Pankow does not contend here that any handbook states the terms of the contract he seeks to enforce. Pankow contends instead that he and WestAmerica entered into an oral contract that provided Pankow with more job security than an employee at will would enjoy. Specifically, Pankow asserts that his oral contract provided that he could continue to work as long as he performed satisfactorily and that he could be discharged for unsatisfactory performance only if he first received oral and written warnings and a chance to improve his performance.
WestAmerica admits its agent made these promises to Pankow but contends that they are not enforceable terms of the employment relationship. First, WestAmerica contends that its representations were not clear and definite enough to sustain a claim that they became part of an enforceable oral contract of employment under Illinois law. Second, WestAmerica argues that Pankow was an employee at will because the handbook and the signed disclaimer said so.
The initial arrangement
Pankow does not allege that he had a contract with a specific duration. Thus, according to the Illinois Supreme Court, there is a presumption that the employment arrangement was at will. That presumption can be overcome by evidence that the parties contracted otherwise. Duldulao, supra, 115 Ill. 2d at 489, 505 N.E.2d at 318, 106 Ill. Dec. at 12. Here, Pankow asserts that he contracted for terms that limit WestAmerica's ability to fire him at will.
Because of the common law tradition that employers may fire employees at will, courts have sometimes been leery of employees' claims that they made oral contracts providing for job security. Some courts have looked for some sort of additional consideration, beyond the employee's exchange of services for payment, before enforcing the employee's claim that additional promises of job security comprised an enforceable part of the employment arrangement. E.g., Ladesic v. Servomation Corp., 140 Ill. App. 3d 489, 492-93, 488 N.E.2d 1355, 1357-58, 95 Ill. Dec. 12, 14-15 (1st Dist. 1986).
Another view, however, notes that the key question in analyzing a contract is to determine the intent of the parties. When that intent is clear and unambiguous, and the parties bargained for and exchanged mutual promises, additional consideration is not necessary. This view regards additional consideration as evidence of the parties' intent but not an independent requirement of every enforceable oral contract. See Martin v. Federal Life Insurance Co. 109 Ill. App. 3d 596, 602, 440 N.E.2d 998, 1003, 65 Ill. Dec. 143, 148 (1st Dist. 1982).
In an earlier case in this court, we determined that the Illinois Supreme Court would enforce a clear and unambiguous oral contract of employment without requiring additional consideration. See Kula v. J.K. Schofield & Co., Inc., 668 F. Supp. 1126, 1130-31 (N.D.Ill. 1987). Following the Illinois court's reasoning in Duldulao, we thus concluded that the primary question is whether the parties formed a contract; that is, whether there was a clear and definite offer, an acceptance, and consideration. As the employee's performance could function as consideration in Duldulao, we see no reason why Pankow's performance could not also serve as consideration.
WestAmerica, moreover, does not contend that Pankow's alleged contract fails for lack of consideration. WestAmerica contends that its promises were not certain and definite enough to constitute an offer that could transform an otherwise at-will relationship into an enforceable contract. It cites cases that note that in Illinois, employers in an otherwise at-will relationship do not limit their right to fire by merely promising to retain employees as long as their performance is satisfactory.
See Gordon v. Matthew Bender & Co., 562 F. Supp. 1286, 1291 (N.D.Ill. 1983); Ray v. Georgetown Life Insurance Co., 94 Ill. App. 3d 863, 865, 419 N.E.2d 721, 722, 50 Ill. Dec. 613, 614 (3d Dist. 1981).
We do not need to evaluate whether the Illinois Supreme Court would follow the reasoning of these cases today,
because they do not control the case at bar. WestAmerica did not simply promise to retain Pankow as long as he performed satisfactorily. It also promised to warn Pankow of any inadequate performance and to give him a chance to correct it. In arguing that the promises are not sufficiently clear and definite to form a contract, WestAmerica's briefs say nothing about this additional promise. This is a motion for summary judgment, and it is WestAmerica's burden to persuade us that its promises are not clear and definite enough to sustain a claim in contract. As we believe that a reasonable factfinder could conclude that the promises, taken together, are sufficiently clear and definite, WestAmerica has failed to carry its burden. We therefore cannot rule that WestAmerica has shown, as a matter of law, that Pankow was an at-will employee when he began his job.
WestAmerica argues that Pankow was an at-will employee because both the handbook and the disclaimer Pankow signed say so. WestAmerica is quite correct in arguing that employers may simultaneously preserve the at-will employment relationship and distribute handbooks to employees. As long as the handbook contains a conspicuous provision announcing that it does not constitute an offer or the terms of a contract, no contract will form.
In this case, however, Pankow contends that he already had an enforceable contract that gave him more rights than an at-will employee. If Pankow is correct, and for this inquiry we assume he is, then the proper question is whether the disclaimer modified that contract and transformed Pankow into an employee at will. We conclude it did not.
Parties to a contract are free to modify their agreement, but the changes are subject to the rules that govern formation of all contracts. "A valid modification must meet all the criteria essential for a valid contract: offer, acceptance, and consideration." Chicago College of Osteopathic Medicine v. George A. Fuller Co., 776 F.2d 198, 208 (7th Cir. 1985) (interpreting Illinois law).
Pankow contends that the disclaimer did not modify his contract because he received no consideration. When WestAmerica distributed its handbook, it was already under a contractual duty to follow certain procedures before firing Pankow. WestAmerica has not suggested that it gave Pankow anything or gave up anything in return for Pankow's signing the disclaimer and surrendering whatever contractual rights to specific disciplinary procedures and job security he enjoyed. Moreover, WestAmerica does not contend that it bargained for Pankow to modify his status and become an employee at will.
Adapting the reasoning of the Duldulao case, WestAmerica argues that by continuing to work after signing the disclaimer, Pankow accepted the revised terms offered in the handbook. Furthermore, WestAmerica argues that Pankow's continued performance constituted consideration for the contract modification. That argument fails. Pankow's continuing to work does not suggest he intended to renounce his rights to job security. Under the oral contract that governed his employment from the beginning, Pankow could continue to work and receive in return both his pay and the limited job security that WestAmerica had promised. Thus, even after signing the disclaimer, Pankow's continuing to work could just as easily represent his continuing performance and assertion of rights under the pre-existing contract.
Furthermore, WestAmerica's argument turns the doctrine of consideration upside down. If the contract were modified as WestAmerica contends, then Pankow gave something up -- the protection of specific termination procedures. To find consideration, we must find some benefit to Pankow, some detriment to WestAmerica, or some evidence that the modification was the product of bargaining or mutual agreement. We don't have it here. We have the opposite. Pankow's continued performance simply conferred a benefit on WestAmerica. Thus we cannot, as WestAmerica suggests, find that Pankow's continued performance constituted consideration for the purported modification of the contract.
In conclusion, nothing suggests that Pankow received any consideration for giving up the valuable terms of the alleged oral contract under which he began working for WestAmerica. We therefore conclude that if Pankow can show he started work under an enforceable oral contract that provided for specific disciplinary procedures, he did not modify or rescind that contract by signing the document that declared he was an employee at will.
WestAmerica has thus failed to persuade us that Pankow must be considered an employee at will as a matter of law. It is thus inappropriate to award WestAmerica summary judgment on the contract claim.
For the foregoing reasons, WestAmerica's motion for summary judgment on Count I is denied.