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PUDIL v. SMART BUY

April 10, 1985

CAROL A. PUDIL, PLAINTIFF,
v.
SMART BUY, INC. AND MARVIN FREEMAN, DEFENDANTS.



The opinion of the court was delivered by: William T. Hart, District Judge.

MEMORANDUM OPINION AND ORDER

Carol A. Pudil originally brought this action in state court against her former employer Smart Buy, Inc. ("Smart Buy") and its president Marvin Freeman. On August 16, 1984, the defendants, both "residents" of California, removed the action to this Court based on diversity of citizenship. Pudil's complaint advances three claims arising from her discharge on May 15, 1984. First, Pudil alleges that Smart Buy discharged her without cause or notice, in violation of the terms of her employment contract as set forth in Smart Buy's employee manual. Second, Pudil asserts that Freeman recklessly inflicted severe emotional distress upon her by directing her discharge. Third, Pudil maintains, as an alternative to her breach of contract claim, that her reasonable reliance upon the defendants' actions gives rise to a promissory estoppel. After taking discovery, including Pudil's deposition, the defendants have moved for summary judgment on all counts.

FACTS

The facts surrounding Pudil's employment and discharge are not in dispute. In 1969, Freeman opened his first "optical boutique" under the trade name Optica. Due to the success of his concept of expensive, high quality "fashion eyewear," Freeman opened a Chicago location in late 1983. He traveled to Chicago prior to its opening to interview candidates for sales positions in his Chicago store.

Pudil began working at the Chicago Optica store on November 16, 1983. In either late December, 1983 or early January, 1984, all employees of the Optica Chicago store met with the store manager. At this meeting, the store manager presented Optica's employee manual to the employees by reading the full text of the eight-page document to them and requiring each employee to sign and return a half-page acknowledgement that he or she had received, read and understood the document. The manual contained: (i) a statement of the history of Optica; (ii) instructions to employees on proper dress, courtesy to customers and attendance; (iii) a statement of health, vacation and eyeglass benefits available to employees and promotion policy, and (iv) a list of those "offenses" that would result in immediate discharge and those that would result in discharge "after written notice."

During the course of her employment at Optica, Pudil purchased a new car (trading in her old car) and finalized her divorce (thereby losing health insurance under her ex-husband's policy). She also "altered her lifestyle in conformance with her increased earnings." Approximately ninety days after Pudil began work at Optica, she received a note from Freeman congratulating her on the quality of her work, informing her that her current paycheck included an increase in pay and expressing the hope that "you'll be with us for a long time."

On May 15, 1984, Optica's Chicago store manager informed Pudil that she was discharged, effective immediately. Optica's assistant store manager offered to help Pudil find a new job and Optica paid Pudil a severance allowance at the time of her termination. Although Pudil asked the reason for her discharge, Optica refused to give any reason. Pudil was distressed by the loss of her job at Optica and consulted her personal doctor, who prescribed tranquilizers.

DISCUSSION

1. Breach of Contract

Pudil concedes that, under Illinois law, a written or oral employment contract which does not specify the duration of employment creates an employment "at-will" relationship, terminable by either party at any time, with or without cause. See, e.g., Gordon v. Matthew Bender & Co., 562 F. Supp. 1286, 1290-92 (N.D.Ill. 1983); Goodman v. Board of Trustees, 511 F. Supp. 602, 606 (N.D.Ill. 1981). Since Pudil does not contend that her original engagement to work at Optica's Chicago store specified any duration, she must be viewed as an employee "at-will." Nonetheless, she maintains that the employee manual, distributed after she began her work at Optica, either modified her original engagement or should be read in interpreting that agreement.

The Illinois Supreme Court has yet to pass on the effect of an employee manual upon the employer's discretion to terminate "at-will" employees. Therefore, this Court must attempt to predict the path the Illinois Supreme Court would follow. In re Air Crash Disaster, 701 F.2d 1189, 1197 (7th Cir.), cert. denied, ___ U.S. ___, 104 S.Ct. 204, 78 L.Ed.2d 178 (1983); Roberts v. Western-Southern Life Ins. Co., 568 F. Supp. 536, 540 (N.D.Ill. 1983). In predicting how the Illinois Supreme Court would decide this issue, the decisions of the Illinois Appellate Court, id., and decisions from other jurisdictions, Martin v. Harrington and Richardson, Inc., 743 F.2d 1200, 1202 (7th Cir. 1984), are helpful indicators.

Illinois case law on this issue begins with Carter v. Kaskaskia Community Action Agency, 24 Ill. App.3d 1056, 322 N.E.2d 574 (5th Dist. 1974). In Carter, the state court found that an employer must abide by the grievance procedures set forth in its personnel policy manual where the manual contained provisions which created mutual obligations for the employer and its employees and the employee assented to the manual as a modification of his employment relation. Subsequently, Sargent v. Illinois Institute of Technology, 78 Ill. App.3d 117, 33 Ill.Dec. 937, 397 N.E.2d 443 (1st Dist. 1979) gave a narrow reading to Carter, holding that since the personnel manual was given to the employee when he began his employment and contained no provisions imposing conditions on him beyond his required duties, the manual was not "bargained for" and so unenforceable. More recently another appellate court applied Carter to require a county board to honor its sheriff's announcement to his deputies that they would receive a raise. Scutt v. LaSalle County Board, 97 Ill. App.3d 181, 53 Ill.Dec. 21, 423 N.E.2d 213 (3rd Dist. 1981).

Relying on the decision in Sargent, two published opinions in this district and additional unpublished opinions, e.g., Brundage v. Trans World Airlines, Inc., No. 80 C 6701, slip op. at 7-9 (N.D.Ill. March 29, 1984) (Hart, J.), have determined that the provisions of personnel manuals do not bind employers. In Rynar v. Ciba-Geigy Corp., 560 F. Supp. 619 (N.D.Ill. 1983), Judge Will found that although the manual contained terms suggesting a mutuality of obligation, the employees had not assented to the modification because they were only generally aware of its existence but had not reviewed or approved its specific provisions. Citing Rynar, Judge Bua later found that a manual provided to ...


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