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Truchan v. Condumex6/21/2002
s we have outlined above, plaintiffs' claims must rest on the same legitimate expectations leg. The Court in Dumas went on to state as to the Group A plaintiffs:
While the deferred compensation cases are subject to contract law, the "legitimate expectations" doctrine of Toussaint does not follow traditional contract analysis. Therefore, it does not logically follow that Toussaint should be extended to the area of compensation. Also, since employees' accrued benefits are protected by the presence of traditional contract remedies, there is no need to extend the expectations rationale to compensation.
In addition to the lack of precedent extending Toussaint to facts similar to those presented here, policy considerations weigh in favor of containing Toussaint to the wrongful-discharge scenario. Were we to extend the legitimate- expectations claim to every area governed by company policy, every time a policy change took place contract rights would be called into question. The fear of courting litigation would result in substantial impairment of a company's operations and its ability to formulate policy. Justice GRIFFIN'S majority opinion in In re Certified Question, supra, p 456, discussed the nature of a business policy:
"In other words, a 'policy' is commonly understood to be a flexible framework for operational guidance, not a perpetually binding contractual obligation. In the modern economic climate, the operating policies of a business enterprise must be adjustable and responsive to change."
Our opinion in In re Certified Question was in furtherance of this Court's traditional reluctance to limit or second guess the decision-making ability of business management. As stated in In re Butterfield Estate, 418 Mich 241, 255; 341 NW2d 453 (1983), " court should be most reluctant to interfere with the business judgment and discretion of directors in the conduct of corporate affairs."
Given the traditional reluctance of courts to interfere with management decisions and the needed flexibility of businesses to change their policies to respond to changing economic circumstances, we conclude that Toussaint should not be extended to create legitimate expectations of a permanent compensation plan. Previous cases have not extended the legitimate-expectations theory to facts similar to these, and we decline the opportunity to extend the theory to compensation terms.
Here, Condumex clearly stated that management had the right, where it deemed it appropriate, not to follow the provisions of its handbook. This is a right similar in effect to the management right to unilaterally alter the provisions of a compensation plan with which the Court in Dumas refused to interfere. We therefore infer that, as the Court in Dumas refused to extend the legitimate expectations subcategory of Toussaint to compensation terms, we similarly should not extend it here to cover a severance policy.
See also Heurtebise v Reliable Business Computers in which the Court held that when a defendant did not intend to be bound to any provision contained in a handbook, it is not a binding contract. The handbook in question in Heurtebise contained language that stated that the defendant had the right to modify any policy at its sole discretion and as future conditions might warrant. Again, this is somewhat similar to the language in the Condumex handbook in which the company reserved the right, where it deemed it appropriate, not to follow the provisions of the handbook. See further Lytle v Malady, in which the Court held that a plaintiff cannot assert a legitimate expectation of just- cause employment based on the employer's policy to terminate for cause, particularly wher
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