A very successful credit union manager, John Duncan, sued his employer for breaching its employee handbook when it began requiring him to sign agreements reducing his compensation package and stating that the agreements would be reviewed and potentially amended after one year. In contrast, the handbook stated that with a few exceptions, ?Salary reviews and adjustments will occur no more frequently than [annually].??? The trial court dismissed the employee?s lawsuit on summary judgment. ?Reversing, in part, the Court of Appeals held that ?whether market conditions, as ?provided ?under ?section ?4.3 ?of ?the ?employee handbook, warranted early review of Duncan?s compensation is a genuine issue of material fact? precluding summary judgment.? ?Likewise, the Court found there were disputed facts over whether? Duncan? justifiably? relied? on? the promises alleged.?? The Court rejected Duncan?s contention, however, that he was entitled to rely on the provisions of the handbook throughout his tenure just because his employer did not amend it during the time at issue. ?Rather, the Court held that once he signed compensation agreements altering his compensation and the frequency of reviews of his compensation, the handbook no longer governed his compensation and in signing the agreements he had notice of that fact.
The Court also found that a letter from an executive vice president to the plaintiff stating that the terms of all employees? employment are documented in the employee handbook created a factual dispute over whether the employer?s inconsistent representations overrode the handbook?s written disclaimer.??? ?Duncan, however,? was? unsuccessful? in? arguing? that? his first compensation agreement was enforceable. The? Court? found? that? it? was? not? a? bilateral contract requiring agreement to modify, and because it was not in writing and was for an indefinite duration, it violated Washington?s statute of frauds and so was void. ?Similarly, the Court rejected Duncan?s contention that even if his agreement was unilaterally terminable that it was not unilaterally amendable:? ??We see no benefit in requiring parties to a terminable-at-will contract ?to? take ?the ?formalistic ?step ?of terminating one agreement before proposing another.? ?Finding facts in dispute over the claim for breach of the handbook provision that adjustments will occur no more frequently than annually, ?the ?Court ?of? Appeals ?reversed judgment on exemplary damages remanding for a determination of whether there was a bona fide dispute over the period of his first agreement. ?In contrast, the Court held that Duncan?s signatures on the subsequent amendments to the agreement coupled? with? his? continued? employment? show that he was ?willing to work, under protest, at the stated rates of compensation and have his compensation reviewed more frequently than provided in either the 2003 Plan agreement or the handbook,? showing that a bona fide dispute existed. ?Finally, the employer argued that since it is an entity, not an individual, to obtain exemplary damages the plaintiff had to–but failed to–show that the employer reached a consensus for willful nonpayment.?? Oddly, rather than holding that the employer? could? be? held? liable? for? the? willful actions of its agents, the Court concluded the evidence showed that ?decisions about Duncan?s compensation were reached with input from managers and officers ? sufficient to show consensus.????? Duncan ?v. ?Alaska ?USA ?Federal Credit Union, ?Case No. 61651-0-I (12/29/08, Cox, Lau, Dwyer).