First, let's talk about interpretation. When courts are faced with a contract that either the court itself doesn't know what it means or that the parties are arguing over what the meaning of the contract is, there are different things a court can do. The court can decide what the right meaning is, the court can decide to favor one of the parties meanings, or the court can say, instead of throw up its hands and say, "There's just no deal here, you guys are so far apart that I don't think you agree to anything." Typically, this happens because parties don't think that they are going to need courts to interpret their deals, they either think that they're using really clear language in the first place, or they think maybe this language isn't clear, but you and I, we understand each other, there's a mutual understanding here, and then, of course, later on down the road, memories get shakier or parties have a less amicable relationship. It turned out that there are a lot of ways to go wrong and misunderstands be a little bit off. One of the most famous contracts cases of interpretations, not really a strictly an employment case, but you get the gist of these cases if I describe it to you, it's a poultry wholesaler in the US employed a European agent to source chicken for him. They got into this huge dispute about whether or not the agent had breached the contract because the agent had sent a mix of stewing and frying chickens. The wholesaler said, "I can't sell these stewing chickens for a profit." The wholesaler was livid because he said, "Look, everybody knows stewing chickens are cheap and I never would have agreed to this deal if I thought I was getting these worthless, tough chickens." The court then had to figure out what the most reasonable interpretation of the term chicken was in light of what the parties actually thought, what they said to each other, how they acted, the language of the deal, and even the norms of the industry. Interpretation is actually one of the most nuanced and I think also inevitable challenges for a contract dispute. For what it's worth, the court found that if you say chicken and don't specify broilers or fryers, you assume the risk that you're going get some stewing chicken in the mix. Let me offer a case that I think is genuinely hard because it's both a real interpretive problem, has really high-stakes, and you're going to see that it brings in some of our default understandings about what employment arrangements are like. Here's this case called Skagerberg versus Blandin Paper. There's an engineer named Skagerberg who's working on a week-to-week consulting arrangement with the Blandin Paper Company, I think in Minnesota. Skagerberg is a big deal in the paper mill engineering world. He has a good consulting business going and then he actually gets an offer of a professorship at Purdue University. The paper company hears that this is happening, of the professorship, and goes at Skagerberg and says, "Let's make a deal with you. Move off this consulting deal and we'll move you to a status of permanent employment with us. You'll be paid a $600 a month salary and you can move to Grand Rapids." Skagerberg took it. He agreed, he moved to Grand Rapids and he worked there for 22 months, at which point he was fired without obvious cause. Skagerberg said, "Wait a minute, I was hired with an offer of permanent employment. Those were your words." That's not in dispute here that those words were used. His argument was, that means you can't fire me at will, that's not a permanent employment is. The paper company said, "No, actually, by permanent employment, we just meant that you turned into a salaried employee, not just a week-to-week consultant." The court ruled in favor of the defendant, in favor of the paper company and said, "Actually, there is a rule on this and here's what it is, in case the parties to a contract of service expressly agree that the employments shall be permanent, the law implies not that the engagement shall be continuous or for any definite period, but that the term being indefinite, the hiring is merely at-will." Basically, we have precedent and guidance that the term permanent is normally interpreted to mean just indefinite but at-will in the employment context. This court said, "It doesn't really matter what Skagerberg actually thought he was being promised, he should have understood that permanent employment means just indefinite at-will employment." This should ring a bell with the case of [inaudible] that we talked about in the [inaudible] section of the course in which the court said, "We know that when the employer said, 'Go ahead and get your man out.' We know he subjectively understood himself to mean, 'Just please leave my office not I'm going to offer you employment.'" But what matters here is the objective meaning and the objective meaning is you're hired. This court said, "The objective meaning of permanent employment, that it means indefinite at-will employment." One question for us is whether the court got Skagerberg case right. There's another articulation of the law that comes from a famous contracts treatise; the treatise writer is Williston. Williston says, I'm paraphrasing, the word dispute should be understood in the sense in which the party who use the words, the speaker, who use the words in question, should reasonably have apprehended that the other party would understand them. The Blandin Paper Company management said to Skagerberg, "Listen, we want to offer you permanent employment." Williston says, or this contracts expert at the time says, "We should understand the words permanent employment in the way that we think the Paper Company folks thought that Skagerberg himself would be understanding those words." There are some interesting facts that would speak to that issue for the case. Skagerberg gave up a job at a university that was pretty well-paid and likely would have had remarkable stability, especially if it was a job with tenure. Also, part of the deal that Skagerberg had with Blandin was that Skagerberg was going to purchase the home of Blandin's outgoing superintendent. Actually, part of being hired was he would be hired and he would also buy this house in Grand Rapids. Normally, we would think of buying a house as being a part of a long-term commitment. Of course, the other thing is that to most non-expert ears, the words permanent employment sound like they mean something other than fireable at whim. That's not the way we think of the word permanent. It's not a stretching too far to think that the Blandin management knew the sense in which Skagerberg would take those words and that Blandin got away with promising something the law wouldn't make them live up to. That for sure seems like a worry that the parties like the paper company, especially the more sophisticated repeat players here, could strategically deploy this vague or ambiguous language knowing that the naive party assumes it's favorable to them, that's what it sounds like on its face, and that a court is likely to rule against that naive understanding. That's why I think this is a hard case. Let me just bring it full circle and say, as a last thought to try to resurrect the court's best argument. This is interpretation case, but it's an interpretation case that's taking place in a shadow of a really strong default understanding of employment contracts. Maybe this is in its heart, a court that's not too much doing interpretation about how they are likely to have understood one another exactly, but maybe ratifying that this is a strong rule in employment. Unless the parties are extraordinarily clear about what they mean, they're going to assume that at-will employment is the rule. Maybe this court actually agrees with the rule that you go with the meaning of the naive party would understand, but thinks actually, you just aren't allowed to be so naive in this context that you don't get what permanent employment means in America, it means indefinite at-will employment.
