.(388) In Roberts, the court allowed a perspective at will employee to proceed on his claim under promissory estoppel where the employer repudiated an employment offer after the employee had quit his current job in reliance on the defendant's offer.(389) The court stated that it was "no answer that the parties' written contract was for an employment-at-will, where the employer foreseeably and intentionally induce[d] the prospective employee to materially change his position to his expense and detriment."(390) However, other courts have either disagreed with Roberts altogether(391) or distinguished it by noting that the promise was a written one for future employment.(392) In other words the employer's promise which was breached just created a duty to employ, but not for a fixed duration.(393) When current at will employees are at issue, courts seem to agree that "[a] promise to provide employment which is subject to termination at any time or for any reason does not provide any assurances about the employer's future conduct, and does not provide a basis for detrimental reliance as a matter a law."(394)
In sum, employers should recognize that there is uncertainly in Texas over the use of promissory estoppel in employment disputes. The doctrine can modify the at will doctrine by subjecting an employer to liability based on promises made to employees upon which they rely to their detriment.(395) It is unclear whether the doctrine is properly restricted to use as an affirmative defense to bar an employer's reliance on the statute of frauds, or whether it is viable as an independent cause of action.(396) Until this is resolved by the Texas Supreme Court, employers involved in litigation should take care to always present facts to negate the elements of promissory estoppel.
Finally, there are several judicially created tort actions which restrict an employer's right to terminate an employee at will. Occasionally, tort actions alone are brought by employees who allege specific wrongful conduct by their employer. More often, several tort actions are brought along with a breach of contract or promissory estoppel action--a throw in the kitchen sink approach. The most commonly asserted actions are fraud, negligent misrepresentation, intentional infliction of emotional distress, and defamation. This section describes each of these actions with a brief discussion of relevant Texas case law.
Fraud is a common allegation in a wrongful discharge suit. The Texas Supreme Court has recognized the elements of fraud as (1) a false, material representation, (2) that was either known to be false when made or made without knowledge of its truth, (3) that was intended to be acted upon, (4) that was relied upon, and (5) that caused injury.(397) Courts generally reject fraud claims that are just an attempt to enforce an otherwise unenforceable alleged contractual obligation.(398) Specifically, courts will not allow an employee to circumvent the statute of frauds or the doctrine of at will employment by recasting a contract cause of action into a tort action.(399) However, fraud actions have been recognized and have been successful in employment suits where there are independent circumstances, aside from an alleged employment contract, that meet the elements set forth above.(400)
Traditionally, Texas courts have begun their inquiry into fraud actions by determining if the employee is actually asserting an action in contract or in tort.(401) This is because, regardless of the terms the claim is framed in, the "nature" of the action is what determines the allowable damages and applicability of certain defenses.(402) To distinguish between tort and contract actions, the supreme court, in DeLanney, directed courts to look to two things.(403) The first is the nature of the duty allegedly breached.(404) Contract duties arise under an agreement and tort duties arise under law.(405) Thus, if an employee seeks damages only for failure to abide by a contractual promise, "the claim sound[s] only in contract."(406) Second, the court examines "the nature of the plaintiff's loss."(407) Specifically, if the injury suffered "is only the economic loss to the subject of a contract itself the action sounds in contract alone."(408)
Applying these concepts, some lower courts have found employment fraud claims barred by the statute of frauds(409) or the employment at will doctrine(410) without ever reaching the merits of the claim. For example, in Leach v. Conoco, Inc., a husband and wife sued the husband's employer for promissory estoppel and fraud, alleging breach of an oral representation that the husband's transfer overseas would last at least four years.(411) They sought damages equivalent to the money they would have saved had the assignment lasted the full four years.(412) The court first noted that "[w]hen a plaintiff, in his claim asserting fraud, attempts to rely upon an allegedly fraudulent oral promise to enforce his principal employment contract, the statute of frauds is a defense to his fraud claims."(413) It then went on to analyze the nature of the claims and injury, concluding that the plaintiffs were really seeking "the benefit of [the husband's] bargain" under the alleged employment contract, rendering it unenforceable by the statute of frauds.(414) The court further noted that the husband "was an at-will employee since he did not allege an enforceable promise . . . that limited [his employer's] right" to discharge him at any time.(415) It explained that this provided an additional bar to the fraud claim because "[a]n 'at will' employee is barred from bringing a cause of action for fraud against his employer based upon the employer's decision to discharge the employee."(416)
However, the Texas Supreme Court in 1998 created some confusion in this area by holding that a "fraudulent inducement" claim can be brought in tort "irrespective of whether the fraudulent representations are later subsumed in a contract or whether the plaintiff only suffers an economic loss related to the subject matter of the contract."(417) In Formosa Plastics Corp. v. Presidio Engineers and Contractors, Inc., a contractor sued a project owner claiming that it was fraudulently induced into entering a low bid by misrepresentations in a bid package.(418) The project owner argued that the contractor's fraud claim was barred because the losses sought were "purely economic losses related to performance and the subject matter of the contract."(419) The court rejected this argument, holding that tort damages are available in fraud cases because "Texas law has long imposed a duty to abstain from inducing another to enter into a contract through the use of fraudulent misrepresentations."(420) Its decision was predicated on the recognition that there is an "independent legal duty, separate from the existence of the contract itself, [that] precludes the use of fraud to induce a binding agreement."(421)
What is left unclear by Formosa is whether a different analysis now applies that would allow employees to seek the "benefit of the bargain" of an alleged employment contract that would otherwise be barred by the statute of frauds by pleading it in tort. Here, although not stated specifically by the court, the difference between "fraudulent inducement" and "fraud" might be meaningful.(422) Technically, there is not really a difference. As one court explained: "Fraudulent inducement is a type of fraud claim that shares the same elements as a simple fraud claim."(423) In fact, in Formosa the court used the terms interchangeably, discussing the independent duty that precludes fraudulently inducing another to enter into a contract, and then eventually holding the contractor had a "viable fraud claim."(424) However, a close reading of the case shows that the court's focus was really in the additional "inducement" effect of the misrepresentations that caused the contractor to enter into the contract.(425) The court seemed to be more concerned with not foreclosing tort recovery for fraudulent inducement where the misrepresentations happen to additionally form some basis of the contract.(426) In other words, it is not clear that a suit for fraud, where the only complaint was fraudulent performance under the contract (with no fraudulent inducement to enter the contract), would be affected by the Formosa decision.(427) Unfortunately, lower courts' treatment of fraud claims following Formosa do not offer much guidance in resolving this confusion.
For example, in James v. Facciolla, the Texarkana Court of Appeals noted that Formosa is "applicable only to fraudulent inducement claims[,]" apparently recognizing fraud and fraudulent inducement as two separate causes of action.(428) The court went on to conduct a traditional contract versus tort analysis to conclude that a plaintiff's "fraud" claim "sound[ed] only in contract," precluding tort damages.(429) To reach this decision, it explained that "[t]he facts which support both the fraud and contract claims are identical, and the losses sought for each claim, which consist of the expected benefit of the bargain, are also identical."(430) Thus, the court merely conducted the same analysis as used prior to Formosa to determine whether the plaintiff was just recasting a contract claim into one based on fraud.(431) This represents the narrowest reading of Formosa, limiting it squarely to "fraudulent inducement."(432)
The Austin Court of Appeals, in Carr v. Christie, also discussed Formosa in deciding that the statute of frauds did not bar a fraudulent inducement suit to recover "out-of-pocket" losses by a former employee.(433) The court recognized the traditional tort versus contract "nature of the injury" distinction by noting that the statute of frauds "has never barred a fraudulent inducement claim in which a plaintiff seeks to obtain only out-of-pocket losses."(434) Significantly, it went on to say that it "express[ed] no opinion as to whether Formosa affects the holdings of those cases which find the statute of frauds a potential bar to the recovery of benefit-of-the-bargain damages in a fraudulent-inducement action."(435) In other words, the court did not express an opinion on the effect of Formosa on a suit for contract damages simply recast as a tort action.
Finally, the court in Gilmartin v. KVTV--Channel 13 rejected the argument that an employee's claim for fraud was barred because it was predicated on a "breach of contract."(436) In Gilmartin, an employee sought to enforce an alleged oral agreement that his employment would continue year to year and be renewed "so long as his work was satisfactory."(437) The court first dismissed the employee's breach of contract claim, holding that the alleged oral contract was not specific enough to modify the at will relationship.(438) It then summarily held that, based on Formosa, the employee was "not barred from bringing a cause of action for fraud even though his contractual claim may be dismissed."(439) This represents by far the broadest reading of Formosa, standing for the proposition that a fraud action, predicated entirely on a failure to perform an alleged contract, can be maintained even if the alleged contract is invalid.(440)
Even though the effect of Formosa on all employment fraud actions is uncertain, it seems unlikely that courts will allow employees to recast purely contractual claims into fraud claims to circumvent the statute of frauds. Thus, until the law is more settled, employers faced with fraud claims should always urge courts to perform a traditional DeLanney analysis to determine if a fraud claim is contractual in nature. If an employee is seeking "benefit of the bargain" damages on the same facts as gave rise to an alleged contractual obligation, the action probably properly "sound[s] only in contract" and should be subject to the statute of frauds.(441)
In addition to the "statute of frauds" defense, the "at will" nature of an employment relationship can serve as a bar to reaching the merits of an employee's fraud claim. For example, in Sebesta v. Kent Electronics Corp., an employee brought suit alleging she was discharged because of her service on a jury.(442) Specifically, she objected to her employer's failure to pay her for two days of jury service and tendered her resignation.(443) Her employer subsequently allowed her to substitute two paid vacation days for the two days of service.(444) Satisfied with this, she "verbally rescinded" her resignation and two weeks later she was terminated.(445) She sued for fraud, claiming that her employer made two false representations to her: (1) that the jury duty issue was resolved, and (2) that her employer's actions indicated that the retraction of a resignation previously tendered was accepted by her employer.(446) The court held that these assertions amounted to "promises of continued employment, and, in the context of employment at will, cannot justifiably be relied upon to support fraud."(447) Several other courts have likewise held that an at will employee has no cause of action for fraud when the alleged representation by the employer is for nothing more than continued employment.(448)
However, if the employee can show that the representations relied upon are for something other than continued employment, the at will nature of their relationship will not act as an automatic bar to a fraud claim. In Johnson & Johnson Medical, Inc. v. Sanchez, the supreme court recognized a cause of action for fraud by an at will employee who was on an "indefinite medical layoff" but who had repeatedly been falsely assured by her employer that she would be called back to work.(449) Her claim was ultimately unsuccessful because there was no evidence of reliance, but the Beaumont Court of Appeals relied upon this recognition to reject the argument that an at will employee can never maintain an action for fraud against its employer.(450) Rather, there just must be representations that amount to more than promises of continued employment.(451) Thus, in Offshore Petroleum Divers, Inc. v. Cromp, the court held that two employees who incurred travel expenses after being induced to relocate by false representations by their employer could maintain a cause of action for fraud that was "not barred by the employment at will doctrine."(452)
If the employee overcomes the statute of frauds and at will employment hurdles, courts then look to see if the employee has proven each element of fraud: (1) a false, material representation, (2) that was either known to be false when made or made without knowledge of its truth, (3) that was intended to be acted upon, (4) that was relied upon, and (5) that caused injury.(453)
In employment suits, probably the most frequently litigated elements of fraud is the requirement that the employer know that its representation was false at the time it was made. While intent is subjective and thus hard to prove, the Texas courts have given some guidance as to how this element may be met. First, it is not enough that a promise is made and then later not performed.(454) Rather, an employee must show that "at the time the promise [is] made--the promisor intended to deceive and had no intention of performing."(455) Thus, the mere failure to perform under an employment contract does not provide any evidence of fraud, and this element can provide the basis for summary judgment or directed verdict in the employer's favor.(456) The supreme court case Spoljaric v. Percival Tours, Inc. provides a good illustration of just what factors, in addition to non-performance, may properly be considered to sufficiently an show an intent not to perform at the time the promise was made.(457)
In Spoljaric, an employee brought a fraud claim against his employer for "breach of a promise to implement a bonus plan."(458) In determining that the employee had met its burden of showing that the employer never had any intention of honoring its promise, the court considered several factors. At the onset, it explained that "[w]hile a party's intent is determined at the time the party made the representation, it may be inferred from the party's subsequent acts after the representation is made."(459) Then, it noted that the employer's denial that he had made an agreement was relevant to the employer's real intent not to perform.(460) Also, the employer's silence about relevant information prompted the court to note that "[w]hen the particular circumstances impose on a person a duty to speak and he deliberately remains silent, his silence is equivalent to a false representation" which is consistent with a lack of intent to keep a promise.(461) Finally, testimony about when the plan was "approved" that was inconsistent with other employee's testimony provided some additional proof of the employer's true intent to not honor his plan.(462) The court looked to these factors, in addition to the employer's failure to perform, and concluded that this "'[s]light circumstantial evidence' of fraud, when considered with the breach of promise to perform, [was] sufficient to support a finding of fraudulent intent."(463)
The other frequently litigated element of fraud is the requirement that the employee actually rely on the misrepresentation. Generally, so long as an employee presents some evidence of a changed position in reliance on an employer's promise, courts will hold that this element has been sufficiently met. For example, in Carr v. Christie, the court found that evidence that an employee had moved to a different town in reliance on his employer's promises sufficient to raise a fact issue on reliance and preclude summary judgment for the employer.(464) Likewise, in Offshore Petroleum Divers, Inc. v. Cromp, the court found evidence that several employees had incurred out of pocket travel and lodging expenses in reliance on their employer's promise sufficient to support jury finding of reliance.(465) However, failure to provide this clear proof can also be fatal to a claim of fraud. For example, in Johnson & Johnson Medical, Inc. v. Sanchez, an employee sued for fraud based on her employer's repeated false representation that she would be called back to work.(466) The supreme court held that her claim must fail because she "did not present any evidence that she relied to her detriment on any representation made by Johnson & Johnson, such as turning down other offers of employment."(467) In Gilmartin v. KVTV--Channel 13, an employee faced a different problem with this same element--the court held the employee's fraud claim was barred because the misrepresentation by the employer was so vague that any reliance by the employee was necessarily unreasonable.(468)
As the cases discussed at the beginning of this section illustrate, there is some confusion as to the role of fraud causes of action in an at will employment relationship. However, it is apparent that there are circumstances where an employer's representation to an employee can subject it to liability in a wrongful discharge suit, if the employee relies upon it to their detriment. Thus, employers should be aware of the principles discussed here--especially the defenses. Fraud is often plead as an alternative to contract, generally when a contract claim is barred. Because courts have shown a reluctance to allow employees to recast deficient contract claims into fraud claims, employers are afforded fairly significant protections under the law in defending these suits.
2. Negligent Misrepresentation
Another common law action occasionally pled in wrongful discharge suits is "negligent misrepresentation." The Texas Supreme Court has defined the elements of negligent misrepresentation as: (1) a representation made by a defendant in the course of his business or a transaction in which he had a pecuniary interest, (2) where the defendant supplied "false information" to guide others in their business, (3) where the defendant did not exercise reasonable care or competence in obtaining or communicating the information, and (4) the plaintiff suffers pecuniary loss by justifiably relying on the representation.(469)
The impact of negligent misrepresentation claims is relatively insignificant in employment disputes. This is because it is a much narrower cause of action, both in scope and allowable damages, than fraud.(470) Thus, if raised at all, it is generally just advanced as an alternative ground to fraud. However, because it is plead in employment disputes with some increasing frequency, it is discussed briefly here.
The first major difference between fraud and negligent misrepresentation is that in the later the "false information" relied upon must be "a misstatement of existing fact."(471) Thus, unlike a fraud action, with negligent misrepresentation the information relied upon can never be a promise of future action.(472) This difference often proves fatal in employment actions. For example, in Airborne Freight Corp., Inc. v. C.R. Lee Enterprises, Inc., a delivery contractor sued Airborne Freight for negligent misrepresentation after Airborne terminated its delivery contract.(473) Specifically, the contractor argued that it had expended money on new equipment and expansion in reliance on Airborne's oral assurance that "as long as you do your job, you'll have a job."(474) However, the El Paso Court of Appeals held that Airborne's "statement was not 'false information' as required for negligent misrepresentation recovery."(475) The court explained that "if anything, it was a conditional promise of future employment."(476) The same result was reached in Miksch v. Exxon Corp., where a discharged employee sued for negligent misrepresentation after relying on a supervisor's statement that her husband's operation of a competitor's gas station in violation of her employer's "conflicts of interest" policy "would not be a problem at all."(477) The court held the granting of summary judgment against the employee was proper, because the "alleged oral promise not to terminate [the employee] was not a misrepresentation of an existing fact but was, at most, a promise to refrain from taking some action in the future."(478)
Another difference between fraud and negligent misrepresentation is that, in the later, damages are limited to those allowed under section 552B of the Restatement, which provides for damages necessary to compensate for pecuniary loss resulting from the misrepresentation, including "(a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and (b) pecuniary loss suffered otherwise as a consequence of the plaintiff's reliance upon the misrepresentation."(479) This section also provides that "the damages recoverable for a negligent misrepresentation do not include the benefit of the plaintiff's contract with the defendant."(480)
Because this section does not allow the "benefit of the bargain" damages allowed in fraud claims, the supreme court has explained that an employee must show an "independent injury" to maintain a cause of action.(481) In other words, the plaintiff must show that he or she suffered damages resulting from reliance on false information--not simply that he or she suffered injury resulting from nonperformance of an agreement by the defendant.(482) This "independent injury" requirement effectively restricts the utilization of negligent misrepresentation claims because it prevents an employee from ever recasting a contract claim into a negligent misrepresentation claim.(483)
As another means to the same end result, the supreme court has also clearly held that negligent claims that only seek to recover damages that compensate for loss of "benefit of the bargain" are subject to bar by the statute of frauds.(484) Here, the courts perform the same analysis as with other contract and tort claims, determining the nature of the duty breached and injury sought.(485) If the duty breached arises from an agreement and the damages sought are the lost "benefit" from that agreement, the suit will be treated as one in contract and subject to the same limitations and defenses.(486) This use of contractual defenses provides another means for courts to prevent plaintiffs from recasting contract claims into negligent misrepresentation claims.(487)
As a practical tool to understanding this cause of action, the El Paso Court of Appeals has made an observation that is helpful: "[T]he tort of negligent misrepresentation frequently involves a defendant's statement that a contract exists, upon which plaintiff relies, only to later discover that the contract has been rejected or was never completed."(488) It went on to state: "Thus, negligent misrepresentation is a cause of action recognized in lieu of a breach of contract claim, not usually available where a contract was actually in force between the parties."(489) Here, the court has really articulated why a negligent misrepresentation claim, unlike a fraud or fraudulent inducement claim, can never really be consistent with an accompanying claim that a contract was breached.(490)
There is one benefit to an employee in pleading negligent misrepresentation instead of fraud--the culpability requirement is less. Negligent misrepresentation "implicates only the duty of care in supplying commercial information," where fraud is an intentional tort.(491) Thus, in negligent misrepresentation cases, honesty and good faith are not defenses, as they are in fraud. Because bad faith and dishonest intentions can be difficult to prove in fraud actions, negligent misrepresentation offers a good alternative to employees in those limited situations where there has been false information relied upon that causes an "independent injury," but not much proof of intentional misrepresentation. This could occur where the employee is erroneously led to believe that an employment contract exists, where in reality, it does not, but the employee has relied on its existence. In any case, employers should be aware that negligent dissemination of information to employees can subject them to liability in narrow situations.
3. Intentional Infliction of Emotional Distress
Another common law cause of action often plead in wrongful discharge suits is "intentional infliction of emotional distress." The supreme court officially recognized this action in Twyman v. Twyman, where it adopted the following Restatement elements: 1) intentional or reckless conduct, 2) that was extreme and outrageous, 3) which caused the plaintiff emotional distress, 4) that was severe.(492)
In Havens v. Tomball Community Hospital, the First Court of Appeals in Houston recognized that an intentional infliction of emotional distress claim could be brought as an independent cause of action in a wrongful discharge suit, rejecting the argument that the claim was barred because it "stemmed from the discharge."(493) The court explained that the employee's claim was predicated on "harsh treatment and rumors circulated" about the plaintiff before her discharge.(494) Thus, her allegations under this claim were "separate and independent" from the allegations supporting her wrongful discharge claim, rendering it permissible as a separate cause of action.(495) The supreme court has since recognized that, under the right circumstances, an at will employee may maintain an action for intentional infliction of emotional distress arising from discharge.(496) Litigation of these claims almost always boils down to two issues: whether the alleged conduct was sufficiently "outrageous," and whether the resulting distress was sufficiently "severe."
Liability for intentional infliction of emotional distress may only be found where the defendant's conduct is "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community."(497) Especially in the at will employment context, this is a very high burden for a plaintiff to meet.(498) Texas courts have made clear that the "fact of termination of employment even if the termination is wrongful, is not legally sufficient evidence" of extreme and outrageous conduct.(499) Rather, there must additional conduct, accompanying the discharge that meets the rigorous standard adopted by the supreme court in Twyman.(500) An employer simply cannot be held liable for exercising its legal right to terminate an at will employee.(501)
To date, the supreme court has rejected several claims of intentional infliction of emotional distress in the employment context, holding that the employer's conduct was not "extreme and outrageous." In Diamond Shamrock Refining & Marketing Co. v. Mendez, a case decided before Twyman, the court declined to decide whether intentional infliction of emotional distress was recognized in Texas, because it found that the employer's conduct was not outrageous.(502) The plaintiff alleged that, in addition to terminating him, his employer had wrongfully depicted him as a thief to the community.(503) The court rejected the claim and held, as a matter of law, that "an employer's public statement of the reason of termination, [where] the employee disputed that reason" is not "in and of itself some evidence that a tort of intentional infliction of emotional distress had been committed."(504) The following year, the court decided Wornick Co. v. Casas, where an employer required a terminated employee to leave the premises, escorted by security, immediately after her termination.(505) The court held that while the actions "could reasonably be expected to cause humiliation," they did not rise to the level of outrageous, where the employer was only exercising its legal right to terminate an at will employee.(506) In Southwestern Bell Mobile Systems, Inc. v. Franco, the court held that there was insufficient evidence of "outrageous behavior" where two employees were allegedly discharged in retaliation for "reporting sexual harassment . . . [and were forced,] in the unnecessary presence of coworkers, . . . to collect and remove their belongings in front of others."(507) The court rejected both the "reason" and "manner" arguments. First, it explained that even if the "retaliatory" discharge was "wrongful," the mere fact of termination was insufficient evidence of outrageous conduct.(508) It then held that the "manner" of discharge fell "far short of being legally sufficient" to prove outrageous conduct.(509) Finally, in Brewerton v. Dalrymple, the court rejected a discharged university professor's claim of outrageous conduct that was based on (1) negative comments in his tenure file, (2) repeated comments that he should not be allowed to continue on a tenure track, (3) restricted speech, (4) and assignment of an excessive case load.(510) The court held that even if this conduct was retaliatory, it failed as a matter of law to rise to the level of "outrageous" conduct.(511) Applying principles derived from these cases, the lower courts have also rejected claims based on violation of a statute,(512) racial discrimination,(513) retaliatory conduct,(514) and isolated incidences of harassment.(515)
In contrast with these cases, the situations where an employer's conduct has been held to be outrageous generally involve an ongoing course of conduct or harassment. This result comes from the recognition by courts that "[w]hile each incident, comment, or confrontation taken separately might not be outrageous conduct, 'when taken together and considered in context and the appropriate time frames,'" the conduct can become "outrageous."(516)
For example, in GTE Southwest, Inc. v. Bruce, the Texarkana Court of Appeals, after "[e]xamining the overall behavior" of an employer, found it to be sufficiently outrageous to maintain an intentional infliction of emotional distress cause of action.(517) The supreme court affirmed the decision, noting that the employees presented evidence "that, over a period of more than two years, [the employer] engaged in a pattern of grossly abusive, threatening, and degrading conduct," including repeatedly flying into rages, "charging" the employees, and cursing them.(518) The court explained that it was "the severity and regularity of the [employer's] abusive and threatening conduct that brings his behavior into the realm of extreme and outrageous conduct."(519) Likewise, in Bushell v. Dean, the Austin Court of Appeals found a repeated course of sexual harassment by an employer over a four month period sufficiently outrageous to support a jury finding of outrageous conduct.(520) Here again, the court stressed that the totality of the evidence, which was "detailed throughout [the] opinion," rose to the level of outrageous.(521) In American Medical International, Inc. v. Giurintano, the Fourteenth Court of Appeals in Houston applied the same analysis, finding a repeated course of conduct against a doctor to be actionable.(522) The court explained that "[t]aken separately each incident, comment or confrontation would seem to belie the existence of outrageous conduct . . . [but], when taken together and considered in context and the appropriate time frames, there is circumstantial evidence of a conspiracy . . . that constitute[s] outrageous conduct."(523)
As these cases reflect, the Texas courts place a high burden on at will employees to show the outrageousness of their employer's conduct, separate from the act of discharge, to maintain a cause of action for intentional infliction of emotional distress. In the rare case that the employee meets this burden, it must also show that the emotional distress caused by the conduct was "severe."(524) This requirement proved fatal to the employee's claim in Gonzales v. Willis, where the San Antonio Court of Appeals held that a plaintiff proved her employer engaged in outrageous conduct through a course of sexual harassment, but failed to put forth sufficient evidence that it caused her "severe" emotional distress.(525) The employee testified that that her employer's actions made her "embarrassed" and "uncomfortable."(526) She also had difficulty trusting people and trouble sleeping.(527) Some of the comments relayed to her through co-workers "made her feel dirty and made her cry."(528) The court held this evidence to be legally insufficient to show that her emotional distress was "severe."(529) Specifically, the court explained that the evidence gave no "indication of the intensity or duration of the emotional distress."(530)
Employees have been more successful in proving the severity of their emotional distress where they put forth very specific evidence of physical manifestations of distress. For example, in Giurintano, the employee put forth evidence that "he felt like everything had fallen apart[;] . . . He had lost his job and his home[;] he felt confused and dazed," and he asked himself each day "if it is worth going on living."(531) He also had testimony from others stating that he "looked older, grayer and thinner . . . and he was very dejected and depressed."(532) While not required, the supreme court has indicated that medical treatment for stress will bolster the evidence of "severity."(533)
"Defamation" is another cause of action which arises often in the employment context.(534) "A defamation claim consists of a defamatory statement that is communicated . . . to a third party without legal justification or excuse."(535) Terminated employees most often bring this cause of action either alleging that their employer defamed them when they were terminated,(536) or alleging their employer defamed them to another potential employer after their discharge.(537) However, an employee's use of this cause of action is actually fairly limited by the existence of a "qualified privilege" held by employers and several common law defenses.(538)
To maintain a successful defamation claim, an employee must first show that a "defamatory statement" was made.(539) A "defamatory statement" is one that "tends to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him, or if it tends to expose him to public hatred, contempt, or ridicule."(540) Here employees really have two burdens. First, they must show that the statement was an assertion of fact--mere opinions are not actionable.(541) Second, they must show that the false statement was injurious to their reputation.(542)
Whether a statement is an assertion of fact or a mere opinion is not always clear. To determine whether a statement is a fact or opinion requires looking at the "entire communication[s] and not examin[ing] separate sentences or portions."(543) The difficulty of making this distinction was illustrated in Schauer v. Memorial Care Systems, where a nurse sued for defamation based on statements made by her supervisor in a performance review.(544) The comments all related to the employee's performance and were critical of her work in several areas, including not being "able to function in all rooms,"(545) "not [being] sensitive to employee relations,"(546) and not being "an effective or efficient Senior Angiographer."(547) The court rejected her defamation claim, holding that these comments were not actionable because they were matters of opinion.(548) In contrast, in Stephens v. Delhi Gas Pipeline Corp., the court held that an employer's statement that it fired the employee for "violating company polic[ies]" was an assertion of fact, not opinion.(549) In both Schauer and Stephens the employer was really commenting on the same thing--the employee's failure to follow company procedures. However, the different outcomes are probably, in part, a reflection of "the reluctance of American courts to hold employers liable for defamation based on employee evaluations."(550)
If an employee establishes that the employer's statement is an assertion of fact, and not a protected opinion, it must then show that the statement "tend[s] to damage a person's reputation, exposing him to public hatred, contempt, ridicule, or financial injury."(551) This can be done two ways. There are some categories of statements that courts have deemed "so obviously hurtful to the person aggrieved by them that they require no proof of their injurious character to make them actionable."(552) These statements are considered libel or slander per se.(553) Statements in this category include charging one with committing a crime,(554) charging someone with being a racist,(555) and "words that affect a person injuriously in his profession or occupation."(556)
If a statement is not defamatory per se, then the employee must show the statement to be injurious to their reputation.(557) The court's analysis in Einhorn v. LaChance provides a good example of how to determine when statements meet this standard.(558) The plaintiffs in Einhorn were Life Flight pilots for Herman Hospital.(559) In response to a dispute with the hospital over safety and overtime compensation, the plaintiffs formed an international organization of Life Flight pilots to address ongoing concerns about safety in the industry.(560) The pilots were then discharged and brought suit for defamation.(561) The statements at issue were: (1) that the plaintiffs "were attempting to form a union,"(562) (2) that one of the plaintiffs was discharged "for reasons relating solely to work performance,'"(563) and (3) that the plaintiffs were engaged in "indirect dealing."(564) The court began by explaining that it construes statements "in light of surrounding circumstances based upon how a person of ordinary intelligence would perceive the entire statement."(565) Further, if the language is ambiguous or of doubtful import, it becomes a jury question to determine the "meaning and the effect the statement's publication has on an ordinary reader."(566) Applying these standards, the court found that the statements regarding the union and the reason for discharge were not defamatory. Specifically, the court noted that forming a union "is a right protected by federal law, not a crime or unethical act."(567) This holding was over the objection of the plaintiffs, who urged the court to recognize the negative connotations that organizing a union has in their profession.(568) The court also held that the statement relating to the plaintiff's "work performance" was not specific enough to be capable of a defamatory meaning.(569) Finally, the court determined that the charge of "indirect dealing" was slander per se, because it referred directly to the plaintiff's occupation.(570)
A defamation action also requires that the defamatory statement be "published" to a third party.(571) "Any act wherein the defamatory matter is intentionally or negligently communicated to a third person is a publication."(572) Further, in Texas, unlike a majority of states, this element may be satisfied by in some circumstances by "self-publication."(573) First State Bank of Corpus Christi v. Ake was the first Texas case to adopt the Restatement view that "[i]f circumstances indicated that communication to a third party is likely . . . a publication may properly be held to have occurred."(574) The San Antonio Court of Appeals followed suit, upholding a plaintiff's recovery for defamation where the defendant "as a reasonably prudent person, should have expected that his defamation of . . . [the plaintiff] to his face would be communicated to others by" the plaintiff.(575) This approach has not been well received by the other courts of appeals, with two rejecting it outright.(576) The Texas Supreme Court has yet to address the issue.
Even if an employee establishes a defamation cause of action, his or her chance of recovery is subject to a significant limitation--the employer's qualified privilege.(577) "A qualified privilege extends to communications made in good faith on a subject in which the author has an interest or a duty, to another person having a corresponding interest or duty, [and] . . . is peculiarly applicable to communications between employers and employees."(578) This privilege can only be overcome by a showing of "actual malice," which requires "sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication."(579) Thus, in most cases, even where an employee makes out a defamation claim, recovery is barred by the privilege.(580) However, an employee can overcome this privilege on the right facts. For example, in Bolling v. Baker, an employee brought a defamation suit against her employer after he "imputed" that she "had been dishonest and deceitful in the practice of her employment."(581) The court held that the employer's statements were protected by a qualified privilege.(582) However, the employee also presented sufficient evidence to show that the employer's actions were motivated by malice.(583) The employer had repeatedly asked the employee out on dates, became angry when she rejected his advances, and then assigned her extra work.(584) It trial, he attempted to depict her as someone who performed deficient work and was dishonest, even though this was contrary to everyone else's testimony.(585) Finally, the irrationality of his accusation provided proof of his "[l]ack of belief in the truth of the conditionally privileged communication."(586) In finding this evidence sufficient to show actual malice, the court stated that malice need not be proved directly.(587) Rather, it can "inferred from the relation of the parties, the circumstances attending the publication, the language used, and from the words or acts of the defendant before, at, or after the time of the communication."(588)
Employers should also note that the burden to show (or negate) actual malice shifts on a summary judgment.(589) Courts do not set a very high threshold for establishing absence of malice, but if an employer fails to put forth any evidence negating it, it will be fatal to the motion.(590) Likewise, an employer must affirmatively plead and prove that it holds a qualified privilege, or that privilege is waived.(591)
Finally, in addition to the qualified privilege, there are several other affirmative defenses which often bar employees' defamation claims in the workplace. For example, truth is an absolute defense to any defamation claim.(592) A statement need only be "substantially truthful" bar recovery.(593) Consent is also a defense, so long as the employee reasonably understands to what he is consenting.(594) Consent often becomes an issue when a discharged employee gives references for prospective employers to contact, and then one of the former employers makes defamatory remarks.(595) However, when an employee has been discharged but "consents to inquiries to previous employers for references in connection with an application for a new job, [the employee] must be considered willing" to have unfavorable views expressed.(596) Similarly, an employee is barred from recovering for defamation which he or she "invited."(597) This can occur when employees ask for an explanation of their discharge.(598)
The existence of these privileges and defenses to defamation in the workplace makes a successful action against an employer fairly rare. However, employers should understand the scope of these privileges and defenses, and be conscious of their burden to affirmatively plead and prove each one, or risk waiving the protection.
The "at will" employment doctrine has been observed in Texas since 1888.(599) The good news for employers is, despite questions about the validity of its origin,(600) and calls to abolish it,(601) the doctrine appears to be here to stay.(602) In fact, there appears to be a trend towards curbing the growth of exceptions to the doctrine that have developed since its inception. Specifically, the Texas Supreme Court has been very reserved in exercising its power to modify the doctrine on public policy grounds.(603) In addition, several of the court's recent opinions indicate a reluctance to allow modification of the doctrine without a showing that modification by the employer is clearly intended.(604)
However, there still exist numerous exceptions that have evolved over time, eroding the doctrine.(605) Employers unfamiliar with Texas law run the real and serious risk of creating contractual obligations that were not intended, or running afoul of numerous legislative limitations on the right to discharge employees at will. Thus, employers should utilize the overview provided by this article as a tool to generally familiarize themselves with these numerous exceptions. This knowledge will help protect the employer by educating them as to how to avoid making representations to employees that inadvertently create expectations, and possibly legal obligations, that alter the at will relationship and subject them to liability.
* J.D., South Texas College of Law, May 2000; B.S., University of Houston-Clear Lake; Editor-in-Chief, South Texas Law Review.
1 Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998). That employees serve at will is a concept that has been firmly rooted in Texas for over a century. Id. ("For well over a century, the general rule in this State . . . has been that absent a specific agreement to the contrary, employment may be terminated by the employer or the employee at will, for good cause, bad cause, or no cause at all."). The doctrine was first introduced to American Jurisprudence in 1877 in a treatise by Professor Wood. See Horace G. Wood, The Law of Master and Servant §134, at 272 (1877) (poising that "with us the rule is inflexible, that a general or indefinite hiring is prima facie a hiring at will, and if the servant seeks to make it out a yearly hiring, the burden is upon him to establish it by proof . . . . "). The Supreme Court of Texas officially adopted the at will doctrine in 1888 in East Line & Red River R.R. Co. v. Scott, where it held for the first time that employment for an indefinite term is terminable at will by either party, with or without cause. See 72 Tex. 70, 75-76, 10 S.W. 99, 102 (1988).
2 See generally Kathleen T. McCormick, Wrongful Discharge of Private Employees in Texas: Status Quo or Statute?, 19 T. Marshall L. Rev. 45, 49 (1993) (explaining that "[s]ince the mid-1980s, the employment-at-will doctrine in Texas has undergone a transformation . . . which . . . has created a patchwork of limited and narrowly construed exceptions . . . [that] has resulted in . . . indefinite and uncertain standard[s] by which terminations will be evaluated").
3 See, e.g., Brown, 965 S.W.2d at 502-04 (recognizing that the at will doctrine may be modified by an employee handbook or oral assurances so long as the terms are sufficiently specific).
4 See generally Harvey Brown & Sarah V. Kerrigan, 42 U.S.C. §1983: The Vehicle for Protecting Public Employees' Constitutional Rights, 47 Baylor L. Rev. 619 (1995) (discussing wrongful discharge protections offered by federal anti-discrimination statute); Lisa A. May, Labor and Employment Law, 30 Tex. Tech L. Rev. 811 (1999) (surveying the Fifth Circuit's recent application of federal statutory protections in wrongful discharge suits); Bonita K. Roberts, The More Things Change, the More They Stay the Same: The Employment-at-Will Doctrine in Texas, 25 St. Mary's L.J. 435, 436 n.6 (1993) (chronicling some of the Texas statutory provisions restricting employers' ability to discharge employees at will).
5 See Sabine Pilot Serv. Inc. v. Hauck, 687 S.W.2d 733, 735 (Tex. 1985) (recognizing cause of action for employee discharged solely for "refus[ing] to perform an illegal act" on public policy grounds).
6 See generally McCormick, supra note 2, at 63-71 (discussing numerous tort and common law theories advanced in wrongful discharge suits).
7 See Andrew P. Morriss, Bad Data, Bad Economics, and Bad Policy: Time to Fire Wrongful Discharge Law, 74 Tex. L. Rev. 1901, 1902-03 (1996) (characterizing the at will doctrine as a "default" rule, and arguing that it "allows the heterogeneous class of employees to choose among a diverse set of job characteristics when making employment decisions").
8 See, e.g., Federal Express Corp. v. Dutschmann, 846 S.W.2d 282, 283 (Tex. 1993) (noting that employment is at will only "absent an express agreement to the contrary"); Goodyear Tire & Rubber Co. v. Portilla, 836 S.W.2d 664, 667-68 (Tex. App.--Corpus Christi 1992) (explaining that parties are free to alter their at will relationship through express written or oral agreement), aff'd, 879 S.W.2d 47 (Tex. 1994).
9 See Michael Rhodes Wallace, Comment, Employee Manuals as Implied Contracts: The Guidelines That Bind, 27 Tulsa L.J. 263, 263 (1991) ("Increasingly in recent years, employers . . . have been saddled with liability to former employees even though the employers believed that they had disclaimed that liability effectively and despite their intention to avoid it.").
10 See id. at 276 (explaining that the "employee reliance theory" followed in some states is based on courts' recognition that an employee handbook coupled with a "'pattern of practice indicating the adoption and consistent use' of the procedures contained" therein can create reasonable expectations of job security by employees) (quoting Johnson v. Nasca, 802 P.2d 1294, 1297 (Okla. Ct. App. 1990)).
11 Benoit v. Polysar Gulf Coast, Inc., 728 S.W.2d 403, 406 (Tex. App.--Beaumont 1987, writ ref'd n.r.e.).
12 Id.
13 Henry H. Perritt, Employment Dismissal Law and Practices 17 (1987).
14 Benoit, 728 S.W.2d at 406.
15 For an agreement modifying at will employment to be binding, the agreement must be made by an "agent authorized to bind" the employer. Almazan v. United Servs. Auto. Ass'n, 840 S.W.2d 776, 780 (Tex. App.--San Antonio 1992, writ denied). While agency authority is not usually an issue, employers should note that there are a few cases where an agreement modifying the at will relationship has arguably been made, but the case has turned on the agent's lack of authority to enter the agreement. See, e.g., Abbott v. Pollock, 946 S.W.2d 513, 517 (Tex. App.--Austin 1997, writ denied) ("As for appellants' claims that County Officials told them they could not be terminated except for good cause, it is undisputed that none of these individuals were acting under authority granted to them.").
16 See Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998) ("For such a contract to exist, the employer must unequivocally indicate a definite intent to be bound not to terminate the employee except under clearly specified circumstances."); Mansell v. Texas & Pac. Ry. Co., 135 Tex. 31, 36, 137 S.W.2d 997, 999 (1940) (holding that an employer's right to discharge may be contractually limited even when employment is for an indefinite term).
17 See generally City of Odessa v. Barton, 967 S.W.2d 834 (Tex. 1998) (for cause); Maxwell v. Cardinal Petroleum Corp., 471 S.W.2d 785 (Tex. 1971) (good faith dissatisfaction); Hussong v. Schwan's Sales Enters., Inc., 896 S.W.2d 320 (Tex. App.--Houston [1st Dist.] 1995, no writ) (with notice); United Transp. Union v. Brown, 694 S.W.2d 630 (Tex. App.--Texarkana 1985, writ ref'd n.r.e.) (demotion and termination procedures).
18 McCormick, supra note 2, at 54 ("Written contracts of specific duration are the most widely accepted means by [which] to limit employment-at-will.").
19 See id. at 55 ("Texas courts have long recognized that valid contractual limitations on the right to terminate an employee may be imposed by written agreement of the parties.") (citing Mansell v. Texas & Pac. Ry. Co., 135 Tex. 31, 137 S.W.2d 997 (1940) and Hardison v. A.H. Belo Corp., 247 S.W.2d 167 (Tex. Civ. App.--Dallas 1952, no writ)).
20 See, e.g., Demunbrun v. Gray, 986 S.W.2d 627, 628 (Tex. App.--El Paso 1998, no pet.) (reversing summary judgment because fact question existed as to whether recitation of base salary in contract created "definite employment for the period named" that restricted employer's ability to discharge employee at will).
21 See, e.g., Miller Paper Co. v. Roberts Paper Co., 901 S.W.2d 593, 599 (Tex. App.--Amarillo 1995, no writ) (holding employment contract illusory because promises did not modify at will relationship).
22 As a result of the Texas Supreme Court's decision in Montgomery County Hospital District v. Brown, there is currently some uncertainty about the effectiveness of this "for cause" language in oral employment contracts. See generally 965 S.W.2d 501 (Tex. 1998); see also infra notes 163-75, 215-25 and accompanying text. In Brown, the court held an oral assurance that an employee would only be terminated "for cause" insufficient to modify the at will employment relationship. Brown, 965 S.W.2d at 501-02 (explaining that "[g]eneral comments that an employee will not be discharged as long as his work is satisfactory . . . [or] that an employee will be discharged only for 'good reason' or 'good cause'" do not manifest an employer's unequivocal intent to be bound to only discharge an employee under certain circumstances "when there is no agreement on what those terms encompass"). This decision appears to be limited to the context of oral agreements, and no courts have interpreted it as altering the enforceability of written agreements to discharge only for cause.
23 See, e.g., Evan's World Travel, Inc. v. Adams, 978 S.W.2d 225, 229-30 (Tex. App.--Texarkana 1998, no writ); see also Lee-Wright, Inc. v. Hall, 840 S.W.2d 572, 578 (Tex. App.--Houston [1st Dist.] 1992, no writ) ("[T]he contract between Hall and Lee-Wright limited in a meaningful and special way Lee-Wright's right to discharge Hall for the stated term of five years.").
24 See Evan's World Travel, Inc., 978 S.W.2d at 230 ("Generally, once the parties have agreed to a term of service, the employee cannot be fired except for good cause."); AccuBanc Mortgage Corp. v. Drummonds, 938 S.W.2d 135, 142 (Tex. App.--Fort Worth 1996, writ denied) ("Once the parties have agreed to a term of service, the employee cannot be fired except for good cause."); Winograd v. Willis, 789 S.W.2d 307, 310 (Tex. App.--Houston [14th Dist.] 1990, writ denied) ("[A] hiring based on an agreement of an annual salary limits in a 'meaningful and special way' the employer's prerogative to discharge the employee during the dictated period of employment.").
25 See 978 S.W.2d at 230 (reversing summary judgment granted in favor of employer because "the agreement provided for a term of years, which . . . alters the at-will presumption and limits the employer's ability to terminate the employee to only 'for cause'").
26 See id. at 229-30.
27 See, e.g., Massey v. Houston Baptist Univ., 902 S.W.2d 81, 83-84 (Tex. App.--Houston [1st Dist.] 1985, writ denied) (holding that contract providing for $916.67 a month salary altered at will relationship where employer "could not arbitrarily terminate [employee] within one month period").
28 Lee-Wright, Inc., 840 S.W.2d at 577; see also Ronnie Loper Chevrolet-Geo, Inc. v. Hagey, 999 S.W.2d 81, 84 (Tex. App.--Houston [14th Dist.] 1999, no pet h.) ("In the absence of special circumstances, however, Texas also follows the general rule practiced in England, which dictates that a hiring at a stated sum per week, month, or year, is a definite employment for the period named and may not be arbitrarily concluded."). Dallas Hotel Co. v. Lackey, 203 S.W.2d 557, 561 (Tex. Civ. App.--Dallas 1947, writ ref'd n.r.e.) ("In Texas, however, the rule is settled that, in absence of special circumstances, a hiring at a stated sum per week, month or year, is a definite employment for the period named.").
29 986 S.W.2d 627, 628 (Tex. App.--El Paso 1998, no pet.).
30 999 S.W.2d at 82-84.
31 974 S.W.2d 117, 124-25 (Tex. App.--San Antonio 1998, no pet.).
32 Id. at 127 (Green, J., dissenting).
33 See id. at 128-29 (on motion for rehearing).
34 Ronnie Loper Chevrolet-Geo, Inc., 999 S.W.2d at 82.
35 In fact, both Ronnie Loper and Demunbrun were decided after the Saucedo case.
36 See Demunbrun v. Gray, 986 S.W.2d 627, 628 (Tex. App.--El Paso 1998, no pet.).
37 Id.
38 Ronnie Loper Chevrolet-Geo, Inc., 999 S.W.2d at 83; Dallas Hotel Co. v. Lackey, 203 S.W.2d 557, 559 (Tex. Civ. App.--Dallas 1947, writ ref'd n.r.e.).
39 Lackey, 203 S.W.2d at 559 (quoting signed employment card, which provided that "[t]his agreement of employment is at the will of the Employer and the Employee may be discharged without cause at the will of the Employer, and the Employee agrees that he or she will make no claim for any wages or salary from and after the date of notice of discharge from Employer").
40 Ronnie Loper Chevrolet-Geo Inc., 999 S.W.2d at 83 (quoting signed employment application form, which stated that "I understand that just as I am free to resign at any time, the employer reserves the right to terminate my employment at any time, with or without cause and without prior notice").
41 See id. at 84 (holding that pre-printed application form purporting to reserve at will employment status was insufficient to override express agreement for employment term); Lackey, 203 S.W.2d at 561 (holding that form employment card's at will language "must yield" to conflicting language in express employment agreement).
42 Lackey, 203 S.W.2d at 561.
43 Saucedo, 974 S.W.2d at 125.
44 See, e.g., City of Midland v. O'Bryant, No. 97-0954, 2000 WL 351205, at *1 (Tex Apr. 6, 2000) ("[W]e decline to impose a duty of good faith and fair dealing on employers . . . ."); Federal Express Corp. v. Dutschmann, 846 S.W.2d 282, 284 n.1 (Tex. 1993) (declining to recognize a general duty of good faith and fair dealing in employment relationships); Winters v. Houston Chronicle Publ'g Co., 795 S.W.2d 723, 724-25 n.2 (Tex. 1990) (same). However, employers should note that occasionally a good faith duty can arise in the employment context when there is a special relationship that creates an independent basis for the duty. See, e.g., Dutschmann, 846 S.W.2d at 284 n.1 ("The tort duty of good faith and fair dealings [can be] found . . . in "special relationships."); E-Z Mart Stores, Inc. v. Hale, 883 S.W.2d 695, 699 (Tex. App.--Texarkana 1994, writ denied) (explaining that while a duty of good faith and fair dealing does not exist in the employment context, Texas "does recognize such a duty rising as a matter of law from the insured-insurer relationship" that will be applied to employment disputes where the employer has placed themselves in the role of insurer).
45 Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 659 (Tex. App.--Dallas 1992, no writ).
46 Id.
47 See, e.g., Maxwell v. Cardinal Petroleum Corp., 471 S.W.2d 785, 786 (Tex. 1971) (recognizing that contract provision providing that employee would "continue at the above salary . . . providing that you are able and satisfactorily perform the necessary services" created obligation to discharge only for good faith dissatisfaction). But see Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998) (discussing oral satisfaction clauses and noting that "[g]eneral comments that an employee will not be discharged as long as his work is satisfactory do not in themselves manifest" an intent to be bound to an agreement modifying the at will relationship). The supreme court in Brown implied that, in the oral agreement context, there must be a more specific agreement--the use of the term "satisfaction" is not enough. See id. However, the impact of the Brown decision on written satisfaction contracts is not clear. While it only addresses oral contracts, it could be argued that Brown now requires more specificity in written satisfaction contracts.
48 Zep Mfg. Co., 824 S.W.2d at 658.
49 See id. at 559 (explaining that "[a]lthough the determination of the quality of [the employee's] performance is within Zep's president's 'sole discretion,' Texas law implies that the determination to terminate . . . will be made in good faith").
50 230 S.W. 1089, 1090-91 (Tex. Civ. App.--San Antonio 1921, writ dism'd w.o.j.) ("To annul and cancel a contract upon the ground that the agreement is to perform satisfactory service does not mean to give the arbitrary right, without cause, or discharge during its existence, but such act must be done in good faith in the honest exercise of the power.").
51 This is because a satisfaction contract does not impose a duty on the employer to justify the reasonableness of his or her dissatisfaction--just the genuineness of the dissatisfaction. See Kree Inst. of Electrolysis, Inc. v. Fageros, 478 S.W.2d 569, 572 (Tex. Civ. App.--Waco 1972, no writ) (noting that "the reasonableness of action of the employer in terminating [an employee] is not an issue"); see also Lone Star Gas Co. v. Pippin, 620 S.W.2d 922, 924 (Tex. Civ. App.--Dallas 1981, writ ref'd n.r.e.) ("It is generally conceded that a contract by which one agrees to employ another as long as the services are 'satisfactory' . . . gives the employer the right to terminate the contract and discharge the employee whenever he, the employer, acting in good faith, is actually dissatisfied with the employee's work.") (alteration in original).
52 186 S.W. 357, 358-59 (Tex. Civ. App.--San Antonio, 1916, writ dism'd w.o.j.) (alteration in original).
53 See id. at 359.
54 Id.
55 Id.
56 471 S.W.2d 785, 786-87 (Tex. 1971).
57 See id. at 787.
58 See id. (explaining that if "a fact finder should determine that the contract did not impose upon Maxwell the duty to generate new business, this would support an inference that Cardina's discharge of Maxwell was not based upon its good faith dissatisfaction with the services required by the contract").
59 Kree Inst. of Electrolysis, Inc. v. Fageros, 478 S.W.2d 569, 572 (Tex. Civ. App.--Waco 1972, no writ); see also Lone Star Gas Co. v. Pippin, 620 S.W.2d 922, 924 (Tex. Civ. App.--Dallas 1981, writ ref'd n.r.e.) ("Under a contract to render satisfactory services it is not required that a reasonable ground for discharge should exist on the part of the employer[, rather i]t is merely necessary that he be honestly dissatisfied with the employee's work; in other words, that such dissatisfaction is real and not pretended.") (quoting Hardison v. A.H. Belo Corp., 247 S.W.2d 167, 168 (Tex. Civ. App.--Dallas 1952, no writ)).
60 See Pippen, 620 S.W.2d at 924.
61 See Golden Rod Mills v. Green, 230 S.W. 1089, 1091 (Tex. Civ. App.--San Antonio 1921, writ dism'd w.o.j.).
62 Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 659 (Tex. App.--Dallas 1992, no writ).
63 Fageros, 478 S.W.2d at 570 (quoting the employment contract).
64 See id. at 571-72.
65 See id. at 571.
66 See id. ("[N]obody from Kree contacted her at all to tell her she was terminated, but . . . the manager . . . told her that 'Kree had called them and said just to close the shop up' . . . [and t]he equipment was left in place, and within two weeks thereafter the shop was back in operation with the other electrologist.").
67 Id. at 572.
68 368 S.W.2d 883, 886 (Tex. Civ. App.--Eastland 1963, no writ).
69 See id. at 884-85 (explaining that each employee paid a portion of a private investigator's salary to investigate the President of the company without his knowledge). The discharged employees argued that they were acting under the direction of another company executive who told them to keep their actions secret. See id.
70 Id. at 885.
71 See id.
72 See id.
73 Id.
74 Golden Rod Mills v. Green, 230 S.W. 1089, 1090 (Tex. Civ. App.--San Antonio 1921, writ dism'd w.o.j.).
75 Id. at 1090-91 (recognizing that "[n]o one should know better than an employer whether the work of the employee is satisfactory or not" but explaining that the genuineness of the employer's dissatisfaction must still be judicially reviewed).
76 See, e.g., Lone Star Gas Co. v. Pippen, 620 S.W.2d 922, 925 (Tex. Civ. App.--Dallas, 1981, writ ref'd n.r.e.) (explaining that the only issue is "whether the employer's dissatisfaction was honest at the time of discharge").
77 See id. ("[N]either Pippin's ability to do his work at a prior time, nor his earlier supervisor's satisfaction with his work, nor his earlier merit raises and promotions constitute any evidence that Pippin's discharge was not upon an 'honest dissatisfaction' of his employer at the actual time of discharge.").
78 Id. at 924.
79 See Coker v. Wesco Materials Corp., 368 S.W.2d 883, 885 (Tex. Civ. App.--Eastland 1963, no writ).
80 See id.
81 Golden Rod Mills v. Green, 230 S.W. 1089, 1091 (Tex. Civ. App.--San Antonio 1921, writ dism'd w.o.j.) ("[T]he employee may call the honesty and good faith [of its employer] in question, but the burden is on him to prove his case by the preponderance of the evidence.").
82 See, e.g., Daytona Group of Tex., Inc. v. Smith, 800 S.W.2d 289 (Tex. App.--Corpus Chrisi 1990, writ denied) (holding covenant not to compete provision in employment contract invalid because the "underlying employment agreement was an 'at will' relationship" which could not be considered an "otherwise enforceable agreement").
83 See Tex. Bus. & Com. Code Ann. § 15.50 (Vernon Supp. 2000); see also Ireland v. Franklin, 950 S.W.2d 155, 157 (Tex. App.--San Antonio 1997, no writ) (explaining that a covenant not to compete must be "ancillary to or part of an otherwise enforceable agreement at the time the agreement is made").
84 See Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 388 (Tex. App.--Houston [14th Dist.] 1998, pet. dism'd w.o.j.) (noting that the controlling issue is whether there is an enforceable contract to arbitrate supported by consideration from the employer).
85 To determine the enforceability of covenants not to compete and arbitration agreements, there is always a two-step process. First, the court must determine if there is an enforceable, non-illusory agreement between the parties. Then, there is a second inquiry into whether the agreements comply with other statutory and judicial requirements--requirements which this article does not address. However, the outcome of the first inquiry often turns on whether there is an enforceable employment agreement that modified the at will employment relationship, making the concepts discussed elsewhere in this article relevant to the drafting of agreements containing these provisions.
86 883 S.W.2d 642 (Tex. 1994).
87 See id. at 643.
88 See id. at 644 (noting that Light was "an employee-at-will").
89 Id. at 643.
90 See id. at 644-46.
91 Id. at 645 n.5.
92 Id. at 645.
93 Id. at 645 n.5.
94 Id. at 645 n.7 (alteration in original).
95 See, e.g., Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 388-89 (Tex. App.--Houston [14th Dist.] 1998, pet. dism'd w.o.j.) (explaining that employee's mere agreement to serve at will could not provide consideration to support enforceability of arbitration clause); Larry D. Carlson, Enforcing a Non-Compete, 4 Tex. Intell. Prop. L.J. 149, 152-53 (1996) (explaining that "it has long been the law in Texas that an employment-at-will relationship is not an 'otherwise enforceable agreement' because it can be terminated by either the employer or the employee at any time and for any reason[, and thus i]t follows that a covenant not to compete that is ancillary only to an employment-at-will relationship is invalid").
96 There are many other promises, outside the scope of this article, that courts have found to be sufficient consideration to support non-compete and arbitration agreements. See Light, 883 S.W.2d at 644-45 ("At-will employees may contract with their employers on any matter except those which would limit the ability of either employer or employee to terminate the promise, [but c]onsideration for a promise, by either the employee or the employer in an at-will employment, cannot be dependent on a period of continued employment."); CRC-Evans Pipeline Int'l, Inc. v. Myers, 927 S.W.2d 259, 263 (Tex. App.--Houston [1st Dist.] 1996, no writ) (noting that an "'otherwise enforceable agreement' can emanate from at-will employment, but only so long as the consideration for a promise is not dependent on a period of continued employment" because it would be "illusory"). For example, the Texas Supreme Court explained in Light that an agreement by an employer to give the employee "confidential and proprietary information or trade secrets in exchange for the employee's promise not to disclose them" would be adequate to support a covenant not to compete. See 883 S.W.2d at 647 n.14; see also Carlson, supra note 95, at 158 (noting that if "a covenant not to compete is contained in another agreement, such as an employment agreement, a settlement agreement, or an agreement for the sale of a business, it is only necessary to show that the entire agreement is supported by legal consideration"). However, a significant amount of case law shows that employers often rely solely on the existence of an at will employment agreement, without much thought to whether the agreement provides sufficient consideration to support the promises they wish to enforce against the employee. See, e.g., Light, 883 S.W.2d at 644-45; Tenet Healthcare Ltd., 960 S.W.2d at 388-89. Further, even when there are other promises, independent of any agreement altering the at will status of the employee, they are likewise insufficient if they depend on a continued period of employment. See, e.g., Donahue v. Bowles, Troy, Donahue, Johnson, Inc., 949 S.W.2d 746, 751 (Tex. App.--Dallas 1997, writ denied) (explaining that employer's promise to compensate employee and employee's promise to not work for anyone else while working for employer were "illusory because they are dependent upon some interval of continued at-will employment [and thus] . . . cannot form the basis of an otherwise enforceable agreement"); Miller Paper Co. v. Roberts Paper Co., 901 S.W.2d 593, 599 (Tex. App.--Amarillo 1995, no writ) (rejecting argument that "agreement to relinquish all claim to goodwill" provided adequate consideration because this "promise[ was] given in exchange for [an] . . . agreement to make the payments herein set forth[ y]et as determined above, the obligation to pay was dependent upon an interval on continued at-will employment and, thus, illusory").
97 Employers seem to fall trap to this surprisingly often. There are numerous Texas cases rejecting employers' argument that the employment contracts at issue modified the at will relationship effectively. See, e.g., Tenet Healthcare Ltd., 960 S.W.2d at 388-89 (explaining that handbook did not effectively modify the at will employment relationship, and thus the purported agreement was "illusory"); Myers, 927 S.W.2d at 263-65 (holding that employees were at will and thus their employment contract could not provide consideration to support covenant not to compete); Miller Paper Co., 901 S.W.2d at 599 (explaining that "the employment relationships involved herein were at-will [and a]s such, they could not form otherwise enforceable agreements to which the covenant could append"); Burgess v. Permian Court Reporters, Inc., 864 S.W.2d 725, 727-28 (Tex. App.--El Paso 1993, writ dism'd w.o.j.) (holding that employment contract created "merely an at will relationship" that could "not support the enforcement of non-competition agreements").
98 960 S.W.2d at 386.
99 Id.
100 See id. at 387 (quoting the employment handbook's "Acknowledgment Form" which provided: "I understand that . . . no written statement or agreement in this handbook concerning employment is binding, since provisions are subject to change, and as all AMI employees are employed on an 'at will' basis").
101 See id. at 389 (holding the arbitration agreement unenforceable because "appellant's agreement to continue Cooper's employment was illusory from the purported contract's inception" and the "language from the handbook, including the acknowledgment form, expressly denied that appellant was bound by the policies set out in that document").
102 See generally Evan's World Travel, Inc. v. Adams, 978 S.W.2d 225, 230 (Tex. App.--Texarkana 1998, no pet.) (holding employment agreement which provided term of years sufficient to modify at will employment agreement restricting employer's right to terminate without cause and provide consideration for covenant not to compete); Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 659 (Tex. App.--Dallas 1992, no writ) (holding employment agreement which limited right to discharge in bad faith sufficient to modify at will relationship and support non competition provision in contract).
103 See Wallace, supra note 9, at 263-64 (noting that "[e]mployers who have large numbers of employees or who have complicated company policies find themselves in a precarious position" when trying to decide how much detail to incorporate into an employment manual).
104 See id. at 263.
105 See id. ("[T]he purpose of issuing an employee manual is to provide employees with information about company policies and procedures.").
106 See generally id.
107 See Claudia Everett Decker, Comment, The At-Will Doctrine: A Proposal to Modify the Texas Employment Relationship, 36 Baylor L. Rev. 667, 673-74 (1984) (explaining that one rational supporting holding employers bound to their employment manual is that "the employer who establishes such policies and practices presumably enhances the employment relationship in that his employees obtain the peace of mind which results from job security and from knowing they will be treated fairly") (citing Toussaint v. Blue Cross & Blue Shield of Mich., 292 N.W.2d 880, 892 (Mich. 1980)).
108 See, e.g., City of Odessa v. Barton, 967 S.W.2d 834, 835 (Tex. 1998) ("Here, in its employment manual, the City of Odessa conferred the benefit of just-cause status on its employees."); see also Mansell v. Texas & Pac. Ry. Co., 135 Tex. 31, 36, 137 S.W. 997, 999-1000 (1940) (quoting provision which provided: "No employee will be discharged on a charge of incompetency after thirty days' [sic] service" and explaining that "[o]bviously, these provisions of the contract constitute a limitation on the right of the employer to discharge the plaintiffs and negative the theory that the contract was one which could be terminated with impunity by the employer at will without notice and hearing").
109 C.f. Kenneth A. Clark, Note, Ensuring Good Faith in Dismissals, 63 Tex. L. Rev. 285, 286-87 (1984) (noting that managers and commentators have long recognized that good faith requirements and protections against arbitrary dismissals "enhances both productivity and job satisfaction[ and provides] . . . a sense of dignity and self-determination that likely would increase productivity").
110 See id. at 286 (explaining that because "[a]rbitrary and bad faith dismissals often result from individual managers' unchecked authority to dismiss employees[, m]eaningful protection could be provided . . . by requiring dismissal review procedures that divest individual managers of sole discretion to dismiss").
111 See Barton, 967 S.W.2d at 835 ("Here, in its employment manual, the [employer] conferred the benefit of just-cause status on its employees.").
112 Compare Vida v. El Paso Employees' Fed. Credit Union, 885 S.W.2d 177, 181 (Tex. App.--El Paso 1994, no writ) (holding that the "assurance in this employee handbook meets the test of a specific, express limitation that alters the at-will relationship in a meaningful way"), with Reynolds Mfg. Co. v. Mendoza, 644 S.W.2d 536, 539 (Tex. App.--Corpus Christi 1982, no writ) (holding that employee handbook "did not contractually limit the manner and procedure by which [the employer] could discharge any employee").
113 See, e.g., Shell Oil Co. v. Humphrey, 880 S.W.2d 170, 176 (Tex. App.--Houston [14th Dist.] 1994, writ denied) ("Employee handbooks, unaccompanied by an express agreement dealing with procedures for discharge of employees, do not create contractual rights regarding those procedures."); Day & Zimmermann, Inc. v. Hatridge, 831 S.W.2d 65, 69 (Tex. App.--Texarkana 1992, writ denied) ("It is well established, however, that an application for employment, handbooks, copies of the employer's policies, and other similar documents do not constitute an agreement or contract that limits the employer's right to terminate the employment at will."); Hicks v. Baylor Univ. Med. Ctr., 789 S.W.2d 299, 302 (Tex. App.--Dallas 1990, writ denied) ("Texas courts have consistently held that general company manuals or handbooks, if unaccompanied by an express agreement or written representation regarding procedures for discharge of employees, do not constitute written employment agreements immune from the at-will rule.").
114 See, e.g., Welch v. Doss Aviation, Inc., 978 S.W.2d 215, 221 (Tex. App.--Amarillo 1998, no pet.) ("Generally, employee handbooks do not create an employment contract absent a contractual provision that alters the at-will status in a meaningful and special way."); Stiver v. Texas Instruments, Inc., 750 S.W.2d 843, 846 (Tex. App.--Houston [14th Dist.] 1988, no writ) (noting that to modify the at will relationship, a handbook "must provide in 'a meaningful and special way' that the employer does not have the right to terminate the employment relationship at will").
115 See, e.g., Salazar v. Amigos Del Valle, Inc., 754 S.W.2d 410, 413 (Tex. App.--Corpus Christi 1988, no writ) (employees arguing that under employment manual they were employed "on a year-to-year basis").
116 See, e.g., Hicks, 789 S.W.2d at 301 (employee arguing that "the employee handbook modified his at-will employment contract and imposed contractual obligations on Baylor to discharge him only upon a showing of good cause").
117 See, e.g., Reynolds Mfg. Co., 644 S.W.2d at 537 (employee arguing that he was wrongfully discharged because employer terminated his employment "in a manner not provided for in its" manual).
118 See generally Figueroa v. West, 902 S.W.2d 701, 704 (Tex. App.--El Paso 1995, no writ) (noting that "[i]n numerous cases, discharged employees have attempted to recover for breach of contract by alleging that their employers' personnel manuals contained enforceable promises altering the at-will relationship[, but] . . . Texas courts have generally rejected this theory . . . .").
119 E.g., Almazan v. United Servs. Auto. Ass'n, Inc., 840 S.W.2d 776, 781 (Tex. App.--San Antonio 1992, writ denied).
120 Id. at 780.
121 See, e.g., McAlister v. Medina Elec. Cooperative, 830 S.W.2d 659, 664 (Tex. App.--San Antonio 1992, writ denied) (rejecting claim that employment manual created contractual obligations).
122 See City of Odessa v. Barton, 967 S.W.2d 834, 835 (Tex. 1998) (holding that at will relationship was modified where employment manual "provided that the City could discharge a just-cause employee only for violating certain delineated policies and in accordance with a prescribed two-step termination process").
123 885 S.W.2d 177, 179-80 (Tex. App.--El Paso 1994, no writ).
124 See id. at 179.
125 Id. at 181 (alteration in original).
126 Id.
127 818 F.2d 1196, 1198 (5th Cir. 1987).
128 Id. at 1199.
129 Id. at 1200. The real impact of this case has been questioned, however, because the employer initially stipulated in its pretrial order that its personnel manual prohibited it from discharging an employee without good cause. See id. at 1198 ("United stipulated in its pretrial order that its 'personnel policies' prohibited it from discharging an employee without good cause.").
130 See, e.g., Welch v. Doss Aviation, Inc., 978 S.W.2d 215, 221 (Tex. App.--Amarillo 1998, no pet.) (rejecting argument that employment handbook, which contained specific provisions relating to termination, probationary hiring, and discipline, modified the employer's right to terminate employee at will).
131 728 S.W.2d 403, 404 (Tex. App.--Beaumont 1987, writ ref'd n.r.e.).
132 Id. at 405.
133 See id. at 405-06.
134 Id. at 406.
135 830 S.W.2d 659, 664 (Tex. App.--San Antonio 1992, writ denied) ("The record shows as a matter of law that the at-will relationship was not contractually modified.").
136 Id.
137 Id.
138 See, e.g., Day & Zimmerman, Inc. v. Hatridge, 831 S.W.2d 65, 69-70 (Tex. App.--Texarkana 1992, writ denied) (noting that the employer's right to unilaterally amend its handbook is "another indication that the handbook was not a contract"); Reynolds Mfg. Co. v. Mendoza, 644 S.W.2d 536, 539 (Tex. App.--Corpus Christi 1982, no writ) (relying, in part, on fact that employer "was in no way prevented from unilaterally amending or even totally withdrawing its handbook").
139 Whitehead v. University of Tex. Health Science Ctr. at San Antonio, 854 S.W.2d 175, 181 (Tex. App.--San Antonio 1993, no writ).
140 Many courts conduct their analysis of whether an employment manual creates contractual obligations without ever discussing the effect of the employer's right to unilaterally modify the contract. See, e.g., Byars v. City of Austin, 910 S.W.2d 520 (Tex. App.--Austin 1995, writ denied); Stiver v. Texas Instruments, Inc., 750 S.W.2d 843 (Tex. App.--Houston [14th Dist.] 1988, no writ).
141 United Transp. Union v. Brown, 694 S.W.2d 630, 633 (Tex. App.--Texarkana 1985, writ ref'd n.r.e.).
142 See, e.g., Figueroa v. West, 902 S.W.2d 701, 704-05 (Tex. App.--El Paso 1995, no writ) (relying on existence of disclaimer in handbook to find that it failed to alter at will relationship); Almazan v. United Servs. Auto. Ass'n, 840 S.W.2d 776, 781 (Tex. App.--San Antonio 1992, writ denied) ("When a manual expressly affirms the employer's right to terminate the relationship, or denies that the manual creates an employment contract, the relationship is at-will.").
143 In fact, the Supreme Court of Texas has treated this as dispositive. In Federal Express Corp. v. Dutschmann, the defendant's handbook stated: "[T]he policy and procedures set forth in this manual provide guidelines for management and employees during employment, but do not create contractual rights regarding termination or otherwise." 846 S.W.2d 282, 283 (Tex. 1993). The employee also signed an acknowledgment stating: "I understand (the handbook) is not a contract and the information provided may need to be changed by the company from time to time." Id. On these fact, the supreme court held, "[a]s a matter of law, no contract restricting the employment at will relationship existed." Id. at 284. The court explained that a "disclaimer in an employee handbook . . . negates any implication that a personnel procedures manual places a restriction on the employment at will relationship." Id. But see Aiello v. United Air Lines, Inc., 818 F.2d 1196, 1198 (5th Cir. 1987) (finding at will relationship modified, despite clear disclaimer, because (1) the manual also contained clear "for cause" language, (2) the defendant stipulated in its pretrial order that its policies prohibited it from discharging an employee without good cause, and (3) two former supervisors testified that, in their opinion, the manual was contractual and implied prohibited discriminatory discipline).
144 See United Transp. Union, 694 S.W.2d at 632 (discussing evidence of representations made by supervisor about employment manual).
145 Id.
146 See id. at 633.
147 See Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 388 (Tex. App.--Houston [14th Dist.] 1998, pet. dism'd w.o.j.). The Tenet court relied in part on a provision in the handbook providing that contractual obligations could "only occur with a written agreement executed by a facility Executive director and an AMI Senior Executive Officer." Id.
148 See, e.g., Rios v. Texas Commerce Bancshares, Inc., 930 S.W.2d 809 (Tex. App.--Corpus Christi 1996, writ denied); Massey v. Houston Baptist Univ., 902 S.W.2d 81 (Tex. App.--Houston [1st Dist.] 1995, writ denied); W. Pat Crow Forgings, Inc. v. Casarez, 749 S.W.2d 192 (Tex. App.--Fort Worth 1988, writ denied); Webber v. M.W. Kellogg Co., 720 S.W.2d 124 (Tex. App.--Houston [14th Dist.] 1986, writ ref'd n.r.e.); Dallas Hotel Co. v. Lackey, 203 S.W.2d 557 (Tex. Civ. App.--Dallas 1947, writ ref'd n.r.e.).
149 See generally Rios, 930 S.W.2d at 815 (relying on lack of specific details in letter to reject contract claim).
150 See, e.g., Coker v. Wesco Materials Corp., 368 S.W.2d 883, 883 (Tex. Civ. App.--Eastland 1963, no writ) (recognizing letters at issue expressly created one-year satisfaction employment contracts).
151 749 S.W.2d at 193.
152 See id. at 194 (holding that appellee had an enforceable contract with the appellants which gave appellee the right to return to the position of hammer operator after he was terminated as forge shop supervisor).
153 471 S.W.2d 785, 786 (Tex. 1971).
154 Id.
155 Id.
156 930 S.W.2d 809, 815 (Tex. App.--Corpus Christi 1996, writ denied) (holding that letter "did not create an employment agreement or limit in any way the right of TCB to terminate appellant at will").
157 Specifically, the court noted that while the letter did recite a salary of $28,000, it did not specify a beginning date of employment or time period for which that salary was based. See id. In addition, in the employee's deposition, he claimed that there were several other terms of employment already agreed upon, such as a raise after his first evaluation, a transfer to Houston at a later date, and a promise from the bank that they would provide good clerical support. See id. The court placed significance on this testimony, reasoning that if these terms were not embedded in the letter, the parties could not have intended the letter to be a contract. See id.
158 999 S.W.2d 81, 84-85 (Tex. App.--Houston [14th Dist.] 1999, no pet. h.).
159 See id. at 84.
160 786 S.W.2d 63, 66 (Tex. App.--Dallas 1990, no writ).
161 Id. at 64.
162 The employee argued that the memorandum memorialized the oral agreement reached by the parties, which included an agreement that "it was he who was hired, that his employer was Metro Label, that the job he accepted was as general manager of three Metro Label plants, and that the period of employment was for one full year." Id. at 66. The court stated that "[t]he memorandum itself, however, cannot be stretched so far." Id.
163 See Rebecca Guerra, Comment, Oral Contracts to Fire for Good Cause Only: Texas Courts Putting the Cart Before the Horse, 47 Baylor L. Rev. 1181, 1183 (1995) (noting that "oral modifications [of the at will doctrine] have created a great deal of confusion and controversy").
164 879 S.W.2d 47, 48 (Tex. 1994). Portilla, an employee of Goodyear, had worked under the supervision of her brother for seventeen of her twenty-two years of employment, which was a violation of Goodyear's anti-nepotism policy. See id. at 49. There was evidence presented at trial that she had received a written waiver of Goodyear's policy, even though the writing could not be produced at trial. See id. at 51 n.8. She brought a wrongful discharge suit after she was terminated for violating the policy. See id. at 49 ("Violation of the nepotism policy was the sole reason Goodyear discharged her."). The jury found two things: (1) that oral statements to Portilla assuring her job security modified the at will relationship where she could only be discharged for cause, and (2) Goodyear did not have "cause" to discharge her. See id. at 48, 50-51. The jury also made more specific findings, including that Goodyear "had expressly waived its anti-nepotism policy with respect to Portilla." Id. at 50.
165 Id. at 48.
166 See id. at 52 (explaining that employee's discharge was wrongful because "[a]ssuming Portilla's employment contract was otherwise at-will, Goodyear fired her for the only reason for which it expressly contracted not to fire her"). In focusing on this issue, the court sidestepped the issue of oral modification all together by refusing to even address whether Goodyear's assurances to Portilla about job security limited its ability to discharge her without cause. See id. at 50 ("Without addressing whether there was evidence of the broad 'good cause' modification of the employment-at-will relationship, we focus our attention on the specific findings on the anti-nepotism policy.").
167 Id. at 51 n.8.
168 Id.
169 965 S.W.2d 501, 501 (Tex. 1998). The employee testified that: "At the time I was hired as well as during my employment, I was told by [the Hospital administrator] that I would be able to keep my job at the Hospital as long as I was doing my job and that I would not be fired unless there was a good reason or good cause to fire me." Id. at 502 (alteration in original) (quoting summary judgment evidence).
170 Id. at 502.
171 Id. at 501.
172 Although the court did note that it "would be unusual, however, for oral assurances of employment for an indefinite term to be sufficiently specific and definite to modify an at-will relationship." Id. at 503.
173 See, e.g., id. at 502 (employee arguing that oral assurance by employer created obligation to fire her only for good cause).
174 See, e.g., Rios v. Texas Commerce Bancshares, Inc., 930 S.W.2d 809, 815 (Tex. App.--Corpus Christi 1996, writ denied) (employee arguing that oral agreement provided basis for and supplemented incomplete writings).
175 See, e.g., McAlister v. Medina Elec. Coop., 830 S.W.2d 659, 663 (Tex. App.--San Antonio 1992, writ denied) (employee arguing that oral promises by employer made handbook provisions contractually binding).
176 Many cases require analysis of oral statements and separate writings (contracts, handbooks, memorandum, etc.) independently to determine if either forms the basis for an employment contract. See id. at 663-64 (analyzing writings and oral statements separately). However, when not precluded by the statute of frauds, courts must then determine if the oral and written agreements, taken together, can provide enough terms together to create contractual obligations. See, e.g., Culkin v. Neiman-Marcus Co., 354 S.W.2d 397, 400-01 (Tex. Civ. App.--Fort Worth 1962, no writ) (reading letter and oral assurances together to determine contractual terms).
177 Tex. Bus. & Com. Code. Ann. § 26.01(a) (Vernon 1987).
178 See, e.g., Collins v. Allied Pharmacy Management, Inc., 871 S.W.2d 929, 933 (Tex. App.--Houston [14th Dist.] 1994, no writ) (stating that "there are two essential elements to a breach of employment contract cause of action: . . . (2) the employment contract must be in writing"); Wilhite v. H.E. Butt Co., 812 S.W.2d 1, 5 (Tex. App.--Corpus Christi 1991, no writ) (stating that to establish a cause of action for wrongful discharge, the employee "must prove that: . . . (2) the employment contract was in writing").
179 Tex. Bus. & Com. Code. Ann. § 26.01 (Vernon 1987). The underlying policy behind applying the statute of fraud's writing requirement to employment contracts is "to ensure that employers are not vulnerable to allegations by their employees, especially when witness' memories may not last for over one year." Lucy Haroutunian, Comment, Employee, You Have a Job for Life: But is this Oral Promise Enforceable Under the Statute of Frauds?, 50 Baylor L. Rev. 493, 501 (1998).
180 Tex. Bus. & Com. Code. Ann. § 26.01(a) (Vernon 1987).
181 Id. § 26.01(b)(6).
182 For a criticism of Texas courts' frequent failure to properly perform this two-part analysis, see Guerra, supra note 163, at 1183 (explaining that many courts "begin with an assumption that the existence of the oral assurance or statement is sufficient to create an employment contract[ and then] . . . analyze whether the oral 'contract' is valid under the statute of frauds").
183 See generally Guerra, supra note 163, at 1183-84 (explaining that courts must first determine whether oral assurances by employers give rise to contractual obligations by looking to traditional "contract principals such as intent to contract and meeting of the minds").
184 See, e.g., Massey v. Houston Baptist Univ., 902 S.W.2d 81, 84 (Tex. App.--Houston [1st Dist.] 1995, writ denied) (applying two step process by first determining that there was evidence of a valid oral agreement for "life" and then concluding that enforcement of that agreement was barred by the statute of frauds).
185 Haroutunian, supra note 179.
186 The "term" of a contract can be determined either "from the terms of the agreement or the nature of the obligations undertaken by parties." Id. at 498. Thus, if the term is not spelled out in the agreement, courts may still conclude the contract is for a "definite term," not performable in one year if the facts and circumstances show this to be the parties' intention. See id. at 497-98. For example, in Benoit v. Polysar Gulf Coast, Inc., an employee sought to establish that after he completed his probationary period he was a "permanent employee," only subject to discharge for cause. See 728 S.W.2d 403, 405 (Tex. App.--Beaumont 1987, writ ref'd n.r.e.). He argued that he "was to have been retained in employment until his retirement age of 65," because that was the "usage or custom of his two successive employers, as well as all the chemical plants in the area." Id. at 404-05. The court held that the statute of frauds applied because it was "clear, from this record, that the Appellant is seeking to enforce an employment agreement that definitely provided for an employment term of greater than one year." Id. at 406. Specifically, the court noted that the employee started work in 1968, was terminated in 1982, and that he was arguing that he was guaranteed employment until he reached the age of sixty-five. See id. On these facts, the court concluded that the parties' intention and circumstances showed that the contract was not performable within one year. See id.
187 "The duration [of a definite term contract] is ascertained by comparing the date the contract is made to the date the agreement contemplates expiration of the duties undertaken by the parties." Haroutunian, supra note 179, at 498.
188 See, e.g., Dobson v. Metro Label Corp., 786 S.W.2d 63, 66 (Tex. App.--Dallas 1990, no writ) (holding that employment agreement for one year term was "subject to the statute of frauds"). It is important to remember that the relevant inquiry is not whether the stated term is less than a year, but rather whether the contract can be "performed within one year from the date it was made." Tex. Bus. & Com. Code. Ann. § 26.01(a) (Vernon 1987) For example, the employment agreement in Dobson was made on July 14, 1987, employment was to begin on August 3, 1987, and the employment was to conclude on August 2, 1988. See Dobson, 786 S.W.2d at 66. Because the employment ending date was later than one year after the contract formation date, the agreement was subject to the statute of frauds. See id.
189 See, e.g., Collins v. Allied Pharmacy Management, Inc., 871 S.W.2d 929, 934 (Tex. App.--Houston [14th Dist.] 1994, no writ) ("When a contract is for a term longer than one year, the mere possibility of termination within a year because of death or another contingent event does not then insulate it from the statute of frauds.").
190 See Gerstacker v. Blum Consulting Eng'rs, Inc., 884 S.W.2d 845, 850 (Tex. App.--Dallas 1994, writ denied) (explaining that a court may use "any reasonably clear method of ascertaining the intended length of performance" under a contract and noting that the relevant inquiry is "the parties' intentions at the time of contracting").
191 The distinction between contingencies that constitute "performance" under a contract and those that "terminate" the contract or merely "excuse" non-performance is significant in determining the applicability of the statute of frauds to a contract. Collins v. Allied Pharmacy Management, Inc. provides a good illustration of the difference in these concepts. 871 S.W.2d at 929. In Collins, the employees argued that their employment was governed by written agreements that were "implicitly" for three-year terms. Id. at 933. When the employer asserted the statute of frauds as a defense, the employees argued that the three-year terms were actually performable within one year because they could be discharged for cause within that time period. See id. at 934. The court rejected this argument, explaining that "termination for cause is not equivalent to performance of the contract." Id. at 934. In other words, a contingency that terminates or otherwise excuses non-performance, such as a breach, does not equate to performance for purposes of the statute.
192 Haroutunian, supra note 179, at 498.
193 Gerstacker, 884 S.W.2d at 849.
194 The impossibility of categorizing plaintiffs' claims to determine if they fall within the statute of frauds was illustrated by the Gerstacker court, where it held that an oral satisfaction contract that promised employment by a measurement of "quality of performance (not months or years)" to be outside the statute of frauds, while stating in a footnote that it could "imagine an employment situation where the evidence showed that the parties, at the time of the contract, understood that satisfactory performance would specifically require employment for more than one year (thereby expressly placing the contract within the statute of frauds)." Id. at 851 & n.4.
195 See Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 501 (Tex. 1998) ("We hold that an employer's oral statements do not modify an employee's at-will status absent a definite, stated intention to the contrary.").
196 See, e.g., Young v. Ward, 917 S.W.2d 506, 506-07 (Tex. App.--Waco 1996, no writ) (holding employee presented sufficient evidence of oral lifetime employment contract that was not barred by statute of frauds); Molnar v. Engles, Inc., 705 S.W.2d 224, 226 (Tex. App.--San Antonio 1985, writ ref'd n.r.e.) (holding that employee presented sufficient summary judgment evidence of an oral employment contract that was not barred by the statute of frauds); United Transp. Union v. Brown, 694 S.W.2d 630, 633 (Tex. App.--Texarkana 1985, writ ref'd n.r.e.) (holding that employee presented sufficient evidence of oral agreement that modified the at will relationship); Hoffrichter v. Brookhaven Country Club Corp., 448 S.W.2d 843, 845 (Tex. App.--Dallas 1969, writ ref'd n.r.e.) (holding there was some evidence of oral agreement for oral three month term of employment); Dallas Hotel Co. v. McCue, 25 S.W.2d 902, 906 (Tex. Civ. App.--Dallas 1930, no writ) (holding sufficient evidence supported jury finding of oral employment contract for month to month employment).
197 See, e.g., Culkin v. Neiman-Marcus Co., 354 S.W.2d 397, 400 (Tex. App.--Fort Worth 1962, no writ) (definite term); Brown, 965 S.W.2d at 501 (indefinite term).
198 See, e.g., Gilmartin v. KVTV-Channel 13, 985 S.W.2d 553, 556 (Tex. App.--San Antonio 1998, no pet.) (satisfactory performance).
199 See, e.g., Wal-Mart Stores, Inc. v. Coward, 829 S.W.2d 340, 343 (Tex. App.--Beaumont 1992, writ denied) (lifetime employment).
200 See, e.g., Schroeder v. Texas Iron Works, Inc., 813 S.W.2d 483, 489 (Tex. 1991) (employment until retirement).
201 See, e.g., Miksch v. Exxon Corp., 979 S.W.2d 700, 705 (Tex. App.--Houston [14th Dist.] 1998, no pet.) (promise not to discharge for specific act).
202 As discussed in Section II.A.1, a stated term of employment gives rise to the presumption that the employee may not be discharged during that term, absent good cause. See supra notes 23-26 and accompanying text. Likewise, a hiring for a stated sum implies a term of employment. See supra notes 27-35 and accompanying text.
203 For example, in Brown where the employee argued that her employer's oral assurances guaranteed her an indefinite term of employment that could only be terminated for "good cause." Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998).
204 See generally Hoffrichter v. Brookhaven Country Club Corp., 448 S.W.2d 843, 845 (Tex. Civ. App.--Dallas 1969, writ ref'd n.r.e.) (recognizing validity of three month oral contract of employment).
205 705 S.W.2d 224, 224-26 (Tex. App.--San Antonio 1985, writ ref'd n.r.e.) ("Molnar has presented sufficient summary judgment evidence to raise a genuine issue of material fact as to whether his employment was at will or for a period of one year.").
206 448 S.W.2d at 844-45 ("We have carefully reviewed the evidence and have concluded that there was at least some evidence to raise an issue for the jury as to whether there was in fact a contract of employment for a definite term in 1996."). The employee in Hoffrichter had been employed as a pool activities director from June 1st through Labor Day in 1958 through 1965. See id. at 844. His contract claim for the summer of 1966 was based on a conversation with a supervisor who stated "I guess we will go along with you again" and then introduced him to a third party as the "pool director." See id. at 845.
207 See Dallas Hotel Co. v. McCue, 25 S.W.2d 902, 906 (Tex. Civ. App.--Dallas 1930, no writ) (analyzing whether evidence of oral agreement was specific enough to show employment for a term).
208 See Dobson v. Metro Label Corp., 786 S.W.2d 63, 65 (Tex. App.--Dallas 1990, no writ) ("[W]e note that if an employment agreement, either by its terms or by the nature of the required acts, cannot be completed within one year, the Statute of Frauds will apply, and the agreement must meet its requirements.").
209 See id. Further, the writing must be "complete within itself in every material detail . . . so that the contract can be ascertained from the writing without resorting to oral testimony." Id.
210 Id. at 66.
211 See id. (explaining that "since the contract alleged by Dobson could not have been performed within one year from the date of its making, it is subject to the Statute of Frauds . . . and [because] resort to oral testimony is necessary to complete the material terms of the contract, we hold as a matter of law that the memorandum does not satisfy the Statute of Frauds").
212 Collins v. Allied Pharmacy Management, 871 S.W.2d 929, 934 (Tex. App.--Houston [14th Dist.] 1994, no writ) ("When a[n employment] contract is for a term longer than one year, the mere possibility of termination within an year because of death or another contingent event does not then insulate it from the statute of frauds.").
213 Id.
214 Id. (explaining that "termination for cause is not equivalent to performance of the contract").
215 Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 501 (holding "that an employer's oral statement do not modify an employee's at-will status absent a definite, stated intention to the contrary").
216 Id. at 503.
217 Id. at 502 ("Without such agreement [on the meaning of 'good cause,'] the employee cannot reasonably expect to limit the employer's right to terminate him.").
218 Id. at 503 (stating that "[t]o the extent these cases can be read to reach a result contrary to our holding here, we disapprove them").
219 Dawson Prod. Servs. v. Sims, No. 09-97-308 CV, 1999 WL 228776, at *1 (Tex. App.--Beaumont Apr. 1, 1999, no pet. h.) (noting that it was "following the precedent set out by the Texas Supreme Court in Montgomery County Hosp. Dist." v. Brown).
220 In fact, before Brown was decided, it appeared all that was necessary to create an indefinite term satisfaction contract was an assurance from the employer containing the word "satisfaction." See, e.g., Lone Star Gas Co. v. Pippin, 620 S.W.2d 922, 923 (Tex. Civ. App.--Dallas 1981, writ ref'd n.r.e.) (recognizing that promise to employ "for as long as his work is satisfactory" modified employer's right to discharge employee absent genuine dissatisfaction with his performance); Porter v. United Motels, Inc., 315 S.W.2d 340, 344 (Tex. Civ. App.--Waco 1958, no writ) (recognizing employer's assurance that employee would have "job of manager as long as he faithfully and satisfactorily performed his duties as manager" established oral employment contract).
221 Brown, 965 S.W.2d at 502.
222 The three cases cited by the court had all recognized the existence of a satisfaction contract based upon oral assurances by the employer. In Hardison v. A.H. Belo Corp., the employer had promised employment "for so long and for such a time as the services of the plaintiff were satisfactory and satisfactorily performed to the defendant." 247 S.W.2d 167, 167 (Tex. Civ. App.--Dallas 1952, no writ). In Johnson v. Ford Motor Co., the employer promised the employee that his employment would "continue so long as his work was satisfactory." 690 S.W.2d 90, 91 (Tex. App.--Eastland 1985, writ ref'd n.r.e.). Finally, in Morgan v. Jack Brown Cleaners, Inc., the employer assured the employee she would have "job protection." 764 S.W.2d 825, 826 (Tex. App.--Austin 1989, writ denied).
223 Brown, 965 S.W.2d at 503. The Brown court here seems to have explicitly done away with the traditional notion that the use of the language "satisfaction" in an employment contract is enough to modify the at will doctrine, at least in the context of oral agreements.
224 978 S.W.2d 215, 220-21 (Tex. App.--Amarillo 1998, no pet.).
225 Brown, 965 S.W.2d at 502.
226 Id. at 503.
227 See id. at 503-04.
228 Gerstacker v. Blum Consulting Eng'rs, Inc., 884 S.W.2d 845, 850 (Tex. App.--Dallas 1994, writ denied). In Gerstacker, the employee sued for wrongful termination under a satisfaction contract and pled eighteen months worth of damages. See id. The employer argued that the "plea of damages based on eighteen months' employment [was] a judicial admission that affirmatively negates the existence of a contract performable in one year." Id. The court rejected this argument, reasoning that the "plea of damages [have] . . . nothing to do with the facts and circumstances present at the time the parties entered the oral agreement." Id. at 850-51.
229 See, e.g., Benoit v. Polysar Gulf Coast, Inc., 728 S.W.2d 403, 407 (Tex. App.--Beaumont 1987, writ ref'd n.r.e.) ("Appellant takes the position that[, through an oral agreement,] he was a permanent employee or an employee to be retained in service until his normal retirement age of 65.").
230 Compare Young v. Ward, 917 S.W.2d 506 (Tex. App.--Waco 1996, no writ) (lifetime oral contract not barred by statute of frauds), with Wal-Mart Stores, Inc. v. Coward, 829 S.W.2d 340 (Tex. App.--Beaumont 1992, writ denied) (lifetime oral contract barred by statute of frauds).
231 See Haroutunian, supra note 179, at 513 (explaining that "an oral contract for lifetime employment is not within the statute of frauds" because "[a]n oral contract for life is a contract with an indefinite term"). Courts often fail to make the distinction between an indefinite lifetime contract and a definite term retirement contract. See id. at 513-15.
232 917 S.W.2d at 506.
233 Id. at 511.
234 Id. at 512.
235 Royle v. Tyler Pipe Indus., Inc., 6 S.W.3d 593, 595 (Tex. App.--Tyler 1999, pet. denied).
236 Id.
237 See, e.g., Massey v. Houston Baptist Univ., 902 S.W.2d 81, 84 (Tex. App.--Houston [1st Dist.] 1995, writ denied) (stating that the "promise of permanent or lifetime employment, or the promise of employment until retirement age, is the type of employment contract that must be reduced to writing to be enforceable"). Generally, courts reach this conclusion in lifetime employment cases by "lumping together" these cases with cases promising employment until retirement and thus missing the real distinction between the two. See Haroutunian, supra note 179, at 513-15 (discussing courts' failure to differentiate between "lifetime" and "until retirement" contracts); see also infra notes 238-40 and accompanying text (discussing cases construing promises to employ "until retirement").
238 See Haroutunian, supra note 179, at 513 (explaining that an "oral promise that the employee has a job until the employee retires is a definite term contract, since the facts and circumstances surrounding the contract permit evaluation of the contract's term").
239 813 S.W.2d 483, 489 (Tex. 1991).
240 See, e.g., Benoit v. Polysar Gulf Coast, Inc., 728 S.W.2d 403, 406-07 (Tex. App.--Beaumont 1987, writ ref'd n.r.e.) (holding statute of frauds barred claim that employee was promised employment until age sixty five); Webber v. M.W. Kellogg Co., 720 S.W.2d 124, 129 (Tex. App.--Houston [14th Dist.] 1986, writ ref'd n.r.e.) (holding that statute of frauds barred action for alleged oral promise of employment until retirement where it could not have been performed within one year).
241 See, e.g., Miksch v. Exxon Corp., 979 S.W.2d 700 (Tex. App.--Houston [14th Dist.] 1998, pet. denied).
242 See id. at 702. The employee in Miksch was employed as a secretary with Exxon. See id. at 701. Exxon had a conflicts policy which prohibited employees, their spouses, and their dependants from competing with Exxon without Exxon's knowledge and consent. See id. at 702. When the employee's husband decided to acquire an interest in a gas station, the she went to her supervisor for approval. Id. Later the policy was revised to require the approval of "senior management" if an employee was in violation of the conflicts policy. See id. at 702. A member of senior management then told the employee that her husband would have to give up control of his service station or she would be terminated. See id.
243 Id. at 702.
244 Id. at 705 (noting that the "summary judgment proof shows Miksch specifically asked Mize whether her husband's plan [to operate the store] . . . would threaten her position with Exxon. Mize's response is specific and definite, and when viewed in its proper context, communicates the clear message that Miksch would not be fired for what ordinarily would have violated Exxon's conflict's policy").
245 Id. at 705 & n.7 (explaining that it "is undisputed that Miksch's alleged oral employment agreement could have been performed within one year" and noting that "Exxon could have fired her at any time and for any reason (except for her husband's operation of the 43rd Street Chevron)").
246 42 U.S.C. § 2000e-2 (1994).
247 Id.
248 Id. § 2000e-2(a)(1).
249 Id. § 2000e-2(a)(2).
250 Id. § 2000e-3(a).
251 29 U.S.C. § 623 (1999).
252 42 U.S.C. § 12112 (1995).
253 38 U.S.C. § 4311 (Supp. 1999).
254 28 U.S.C. § 1875 (1994).
255 29 U.S.C. § 1140 (1999).
256 29 U.S.C. § 158 (1998).
257 29 U.S.C. § 2615 (1999).
258 For example, courts look to similar provisions in Title VII when interpreting the analogous Texas Commission on Human Rights Act. See Eckerdt v. Frostex Foods, Inc., 802 S.W.2d 70, 72 (Tex. App.--Austin 1990, no writ) (explaining that state courts should consider how similar federal Civil Rights Act provisions are interpreted when interpreting the TCHRA).
259 Tex. Lab. Code. Ann. § 21.051 (Vernon 1996); see also Tex. Health & Safety Code Ann. § 592.015 (Vernon 1992) (providing equal employment opportunities for the mentally retarded).
260 Tex. Gov't Code Ann. § 431.005 (Vernon 1998).
261 Tex. Civ. Prac. & Rem. Code Ann. § 122.001 (Vernon 1997).
262 Tex. Lab. Code Ann. § 101.003 (Vernon 1996); Tex. Lab. Code Ann. § 101.052 (Vernon 1996).
263 Tex. Elec. Code Ann. § 276.004(1) (Vernon Supp. 2000).
264 Tex. Elec. Code Ann. § 161.007 (Vernon Supp. 2000).
265 Tex. Elec. Code Ann. § 276.001 (Vernon Supp. 2000).
266 Tex. Occ. Code Ann. § 103.001 (Vernon 2000).
267 Tex. Occ. Code Ann. § 160.012 (Vernon 2000).
268 Tex. Occ. Code Ann. § 301.413 (Vernon 2000).
269 Tex. Health & Safety Code Ann. § 161.134 (Vernon Supp. 2000).
270 Tex. Agric. Code Ann. § 125.013 (Vernon 1995).
271 Tex. Health & Safety Code Ann. § 242.133 (Vernon Supp. 2000).
272 Tex. Lab. Code Ann. § 52.041 (Vernon 1996).
273 Tex. Lab. Code Ann. § 451.001 (Vernon 1996).
274 Tex. Health & Safety Code Ann. § 81.102(a) (Vernon Supp. 2000).
275 Tex. Fam. Code Ann. § 158.209 (Vernon Supp. 2000).
276 Tex. Gov't Code Ann. § 554.002(a) (Vernon Supp. 2000).
277 See Austin v. Healthtrust, Inc.-The Hosp. Co., 967 S.W.2d 400, 403 (Tex. 1998) (noting that the narrow statutory exceptions to the at will doctrine are the result of careful balancing of policy choices and interest by the Texas Legislature).
278 See id. at 403-04 (Gonzalez, J., concurring) (reiterating that it is the court's duty to amend the at will employment doctrine "to reflect social and economic changes" as it did in Sabine Pilot); see also John W. Ferguson, Jr., Note, Texas Supreme Court Refuses to Recognize a "Whistleblower" Exception to the At-Will Employment Rule for Private Employees: Winters v. Houston Chronicle Publishing Co., 795 S.W.2d 723 (Tex. 1990), 22 Tex. Tech L. Rev. 1215, 1229 (1991) (noting that deference to the Legislature in creating exceptions to the at will doctrine is unjustified where the doctrine itself was judicially-created).
279 See Sabine Pilot Serv., Inc. v. Hauck, 687 S.W.2d 733, 735 (Tex. 1985) (holding that employer cannot retaliate against employee for refusal to perform an illegal act); see also McClendon v. Ingersoll-Rand Co., 779 S.W.2d 69, 71 (Tex. 1989) (holding that employer cannot discharge employee to avoid contributing to pension plan), rev'd, 498 U.S. 133 (1990) McClendon was reversed by the United States Supreme Court because it determined that it was an impermissible attempt to preempt ERISA. See Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 140 (1990).
280 795 S.W.2d 723, 726-27 (Tex. 1990) (Doggett, J., concurring) (discussing the discharge of a nursing home employee for reporting neglect and noting that it took "[s]even years and unknown numbers of dismissed employees or unreported observations of nursing home patient neglect later[ before] the legislature finally adopted protection for such employees").
281 Sabine Pilot Serv., Inc., 687 S.W.2d at 735.
282 See id. at 734 (noting that the "courts of Texas have steadfastly refused to vary from" the at will doctrine); see also McCormick, supra note 2, at 53 (noting that Sabine Pilot represented the first public policy exception to the at will doctrine).
283 See Sabine Pilot Serv., Inc., 687 S.W.2d at 734.
284 Id.
285 See id.
286 See id. ("The sole issue for out determination is whether an allegation by an employee that he was discharged for refusing to perform an illegal act states a cause of action.").
287 Id. at 735.
288 See Johnston v. Del Mar Distrib. Co., 776 S.W.2d 768, 771 (Tex. App.--Corpus Christi 1989, writ denied).
289 See id. at 769.
290 See id.
291 See id.
292 See id. at 770.
293 Id. at 771.
294 See Mayfield v. Lockheed Eng'g & Sciences Co., 970 S.W.2d 185, 187-88 (Tex. App.--Houston [14th Dist.] 1998, pet. denied) ("We cannot . . . agree that a cause of action exists when termination follows the refusal to do a legal act, much less an inquiry into the legality of an act later determined to be within the bounds of the law.").
295 See, e.g., Thompson v. El Centro Del Barrio, 905 S.W.2d 356, 359 (Tex. App.--San Antonio 1995,writ denied) (refusing to extend Sabine Pilot to protect private employees who report illegal acts).
296 818 S.W.2d 466, 470 (Tex. App.--Corpus Christi 1991), rev'd, 856 S.W.2d 732 (Tex. 1993).
297 Id.
298 Sabine Pilot Serv., Inc. v. Hauck, 687 S.W.2d 733, 734 (Tex. 1985). The Texarkana Court of Appeals also refused to extend the Sabine Pilot exception in Fite v. Cherokee Water Co., 6 S.W.3d 337, 342 (Tex. App.--Texarkana 1999, no pet.). An employee argued that he was discharged for leaving his employer's premises while he was on duty as a security guard because a peace officer asked his assistance in locating a stolen vehicle. See id. at 339. He relied upon Article 2.15 of the Texas Code of Criminal Procedure, which provided that "a person who is requested to aid a peace officer and fails to do so shall be reported to the district attorney or the county attorney for prosecution." Id. at 341. However, an officer's authority is limited to asking for aid when they meet with resistance, which did not happen in this case. See id. at 341-42. Thus, the court held that Article 2.15 did not apply. See id. Interestingly, the court went on to state that even if this section had applied, "his termination would not [have been] wrongful under the Sabine Pilot exception because the statutes he allegedly was compelled to violate do not have any criminal penalties attached to their violation." Id. (noting that referral to the district attorney, even if it results in conviction, is not actual prosecution). But see Ebasco Constructors, Inc. v. Rex, 923 S.W.2d 694, 700 (Tex. App.--Corpus Christi 1996, writ denied) (holding Sabine Pilot exception applied where employee put forth sufficient evidence that "the sole reason" for his termination was "because he refused to perform an illegal act" of falsifying reports).
299 See McClendon v. Ingersoll-Rand Co., 779 S.W.2d 69, 71 (Tex. 1989), rev'd, 498 U.S. 133 (1990).
300 See id. at 69.
301 See id. at 70.
302 Id. at 71.
303 See Ingersoll-Rand, Inc. v. McClendon, 498 U.S.133, 140 (1990).
304 Ferguson, supra note 278, at 1225.
305 795 S.W.2d 723, 724-25 (Tex. 1990). Winters was an employee of the Houston Chronicle from April 1977 to June 1986. See id. at 723. He alleged that in 1980 he became aware of illegal activities by other employees including "falsely reporting an inflated number of paid subscribers, . . . inventory theft, and . . . a kickback scheme," which he reported to upper management in January 1986. Id. He claimed that his reporting these illegal activities was the sole reason he was fired six months later. See id. The court "declined to recognize a cause of action for private employees who are discharged for reporting illegal activities." Id. at 724.
306 967 S.W.2d 400, 400 (Tex. 1998). Austin was an emergency room nurse at Gulf Coast Medical Hospital for fifteen years. See id. She reported to her supervisor that a co-worker appeared to be under the influence of drugs and was distributing prescription drugs to patients without doctor authorization. See id. The supervisor, a family friend of the co-worker, "instructed Austin to keep the information to herself" and then fired her six months later. Id. Austin claimed that "she was discharged in retaliation for reporting [her co-worker's] unlawful, dangerous, and unethical activities." Id. at 401. The court refused to recognize a private whistleblower cause of action, stating: "We decline[] to further modify the employment-at-will doctrine by permitting a suit for retaliation." Id.
307 Winters, 795 S.W.2d at 725.
308 Austin, 967 S.W.2d at 400.
309 See generally id. at 401-03 (discussing the relationship between judicially created and legislatively created public policy exceptions to at will employment); see also Frank J. Cavico, Employment at Will and Public Policy, 25 Akron L. Rev. 497, 531-32 (1992) (presenting competing arguments for legislative and judicial public policy initiatives).
310 See Kelsey Menzel, Master and Servant--Retaliatory Discharge--An "At-Will" Employee May be Fired Despite Motives Which Violate Stated Public Policy Maus v. National Living Centers, Inc., 633 S.W.2d 674 (Tex. Ct. App.--Austin 1982, writ ref'd n.r.e.), 14 St. Mary's L.J. 443, 450 (1983) (noting that the "practical effect of the court's disallowance of a cause of action for wrongful discharge where the employer has violated stated public policy is to force the employee to choose between acting on his statutory right or duty and maintaining his job").
311 Austin, 967 S.W.2d at 401.
312 Id. at 401.
313 Id. at 401-03. The court noted that the Legislature is in a better position to balance policies and tailor the cause of action and the remedy for retaliatory conduct accordingly. See id. at 403 ("Unlike the Legislature, we cannot craft statutes of limitation that vary depending upon the area of employment[; n]or can the Court establish an administrative scheme[, and thus, w]ere we to create a broad-based whistleblower cause of action, it would in large part eviscerate the specific measures the Legislature has already adopted.").
314 See Cavico, supra note 309, at 506-29.
315 See id. at 507-10. "[T]he cases indicate that constitutions, particularly Bills of Rights, are viewed as fundamental sources of public policy upon which to build a tort cause of action against a private employer." Id. at 507 (citing Novosel v. Nationwide Ins. Co., 721 F.2d 894, 899-900 (3rd Cir. 1983) (applying Pennsylvania law); Rojo v. Klinger, 52 Cal. 3d 65, 90 (1990); Luedtke v. Nabors Ala. Drilling, 768 P.2d 1123, 1132-33 (Alaska 1989); Boyle v. Vista Eyewear, 700 S.W.2d 859, 871 (Mo. Ct. App.1985)).
316 See id. at 512-13. "An employee whose discharge resulted from a refusal to perform an act, ordered by the employer, which would violate a statute is very likely to receive protection under the public policy exception[, and this] protection also is extended to employees who are discharged for refusing to violate an administrative regulation." Id. at 512 (citing Sargent v. Central Nat'l Bank & Trust Co., 809 P.2d 1298, 1300-01 (Okla. 1991); Coman v. Thomas Mfg. Co., 381 S.E.2d 445, 447-48 (N.C.1989)).
317 See id. at 514-18. "Pursuant to this aspect of public policy, an employee who is discharged for pursuing or vindicating a statutory right related to his or her role as an employee possesses a public policy tort cause of action." Id. at 514 (citing Travis v. Gary Community Mental Health Ctr., 921 F.2d 108, 111-12 (7th Cir. 1990); Smith v. Smithway Motor Xpress, 464 N.W.2d 682, 685 (Iowa 1991)).
318 See id. at 520. "When an employee is discharged for seeking to perform an important public obligation, the employer can be subject to the public policy tort." Id. (citing Hinson v. Cameron, 742 P.2d 549, 553-54 n.9 (Okla. 1987); Delaney v. Taco Time Int'l, 681 P.2d 114, 117-18 (Or. 1984)).
319 See id. at 520-24. "This . . . public policy exception is rationalized on the grounds that a discharge of a whistle-blowing employee jeopardizes the interests of co-workers as well as the public's health, safety, and welfare." Id. at 521 (citing Parr v. Triplett Corp., 727 F. Supp. 1163, 1165-66 (N.D. Ill. 1989); Collier v. Superior Court (MCA Inc.), 279 Cal. Rprt. 453, 454 (1991)).
320 See id. at 526-28. "Caselaw exists . . . holding that Codes of Ethics of a profession properly may be regarded as sources of public policy." Id. at 526 (citing Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 512 (N.J.1980); Kalman v. Grand Union Co., 443 A.2d 728, 730-31 (N.J.1982)).
321 See id. at 528-29. "The most far-reaching and expansive standard to the public policy exception, however, pertains to discharges appropriately deemed outrageous and imposes liability for malicious and immoral discharges." Id. at 528 (citing Tourville v. Inter-Ocean Ins. Co., 508 A.2d 1263, 1265-66 (1986), appeal denied, 521 A.2d 933 (Pa. 1987)).
322 See id. at 524-26. "Another aspect of the public policy exception concerns the judicial source-based "catch-all" category for a discharge contrary to the public interest." Id. at 524 (citing Carlson v. Crater Lake Lumber Co., 796 P.2d 1216, 1219 (1990), modified on other grounds, 804 P.2d 511 (Or.1991); Hinson v. Cameroon, 742 P.2d 549, 553-54 n.11 (Okla. 1987)).
323 See id. at 510. "A discharged employee may not be required to point to a specific statute; rather, the presence of a statutory scheme can support the finding of a state's public policy." Id. (citing Dabbs v. Cardiopulmonary Management Serv., 188 Cal. App. 3d 1437, 1443 (1987)).
324 If there ever were compelling facts to create a cause of action for retaliatory firing on public policy grounds, the Austin Court of Appeals was faced with them in Maus v. National Living Centers, Inc., where it declined to recognize a cause of action where the "motive for the firing violate[d] a substantial, stated public policy." 633 S.W.2d 674, 675 (Tex. App.--Austin 1982, writ ref'd n.r.e.). Maus was a dedicated employee at Colonial Nursing Home for thirteen years before the home was purchased by National Living Centers. See id. After the change in ownership, Maus complained to supervisors about the quality of the care given to patients. See id. After one patient suffered a stroke and Maus' supervisor refused to call a doctor, Maus administered CPR and personally kept the patient alive for several days. See id. As a direct result of her complaints, Maus was discharged and brought suit for "illegal termination." See id. Maus argued that her firing was in direct conflict with a "substantial, stated policy" because there was a statute requiring substandard nursing home care to be reported to the state, under penalty of law for failure to comply. Id. The court noted that neither the Legislature or the supreme court had created a tort remedy for those retaliated against for compliance and thus concluded that "this Court must exercise judicial restraint and refrain from creating this new right of recovery[, because t]o do otherwise would be to exceed our proper authority within the legal framework." Id. at 676. The court's reluctance was criticized by commentators, who claimed that the court was "making law," when it chose to either grant or deny relief where the issue had never been addressed by the Legislature or supreme court. See Menzel, supra note 310, at 449 (1983) (explaining that "[j]udicial restraint is appropriate in an intermediate court only when the issue has already been decided by a superior court"). Fortunately, but not for Maus, the Legislature later created a cause of action for retaliatory discharge in nursing homes. See Tex. Health & Safety Code Ann. § 242.133 (Vernon Supp. 2000); see also Winters v. Houston Chronicle Publ'g Co., 795 S.W.2d 723, 726 (Tex. 1990) (Doggett, J., concurring) (discussing Maus and noting that "[s]even years and unknown numbers of dismissed employees or unreported observations of nursing home patient neglect later, the legislature finally adopted protection for such employees"). This same type of judicial restraint has been practiced by other lower courts. See Thompson v. El Centro Del Barrio, 905 S.W.2d 356, 359 (Tex. App.--San Antonio 1995, writ denied) (refusing to recognize a private whistleblower cause of action despite the fact that the alleged illegal act involved "public funding"); Burgess v. El Paso Cancer Treatment Ctr., 881 S.W.2d 552, 555-56 (Tex. App.--El Paso 1994, writ denied) (refusing to recognize a private whistleblower cause of action despite argument that facts presented showed a "probable adverse effect upon the public"); Amador v. Tan, 855 S.W.2d 131, 134 (Tex. App.--El Paso 1993, writ denied) (refusing to recognize a public policy cause of action for "private, at-will employee who has been terminated as a result of his or her discussions regarding the issue of abortion"); Brunner v. Al Attar, 786 S.W.2d 784, 786 (Tex. App.--Houston [1st Dist.] 1990, writ denied) (refusing to recognize cause of action for employee who was discharged for refusal to discontinue volunteer work with AIDS foundation).
325 See supra Section III.
326 See Cortlan H. Maddux, Employers Beware! The Emerging Use of Promissory Estoppel as an Exception to Employment at Will, 49 Baylor L. Rev. 197, 198 (1997) ("Increasingly, employees are using promissory estoppel as a theory of recovery in wrongful discharge claims.").
327 Restatement (Second) of Contracts § 90(1) (1981).
328 English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983).
329 Lone Star Steel Co. v. Scott, 759 S.W.2d 144, 154 (Tex. App.--Texarkana 1988, writ denied) (characterizing cause of action as "estoppel," but analyzing under same elements as promissory estoppel).
330 "Equitable Estoppel" is similar to promissory estoppel, but requires a showing of "a false representation or concealment of material facts," rather than a future promise. Schroeder v. Texas Iron Works, Inc., 813 S.W.2d 483, 489 (Tex. 1991) (defining "equitable estoppel"). However, commentators have noted that this distinction between the two concepts is usually no longer significant, because the "illusory nature of the definitional differences, and the courts' lack of inclination to distinguish the doctrines have substantially merged equitable and promissory estoppel into a single offensive and defensive plea." Maddux, supra note 326, at 206 n.37 (quoting Jay M. Feinman, Promissory Estoppel and Judicial Method, 97 Harv. L. Rev. 678, 681 n.18 (1984)).
331 See International Piping Sys., Ltd. v. M.M. White & Assoc., Inc., 831 S.W.2d 444, 446 (Tex. App.--Houston [14th Dist.] 1992, writ denied) (characterizing cause of action as "detrimental reliance on promises made"). "Detrimental reliance" has been described as "equivalent to contractual promissory estoppel." University of Tex. Sys. v. Courtney, 946 S.W.2d 464, 468 (Tex. App.--Fort Worth 1997, writ denied) (rejecting argument that "detrimental reliance" is a separate tort cause of action); see also Roberts v. Geosource Drilling Servs., Inc., 757 S.W.2d 48, 50-51 (Tex. App.--Houston [1st Dist.] 1988, no writ) (explicitly treating "detrimental reliance" and "promissory estoppel" interchangeably).
332 See Wheeler v. White, 398 S.W.2d 93, 96 (Tex. 1965) (citing early cases where the doctrine was applied and noting that "[t]hese early cases do not speak of the doctrine of promissory estoppel in specific terms since those cases were written before the compilation of the Restatement").
333 See Maddux, supra note 326, at 211.
334 See id. ("[A]lthough cases involving prehiring promises to employ are instructive as to the emerging uses of promissory estoppel, they do not erode employment at will.").
335 See id. at 220 (explaining that "[a]lthough few doubt that promissory estoppel had its origins in the defensive doctrine of equitable estoppel, considerable disagreement exists regarding whether promissory estoppel should remain defensive in nature").
336 Wheeler, 398 S.W.2d at 96.
337 Id.
338 See, e.g., Collins v. Allied Pharmacy Management, Inc., 871 S.W.2d 929, 936 (Tex. App.--Houston [14th Dist.] 1994, no writ) (citing 'Moore' Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936 (Tex. 1972) ("Promissory estoppel is a defensive plea; it is a plea in confession and avoidance.")).
339 See, e.g., Central Tex. Micrographics v. Leal, 908 S.W.2d 292, 298 (Tex. App.--San Antonio 1995, no writ) (recognizing promissory estoppel as an "alternative theory" to employee's breach of contract claim).
340 See, e.g., Choi v. McKenzie, 975 S.W.2d 740, 741-43 & n.3 (Tex. App.--Corpus Christi 1998, pet. denied) (claiming promissory estoppel defense to statute of frauds in oral employment contract suit); Dodson v. King, 717 S.W.2d 385, 389 (Tex. App.--Houston [14th Dist.] 1986, writ ref'd n.r.e.) (addressing claim that promissory estoppel barred statute of frauds defense in employment contract suit).
341 See generally Maddux, supra note 326, at 230 (noting that "[p]romissory estoppel as a defense, however, offers very limited protection in Texas against an employer's affirmative defense of the statute of frauds").
342 See Nagle v. Nagle, 633 S.W.2d 796, 800 (Tex. 1982) (explaining that the promissory estoppel exception to the statute of frauds is limited to "cases where the promise was 'to sign a written agreement which itself complies with the Statute of Frauds'") (quoting 'Moore' Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936 (Tex. 1972)) .
343 See, e.g., Choi, 975 S.W.2d at 743 n.3 ("In order for promissory estoppel to defeat the statute of frauds, there must be proof of an additional promise to sign a written agreement which complies with the statute and that this promise was relied on."); Mann v. NCNB Tex. Nat'l Bank, 854 S.W.2d 664, 669 (Tex. App.--Dallas 1992, no writ) (rejecting promissory estoppel argument as a defense to the statute of frauds because there was no evidence presented that "the parties promised to sign an existing written document"); Webber v. M.W. Kellogg Co., 720 S.W.2d 124, 128 (Tex. App.--Houston [14th Dist.] 1986, writ ref'd n.r.e.) (rejecting promissory estoppel argument because "[t]here were neither allegations nor proof that appellee promised to reduce his oral employment agreement to writing or that appellee misrepresented to him that a writing complied with the statute of frauds").
344 871 S.W.2d 929, 932-33 (Tex. App.--Houston [14th Dist.] 1994, no writ).
345 See id. at 933.
346 See id. at 934.
347 Id. at 936.
348 Id.
349 See id. at 937.
350 See, e.g., Choi v. McKenzie, 975 S.W.2d 740, 743 & n.3 (Tex. App.--Corpus Christi 1998, pet. denied) (holding that "[n]o elements of . . . promissory estoppel were pleaded or established by the evidence[ because i]n order for promissory estoppel to defeat the statute of frauds, there must be proof of an additional promise to sign a written agreement which complies with the statute and that this promise was relied on."); Saucedo v. Rheem Manufacturing Co., 974 S.W.2d 117, 125 (Tex. App.--San Antonio 1998, pet. denied) (holding that employee "failed to establish his right to rely on the doctrine of promissory estoppel" because the promise relied upon was not "to sign an agreement that satisfies the statute of frauds"); Leach v. Conoco, Inc., 892 S.W.2d 954, 959 (Tex. App.--Houston [1st Dist.] 1995,writ dism'd w.o.j.) (holding that employee's oral agreement with his employer was "barred by the Statute of Frauds," because the record did not reflect that the employer "promised to reduce its oral agreement . . . to writing nor represented to him that the agreement satisfied the Statute of Frauds"); Benoit v. Polysar Gulf Coast, Inc., 728 S.W.2d 403, 407 (Tex. App.--Beaumont 1987, writ ref'd n.r.e.) (holding that "promissory estoppel will not set aside the statute of frauds" because the "record is totally devoid of any proof that Polysar had promised to reduce any oral representations to an actual writing" and there was no evidence the employee was "misled nor was it misrepresented to him that the handbook and policy involved complied with the statute of frauds"); Mobley v. Wenger, 689 S.W.2d 477, 479 (Tex. App.--Houston [14th Dist.] 1985, no writ) (holding that employee was "unable to invoke the doctrine of promissory estoppel" because "the record is silent as to a second promise . . . to reduce the unenforceable promise to writing").
351 See, e.g., 'Moore' Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936 (Tex. 1972) (explaining that "[p]romissory estoppel is a defensive plea . . . in confession and avoidance"); Leach, 892 S.W.2d at 959 (explaining that "[p]romissory estoppel is a defensive plea in confession and avoidance" and thus "the movant does not have the burden to negate the plaintiff's claim of promissory estoppel").
352 See Maddux, supra note 326, at 218 (explaining the effect of promissory estoppel in different employment situations and concluding that, as a defense, it offers employees little protection against the statute of frauds).
353 See 871 S.W.2d at 936-39 (noting that, in the absence of a promise to reduce an agreement to writing to counter the Statute of Frauds, "we need not further consider appellants' arguments on promissory estoppel").
354 Id. at 936.
355 See id. (explaining that "[w]here a motion for summary judgment establishes the statute of frauds as a matter of law, the movant does not have the burden to negate the plaintiff's claim of promissory estoppel"); Saucedo v. Rheem Manufacturing Co., 974 S.W.2d 117, 125 (Tex. App.--San Antonio 1998, pet. denied) (same).
356 See, e.g., David McDavid Nissan, Inc. v. Subaru of Am., Inc., 10 S.W.3d 56, 73 (Tex. App.--Dallas 1999, no pet. h.) ("Although promissory estoppel is normally a defensive theory, it is an available cause of action to a promisee who has acted to his detriment in reasonable reliance on an otherwise unenforceable promise."); Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141 (Tex. App.--Houston [14th Dist.] 1999, pet. denied) ("Generally, promissory estoppel is a viable alternative to breach of contract."); El Paso Healthcare Sys., Ltd. v. Piping Rock Corp., 939 S.W.2d 695, 698 (Tex. App.--El Paso 1997, writ denied) ("Although promissory estoppel is normally a defensive theory, it may be asserted by a plaintiff as an affirmative ground for relief.").
357 See, e.g., Central Texas Micrographics v. Leal, 908 S.W.2d 292, 298 (Tex. App.--San Antonio 1995, no writ) (explaining that employee "pleaded promissory estoppel and detrimental reliance as an alternative to his breach of contract claim); Vida v. El Paso Employees' Fed. Credit Union, 885 S.W.2d 177, 181 (Tex. App.--El Paso 1994, no writ) (characterizing promissory estoppel claim as an "alternative theory" to employee's contract cause of action).
358 757 S.W.2d 48 (Tex. App.--Houston [1st Dist.] 1988, no writ).
359 See id. at 49-50.
360 See id. The prospective employee in Roberts was hired by Geosource to perform a job in South America. See id. at 49. Geosource was aware that he was already employed by another company, which he quit after signing his employment contract. See id. However, a few days later, Geosource notified him that it would not been sending him to the job because "the corporation had found someone better qualified to fill its position." Id. at 49-50.
361 See id. at 50.
362 908 S.W.2d at 294.
363 See id. at 298.
364 In fact, the Texas Pattern Jury Charges even treats promissory estoppel as an affirmative defense, asking: "Did [employee] substantially rely to his detriment on [employer's] promise, if any, and was this reliance foreseeable by [the employer]?" Maddux, supra note 326, at 223 & n.138 (quoting 4 State Bar of Texas, Texas Pattern Jury Charges PJC 101.41 (1993)) (alteration in original). The comments following this charge also notes that "promissory estoppel may be invoked as a cause of action." Id. at 223 & n.140 (quoting 4 State Bar of Texas, Texas Pattern Jury Charges PJC 101.41 cmt. (1993)).
365 The consequence of failing to allege facts negating promissory estoppel are seen in Roberts, where the court placed the burden on the defendant to negate the employee's cause of action and then reversed the granting of a summary judgment because the employer "failed to prove that there [was] no genuine issue of material fact or that they [were] entitled to summary judgment as a matter of law." Roberts, 757 S.W.2d at 50-51 (explaining that "[a] defendant moving for summary judgment is similarly required to assume a negative burden to show that the plaintiff has no cause of action against him as a matter of law and that no material fact issues remain"). Thus, an employer should not assume that the court will limit an employee's use of promissory estoppel to an affirmative defense.
366 See, e.g., English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983).
367 Mobley v. Wenger, 689 S.W.2d 477, 478 (Tex. App.--Houston [14th Dist.] 1985, no writ).
368 See cases cited supra notes 344-50.
369 985 S.W.2d 553, 559 (Tex. App.--San Antonio 1998, no pet.). The employee in Gilmartin was hired as a station manager for KVTV. See id. at 556. He claimed that he had an oral agreement where he would work from year to year, with his contract renewing automatically "so long as his work was satisfactory" and that he was assured "that a written agreement would not be necessary." Id. When he was subsequently terminated, he brought suit alleging several causes of action, including breach of contract and promissory estoppel. See id. at 555.
370 Id. at 559.
371 However, if the promise is not clear enough, employees run the risk that the court will find that his or her reliance on the promise was not justified. See Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141-42 (Tex. App.--Houston [14th Dist.] 1999, pet. denied) (recognizing promissory estoppel as an affirmative cause of action, but holding that "promise was too vague" to support estoppel cause of action because it rendered the employee's reliance unreasonable and unjustified "as a matter of law").
372 See generally Maddux, supra note 326, at 212.
373 See, e.g., Gilmartin, 985 S.W.2d at 558-59 (rejecting promissory estoppel claim after concluding that any reliance by employee on vague promise was unreasonable, without any discussion of foreseeability of reliance); Ryan v. Superior Oil Co., 813 S.W.2d 594, 596 (Tex. App.--Houston [14th Dist.] 1991, writ denied) (rejecting promissory estoppel claim without addressing foreseeability of reliance by employer because there was no evidence of detrimental reliance by employee); Lone Star Steel Co. v. Scott, 759 S.W.2d 144, 154 (Tex. App.--Texarkana 1988, writ denied) (same).
374 885 S.W.2d 177, 179-80 (Tex. App.--El Paso 1994, no writ) (alteration in original).
375 Id. at 182.
376 908 S.W.2d 292, 298-99 (Tex. App.--San Antonio 1995, no writ).
377 See id. at 298. The summary judgment evidence presented showed that the employee had agreed to a salary that was "the least amount that [he] could live on, because if [the client] prevailed in its litigation the proceeds would be shared" with the employee. Id.
378 See Vida, 885 S.W.2d at 182 (holding that employee presented sufficient summary judgment evidence of detrimental reliance by asserting that she "elected not to complain to state and federal agencies which might have provided a remedy for her problem because of the non-retaliation promise"); Central Texas Micrographics, 908 S.W.2d at 299 (holding that evidence that employee "worked for one and one half years on the litigation" at a reduced salary in anticipation of bonus was sufficient evidence of detrimental reliance to support jury verdict).
379 See cases cited supra note 373.
380 See, e.g., Lone Star Steel Co. v. Scott, 759 S.W.2d 144, 154 ( Tex. App.--Texarkana 1988, writ denied) (noting that "had there been the requisite reliance and resulting damage, [the employer] could have been estopped[,]" but "there is no evidence of detrimental reliance by the [employee] on any representation or conduct" on the employer's part).
381 See, e.g., Gilmartin v. KVTV--Channel 13, 985 S.W.2d 553, 559 (Tex. App.--San Antonio, 1998 no pet.) (rejecting promissory estoppel claim because promise by employer was not specific enough for reliance by employee to have been reasonable).
382 813 S.W.2d 594, 595 (Tex. App.--Houston [14th Dist.] 1991, writ denied).
383 Id. at 595.
384 Id.
385 Id. at 596.
386 See, e.g., Robert J. Patterson, P.C. v. Leal, 942 S.W.2d 692, 695 (Tex. App.--Corpus Christi 1997, writ denied) ("We therefore cannot create a cause of action for promissory estoppel when the underlying evidence consists of purely oral representations as to employment for an indefinite period.").
387 757 S.W.2d 48 (Tex. App.--Houston [1st Dist.] 1988, no writ).
388 See id. at 49-50.
389 Id. at 50.
390 See Robert J. Patterson, P.C., 942 S.W.2d at 694-95 (questioning the soundness of Roberts and noting that it "was not tested on appeal"); Collins v. Allied Pharmacy Management, Inc., 871 S.W.2d 929, 937 (Tex. App.--Houston [14th Dist.] 1994, no writ) ("In our opinion, Roberts was wrongly decided.").
391 See Robert J. Patterson, P.C., 942 S.W.2d at 694 (noting that "[i]n the Roberts case, the plaintiff was discharged prior to the commencement of employment" and then explaining that "[t]he nonexistence of a written contract in the case at bar renders the Roberts decision inapposite").
392 See Roberts, 757 S.W.2d at 50.
393 Collins, 871 S.W.2d at 937; see also Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 142 (Tex. App.--Houston [14th Dist.] 1999, pet. denied) ("Reliance on a supposed promise of continued employment is unjustified."). The Collins court explained the reasoning here most succinctly in addressing the promissory estoppel claims of several at will employees. As the court explained: "Appellants relied upon an employment agreement for no specific length of time and with no clear limit on the employer's freedom of action; accordingly, any promise was illusory and reliance on it was based upon appellants' subjective expectations and was unjustified." Collins, 871 S.W.2d at 938. Thus, the court held, "as a matter of law, neither promissory nor equitable estoppel is available to avoid termination at will." Id.
394 See Maddux, supra note 326, at 212 ("The emergence of promissory estoppel as a cause of action, however, has given employees an additional vehicle by which they can limit employers' right to discharge at will.").
395 Compare Collins, 871 S.W.2d at 936 ("[E]stoppel is a defensive plea in confession and avoidance."), with Allied Vista, Inc., 987 S.W.2d at 141 ("Generally, promissory estoppel is a viable alternative to breach of contract.").
396 See Formosa Plastics Corp. v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998).
397 Levine v. Loma Corp., 661 S.W.2d 779, 783 (Tex. App.--Fort Worth 1983, no writ) ("The courts in Texas have often rejected attempts to make fraud cases out of simple actions for breach of contract.").
398 See Leach v. Conoco, Inc., 892 S.W.2d 954, 960-61 (Tex. App.--Houston [1st Dist.] 1995, writ dism'd w.o.j.) (holding that employee's fraud cause of action was barred by statute of frauds because "the gist of his cause of action for fraud is the breach of a promise rendered unenforceable by the Statute of Frauds"). The Leach court explained that the nature of the injury alleged and the type of damages sought are considerations in determining whether a separate fraud action exists aside from any contractual claim. See id. at 960. "When the injury is only the economic loss to the subject of the contract itself, the action sounds in contract alone." Id. This is the test for evaluating the contractual or tort nature of a claim articulated by the supreme court. See Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494-95 (Tex. 1991).
399 See, e.g., Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 436 (Tex. 1986) (holding that there was sufficient evidence to support jury finding of fraud against employer who made false representations about bonus plan); Carr v. Christie, 970 S.W.2d 620, 624 (Tex. App.--Austin 1998, pet. denied) (holding that employee pled cause of action for fraud against employer because he was "not using [the] fraud claim as a vehicle for obtaining the benefit" of his employment contract).
400 See Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 617-18 (Tex. 1986) (admonishing courts to look "to the substance of the cause of action and not necessarily the manner in which it was pleaded" in determining if an action is actually in contract or tort).
401 See Collins v. McCombs, 511 S.W.2d 745, 747 (Tex. Civ. App.--San Antonio 1974, writ ref'd n.r.e.) (explaining both the difference in available damages and defenses between a contract and tort cause of action). "[T]he measure of damages for fraud and deceit is not what the plaintiff might have gained, had the representation been true, but what he has lost." Id. Thus, the Collins court concluded that the plaintiff in that case, who was "seeking to recover what he would have gained had the promise been performed" was really seeking to enforce a contractual promise. Id. The court also explained that the defense of the statute of frauds should apply to tort actions that are really grounded in contract. See id. at 747. Citing another case which stated "that there could be no action for fraud based on a contract declared unenforceable by the statute of frauds, because to allow recovery in such a case 'would be to create an anomaly, and allow one to do indirectly what he could not by law do directly,'" the Collins court recognized that "the judicial disregard of the statute [of frauds in tort cases] should be limited to situations in which the essence of the action truly sounds in tort." Id.; see also Jim Walter Homes, Inc., 711 S.W.2d at 617 (reversing award of exemplary damages because the purported negligence claim was actually grounded only in contract); Benoit v. Polysar Gulf Coast, Inc., 728 S.W.2d 403, 408 (Tex. App.--Beaumont 1987, writ ref'd n.r.e.) (holding that statute of frauds was defense to fraud action because the claim "sounds, primarily, in breach of contract").
402 See generally 809 S.W.2d at 494-95 (discussing the differences between contract and tort actions).
403 See id. at 494.
404 See id. The facts in Montgomery Ward & Co. v. Scharrenbeck illustrate this "duty" distinction clearly. 146 Tex. 153, 157, 204 S.W.2d 508, 510 (1947). In Scharrenbeck, the plaintiff contracted to have the defendant repair a water heater in the plaintiff's home. See 146 Tex. at 155, 204 S.W.2d at 509. After the repair, water heater caught on fire and burnt the plaintiff's house down. See id. The court explained that the failure to properly repair the water heater was a breach of the defendant's contractual duty to put the heater back in good working order, giving rise to a contractual claim. See 146 Tex. at 157, 204 S.W.2d at 510. However, burning the house down breached a separate common-law duty to act with reasonable skill and diligence in making the repairs that could be actionable in tort. See 146 Tex. at 157-58, 204 S.W.2d at 510-11.
405 DeLanney, 809 S.W.2d at 494.
406 Id.
407 Id. at 495; see also Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986) (reversing award of exemplary damages because the purported negligence claim was actually grounded only in contract).
408 See, e.g., Choi v. McKenzie, 975 S.W.2d 740, 745 (Tex. App.--Corpus Christi 1998, pet. denied) ("While cast in language sounding in tort, we hold McKenzie's indirect attempt to recover for the breach of the unenforceable promise is barred by the statute of frauds."); CRRS Inc. v. Runion. 992 S.W.2d 1, 7-8 (Tex. App.--Houston [1st Dist.] 1995, no writ) (explaining that because the employee is "seeking to recover what he would have gained had the promise been performed, . . . it is apparent that his action, while cast in language sounding in tort, is an indirect attempt to recover for the breach of the unenforceable promise and is, therefore, barred by the statute of frauds").
409 Leach v. Conoco, Inc., 892 S.W.2d 954, 961 (Tex. App.--Houston [1st Dist.] 1995, writ dism'd w.o.j.) ("An 'at will' employee is barred from bringing a cause of action for fraud against his employer based upon the employer's decision to discharge the employee."); c.f. Jones v. Legal Copy, Inc., 846 S.W.2d 922, 925 (Tex. App.--Houston [1st Dist.] 1993, no writ) (noting that the at will doctrine "effectively bars contract and tort claims based on the decision to discharge an employee"). But see Offshore Petroleum Divers, Inc. v. Cromp, 952 S.W.2d 954, 956 (Tex. App.--Beaumont 1997, no pet.) ("We further hold that the cause of action for fraud, which encompasses misrepresentations made before employment, as well as those made during employment, is not barred by the employment at will doctrine.").
410 892 S.W.2d at 956. The employee in Leach alleged that he was offered and accepted a transfer from Houston to Norway that "would last for four years and would require relocation" of his wife and family. Id.
411 See id. at 956. The employee claimed to have accepted the position because he and his wife "wished to increase their earnings and save approximately $320,000 over the four-year assignment for their children's college education fund." Id. The actual damages sought were "lost earnings and savings, salary, and out-of-pocket unreimbursed expenses in an amount not less that $351,000." Id. at 957.
412 Id. at 960.
413 Id.
414 Id. at 960-61.
415 Id. at 961.
416 Id. Formosa Plastics Corp. v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998).
417 See id. at 44. The contractor "presented evidence to the jury that Formosa had an intentional, premeditated scheme to defraud the contractors working on its expansion project[,]" by "entic[ing] contractors to make low bids by making misrepresentations in the bid package regarding scheduling, delivery of materials, and responsibility for delay damages." Id.
418 Id.
419 Id. at 46.
420 Id. at 47. The court also expressly disapproved of several lower court cases, "to the extent that they hold that tort damages cannot be recovered for a fraudulent inducement claim absent an injury that is distinct from any permissible contractual damages." Id.
421 It appears that this distinction was argued in Kajima Int'l, Inc. v. Formosa Plastics Corp., a case decided after Formosa. No. 13-98-266-CV, 2000 WL 305508, at *3 (Tex. App.--Corpus Christi Mar. 23, 2000). In Kajima, the defendant argued that Formosa "stands for the proposition that the only type of fraud claim which can exist in a contract setting is a claim for fraud in the inducement of contracts." Id. The court rejected this interpretation, but noted that determining the actual scope of Formosa was not necessary on the facts of the case. See id. at *4. Specifically, the court explained that "[t]he promise in the instant case was not a promise to pay what was owed under the contract[, but r]ather, the promise to pay for overtime work . . . outside the purview of the contract." Id. Thus, the facts of this case takes it outside the body of cases where the fraud actions are simply recast contract suits. The court ultimately held that "[r]egardless of whether we characterize the fraud in this case as fraudulent inducement to make an oral amendment to an existing contract, fraudulent inducement to enter into a new oral contract, fraudulent misrepresentation, fraudulent inducement to continue performance, or fraud in the performance," the plaintiff established "the essential requirement that promise was made with no intention of performing when it was made." Id.
422 Amouri v. Southwest Toyota, Inc., No. 06-99-00099-CV, 2000 WL 225547, at *3 (Feb. 29, 2000) (citing DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990)).
423 See Formosa Plastics Corp., 960 S.W.2d at 47.
424 See id. at 46 (discussing the long standing "duty to abstain from inducing another to enter into a contract though the use of fraudulent misrepresentations").
425 See id. at 47 ("Accordingly tort damages are recoverable for a fraudulent inducement claim irrespective of whether the fraudulent representations are later subsumed in a contract or whether the plaintiff only suffers an economic loss related to the subject matter of the contract.").
426 In fact, the Formosa court reiterated that "[a]s a general rule, the failure to perform the terms of a contract is a breach of contract, not a tort." Id. at 46.
427 968 S.W.2d 435, 448 (Tex. App.--Texarkana 1998, no pet.).
428 Id. at 449.
429 Id.
430 See id. at 448 ("We believe that the DeLanney analysis is still an appropriate guide in assessing whether a tort action is available separately from contract claims.").
431 Id. at 448 ("We read Formosa as applicable only to fraudulent inducement claims and, therefore, inapplicable in this [fraud] case.").
432 970 S.W.2d 620, 624 & n.5 (Tex. App.--Austin 1998, pet. denied).
433 Id. at 624. The court recognized that "[h]istorically, courts have held the statute of frauds bars a fraudulent-inducement claim only when the plaintiff claims as damages the benefit of the bargain that he would have obtained had the promise been performed." Id.
434 Id. at 624 n.5.
435 985 S.W.2d 553, 558 (Tex. App.--San Antonio 1998, no pet.).
436 Id. at 556.
437 See id. at 556 & n.1.
438 Id. at 558.
439 See id. (explaining that its reading of Formosa is that the DeLanney analysis had been rejected in matters of fraudulent misrepresentation).
440 Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494-95 (Tex. 1991).
441 886 S.W.2d 459, 460 (Tex. App.--Houston [1st Dist.] 1994, writ denied).
442 See id. at 460-61. The employee tendered a letter to her supervisor stating "If in fact your decision [to refuse pay for jury service] is a true reflection of the company's viewpoint on this matter, I can no longer continue my employment with Kent Electronics and wish to offer my resignation effective April 30, 1992." Id. at 461.
443 See id.
444 See id.
445 See id. at 464. She also claimed that her employer's promise that she could take two vacation day to substitute for her jury service was a false representation, but the court rejected this argument because she was actually later paid for these days, so this assertion was not "false." See id.
446 Id.
447 See, e.g., Leach v. Conoco, Inc., 892 S.W.2d 954, 961 (Tex. App.--Houston [1st Dist.] 1995, writ dism'd w.o.j.) (holding that "'at will' employee is barred from bringing a cause of action for fraud against his employer based upon the employer's decision to discharge the employee"); Molder v. Southwestern Bell Tel. Co., 665 S.W.2d 175, 177 (Tex. App.--Houston [1st Dist.] 1983, writ ref'd n.r.e.) (rejecting argument that the trial court erred in "applying the 'at will' rule of employment, instead of considering the appellant's claims of fraud").
448 924 S.W.2d 925, 927-28 (Tex. 1996) The court ultimately found that her fraud claim must fail because there was no evidence of reliance on the employer's false assertions. See id. at 930.
449 Offshore Petroleum Divers, Inc. v. Cromp, 952 S.W.2d 954, 955 (Tex. App.--Beaumont 1997, pet. denied) (noting that "[i]n a recent case, the Texas Supreme Court allowed a fraud cause of action against an employer which had placed an employee on 'indefinite medical layoff'" and interpreting "the Supreme Court's action to also allow, at least under some circumstances, a fraud claim by an employee against an employer during an employment at will relationship") (construing Johnson & Johnson Med., Inc. v. Sanchez, 924 S.W.2d 925 (Tex. 1996)).
450 See id. at 956 (explaining that employee's fraud action was not barred because the fraudulent representations included more than a promise of continuous employment).
451 Id.
452 See Formosa Plastics Corp. v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998).
453 See Gilmartin v. KVTV--Channel 13, 985 S.W.2d 553, 558 (Tex. App.--San Antonio 1998, no pet.).
454 Id.
455 See, e.g., Figueroa v. West, 902 S.W.2d 701, 707 (Tex. App.--El Paso 1995, no writ) (affirming trial court granting of directed verdict because evidence of employer's "post-representation nonconformity [was] alone no evidence of fraud").
456 708 S.W.2d 432 (Tex. 1986).
457 Id. at 433.
458 Id. at 434.
459 See id. at 435 (citing Stanfield v. O'Boyle, 462 S.W.2d 270, 272 (Tex. 1971)).
460 Id. (citing Smith v. National Resort Communities, Inc., 585 S.W.2d 655, 658 (Tex. 1979)).
461 See id.
462 Id.
463 970 S.W.2d 620, 625 (Tex. App.--Austin 1998, pet. denied).
464 952 S.W.2d 954, 956 (Tex. App.--Beaumont 1997, pet. denied).
465 924 S.W.2d 925, 927 (Tex. 1996).
466 Id. at 930.
467 985 S.W.2d 553, 558-59 (Tex. App.--San Antonio 1998, no pet.).
468 Federal Land Bank Ass'n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991).
469 See generally D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662, 663-64 (Tex. 1998) (explaining differences between fraud and negligent misrepresentation).
470 Airborne Freight Corp. v. C.R. Lee Enters., Inc., 847 S.W.2d 289, 294 (Tex. App.--El Paso 1992, writ denied).
471 See id. at 294-95.
472 See id. at 292.
473 Id. In Spring 1989, Airborne requested that the delivery contractor expand its business to handle a new client. See id. Based on the assurance that he would have a job as long as he did his job, the contractor complied, acquiring a new employee, a new tractor-trailer rig, three vans, and a new business headquarters. See id. He borrowed $130,000 to fund this expansion. See id.
474 Id. at 298 ("To prevail in its claim of negligent misrepresentation, Lee needed to show that Airborne misrepresented an existing fact, not a promise of future conduct.").
475 Id.
476 979 S.W.2d 700, 702 (Tex. App.--Houston [14th Dist.] 1998, pet. denied).
477 Id. at 706; see also Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141 (Tex. App.--Houston [14th Dist.] 1999, pet. denied) (holding that promises of future salary and to supply equipment in the future were "insufficient to establish negligent misrepresentation as a matter of law because they do not constitute a representation of existing fact").
478 Restatement (Second) of Torts § 522B(1) (1977).
479 Id. § 522B(2).
480 D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662, 663-64 (Tex. 1998) (per curium) ("The Formosa opinion's rejection of the independent injury requirement in fraudulent inducement claims does not extend to claims for negligent misrepresentation or negligent inducement.").
481 See id. (holding that plaintiff "did not meet its burden of proving the independent injury required under section 552" because it "in essence asked for the benefit of its bargain . . . ."); Federal Land Bank Ass'n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991) (holding that plaintiff stated cause of action for negligent misrepresentation because the damages sought were not for breach of the agreement that was never made, but for injuries suffered from reasonable reliance on the defendant's representation that a contract existed).
482 See D.S.A., Inc., 973 S.W.2d at 664 (explaining that "[r]epudiating the independent injury requirement for negligent misrepresentation claims would potentially convert every contract interpretation dispute into a negligent misrepresentation claim") .
483 Sloane, 825 S.W.2d at 442 (explaining that "a claim of negligent misrepresentation may not be used to circumvent the statute of frauds," where a plaintiff seeks damages for breach of an alleged agreement).
484 See id. (analyzing damages sought to resolve whether if claim sounded in tort or contract).
485 See CRSS Inc. v. Runion, 992 S.W.2d 1, 7-8 (Tex. App.--Houston [1st Dist.] 1995, no writ) (holding that employee's negligent representation claim was barred by the statute of frauds because the "only damages actually pled were the benefits bestowed by the terms in [the alleged contract] and the diminishment of past and future wage-earning capacity"). But see Sloane, 825 S.W.2d at 442 (holding that plaintiffs' negligent misrepresentation claims were not barred by the statute of frauds because they did "not seek damages for breach of the loan agreement never made, but for their reasonable reliance upon the bank's misrepresentation").
486 See, e.g., Collins v. Allied Pharmacy Management, Inc., 871 S.W.2d 929, 936 (Tex. App.--Houston [14th Dist.] 1994, no writ) ("Negligent misrepresentation may not be used to circumvent the statute of frauds.").
487 Airborne Freight Corp., Inc. v. C.R. Lee Enters., Inc., 847 S.W.2d 289, 295 (Tex. App.--El Paso 1992, writ denied).
488 Id.
489 In Federal Land Bank Ass'n v. Sloan, the supreme court stressed this distinction in holding that the statute of frauds did not bar the plaintiffs' recovery for negligent misrepresentation. 825 S.W.2d 439, 442 (Tex. 1991). The plaintiffs sued the defendant bank for negligently representing that it had approved a loan to improve their property where they raised chickens. See id. at 440. In reliance on the bank's representation, the plaintiffs incurred construction preparatory expenses and then their loan was subsequently denied. See id. at 441 & n.3. The defendant argued that, as a matter of law, the statute of frauds barred the plaintiff's suit. See id. at 441. The supreme court rejected this argument, explaining that the plaintiffs did "not claim that the bank agreed to loan them money and then breached that agreement; rather, they claim that the bank did not agree to loan them money, yet negligently misrepresented that it had made such an agreement." Id. at 442. Because "the premise of the [plaintiffs'] claim is that [the parties] never reached an agreement, oral or written," their claim did not sound in contract and was not barred by the statute of frauds. Id. at 441-42.
490 D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662, 664 (Tex. 1998) (per curium).
491 855 S.W.2d 619, 621 (Tex. 1993) (citing Restatement (Second) of Torts § 46(1) (1965)). While Twyman represented the first time the supreme court had recognized this cause of action, it had been previously applied by several courts of appeals. See id.
492 793 S.W.2d 690, 692 (Tex. App.--Houston [1st Dist.] 1990, writ denied).
493 Id. Specifically, the employee alleged that the defendants had "commenced a course of conduct to harass, humiliate, and degrade her good name, eventually leading to her willful, malicious, and unlawful termination." Id. at 691.
494 Id.
495 See Diamond Shamrock Ref. & Mktg. Co. v. Mendez, 844 S.W.2d 198, 202 (Tex. 1992) (recognizing that there could be instances where an at will employee's termination was accompanied by behavior that was so outrageous as to support a claim for intentional infliction of emotional distress).
496 Twyman v. Twyman, 855 S.W.2d 619, 621 (Tex. 1993) (quoting Restatement (Second) of Torts § 46 cmt. d (1965)).
497 See Brewerton v. Dalrymple, 997 S.W.2d 212, 216 (Tex. 1999) (explaining that "if the threshold for extreme and outrageous conduct were not sufficiently rigorous, 'employers would be subjected to a potential jury trial in connection with virtually every discharge, and there would be very little left of the employment-at-will doctrine'") (quoting Wornick Co. v. Casas, 856 S.W.2d 732, 736 (Tex. 1993)).
498 Id.
499 Id.
500 Wornick Co. v. Casas, 856 S.W.2d 732, 735 (Tex. 1993)
501 844 S.W.2d 198, 201-02 (Tex. 1992) ("We need not decide in this case whether the tort [of intentional infliction of emotional distress] exists in Texas, because Mendez failed to offer more than a scintilla of evidence of an essential element of the tort[,] . . . the presence of outrageous conduct.").
502 See id. at 202. The employee was terminated after he was accused of stealing some discarded nails, "the value of which was less than five dollars." Id. at 199. Word of his termination and the reason spread throughout the community and quickly reached other potential employers. See id. While he alleged that his employer "told all of his fellow employees . . . [and] the community at large" that he was a thief, the direct evidence in the case only reflected that his employer informed "the plant supervisors and one chief operator" about his termination. See id. at 202 n.3.
503 Id. at 202.
504 856 S.W.2d 732, 735 (Tex. 1993).
505 Id. The employee also argued that she was fired because "she possessed incriminating information" about her employer. Id. However, the court held that because this reason did not fall within the Sabine Pilot public policy exception to the at will doctrine, terminating her was within the employer's legal rights. See id.
506 971 S.W.2d 52, 54 (Tex. 1998).
507 Id.
508 Id.
509 997 S.W.2d 212, 216 (Tex. 1999).
510 Id. The court explained that it is not "enough that the defendant has acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by 'malice,' or a degree of aggravation which would entitle the plaintiff to punitive damages" in another action. Id. at 215-16.
511 See Beiser v. Tomball Hosp. Auth., 902 S.W.2d 721, 725 (Tex. App.--Houston [1st Dist.] 1995, writ denied) (holding that employer's violation of whistleblower statute was insufficient, as a matter of law, to constitute extreme and outrageous conduct); Sebesta v. Kent Elecs. Corp., 886 S.W.2d 459, 463 (Tex. App.--Houston [1st Dist.] 1994, writ denied) (holding that violation of Juror Reemployment Act was not extreme and outrageous conduct). But see Higginbotham v. Allwaste, Inc., 889 S.W.2d 411, 416-17 (Tex. App.--Houston [14th Dist.] 1994, writ denied) (holding that retaliation against employee for refusal to perform an illegal act would be extreme and outrageous conduct).
512 See Sibley v. Kaiser Found. Health Plan of Tex., 998 S.W.2d 399, 404-05 (Tex. App.--Texarkana 1999, no pet.) (holding evidence that plaintiff "perceived a pattern of racially motivated unfairness in the way that he was treated by his superiors" insufficient to constitute "extreme and outrageous behavior").
513 See Leatherman v. Rangel, 986 S.W.2d 759, 761 (Tex. App.--Texarkana 1999, pet. denied) (holding that discharge in retaliation for writing letter critical of employer was not outrageous conduct); Miller v. Galveston/Houston Diocese, 911 S.W.2d 897, 900 (Tex. App.--Amarillo 1995, no writ) (holding that retaliatory discharge for speech at meeting where employee was "falsely induced" to speak free was not outrageous conduct); Amador v. Tan, 855 S.W.2d 131, 133-34 (Tex. App.--El Paso 1993, writ denied) (holding that discharge in retaliation for counseling co-working against aborting supervisor's child was not outrageous conduct).
514 See Garcia v. Andrews, 867 S.W.2d 409, 412 (Tex. App.--Corpus Christi 1993, no writ) (holding that three isolated "sexual harassment" incidences did not constitute outrageous conduct).
515 See GTE Southwest, Inc. v. Bruce, 956 S.W.2d 636, 644 (Tex. App.--Texarkana 1997), aff'd, 998 S.W.2d 605 (1999).
516 Id. at 647.
517 GTE Southwest, Inc. v. Bruce, 998 S.W.2d 605, 613 (Tex. 1999).
518 Id. at 617.
519 803 S.W.2d 711 (Tex. 1991).
520 Id. at 658.
521 821 S.W.2d 331, 342 (Tex. App.--Houston [14th Dist.] 1991, no writ).
522 Id.
523 See id. at 341 (noting that there must be "sufficient proof of severe emotional distress, wholly apart from any outrageous conduct on the defendant's part") (citing Tidelands Auto. Club v. Walters, 699 S.W.2d 939, 944 (Tex. App.--Beaumont 1985, writ ref'd n.r.e.)).
524 995 S.W.2d 729, 737 (Tex. App.--San Antonio 1999, no pet.).
525 Id.
526 See id.
527 Id.
528 See id.
529 Id.
530 821 S.W.2d 331, 343 (Tex. App.--Houston [14th Dist.] 1991, no writ).
531 Id.
532 See GTE Southwest, Inc. v. Bruce, 998 S.W.2d 605, 615-16 (Tex. 1999) (holding evidence sufficient to show "severe" emotional distress); In GTE Southwest, Inc., the employees testified that they experienced "crying spells, emotional outbursts, nausea, stomach disorders, headaches, difficulty in sleeping and eating, stress, anxiety, and depression." Id. Each employee also obtained medical treatment for their stress. See id.; see also Tidelands Auto. Club v. Walters, 699 S.W.2d 939, 945 (Tex. App.--Beaumont 1985, writ ref'd n.r.e.) (considering plaintiff's visit to doctor as a factor supporting "severe" emotional distress).
533 See generally Peter Bennett et al., Defamation Claims Arising Out of the Employment Relationship, 33 Tort & Ins. L.J. 857 (1998).
534 David A. Scott, An Employer's Guide to Defending Workplace Defamation Claims, 37 S. Tex. L. Rev. 845, 846 (1996) (citing Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 646 (Tex. 1995) (listing elements of slander claim) and Tex. Civ. Prac. & Rem. Code. Ann. § 73.001 (Vernon 1986) (listing elements of libel claim)). When a defamatory statement is written, it is "libel"; when it is "oral," it is slander. See id. at 646 n.3.
535 See, e.g., Marathon Oil Co. v. Salazar, 682 S.W.2d 624, 626-27 (Tex. App.--Houston [1st Dist.] 1984, writ ref'd n.r.e.).
536 See McCormick, supra note 2, at 67-68. Defamation actions also arise in the employment setting other ways that are not relevant to at will employment, such as for negative remarks made by co-workers, negative remarks made by the employee to others, and negative remarks made by the employer about the employee to governmental agencies. See Bennett et al., supra note 533, at 857.
537 See Scott, supra note 534, at 858-67 (discussing qualified privileges for employers and the use of consent as a defense to defamation).
538 See, e.g., Schauer v. Memorial Care Sys., 856 S.W.2d 437, 446 (Tex. App.--Houston [1st Dist.] 1993, no writ) ("To sustain her defamation claim, Schauer must show Memorial published defamatory matter about her . . . .").
539 Hardwick v. Houston Lighting & Power Co., 881 S.W.2d 195, 197 (Tex. App.--Corpus Christi 1994, writ dism'd w.o.j.). Whether a statement is defamatory is a question for the court. See Musser v. Smith Protective Serv., Inc., 723 S.W.2d 653, 654-55 (Tex. 1987). If the court finds the language to be ambiguous, it becomes a question for the jury. See id.
540 See, e.g., Banfield v. Laidlaw Waste Sys., 977 S.W.2d 434, 439 (Tex. App.--Dallas 1998, pet. denied) (rejecting argument that alleged defamatory statements were actionable, because they were actually statements of opinion); Schauer, 856 S.W.2d at 447 (explaining that "[a]n expression of opinion is protected free speech.") (citing Yiamouyiannis v. Thompson, 764 S.W.2d 338, 340 (Tex. App.--San Antonio 1988, writ denied)).
541 See Schauer, 856 S.W.2d at 446 (noting that employee must show that employer published false information "which injured or impeached her reputation" to sustain slander claim).
542 Id.
543 Id. at 443.
544 Id. at 447.
545 Id.
546 Id. at 448.
547 See id. at 446-447. As a practical matter, despite the holding in Schauer, "employers [should] be careful to make their employee evaluations factual." Bennett et al., supra note 533, at 857 ("Thus, rather than describing an employee as 'incompetent, employers should describe the performance deficiencies of its employees in a specific and factual manner."). For example, "rather than referring to an employee as 'lazy' or 'irresponsible,' an employer's evaluation should simply list the days the employee was tardy, or absent without explanation." Id.
548 924 S.W.2d 765, 770 (Tex. App.--Texarkana 1996, writ denied).
549 Bennett et al., supra note 533 at 857 (explaining the deference the courts seem to give employers in utilizing employment evaluations to critique employees).
550 Banfield v. Laidlaw Waste Systems, 977 S.W.2d 434, 439 (Tex. App.--Dallas 1998, pet. denied).
551 City of Brownsville v. Pena, 716 S.W.2d 677, 682 (Tex. App.--Corpus Christi, 1986, no writ).
552 See id.
553 See, e.g., Marathon Oil Co. v. Salazar, 682 S.W.2d 624, 630 (Tex. App.--Houston [1st Dist.] 1984, writ ref'd n.r.e.) ("Charging one falsely with the commission of any crime for which he may be punished by imprisonment is libel per se."); see also Bradbury v. Scott, 788 S.W.2d 31, 38 (Tex. App.--Houston [1st Dist.] 1990, writ denied) (holding that employer's representation that employee had "been dishonest" in dealings with employer were slanderous per se and thus the employee did not have to prove damage to reputation to recover jury award).
554 See, e.g., Pena, 716 S.W.2d at 682 (holding that imputing racism to employee was libelous per se).
555 See, e.g., Einhorn v. LaChance, 823 S.W.2d 405, 411 (Tex. App.--Houston [1st Dist.] 1992, writ dism'd w.o.j.) ("[W]ords not otherwise actionable per se sometimes become actionable if they refer to a person engaged in a particular business or profession, where they charge him with fraud, indirect dealings, or incapacity, and tend to injure him in his trade, occupation, employment, or business.).
556 Id. at 410-11.
557 See id.
558 See id. at 408.
559 See id.
560 See id.
561 Id. at 411.
562 Id.
563 Id.
564 Id.
565 Id.
566 Id.
567 Id. The court noted that the meaning the plaintiff imputed to the defendant's words was "not typical of the meaning an ordinary person would impute to the statements." Id.
568 See id.
569 See id. (noting that this statement was defamatory "as a matter of law").
570 See Lyle v. Waddle, 144 Tex. 90, 94, 188 S.W.2d 770, 772 (1945) (holding that plaintiff could not maintain cause of action for libel because there was no publication").
571 Frank B. Hall & Co., Inc. v. Buck, 678 S.W.2d 612, 617 (Tex. App.--Houston [14th Dist.] 1984, writ ref'd n.r.e.).
572 Louis B. Eble, Self-Publication Defamation: Employee Right or Employee Burden?, 47 Baylor L. Rev. 745, 749 (1995) (recognizing that "[i]n the employment setting . . . some courts have eliminated the publishing element of traditional defamation and have held a defendant-employer liable for defamation which was only communicated to the plaintiff-employee").
573 606 S.W.2d 696, 701 (Tex. Civ. App.--Corpus Christi 1980, writ ref'd n.r.e.) (citing Restatement (Second) of Torts § 577 cmt. m (1977)).
574 See Chasewood Constr. Co. v. Rico, 696 S.W.2d 439, 445 (Tex. App.--San Antonio 1985, writ ref'd n.r.e.).
575 See AccuBanc Mortgage Corp. v. Drummonds, 938 S.W.2d 135, 148 (Tex. App.--Fort Worth 1996, writ denied) (declining to follow Ake and Chasewood); Doe v. Smithkline Beecham Corp., 855 S.W.2d 248, 259 (Tex. App.--Austin 1993), aff'd as modified, 903 S.W.2d 347 (Tex. 1995).
576 See, e.g., Reeves v. Western Co. of N. Am., 867 S.W.2d 385, 394 (Tex. App.--San Antonio 1993, writ denied) ("Even if a communication is false, it may still be privileged, and actionable slander would not lie.").
577 Leatherman v. Rangel, 986 S.W.2d 759, 762 (Tex. App.--Texarkana 1999, pet. denied); see also Bergman v. Oshman's Sporting Goods, Inc., 594 S.W.2d 814, 816 (Tex. Civ. App.--Tyler 1980, no writ) ("Accusations against an employee by his employer or another employee, made to a person having a corresponding interest or duty in the matter to which the communication relates, are qualified privileged.").
578 Garcia v. Burris, 961 S.W.2d 603, 606 (Tex. App.--San Antonio 1997, pet. denied).
579 See, e.g., Dixon v. Southwestern Bell Tel. Co., 607 S.W.2d 240, 242 (Tex. 1980).
580 671 S.W.2d 559, 571 (Tex. App.--San Antonio 1984, writ dism'd w.o.j.).
581 Id. at 564.
582 Id. at 565.
583 Id.
584 Id.
585 Id.
586 Id.
587 Id.
588 See Ramos v. Henry C. Beck Co., 711 S.W.2d 331, 335 (Tex. App.--Dallas 1986, no writ) (explaining that when "a defendant moves for summary judgment, as movant he has the burden to prove absence or [sic] malice").
589 See id. at 335-36 (holding that summary judgment was improper, because the defendant failed to put forth any evidence negating malice).
590 See, e.g., Bradbury v. Scott, 788 S.W.2d 31, 37 (Tex. App.--Houston [1st Dist.] 1989, writ denied) (holding that employer waived privilege because it failed to raise it).
591 See, e.g., Randall's Food Mkt., Inc., v. Johnson, 891 S.W.2d 640, 647 (Tex. 1995) ("[T]ruth is a complete defense to defamation."); see also Jackson's Indus. Supplies, Inc. v. Cochran, 809 S.W.2d 802, 806 (Tex. App.--Beaumont 1991, no writ) (holding "truth" defense required reversal of trial court's finding of defamation based on statement that plaintiff was a "thief" because court found that the plaintiff "is a thief by admission, by agreement and by a written contract supported by consideration").
592 See ABC, Inc. v. Shanks, 1 S.W.3d 230, 234 (Tex. App.--Corpus Christi 1999, pet. denied) ("It is well-established in Texas that truth, or 'substantial' truth, is an absolute defense to a libel action"). "A statement is substantially true where the alleged defamatory statement is no more ignominious in the mind of the average listener than a true statement would have been." Id. (citing KTRK Television, Inc. v. Fowkes, 981 S.W.2d 779, 788 (Tex. App.--Houston [1st Dist.] 1998, pet. denied). Basically, substantial truth is determined by looking to the "gist" of the statement while disregarding variances of secondary importance. Id. The question is whether "in the mind of the average person who heard the statement, an allegedly defamatory statement was more damaging to the plaintiffs' reputation than a truthful statement would have been." Delta Airlines, Inc. v. Norris, 949 S.W.2d 422, 426 (Tex. App.--Corpus Christi 1997, writ denied).
593 See Smith v. Holley, 827 S.W.2d 433, 437 (Tex. App.--San Antonio 1992, writ denied) ("If the publication of which the plaintiff complains was consented to . . . by the plaintiff, he cannot recover for injuries sustained by reason of the publication.").
594 See e.g., Duncantell v. Universal Life Insur. Co., 446 S.W.2d 934, 937 (Tex. Civ. App.--Houston [14th Dist. 1969, writ ref'd n.r.e.).
595 2 F. Harper et al., The Law of Torts § 5.17, at 138-39 (2d ed. 1986); see also Duncantell, 446 S.W.2d at 937 (rejecting claim based on previous employer's defamatory statements to prospective employer).
596 See Ramos v. Henry C. Beck Co., 711 S.W.2d 331, 336 (Tex. App.--Dallas 1986, no writ).
597 See id. In Ramos, a discharged employee asked his supervisor why he was terminated. His supervisor told him he was being discharged because there was a rumor that he had been seen stealing a power tool from the company. See id. at 334. The employee sued for defamation based on this accusation. See id. at 333. The employer was granted summary judgment on his claim that the employee "invited" the statement, which is an absolute defense to defamation. See id. at 336. The Dallas Court of Appeals reversed, explaining that there must be evidence to indicate that the employee knew that his employer "would defame him when [he] made his inquiry." See id.
598 See East Line & Red River R.R. Co. v. Scott, 72 Tex. 70, 75-76, 10 S.W. 99, 102 (1988) (adopting the at will employment doctrine in Texas).
599 See, e.g., Decker, supra note 107, at 668 (noting that Texas' adoption of the at will doctrine was premised on a treatise by Horace Wood, which "was not supported by the authorities cited" therein).
600 See, e.g., Clark, supra note 109 (advocating a "good faith" requirement in all employment relationship).
601 See Maddux, supra note 326 ("Texas first recognized the at-will doctrine in 1888, and since then Texas courts have vigorously adhered to the doctrine and sought to preserve it.") (footnote omitted).
602 See discussion supra Section IV.A.
603 See supra notes 215-25 and accompanying text.
604 See Cynthia L. Estlund, Wrongful Discharge Protections in an At-Will World, 74 Tex. L. Rev. 1655, 1655 (1996) ("The employer's presumptive right to fire employees at will . . . has been drastically cut back in the last sixty years.").