John A. Kessler
Hunt & Wilson
Charleston, West Virginia
Counsel for Plaintiff
Ted M. Kanner
Forman, Kanner & Crane
Charleston, West Virginia
Counsel for Plaintiff
Steven C. Hanley
Kevin A. Nelson
Kay, Casto, Chaney, Love & Wise
Charleston, West Virginia
Counsel for Defendant
JUSTICE WORKMAN delivered the Opinion of the Court.
1. "A promise of job security contained in an employee
handbook distributed by an employer to its employees constitutes an
offer for a unilateral contract; and an employee's continuing to
work, while under no obligation to do so, constitutes an acceptance
and sufficient consideration to make the employer's promise binding
and enforceable." Syl. Pt. 5, Cook v. Heck's, Inc., 176 W. Va.
368, 342 S.E.2d 453 (1986).
2. "An employee handbook may form the basis of a unilateral
contract if there is a definite promise therein by the employer not
to discharge covered employees except for specified reasons." Syl.
Pt. 6, Cook v. Heck's, Inc., 176 W. Va. 368, 342 S.E.2d 453 (1986).
3. "An employer may protect itself from being bound by
statements made in an employee handbook by having each prospective
employee acknowledge in his employment application that the
employment is for no definite period and by providing in the
employment handbook that the handbook's provisions are not
exclusive." Syl. Pt. 4, Suter v. Harsco Corp., 184 S.E.2d 734, 403
S.E.2d 751 (1991).
4. "An employer may protect itself from being bound by any
and all statements in an employee handbook by placing a clear and
prominent disclaimer to that effect in the handbook itself." Syl.
Pt. 5, Suter v. Harsco Corporation, 184 S.E.2d 734, 403 S.E.2d 751
5. "The rule that an employer has an absolute right to
discharge an at will employee must be tempered by the principle
that where the employer's motivation for the discharge is to
contravene some substantial public policy principle, then the
employer may be liable to the employee for damages occasioned by
this discharge." Syllabus, Harless v. First Nat'l Bank in
Fairmont, 162 W. Va. 116, 246 S.E.2d 270 (1978).
6. Where a retaliatory discharge claim is based upon the
assertion by the plaintiff that he was terminated due to his
attempt to enforce warranty rights granted him pursuant to the West
Virginia Consumer Credit and Protection Act, West Virginia Code §§
46A-6-101 to -107 (1992), the plaintiff has no basis for such a
claim unless he can demonstrate that a valid warranty was created
at the time of the sale of the goods.
7. West Virginia Code § 46-2-313(1)(a) and (b) (1966) mandate
that an express warranty is created only when the affirmation of
fact, promise or description of the goods is part of the basis of
the bargain made by the seller to the buyer about the goods being
This case is before the Court upon the appeals of both James
H. Reed and Sears, Roebuck & Company (hereinafter referred to as
Sears) from the Circuit Court of Wood County. The Plaintiff, Mr.
Reed, appeals from a denial by the trial court of a request to
instruct the jury during trial on punitive damages and assigns as
error the lower court's ruling that punitive damages were not
recoverable in this case.See footnote 1 On March 7, 1991, the jury returned a
verdict in favor of the Plaintiff on the issue of retaliatory
discharge and awarded him damages for lost wages in the amount of
$118,931 and damages for emotional distress in the amount of
$250,275. The Defendant Sears also appeals from a July 1, 1991,
order which denied post-trial motions for judgment notwithstanding
the verdict or in the alternative, for a new trial. Sears contends
that 1) the Plaintiff's evidence failed to establish a cause of
action under West Virginia law for breach of an implied employment
contract; 2) the trial court erred by finding that the Plaintiff
had a valid cause of action under the theory of retaliatory
discharge; and, 3) the trial court erred in not granting the
Defendant a new trial on the Plaintiff's retaliatory discharge
claim. Based upon a review of the record, the parties' briefs and
arguments and all other matters submitted to this Court, we
conclude that the trial court erred when it failed to hold, as a
matter of law, that no warranty existed and that no implied
contract of employment existed, instead leaving those questions to
the jury. Therefore, we reverse the decision of the circuit court.
On June 25, 1986, the Plaintiff, who was employed by the
Parkersburg, West Virginia, Sears store as a service technician,
went to the catalog store in Glenville, West Virginia, on a service
call. Janet Deal, the owner and operator of the catalog store, had
requested that Mr. Reed examine a Kenmore air conditioner and a
dishwasher owned by the store that had been damaged in shipment.
Mrs. Deal testified that after Mr. Reed examined the air
conditioner, he informed her that the air conditioner had a broken
casing and a broken fan motor. He estimated the repair cost on the
service order at $350 and specifically stated that that estimate
"does not include any seal systemSee footnote 2 repair that might be needed[.]"
Further, Mrs. Deal's testimony indicated that Mr. Reed also orally
informed her that the air conditioner had sustained too much damage
and would cost too much to repair.
Based on this information, Mrs. Deal decided to junk the air
conditioner for parts. Mrs. Deal later contacted management at the
Parkersburg Sears store and offered the air conditioner for their
use for spare parts. The Parkersburg Sears store declined to
accept the air conditioner.
On July 10, 1986, Mr. Reed returned to the Sears catalog store
in Glenville under instructions to pick up the dishwasher and the
air conditioner, according to Mr. Reed's testimony at trial. Mrs.
Deal testified that when Mr. Reed arrived at the store, he asked
her if he could buy the air conditioner for parts. Mrs. Deal sold
him the air conditioner for $26.25.See footnote 3 Because Mr. Reed would be
transporting the air conditioner in his Sears' truck, he asked for
a sales receipt as proof of purchase, according to Mrs. Deal's
testimony. Mrs. Deal gave him the requested receipt and
specifically noted the sale of an "Air conditioner for parts[.]"
In addition to that receipt, Mrs. Deal testified that she also
completed a miscellaneous income form used by Sears to record
monies received that were not part of a normal sale. On that form,
Mrs. Deal described the sale as follows: "junked air conditioner
sold for parts[.]" Mrs. Deal testified that had this been a
regular customer transaction, she would have noted the customer's
name and address on the receipt. She further stated that if a
warranty accompanies the merchandise, she is required to list the
name and address of the customer. She did not obtain that
information from Mr. Reed during the sale of the junked air
The Plaintiff took the air conditioner home and repaired the
fan motor and the bent casing. Mr. Reed testified that after he
made those repairs, the air conditioner functioned properly. Mr.
Reed then indicated that he kept the air conditioner in his
basement until August of 1987. At that time, he tested the unit
again only to discover that the compressor was not working properly
and needed to be replaced. On August 7, 1987, in his capacity as
a Sears service technician, the Plaintiff placed an order for a new
compressor under warranty. Additionally, according to Donna
Poling, the parts manager, the Plaintiff sought an "emergency
shipment" of the compressor which normally would have been paid by
Sears.See footnote 4
Troy Miller and Frank Dotson were the acting supervisors in
the Parkersburg Sears Service Department in August 1987. Both men
testified that their job duties included assisting service
technicians in deciding whether appliances and/or parts were under
warranty. Mr. Dotson testified that the normal procedure followed
by a Sears employee making a warranty claim was the same as a
normal customer. That procedure entailed presenting the
merchandise to the front counter where another employee would fill
out a service order and process it into the system. The employee
could also call and have someone come to their home, but a service
order was always filled out first. Moreover, Mr. Miller testified
that the standard unwritten rule among the service technicians was
that a technician would have a supervisor or service manager verify
any warranty work for personal appliances or products. According
to both Mr. Miller and Mr. Dotson, the Plaintiff did not comply
with either of these procedures before ordering the $275
Accordingly, it came to Mr. Miller's attention through other
employees that the Plaintiff had ordered an air conditioner
compressor by filling out a service order himself and by failing to
seek approval from a supervisor since the order was purportedly
under warranty. Concerned with the possible impropriety of Mr.
Reed's conduct, Sears management undertook an investigation.
Mr. Reed testified that he learned from another service
technician, Paul Dowler, that he was in trouble for ordering a
compressor for his air conditioner. Consequently, the Plaintiff
approached Frank Dotson who confirmed that there was a problem
concerning the ordering of the compressor under warranty.
On August 15, 1987, the Plaintiff met with John Howland, the
manager of the Parkersburg Sears store. The Plaintiff testified
that he told Mr. Howland that he heard he was in trouble and that
he wanted to explain the situation. The Plaintiff told Mr. Howland
that he had a receipt for the purchase of the air conditioner. The
Plaintiff also testified that he believed the compressor was
covered by the five-year warranty even though he had purchased the
air conditioner for parts. Mr. Reed then offered to do "'anything
it takes'" to keep his job, including destroying the unit.
Mr. Howland testified that he requested the Plaintiff to
prepare a written statement regarding his version of what
transpired. In his written statement, Mr. Reed stated that "[t]his
air conditioner was purchased as a damaged appliance for parts" and
that when he placed the order for the compressor he "honestly
thought the compressor was under warranty since . . . [he] had
repaired the original problem & the compressor was not 5 years
old." However, Mr. Reed also conceded that "[a]pparently this was
a bad decision on my part & poor judgement [sic]. I did not intend
to do any thing dishonest." Significantly, other than the written
warranty found in the air conditioner box after he first purchased
the item, the Plaintiff offered no evidence that after he was
approached by Mr. Howland he ever asserted that he had a valid
warranty claim for the compressor.
Prior to receiving Mr. Reed's written account on August 17,
1987, Mr. Howland had conferred with Carl Blackburn, Sears'
Regional Human Resources Manager, about the Plaintiff's situation.
Because the Plaintiff had more than ten yearsSee footnote 5 with the company,
Sears company policy required Mr. Blackburn's approval before Mr.
Reed could be terminated. At trial, Mr. Blackburn testified that,
after discussing the Plaintiff's case with Mr. Howland, he
concluded that Mr. Reed should be terminated. Specifically, Mr.
Blackburn testified that Mr. Reed had acted dishonestly by
attempting to obtain a $275 compressor under warranty for an air
conditioner originally purchased for parts at a cost of $25. Mr.
Reed was discharged from employment by Mr. Howland on August 17,
The first issue before the Court is whether the Plaintiff's
evidence established a cause of action for breach of an implied
employment contract.See footnote 6 Sears maintains that the Plaintiff's
evidence failed to establish a cause of action for breach of an
implied contract. The Plaintiff, on the other hand, asserts that
select provisions contained in the "Getting Acquainted With Sears"
booklet, with which the Plaintiff was provided when he was hired,
constitute an implied contract under which he can only be
discharged for good cause. The Plaintiff specifically refers to a
section of the "Getting Acquainted With Sears" handbook entitled
"Employment Rules." The Plaintiff asserts that he believed he
could only be terminated if he violated one or more of the
enumerated rules. That section, in pertinent part, provides:
"[A]ny violation of the following rules may result in immediate
termination of your employment: . . . 2. Conclusive evidence of
dishonesty, a misdemeanor, or an act indicating low moral
In syllabus points 5 and 6 of Cook v. Heck's Inc., 176 W. Va.
368, 342 S.E.2d 453 (1986), this Court held that:
A promise of job security contained in an
employee handbook distributed by an employer
to its employees constitutes an offer for a
unilateral contract; and an employee's
continuing to work, while under no obligation
to do so, constitutes an acceptance and
sufficient consideration to make the
employer's promise binding and enforceable.
An employee handbook may form the basis
of a unilateral contract if there is a
definite promise therein by the employer not
to discharge covered employees except for
However, this concept of an employee handbook forming an implied contract of employment was modified in Suter v. Harsco Corporation, 184 W. Va. 734, 403 S.E.2d 751 (1991).
In Suter, the plaintiff in applying for the position as a
shipping clerk, acknowledged by her signature, the following
disclaimer: "'I UNDERSTAND AND AGREE THAT, IF HIRED, MY EMPLOYMENT
IS FOR NO DEFINITE PERIOD AND MAY, REGARDLESS OF THE DATE OF
PAYMENT OF MY WAGES AND SALARY, BE TERMINATED AT ANY TIME WITHOUT
ANY PRIOR NOTICE.'" Id. at 736, 403 S.E.2d at 753. When hired,
the plaintiff in Suter was given an employee handbook. While the
employee handbook contained no specific list of offenses which
would result in termination, there was some language which could
have been interpreted as meaning that the employer would refrain
from terminating an employee without cause after the employee's
probationary period was completed. Id. at 736-37, 403 S.E.2d at
753-54 n.2. The plaintiff was fired after a year and a half of
employment. She later brought suit against Harsco Corporation for
breach of an implied contract of employment for terminating her
employment without cause. We reversed the trial court and held
that the trial court should have concluded that, as a matter of
law, the at will employment relationship was not modified by the
employee handbook. Id. at 736, 403 S.E.2d at 753.
Particularly, in syllabus points 4 and 5 of Suter, we held
An employer may protect itself from being
bound by statements made in an employee
handbook by having each prospective employee
acknowledge in his employment application that
the employment is for no definite period and
by providing in the employment handbook that
the handbook's provisions are not exclusive.
An employer may protect itself from being
bound by any and all statements in an employee
handbook by placing a clear and prominent
disclaimer to that effect in the handbook
Id. at 745, 403 S.E.2d at 752. Further, in Adkins v. Inco Alloys International, Inc., this Court held that in order for a plaintiff to prove that an implied contract existed, "such claim must be established by clear and convincing evidence." Syl. Pt. 3, in part, 187 W. Va. 219, 417 S.E.2d 910 (1992).
It is also helpful in reaching a decision on this matter to examine the decision of the United States Court of appeals for the Sixth Circuit in Reid v. Sears, Roebuck and Co., 790 F.2d 453 (1986). The Court in Reid was presented with the same argument made by the Plaintiff in the present case, essentially that the language in the "Employee Rules" section of the "Getting Acquainted with Sears" handbook created an implied contract in which an employee could only be discharged for one of the listed causes or for some other good cause. Id. at 457.
The Reid court rejected the Plaintiff's argument by stating
We do not believe the listing of causes
that 'may result in the termination of your
employment' in the Sears handbook detracted in
any way from the language in the application
or provided a reasonable basis for the
conclusion that the plaintiffs were employed
under a 'for cause' contract. The fact that
certain acts were identified as conduct that
might lead to discharge did not indicate that
these acts were the exclusive permissible
grounds for discharge.
Id. at 460. Moreover, the Court in Reid referred to the fact that
an employer under Michigan law, can defeat a claim by an employee
that the employee can be terminated only for good cause by
requiring the prospective employee to acknowledge when he is hired
that he is an at-will employee. This is precisely what occurred in
Reid when the plaintiffs signed an acknowledgement which contained
"unequivocal" language to the effect that they were being hired as
at-will employees. Id. at 461.
The evidence in the present case reveals that the Plaintiff's
application for employment which he completed when he was hired by
Sears contains the following pertinent language: "In consideration
of my employment I agree to conform to the rules and regulations of
Sears, Roebuck and Co., and my employment and compensation can be
terminated, with or without cause, and with or without notice, at
any time at the option of either the Company or myself. . . ."
Further, the following provision is located in the "Getting
Acquainted With Sears" handbook:
The information in this booklet covers many
subjects and is necessarily very general in
its nature. This information is intended only
to acquaint you with the more important
policies and programs of the company and,
except for the paragraphs dealing with
Vacations, is not to be construed as defining
your rights or obligations thereunder.
Therefore, based upon our previous decisions in Cook and
Suter, we conclude that a unilateral or implied contract of
employment was not created based upon the employee handbook. Not
only did the Plaintiff acknowledge that he could be terminated at
any time with or without cause, but the handbook specifically
contains a statement that it is "intended only to acquaint . . .
[the employee] with the more important policies and programs of the
company," and with the exception of the "paragraphs dealing with
Vacations, [it] is not to be construed as defining . . . [the
employee's] rights or obligations thereunder." Moreover,
dishonesty was included in the employee handbook as a possible
basis for termination. Accordingly, we concur with the Sixth
Circuit's holding in Reid and conclude that the trial court erred
in failing to direct a verdict on behalf of the Defendant Sears
since the Plaintiff failed to establish his claim of a breach of an
implied employment contract by clear and convincing evidence.
The next issue addressed by this Court is whether the trial
court erred by finding that the Plaintiff had a valid cause of
action under the theory of retaliatory discharge. The Defendant
maintains that its requests for motions for directed verdicts
should have been granted by the trial court because 1) the
Plaintiff's attempt to obtain a compressor under warranty is not a
matter of public policy sufficient to create a cause of action for
retaliatory discharge and, 2) the Plaintiff failed to prove the
intentional deprivation of an alleged statutory right necessary to
his retaliatory discharge claim. The Plaintiff, however, contends
that he was discharged in contravention of public policy because
his termination was the result of his attempt to enforce warranty
rights granted him by the West Virginia Consumer Credit and
Protection Act, West Virginia Code §§ 46A-6-101 to -107 (1992).
In the syllabus point of Harless v. First National Bank in
Fairmont, 162 W. Va. 116, 246 S.E.2d 270 (1978), we held that
[t]he rule that an employer has an
absolute right to discharge an at will
employee must be tempered by the principle
that where the employer's motivation for the
discharge is to contravene some substantial
public policy principle, then the employer may
be liable to the employee for damages
occasioned by this discharge.
Consequently, in Harless this Court found that the plaintiff stated a cause of action against the defendants when he alleged in his complaint that he was discharged in retaliation for his efforts to bring to the attention of and require his employer to comply with federal and state consumer protection laws where the employer had been "'intentionally and illegally overcharg[ing] customers on prepayment of their installment loans and intentionally did not make proper rebates.'" Id. at 118, 246 S.E.2d at 272. Hence, we have already recognized that if an employee is discharged for attempting to enforce rights granted by the West Virginia Consumer Credit and Protection Act for the protection of all consumers of credit, a substantial public policy is contravened.
However, where a retaliatory discharge claim is based upon the
assertion by the plaintiff that he was terminated due to his
attempt to enforce warranty rights granted him pursuant to the West
Virginia Consumer Credit and Protection Act, West Virginia Code §
46A-6-101 to -107, the plaintiff has no basis for such a claim
unless he can demonstrate that a valid warranty was created at the
time of the sale of the goods. Therefore, it is apparent that the
whole retaliatory discharge theory in this case hinges on whether
a warranty actually existed on the compressor of the air
conditioner purchased by the Plaintiff.
West Virginia Code § 46-2-313(1)(a) and (b) (1966) provides
(1) Express warranties by the seller are
created as follows:
(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.See footnote 7
It is clear that West Virginia Code § 46-2-313(1)(a) and (b) mandate that an express warranty is created only when the affirmation of fact, promise or description of the goods is part of the basis of the bargain made by the seller to the buyer about the goods being sold.
There was no evidence presented before the trial court which
would support the contention that an express warranty of any kind
was created when the Plaintiff purchased the air conditioner for
parts from the Sears catalogue store. Because it was clear as a
matter of law that no warranty existed, the trial court erred in
failing to grant the Defendant's motion for directed verdict on
this issue. Without a valid warranty, the Plaintiff's cause of
action for retaliatory discharge fails, since the motivation for
the discharge cannot be said to have been based on the Plaintiff's
attempt to enforce valid warranty rights.
Based on the foregoing opinion, the decision of the Circuit
Court of Wood County is reversed.
Footnote: 1Based on this Court's rulings regarding the implied employment contract and the retaliatory discharge claims, the punitive damages issue is rendered moot. It is important to note, however, that the trial court's conclusion that punitive damages were not recoverable as a matter of law was based specifically on the facts of this case and was not a general statement of the law with regard to punitive damages in a retaliatory discharge action. We find no error with the trial court's ruling on this matter.
Footnote: 2The seal system contains the compressor which is at issue in this case.
Footnote: 3Had the air conditioner not been damaged, the retail price would have been $500. Moreover, a new undamaged air conditioner was normally sold with two warranties. The first warranty covered the air conditioner as a whole and lasted for one year. The second warranty covered only the sealed system, which included the compressor, and lasted for a period of five years.
Footnote: 4The Plaintiff testified that he told Ms. Poling that he was going to pay for the costs of the emergency order shipment; however, Ms. Poling had no recollection of this statement.
Footnote: 5Mr. Reed had been employed with Sears for 17 years.
Footnote: 6It is undisputed that there was never an express contract of employment.
Footnote: 7It is important to note that the Plaintiff relied upon the existence of an express warranty. This is supported not only by Plaintiff's evidence, but also by the Plaintiff's jury instructions which only instruct the jury about the law concerning express warranties. It is clear that there is no support from which to argue the existence of an implied warranty of merchantability. See W. Va. Code § 46-2-314 (1966).