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GRONLUND v. CHURCH & DWIGHT CO.

May 29, 1981

Jay K. GRONLUND, Plaintiff,
v.
CHURCH & DWIGHT CO., INC., Defendant



The opinion of the court was delivered by: COOPER

On March 25, 1981 the jury delivered a verdict in favor of the plaintiff on the two claims submitted to it for determination: (1) that he should recover $ 10,335. covering twelve (12) weeks severance pay under a contract of employment entered into between the parties; (2) that plaintiff is entitled to $ 11,200. as a bonus for 1979.

We have now before us defendant's motion for judgment notwithstanding the verdict and alternatively for a new trial. The defendant's position is: (1) that plaintiff fraudulently concealed a vital truth which amounts to legal or equitable fraud and so renders null and void the claim for severance pay; (2) that plaintiff is not entitled to a bonus for the simple reason that his arrangement with his employer did not give him a vested, contractual right to payment of a bonus. For his part, the plaintiff insists that the total trial record and the law applicable thereto firmly supports the jury's verdict.

THE FACTS

 Plaintiff commenced his services as product manager with defendant Church & Dwight Co., Inc. ("C&D") in the business of manufacturing baking soda, laundry detergent and oven cleaner in December, 1975; his employment there was terminated on December 20, 1979. In due course, he was promoted to business group manager, a position which entailed considerable discretion. He appears to have fulfilled his duties there with a conscientious approach to the challenges his assignments presented, coupled with an enthusiasm and concern that his efforts prove productive.

 It was not contested at trial that in April, 1979 defendant experienced serious financial problems which caused it to adopt drastic changes in personnel and diversify its products. Included in its attempt to revitalize its business program was the elimination of the position of business group manager then held by plaintiff. And so it came to pass that in April, 1979 Mr. Robert A. Davies ("Davies" "Davis" in trial transcript), then one of defendant's top executives, broke the sad news to plaintiff who testified: *fn1"

 
He said he was sorry this had to happen, but it was for the good of the company, this reorganization was right for the company. He felt that I had done a good job and I was a capable young man, I should not have any problem getting another job.... He would like me to continue working until the end of the year and at the same time look for a new job, and once I do find a job, I would have 12 weeks' severance plus my unused vacation, and, in addition, depending on my performance, I would be eligible for the incentive compensation bonus.

 The vacation pay issue and the 1978 bonus issue were disposed of by the parties and were eliminated from consideration at trial. Davies emphatically denied (in his trial testimony) plaintiff's assertions of their conference in April, 1979.

 From time to time, plaintiff informed Davies of his efforts to secure other employment and was cheered on by him. Fairness prompts the comment that from April to December, 1979 Davies demonstrated sympathy and concern about plaintiff's personal problems and obligations of family.

 In October and November, 1979 plaintiff suggested to Davies that he be allowed to continue work on a special project beyond the close of 1979. Plaintiff testified Davies responded, *fn2" "You have to be terminated by the end of the year. However, you would still be getting your severance at that date." Plaintiff continued his search and from time to time voluntarily commented to his superiors on the progress of his efforts, including his first interview with Joseph E. Seagram & Sons, Inc. ("Seagram") in late October, 1979. It was the circumstances surrounding acceptance of the Seagram offer of employment in early December, 1979 that caused the rift between these litigants and the denial by defendant of plaintiff's claims for severance pay and a bonus for 1979.

 On Thursday, December 6, 1979, at a conference between Davies and plaintiff, the former handed plaintiff a letter dated November 27, 1979 addressed to plaintiff and signed by Davies as Vice President and General Manager. It was received in evidence and marked plaintiff's exhibit 1. The only portions relevant to the issues with which this litigation is concerned read: "At this time, I would like to review the joint understanding regarding your separation from the Company. Your services will no longer be required after December 31, 1979; therefore your active employment and regular employee benefits will terminate on that date. You are then entitled to eight weeks of unused vacation, four for 1978 and four for 1979. You are then eligible for twelve weeks of severance pay at your base salary. Although you are eligible for participation in the 1979 Incentive Compensation program, Company and individual performance targets must be achieved.... I have included one copy of this letter for your files. I would like you to sign the original when you have read and understood the details contained herein and return it to me in the envelope provided...."

 On the same day (December 6) plaintiff wrote Davies (on the second page of that letter): "12/6/79 Bob I understand and agree with all the details of this letter. As discussed today I would be receiving these severance (12 weeks) and vacation (8 weeks) payments, plus the basic medical and insurance benefits until May 19, 1980, starting the day after my separation from active employment January 1, 1980.... Jay K. Gronlund." (pertinent portions only)

 There is no contest that on December 6, 1979 plaintiff saw defendant's letter (dated November 27, 1979), plaintiff's exhibit 1, for the first time. He testified that when Davies handed it to him, Davies "outlined verbally what it consisted of. He said it had twelve weeks of severance, plus the eight weeks of unused vacation. He mentioned that I would be eligible for a bonus. He, in fact, said I had done an outstanding job in the Super Washing Soda, so he would try to get me a good bonus. And that was it." *fn3" On cross-examination defense counsel put to plaintiff the question:3a

 
... Were the terms of that understanding as set forth in the letter consistent with your understanding of your severance arrangements with Mr. (Davies) and C& D?
 
A. Yes, it was identical to the agreement that we reached in April, 1979, and also that we discussed in early November 1979.

 After several interviews with Seagram, which plaintiff testified he mentioned to his immediate superior, Staniar, and to Davies, plaintiff on Wednesday, December 5, 1979 at a conference received from Seagram's personnel manager an oral offer of employment, repeated to him on the telephone by Seagram's president on Friday, December 7th. Plaintiff testified "... he (the president) said he has sent a letter that will formalize the whole offer, that it was in the post." *fn4"

 No proof was adduced to contest plaintiff's repeated assertion that during his conversation with Seagram's personnel manager, he had insisted upon a written confirmation of the oral offer; that at all times he regarded such a writing as imperative to a formal and completed contract. "I said at the outset that I wanted something in writing to be a formal offer." *fn5"

 His best recollection was that he received the confirmation letter on Friday, December 7th, and showed it to Davies the following Monday or Tuesday. He testified: "And I explained to him (Davies) that it was purely coincidental, because I was not a hundred percent sure that I had the offer when I last talked to him, and I even showed him this letter which gave me the formal offer, which was postmarked, I think, December 6 or December 7, and there is no way that I could have received it when I last saw (Davies). And he said, "Well, anyway, good luck.... There's not much we can do about it....' And he said he wished me well and hoped everything works out...." *fn6"

 It was conceded at trial that on Thursday, December 6th plaintiff made no reference whatever to the Seagram oral offer the day before. Defendant insists that such a failure on plaintiff's part is tantamount to withholding an essential truth; that had Davies been told of the December 5 Seagram oral offer, plaintiff's letter (Exhibit 1) would not have been given to plaintiff on December 6th.

 In addition to what we have disclosed above with respect to the bonus, we now undertake to make mention of other points on that subject. On occasion at trial, plaintiff referred to the promise made to him of a bonus in this fashion: "I would be eligible for my bonus." *fn7" He still insists that defendant definitely obligated itself to pay him a bonus come what may; that it was a vested, contractual right to which he was unconditionally entitled. Yet at trial he admitted receiving in January, 1979 an outline of defendant's incentive compensation program for 1979 (B in evidence) which he read. It included: "This company reserves the right to alter, suspend or cancel the program at any time." And at trial (cross-examination): "Q. And you knew that the Company had reserved the right to alter or otherwise cancel the ...


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