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Abstract

In Libby v. Calais Regional Hospital, Elizabeth Libby, a medical technologist at Calais Regional Hospital, brought suit against her former employer claiming breach of contract for improper discharge and alleging that the hospital failed to honor the terms of their mutually binding employment agreement. In particular, the plaintiff maintained that the hospital did not follow the termination procedures that had been set forth in her employee handbook and that were incorporated as terms of her employment contract. The trial court granted defendant's motion for a directed verdict, concluding that the plaintiff did not present sufficient evidence to show that her discharge was a breach of contract. The plaintiff subsequently appealed to the Supreme Judicial Court of Maine, sitting as the Law Court. The Libby case required the Law Court to analyze the circumstances under which an employee who has been hired for an indefinite period of time can be found to have entered into a "discharge for cause" employment contract rather than a common law "employment at will" contract. Libby specifically required the court to interpret and apply the rule announced in Larrabee v. Penobscot Frozen Foods, which held that: [P]arties may enter into an employment contract terminable only pursuant to its express terms—as "for cause"—by clearly stating their intention to do so, even though no consideration other than services to be performed or promised is expected by the employer, or is performed or promised by the employee. By finding that the parties did not contract out of the employment-at-will presumption, the Libby court interpreted the Larrabee rule as requiring a clear expression of intent in the employment contract in order to limit discharge to "for-cause" only, i.e., a contract out of the at-will presumption. This Note initially undertakes an overview of the employment-at-will doctrine in order to gain a perspective into its common law foundation. The Note then describes different approaches courts in other jurisdictions have used to determine whether employee handbooks can be considered part of an employment contract for purposes of governing discharged procedures. In light of this overview, the Note examines the rule seet forth in Larrabee and reviews the court's purpose in establishing such a rule. The Note then analyzes the Maine Law Court's decision in Libby and describes the court's present stance on the relationship between employee handbooks and employment contracts out of the employment-at-will presumption. The analysis also considers whether the Libby court's application of the Larrabee rule serves to address modern employment relationship public policies by examining the concerns that initially prompted both the employment-at-will doctrine and the rule set forth in Larrabee. Based on the above analysis, the Note concludes that the Libby court's extension of the Larrabee rule is inconsistent with ordinary principles of contract law, and consequently fails to recognize the concern set forth in Larrabee that employers and employees remain "free to contract against discharge without good cause." Ignoring both the current trend of those jurisdictions presently addressing the scope of the at-will doctrine and the purpose that the rule was meant to serve in employment relationships, the Libby court construed the Larrabee rule in a manner inconsistent with the majority of jurisdictions adopting an "identical or a similar exception to the terminable-at-will rule." Although the Libby court recognized that parties should be allowed to contract out of the terminable-at-will presumption, its decision creates a heightened standard with respect to what will constitute a finding of a contract for purposes of defeating the at-will presumption. As a result, employers remain freer than ever to utilize employment handbooks as devices of enticement and to create responsibilities on the part of the employee in return for illusory reciprocal obligations on the part of the employer.

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