This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Employee, a long-time management-level worker, was reassigned to a new position after his department was merged with another. Although his pay remained the same, he perceived the reassignment as a demotion. Later, the Employer terminated him, citing insufficient work in his new role. The Employee alleged that his termination was due to interpersonal conflicts with a superior and a contractor, rather than legitimate business reasons (paras 2-3).
Procedural History
- District Court of Eddy County: Granted summary judgment in favor of the Employer, dismissing the Employee’s claims of breach of an implied contract and breach of the implied covenant of good faith and fair dealing (para 3).
Parties' Submissions
- Employee (Appellant): Argued that there was an implied contract that he would only be terminated for cause and after progressive disciplinary procedures. He also claimed that the Employer’s stated reasons for termination were pretextual and that the Employer breached the implied covenant of good faith and fair dealing (paras 5, 25, and 27).
- Employer (Appellee): Contended that the Employee’s termination was lawful under the at-will employment doctrine and that the Employee’s expectations of termination only for cause were not objectively reasonable. The Employer also argued that its policies, including progressive discipline, were discretionary and did not create binding contractual obligations (paras 13-15, 19, and 23).
Legal Issues
- Was there an implied contract that the Employee could only be terminated for cause and after the application of progressive disciplinary procedures?
- Did the Employer breach the implied covenant of good faith and fair dealing?
- Was summary judgment appropriate given the evidence presented?
Disposition
- The Court of Appeals reversed the district court’s grant of summary judgment in favor of the Employer and remanded the case for trial on the merits of the Employee’s claims (paras 28-29).
Reasons
Per Wechsler J. (Vigil and Robles JJ. concurring):
The Court found that genuine issues of material fact existed regarding the existence of an implied contract and the Employee’s reasonable expectations. The Employee presented evidence, including the Employer’s handbook, manager’s guide, and training sessions, which could lead a reasonable jury to conclude that the Employer had created an implied contract to terminate employees only for cause and after progressive disciplinary procedures (paras 6-12, 16-20).
The Court noted that disclaimers in the handbook and guide were not dispositive, as the totality of the Employer’s representations and practices could reasonably lead employees to believe in the existence of an implied contract. The Court also emphasized that conflicting evidence about the discretionary nature of the Employer’s policies created a factual issue for the jury to resolve (paras 17-19).
Regarding the implied covenant of good faith and fair dealing, the Court held that this claim could not be dismissed at the summary judgment stage because it depended on whether an implied contract existed. If such a contract was found, the covenant would apply (para 27).
Finally, the Court rejected the Employer’s argument that its representations about progressive discipline were irrelevant, finding that these policies were central to the Employee’s claims and could not be dismissed as discretionary or inapplicable (paras 23-24).