Sanchez v. Life Care Centers of America, Inc.

Brief Fact Summary.

The enforceability of a disclaimer in an employee handbook was at issue. 

Synopsis of Rule of Law.

In order for a disclaimer in an employee handbook to be effective, it must be conspicuous.

Facts.

The Appellant, Marie Sanchez (the "Appellant"), was employed by the Appellee, Life Care Centers of America, Inc. (the "Appellee"), during part of 1990.  While employed with the Appellee, the Appellant was issued "a Handbook of Employment Guidelines" (the "Handbook").  The Handbook contained a detailed disclaimer.  On July 20, 1990, the Appellant's employment with the Appellee ended.  The District Court found for the Appellee for two reasons.  First, the Handbook disclaimer was conspicuous as a matter of law and nothing in it change the Appellant from an at-will employee.  Second, in Wyoming, a cause of action for promissory estoppel has never been recognized in this context. 

Issue.

Was the disclaimer in the Handbook conspicuous?

Held.

No.  "The disclaimer in question is not set off in any way that would attract attention. It falls under the heading 'GENERAL INSTRUCTIONS' and the subheading 'CONTENTS.'  Nothing is capitalized that would give notice of a disclaimer. The type size equals that of other provisions on the same page. No border sets the disclaimer apart from any other paragraph on the page. The disclaimer is not conspicuous."  The court quoted [Woolley v. Hoffmann-La Roche, Inc.] for an example of how an employee manual can be construed as conspicuous and thus a binding contract.  [Woolley] said:  "[i]t would be unfair to allow an employer to distribute a policy manual that makes the workforce believe that certain promises have been made and then to allow the employer to renege on those promises. What is sought here is basic honesty: if the employer, for whatever reason, does not want the manual to be capable of being construed by the court as a binding contract, there are simple ways to attain that goal. All that need be done is the inclusion in a very prominent position of an appropriate statement that there is no promise of any kind by the employer contained in the manual; that regardless of what the manual says or provides, the employer promises nothing and remains free to change wages and all other working conditions without having to consult anyone and without anyone's agreement; and that the employer continues to have the absolute power to fire anyone with or without good cause."  Here, the court concluded "the disclaimer was not physically conspicuous and its contents were ambiguous in that there was language that inferred that Life Care intended to modify the at-will employment to an employment which could only be terminated for cause." The court was hesitant to "specify language and the placement of a disclaimer in order that it be effective."

Dissent.

The dissenting justices concluded that "disclaimer in this employee handbook was clear, explicit and adequate to inform any reasonable employee that the at-will employment relationship was preserved. I dissent also because the court fails once again to inform an employer what is acceptable as an effective disclaimer in an employee handbook."  Unlike the majority, the dissent wanted the court to specifically say what a sufficient disclaimer should look like, and where it should be placed.  In other words, "a straight forward rule."  The dissent worried that this decision and its predecessors discouraged companies from providing employee manuals.

Discussion.

It is interesting to compare and contrast the majority and dissenting opinions, and to recognize the importance of implementing a rule or a standard.