## Facts

- In January 1971, International Group Plans (IGP), the corporate predecessor of Consumers United Group, Inc. (CUG), hired Richard D. Schoen as vice president for accounting and data processing.
- Schoen received a conventional letter confirming his position and starting salary (about $30,000), but he did not sign or receive a formal written employment contract setting a definite term.
- In 1975, CUG appointed Schoen to serve as chief financial officer (CFO). His responsibilities included major financial planning and cash-management functions, financing work, and other company financial matters.
- Over time, Schoen received mixed performance evaluations—some favorable regarding his accounting work, others unfavorable regarding management and professionalism.
- CUG later experienced severe financial problems. Management developed a plan to reduce personnel, and Schoen’s continued role became uncertain.
- In November 1983, after being presented with options about his future, Schoen chose to remain with CUG temporarily in a lower position at full pay while he searched for another job.
- During the same month, a group of five of CUG’s 12 directors met and adopted a resolution that Schoen later characterized as promising salary maintenance for employees whose positions were eliminated or reduced.
- Schoen also relied on a memorandum prepared shortly before that meeting, which stated the author’s view that maintaining salaries in that situation was a long-standing company policy.
- Although Schoen had described his continued employment as temporary, he remained with CUG after November 1983.
- On February 4, 1985, CUG formally demoted Schoen from CFO of CUG to temporary senior accountant at Consumers United Insurance Company (CUIC), and reduced his salary substantially (from roughly $49,000 to about $31,000).
- Schoen sued CUG and CUIC in federal court (diversity jurisdiction), alleging breach of an alleged contract guaranteeing lifetime employment and/or continued salary without reduction, relying mainly on the directors’ resolution and the internal memorandum. CUG moved for summary judgment on the contract theory.

## Issues

1. Under District of Columbia law, did Schoen present sufficient evidence of an enforceable agreement for lifetime employment or a continuing salary guarantee, rather than at-will employment?
2. Can a corporate resolution adopted in the context of workforce reductions, together with an internal memorandum describing a supposed “policy,” create a binding contract (or contract modification) requiring CUG to maintain Schoen’s salary and employment status?
3. Viewing the record in Schoen’s favor, was there a genuine dispute of material fact that would prevent summary judgment for CUG and CUIC on the contract-based claims?

## Decision

- The court granted summary judgment for CUG and CUIC on Schoen’s contract-based claims.
- The court held Schoen was an at-will employee and failed to establish a binding agreement for lifetime employment or a fixed, continuing salary level.
- The court concluded the directors’ resolution and the internal memorandum were, at most, general statements about personnel treatment and did not show the definite terms and assent needed to create contractual obligations to Schoen.
- Because the documents and surrounding circumstances did not support an enforceable promise of continued employment at an unchanged salary, the defendants were entitled to judgment as a matter of law.

## Legal Principles

- In the District of Columbia, employment of indefinite duration is presumed to be at will unless the employee proves a clear agreement limiting the employer’s ability to end the relationship or change compensation.
- A claim of lifetime employment (or an equivalent permanent guarantee) requires clear, definite contractual terms; generalized assurances or internal policy statements ordinarily are not enough.
- Corporate policy materials—such as internal memoranda or broad board-level statements about how reductions may be handled—do not form a contract with an individual employee absent clear intent to be bound, definite terms, and mutual assent.
- Summary judgment is proper when, even taking the evidence in the nonmovant’s favor, no reasonable factfinder could find the existence of an enforceable contract on essential elements such as definiteness and assent.

## Conclusion

The district court held that Schoen’s employment relationship remained at will and that the directors’ resolution and internal memorandum regarding salary maintenance reflected, at most, nonbinding policy statements rather than a definite, mutually assented-to contract guaranteeing lifetime employment or continued salary; therefore, the court entered summary judgment for CUG and CUIC on the contract-based claims arising from Schoen’s demotion and pay reduction.


Schoen v. Consumers United Group, Inc., 670 F. Supp. 367 (1986)