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08/25/95 AMOCO FABRICS AND FIBERS COMPANY v. ROBERT

August 25, 1995

AMOCO FABRICS AND FIBERS COMPANY, INC.
v.
ROBERT HILSON, ET AL.



Appeal from Covington Circuit Court. (CV-92-234). Jerry E. Stokes, TRIAL JUDGE.

As Corrected October 13, 1995.

Shores, Hornsby, C.j., and Houston, Kennedy, Ingram, and Cook, JJ., concur. Butts, J., concurs in the result.

The opinion of the court was delivered by: Shores

SHORES, JUSTICE.

This is a class action filed by seven named plaintiffs against Amoco Fabrics and Fibers Company, Inc. ("Amoco"), seeking damages for breach of contract, or, alternatively, a quantum meruit recovery, based upon the vacation pay provisions of Amoco's 1989 employee handbook. After certifying the class, trial court entered a partial summary judgment in favor of the plaintiffs on the question of liability and later, following a stipulation of damages and attorney fees, entered a final judgment in favor of the plaintiffs. Amoco appeals the judgment, in the amount of $513,318.51. We affirm.

Robert Hilson and six others *fn1 brought this action to recover vacation pay for themselves and a class of approximately 1,000 similarly situated former hourly employees of Amoco Fabrics and Fibers at its Andalusia, Alabama, carpet manufacturing plant. *fn2

Following about 10 years of operation, Amoco sold the plant to Shaw Industries, Inc. Employees claimed vacation pay earned from January 1, 1992, through the date of the sale, September 25, 1992, in reliance on Amoco's offer of vacation pay contained in the employee handbook. The handbook stated that vacationing employees would receive pay equal to two percent of the previous year's earnings, for each week of vacation. Those with fewer than 5 years' service were to receive 1 week of vacation; those with 5 to 10 years' service, 2 weeks; and those with over 10 years' service, 3 weeks. Employees were eligible to withdraw their accrued vacation pay as early as February of the following year, regardless of whether or when they actually took vacation time off. (For example, about 60% of the vacation pay earned in 1991 was paid out by mid-February 1992.)

Shortly before the sale (August 6, 1992), Amoco posted an announcement regarding vacation policy: "Individuals must be an employee on record as of December 31, in order to be eligible for a vacation the following year." The Handbook, which had been issued in a loose-leaf format to permit changes by the issuance of new pages for insertion, continued to reflect the 1989 vacation pay policy. In the September 21, 1992, sales agreement, Amoco promised to "pay all hourly employees hired by Buyer for vacation earned but not paid in 1992 prior to the closing." Amoco posted unpaid vacation pay to a liability account on the books and records as it accrued. Amoco claims that it is not obligated to pay the vacation pay earned in 1992 because the employees were not employees on record as of December 31, 1992.

There are three issues on appeal: 1) whether the circuit court correctly entered a summary judgment in favor of the employees on the claim that the Handbook contained an offer of vacation pay subject to acceptance by the performance of work even though Amoco claims the Handbook contained an express disclaimer of contractual liability and Amoco claims to have followed the explicit terms of its vacation policy; 2) whether the circuit court correctly held that the employees had a cause of action under the theory of quantum meruit where Amoco claims to have followed the explicit terms of its vacation policy and where the law has created a safe harbor for policies in employee handbooks that include an express disclaimer of contractual liability; 3) whether the circuit court correctly certified a class on the issue of a quantum meruit recovery, which Amoco argues requires individualized proof of each plaintiff's expectation.

On appeal from a summary judgment, we must evaluate the evidence presented and ascertain, in light of the "substantial evidence rule," whether there were any genuine issues of material fact to be decided. Rule 56, A.R.Civ.P., sets forth a two-tiered standard for entering a summary judgment. In order to enter a summary judgment, the trial court must determine: 1) that there is no genuine issue of material fact, and 2) that the moving party is entitled to a judgment as a matter of law. All reasonable doubts concerning the existence of a genuine issue of material fact must be resolved against the moving party. Howard v. Wolff Broadcasting Corp., 611 So. 2d 307 (Ala. 1992), cert. denied, ___ U.S.___, 113 S.Ct. 1849, 123 L. Ed. 2d 473 (1993). In the instant case, both sides stipulated to the absence of any genuine issues of material fact. We, therefore, need consider only whether the court below correctly held that the employees were entitled to the judgment as a matter of law.

Amoco argues that the trial court erred in entering the summary judgment in favor of the employees on the breach of contract claim, holding that Amoco's vacation pay policy, as contained in the employee handbook, gave rise to a unilateral contract. We disagree.

In Paseur v. City of Huntsville, 642 So. 2d 969 (Ala. 1994), this Court reaffirmed the requirements set forth in Hoffman-La Roche, Inc. v. Campbell, 512 So. 2d 725, 735 (Ala. 1987):

"'In summary, we find that the language contained in a handbook can be sufficient to constitute an offer to create a binding unilateral contract. The existence of such a contract is determined by applying the following analysis to the facts of each case: First, the language contained in the handbook must be examined to see if it is specific enough to constitute an offer. Second, the offer must have been communicated to the employee by issuance of the handbook, or otherwise. Third, the employee must have accepted the offer by ...


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