Schoen v. Consumers United Group, Inc.

In 1971, the predecessor of Consumers United Group, Inc. (CUG) (defendant), a Delaware corporation, hired Richard Schoen (plaintiff) to serve as the company’s vice president for accounting and data processing. Schoen received a letter confirming his position and starting salary but did not receive a formal employment contract. In 1975, CUG promoted Schoen to the position of chief financial officer. CUG subsequently experienced severe financial problems that prompted leadership to formulate a plan to reduce the number of company personnel, which included Schoen’s employment. In November 1983, after CUG presented Schoen with options on how to proceed, Schoen chose to remain at CUG temporarily in a lower position at full pay while searching for another job. During the same month, at a meeting among five of CUG’s 12 directors, CUG passed a resolution to maintain the salaries of the employees who were removed. Thereafter, despite the purported temporary nature of his continued employment, Schoen continued to work for CUG. In 1985, CUG formally demoted Schoen and reduced his salary. Consequently, Schoen sued CUG for breach of an alleged contract guaranteeing lifetime employment without reduction in salary. Considering the lack of an employment agreement, Schoen relied on the resolution passed by CUG’s board of directors and a memorandum dated shortly before the meeting reflecting someone’s personal opinion that guaranteed salary maintenance was a longstanding CUG policy. CUG moved for summary judgment.