McDonald v. Mobil Coal Producing, Inc.
820 P.2d 986 (Wyo. 1991)

  • McDonald worked for Mobil. He got fired due to rumors of sexual harassment. McDonald sued Mobil, claiming that his employee handbook constituted a contract and that Mobil was in breach.
    • The employee handbook gave specific procedures for dealing with sexual harassment complaints, and Mobil had not followed those procedures.
    • On the other hand, the employee handbook explicitly said that it was “not a comprehensive policy and procedures manual, nor an employment contract.”
  • The Trial Court granted summary judgment to Mobil, and McDonald appealed.
    • McDonald claimed he was led to believe that Mobil would be bound by its own employee handbook procedures in dealing with the harassment complaints.
    • Mobil argued that it had retained the right to fire McDonald at any time for any reason, and the employee handbook was only a guide, not a requirement.
  • The Wyoming Supreme Court reversed and remanded to see if promissory estoppel applied to the situation.
    • The Wyoming Supreme Court looked at the disclaimers in the handbook, and found that they were inadequate to prevent confusion.
      • The handbook itself didn’t say that it wasn’t binding on the employer, and a reasonable person could get confused and think that it was.
      • Therefore the disclaimers were held to not be binding on McDonald.
    • The Court chose to follow the objective theory of contract formation (as opposed to the subjective theory).
      • It doesn’t matter if Mobil didn’t subjectively intent to make a contract with McDonald if a reasonable person in McDonald’s shoes would think that Mobil did make a contract, this is the objective theory.
        • Under the objective theory the court has to decide whether there’s any possibility that a reasonable person could think such a thing. If there is, then the question should be allowed to go to a jury.
  • In a concurring opinion it was argued that the Court should say as a matter of law that Mobil’s employee handbook constituted a legally binding promise from Mobil to McDonald and that the only issue for the trial court should be Mobil should have been forbidden from firing McDonald without cause.
  • In a dissent it was argued that there’s nothing more that Mobil could have done to make the employee know that they didn’t intend to enter an employment contract.
    • The dissent argued that the Court’s decision could conceivably outlaw at-will employment, and that this is bad from a policy standpoint.