In Storti v. University of Washington, the Washington Supreme Court determined that the University’s faculty handbook had created a valid unilateral contract with its faculty that promised a 2% merit-based salary increase subject to “reevaulation” based on funding.  When University funding went south at the height of the recession in 2009-10, the University cancelled the salary increase expected at the end of the year.  Storti and a class of faculty members sued, arguing that the University could only reevaluate merit increases for the 2010-11 school year because they had already fulfilled their end of the bargain for the 2009-10 year.  The Supreme Court agreed with the University, in a 5-4 decision that read “reevaluation” to be a flexible procedure.  As is her wont, Justice Gordon McCloud dissented, arguing that “reevaluation” required notice to the faculty before the start of the school year.

Typically for contract cases under Washington’s Berg/Heart embrace of extrinsic evidence, this is a highly fact specific case decision based on then-current faculty handbook language and related circumstances.  Unless the faculty handbook language changes, the University will be able to cancel merit-based increases at the end of a school year if it is facing a budget shortfall.  One could hope that robust future funding for the state’s crown jewel public university will avoid that contingency.