AMOCO FABRICS AND FIBERS CO., INC. v. Hilson

Citations: 669 So. 2d 832; 10 I.E.R. Cas. (BNA) 1651; 1995 Ala. LEXIS 351; 1995 WL 502999Docket: 1940611

Court: Supreme Court of Alabama; August 25, 1995; Alabama; State Supreme Court

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A class action was initiated by seven plaintiffs against Amoco Fabrics and Fibers Company, Inc. for damages related to vacation pay, based on provisions in Amoco's 1989 employee handbook. The trial court certified the class and granted a partial summary judgment in favor of the plaintiffs on liability, later issuing a final judgment totaling $513,318.51 after a stipulation on damages and attorney fees. The plaintiffs, representing about 1,000 former hourly employees of Amoco’s Andalusia, Alabama plant, sought vacation pay earned from January 1, 1992, to September 25, 1992. The handbook stipulated vacation pay as a percentage of prior earnings, with varying weeks of vacation based on tenure, and allowed employees to withdraw accrued vacation pay early.

In August 1992, Amoco altered its vacation policy, stating employees must be on record by December 31 to qualify for vacation the following year. Despite this, the handbook still reflected the original 1989 vacation policy. Amoco’s sales agreement with Shaw Industries included a promise to pay for accrued but unpaid 1992 vacation pay. Amoco contended it was not liable for 1992 vacation pay, arguing employees were not on record by the deadline. The appeal raised three issues: 1) whether the trial court correctly determined that the handbook constituted an offer of vacation pay despite Amoco's disclaimers; 2) whether the court rightly recognized a quantum meruit claim in light of Amoco's adherence to its vacation policy; and 3) whether the class certification for quantum meruit recovery was appropriate, given the need for individualized proof. The appellate review focused on whether any genuine material facts remained in dispute under the substantial evidence standard.

Rule 56 of the Alabama Rules of Civil Procedure establishes a two-tiered standard for summary judgment, requiring the trial court to confirm: 1) the absence of any genuine issue of material fact, and 2) the moving party's entitlement to judgment as a matter of law. Any doubts about material facts must favor the non-moving party. In this case, both parties agreed there were no genuine issues of material fact, so the focus shifted to whether the trial court correctly determined the employees were entitled to judgment as a matter of law.

Amoco contested the summary judgment granted to the employees regarding a breach of contract claim, arguing that its vacation pay policy in the employee handbook constituted a unilateral contract. The court referenced prior cases affirming that handbook language can form a binding contract if it meets specific criteria: the language must be clear enough to signify an offer, be communicated to the employee, and the employee must accept the offer through continued employment, which serves as consideration.

Amoco attempted to draw parallels with Group W Cable, Inc. v. Gargis, but the court found distinctions based on the handbook language. Amoco’s vacation policy, effective May 1, 1989, outlined eligibility and pay for vacation based on years of service, while Group W’s policy included a stipulation that individuals not on the payroll as of the year's end were ineligible for vacation pay the following year. The court determined that the clarity of the handbook language regarding vacation pay constituted a unilateral contract, affirming that Amoco had effectively communicated this policy and adhered to it.

Furthermore, employees were aware of the stability of the vacation pay policy, as no changes were announced after an August 6, 1992 communication solely about vacation eligibility. The court also referenced a precedent, stating that when an employment contract is terminated without employee fault, the employee may be entitled to a proportionate share of any bonuses earned, reinforcing the principle that employees are entitled to benefits accrued under the terms of their employment.

In Mayo v. Andress, 373 So.2d 620 (Ala.1979), the court determined that the intention behind a contractual offer is assessed through the objective manifestations of the parties rather than their undisclosed beliefs. The absence of forfeiture clauses in Amoco’s employee handbook, coupled with the established conduct between Amoco and its employees, suggested that Amoco had genuinely offered vacation pay, which the employees accepted by continuing their service until their termination. Legally, Amoco could not revoke this vacation pay policy after the employees had worked from January through September 1992.

The court affirmed the summary judgment for the employees regarding their breach of contract claim, rendering moot Amoco's arguments concerning quantum meruit. The court referenced a standard measure of damages for discharged employees, which involves calculating the promised amount minus what they could reasonably earn elsewhere post-discharge. Although employees could potentially seek quantum meruit damages, they acknowledged that they would not be entitled to both quantum meruit and breach of contract recovery. The court indicated that even without a breach of contract finding, the vacation pay formula and Amoco's own records supported the employees' expectations of payment. Thus, the court upheld the summary judgment that awarded vacation pay based on the employee handbook's percentage formula. The decision was affirmed with concurrence from several justices, and the trial court had certified a class of former hourly employees from Amoco's Andalusia plant as of September 25, 1992.