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St. Peters v. Shell Oil Co.

February 23, 1996

WILLIAM ST. PETERS,

PLAINTIFF-APPELLANT,

v.

SHELL OIL COMPANY,

DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Southern District of Illinois. No. 92 C 586 -- William L. Beatty, Judge.

Before POSNER, Chief Judge, and KANNE and ROVNER, Circuit Judges.

ROVNER, Circuit Judge.

ARGUED JANUARY 19, 1996

DECIDED FEBRUARY 23, 1996

William St. Peters brought this breach of contract action against his former employer, Shell Oil Company, alleging that Shell breached the terms of an enforceable contract when it terminated his employment without following progressive disciplinary procedures set forth in an "Employee Information Booklet" (the "handbook"). At the conclusion of St. Peters' case, the district court concluded that the handbook provisions did not create an enforceable contract and entered judgment for Shell. St. Peters argues on appeal that the district court erred when it determined that the handbook did not create a contractual obligation requiring Shell to utilize procedures of progressive discipline prior to its termination of his employment and that the district court also erred when it entered findings of fact and conclusions of law that went beyond the scope of the issue before the court on Shell's motion for judgment as a matter of law under Fed. R. Civ. P. 52(c). For the reasons discussed below, we affirm the judgment of the district court.

I.

St. Peters brought this action in Illinois state court whereupon it was removed to federal district court on the basis of diversity jurisdiction. *fn1 A bench trial was held and at the conclusion of St. Peters' case, Shell moved for judgment as a matter of law pursuant to Fed. R. Civ. P. 52(c). In an oral bench opinion, the district court granted that motion, finding that St. Peters had failed to prove the existence of an enforceable contract.

The record establishes that St. Peters was employed by Shell as a safety supervisor at its Wood River Manufacturing Complex in Wood River, Illinois, from February 21, 1990 until he was terminated on February 11, 1992. The district court found that St. Peters was "terminated from his employment for insubordination and lack of forthrightness concerning his outside business activities." (Finding of Fact No. 17). The district court also found that St. Peters was not hired for a specific duration or period of time, did not execute a written employment contract, did not have an oral or an implied-in-fact employment contract with Shell, and was an at-will employee. (Fi.r(ng of Fact Nos. 5-8, Conclusion of Law No. 2).

Approximately one month prior to his termination, St. Peters was provided with the handbook, which he contends contains a clear contractual promise that progressive discipline procedures will be followed prior to termination of employment. The district court disagreed, however, and found that the handbook did not create a contract requiring the use of progressive discipline, did not contain a promise modifying St. Peters' status as an at-will employee, and did not contain a promise or mandate to follow progressive discipline prior to termination. (Finding of Fact Nos. 10-12, Conclusion of Law Nos. 3-5).

Our attention is therefore drawn to the terms of the handbook with a particular focus on the provisions which relate to progressive discipline. Reference to progressive discipline first appears in the handbook section pertaining to "[y]our individual responsibilities and guidelines for conduct." Within the subsection entitled "coaching and counseling," the handbook provides that:

To continue working at WRMC, each employee must meet WRMC's performance expectations. For the few employees who do not make that commitment, progressive discipline and/or discharge may result. Additional information about progressive discipline is outlined in Appendix A. You should refer to Appendix B for "Rules involving Disciplinary Action."

Appendix A, entitled "Formal Levels of Progressive Discipline," explains that "[f]or the few employees who do not respond to counseling from their immediate supervisor, Progressive Discipline is designed to provide consistent follow-up to address those performance problems." Appendix A then describes in detail the three, formal levels of progressive discipline, which are, respectively, verbal reminder, letter reminder and disciplinary suspension. A letter reminder "will occur" either when "an employee's commitment to improve is not immediately met and sustained following a Verbal Reminder," or when "an employee's actions warrant a Letter Reminder whether or not a Verbal Reminder has been issued in the past." Similarly, a disciplinary suspension "will occur" either when "an employee's commitment to improve is not immediately met and sustained following a Letter Reminder," or when "[a]n employee's action is so serious that it warrants a Disciplinary Suspension whether or not a Verbal Reminder or Letter Reminder has been issued in the past." The next subsection, entitled "Termination of Employment" then provides that:

In cases where employees do not fulfill their obligations, the Company may take disciplinary action up to and including discharge. Termination results when:

-- An employee does not immediately improve and maintain an overall satisfactory work record following ...


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