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04/18/94 BRYAN DAVIS v. JOHN CRANE

April 18, 1994

BRYAN DAVIS, BRIGITTE RHODES, JOHN HILL, AND HOMERO GARZA, PLAINTIFFS-APPELLANTS,
v.
JOHN CRANE, INC. AND ARTHUR DE STEPHANO, DEFENDANTS-APPELLEES.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE EDWARD R. BURR, JUDGE PRESIDING.

Released for Publication June 7, 1994. As Corrected August 1, 1994.

Campbell, O'connor, Jr., Manning

The opinion of the court was delivered by: Campbell

PRESIDING JUSTICE CAMPBELL delivered the opinion of the court:

Plaintiffs filed a four count amended complaint against defendants, John Crane, Inc., a/k/a John Crane-Houdaille, Inc., (Crane), Arthur De Stephano, individually and as agent of Crane, Special Operations Associates, Inc., (SOA) and Michael Grady, alleging breach of contract, defamation, and interference with economic opportunity. Counts III and IV against SOA and Grady were dismissed and settled, respectively, and this appeal concerns only counts I and II of the amended complaint. On appeal, plaintiffs contend that: (1) the trial court erred in entering judgment against them following a bench trial on the breach of contract allegations of count I of the amended complaint; and (2) the trial court erred in granting summary judgment against plaintiffs and in favor of defendants based on the defamation allegations of count II of the amended complaint.

The record reveals the following relevant facts. Crane is the manufacturer of a variety of seals used in industrial and automotive pumps, employing approximately 1,500 people at its facility in Morton Grove, Illinois. Crane had a policy forbidding employees from either being under the influence of drugs or using, possessing, transferring or distributing drugs during work hours or while on company premises.

During 1987 and early 1988, Crane's in-house medical staff informed De Stephano, Crane's Vice President of Human Resources, of increasing instances of drug use by on-duty employees. In response, Crane hired an outside consulting firm, Bensinger, DuPont & Associates, Inc. (BDA), to develop a comprehensive drug and alcohol policy. BDA hired SOA, an investigation firm, to investigate the extent of Crane's employee drug abuse problem. SOA placed undercover investigators in the plant as production employees, who reported daily to BDA, detailing observations of drug use by specific employees. BDA then provided reports to De Stephano. De Stephano and representatives of BDA met approximately ten (10) times off the Crane premises to discuss the reports and positively identify those employees involved in drug-related activities.

On July 19, 1989, Crane terminated approximately 41 employees, including the plaintiffs, all of whom were identified by the investigators as violating Crane's drug policy. That day, the plaintiffs and the other employees were told by their supervisor to report to the personnel office. Each employee then met with De Stephano and Jeffrey Kinkle, another Crane management official, in De Stephano's office. De Stephano read a prepared statement to each employee informing the employee that his or her employment was being terminated for "violation of company policy in the area of drugs." Each employee was escorted by a security guard to his or her work area or locker to collect personal belongings, and then escorted off of Crane's premises.

Plaintiffs filed a four-count complaint against defendants, counts I and II of which are the subject of this appeal. In count I, plaintiffs alleged that an employment contract existed between plaintiffs and Crane, requiring Crane to comply with a four-step progressive disciplinary policy prior to termination of employment as follows: first, a verbal warning; second, a written warning; third, a three day suspension; and fourth, dismissal if all attempts at amelioration or rehabilitation failed. Plaintiffs alleged that Crane had failed to comply with this procedure before terminating them.

In count II, plaintiffs alleged defamation by De Stephano and Crane. Plaintiffs alleged that De Stephano's statements to the plaintiffs, "You are terminated for drug related reasons," and/or "You are terminated for drug use," were heard by security guards who were within earshot, and therefore caused the plaintiffs "to be outrageously humiliated." Plaintiffs alleged that the allegations of drug use against them were false and untrue, and made knowingly and with reckless disregard by De Stephano, who then "paraded [the plaintiffs] in front of fellow employees."

Defendants filed a motion for summary judgment on count II of plaintiffs' amended complaint on October 10, 1991. Following a hearing on defendants' motion on January 22, 1991, the trial court, Judge Arthur A. Sullivan, presiding, granted summary judgment in defendants' favor, finding no just reason to delay enforcement or appeal. *fn1 On February 11, 1991, the trial court denied plaintiffs' motion to reconsider the January 22, 1991, order of the trial court granting summary judgment in favor of defendants on count II.

A trial on count I of plaintiffs' amended complaint commenced before Judge Edward R. Burr, on February 27, 1992. At trial, Angela Bower, the sister-in-law of plaintiff Bryan Davis, testified on behalf of the plaintiffs that she was a front desk receptionist at Crane for two months at the end of 1987. She received a welcome package when she began working, which contained a yellow employee handbook, approximately 5 by 7 inches, and 100 pages long. The handbook included a statement of a four step termination process, which consisted of a verbal warning; written warning; three day suspension; and termination.

Plaintiffs' counsel introduced into evidence plaintiffs' exhibit 1, a copy of a Crane Attendance Policy, which provided as follows:

COMPANY POLICIES PERTAINING TO THE FOLLOWING WILL BE FOLLOWED TO THE LETTER OF THE POLICY:

1: ATTENDANCE

A) ABSENCE: MORE THAN ONE OCCURRENCE IN A FOUR WEEK PERIOD WILL BE CONSIDERED EXCESSIVE.

B) TARDINESS: MORE THAN TWO OCCURRENCES IN A FOUR WEEK PERIOD WILL BE CONSIDERED EXCESSIVE. THIS INCLUDES THE LUNCH PERIODS, LONG LUNCH PERIODS WILL NOT BE ALLOWED. THE PROGRESSIVE DISCIPLINARY ACTION WHICH WILL BE FOLLOWED IS LISTED BELOW:

A) 1ST VIOLATION -- VERBAL WARNING

B) 2ND VIOLATION -- WRITTEN WARNING

C) 3RD VIOLATION -- DISCIPLINARY LAYOFF (3 DAYS)

D) 4TH VIOLATION -- DISCHARGE

Bower stated that she saw evidence that the above policy was enforced, because she filed papers relating to people who had been disciplined pursuant to the policy.

On cross-examination, Bower stated that she worked for 60 days at Crane, and was then terminated for tardiness. Bower did not have a copy of the employee handbook, and did not recall whether the handbook contained a disclaimer.

Glen Hacker testified that he worked at Crane from March 1977 through July 1987 as a foreman. He received an employee handbook when he was first hired which contained a four step termination policy. Hacker had the four step policy explained to him by his supervisor, George Darling, about three years before Hacker left Crane. Darling told Hacker the four steps necessary prior to terminating an employee.

On cross-examination, Hacker stated that he was fired in 1987 for violation of company policy, but that he was never given a reason. He did not recall being suspended for three days, and did not have a copy of the employee handbook. Hacker did not appeal his termination even though the four step policy was not followed. He did not ...


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