Coman v. Thomas Manufacturing Co.

*179 Justice Meyer

dissenting.

I wish to express at the outset of this dissenting opinion my view that the alleged conduct of the employer in this case cannot be condoned and that if the allegations of the complaint can be proved, the employee should have a remedy and a recovery for his losses and damages in the federal courts. If, in addition to his federal remedy, a state remedy should be provided, it should be provided by our General Assembly and not by judicial legislation of this Court.

Plaintiff has not attempted to pursue any remedies which might be available to him under the federal Surface Transportation Assistance Act of 1982 § 405, 49 U.S.C. app. § 2305(b) (1982). Instead, plaintiff seeks to have the courts of North Carolina recognize a new general “bad faith” exception to the employment-at-will doctrine.

North Carolina strictly adheres to the common law doctrine that employment contracts of indefinite duration are terminable at will. Presnell v. Pell, 298 N.C. 715 , 260 S.E. 2d 611 (1979); Still v. Lance, 279 N.C. 254 , 182 S.E. 2d 403 (1971). The core of the doctrine, which has consistently been reaffirmed, is the mutual privilege of employers and employees to terminate an employment relationship at either party’s election.

We have consistently acknowledged the wisdom of the employment-at-will doctrine. See, e.g., Smith v. Ford Motor Co., 289 N.C. 71 , 221 S.E. 2d 282 (1976) (employee fired for “no just cause” had no recourse against employer); Still v. Lance, 279 N.C. 254 , 182 S.E. 2d 403 (schoolteacher failed to state an action for wrongful discharge when she alleged her discharge was arbitrary and without cause); Dockery v. Table Co., 36 N.C. App. 293 , 244 S.E. 2d 272 , disc. rev. denied, 295 N.C. 415 , 246 S.E. 2d 215 (1978) (prior to enactment of the remedial statute, employee did not state a wrongful discharge action when he alleged he was fired in retaliation for filing a workers’ compensation claim).

I find the majority’s characterizations of Haskins v. Royster, 70 N.C. 600 (1874), and Malever v. Jewelry Co., 223 N.C. 148 , 25 S.E. 2d 436 (1943), misleading. Haskins , an 1874 case, does not, as the majority implies, stand for the proposition that the discharge of an at-will employee must be in good faith. Haskins was not even an employee discharge case — it involved a suit by one employer *180 against another for maliciously enticing away sharecroppers who were employed for the crop year to be paid with a portion of the crop. The only mention of bad faith appears in a discussion of a case involving the discharge of contractors employed to build a road “after the contractors had duly performed all or a part of the work, [where] the plaintiff had [discharged them] mala fide, or without lawful cause,” and the issue was whether the contractors could recover on the contract. Haskins, 70 N.C. at 610 . It is misleading to cite Haskins for the proposition that “this Court recognized the principle that a master could not discharge his servant in bad faith.”

The majority’s citation of Malever is equally misleading. In Malever , the plaintiff was working in Fayetteville for $75.00 a week. The defendant offered him employment in a new store in Charlotte at $50.00 a week. Plaintiff agreed to accept the job at the lesser wage because he would “rather work for less in Charlotte and be at home with his family,” but he insisted on a permanent job, not just a “Christmas job.” Malever, 223 N.C. at 148 , 25 S.E. 2d at 436 . Defendant assured him it would be permanent. After plaintiff worked eight weeks in Charlotte, defendant closed the new store because it operated at a loss. Plaintiff was discharged and, after a discussion, was paid, in addition to his wages, “$200 in full satisfaction,” as suggested by the plaintiff, who assured defendant that he “would be happy about it, and that that would be the end of it.” Id. at 148 , 25 S.E. 2d at 436-37 . Plaintiff sued and the Court concluded that plaintiff’s employment was terminable at will and held as follows:

The general rule is, that “permanent employment” means steady employment, a steady job, a position of some permanence, as contrasted with a temporary employment or a temporary job. Ordinarily, where there is no additional expression as to duration, a contract for permanent employment implies an indefinite general hiring, terminable at will. McKelvy v. Oil Co., 52 Okla., 81 , 152 P., 414 . Here, the plaintiff shows a promise of permanent employment, simpliciter, and no more. Anno., 135 A.L.R., 646 .

We find nothing on the record to take the case out of the general rule.

Id. at 149, 25 S.E. 2d at 437 . There was not the slightest discussion of whether the discharge was required to be “in good faith.”

*181 The courts of North Carolina have judicially created but one exception to the employment-at-will doctrine. That exception was established by the Court of Appeals in Sides v. Duke University, 74 N.C. App. 331 , 328 S.E. 2d 818 , disc. rev. denied, 314 N.C. 331 , 333 S.E. 2d 490 (1985). The plaintiff, Sides, was a nurse anesthetist at Duke University Medical Center. Sides alleged that she had been discharged after she had refused to testify falsely at a medical malpractice trial in which the University was a defendant. The Court of Appeals ruled that Sides had stated a claim for wrongful discharge under theories of both tort and breach of contract. The central principle established by Sides is “that no employer in this State, notwithstanding that, an employment is at will, has the right to discharge an employee and deprive him of his livelihood without civil liability because he refuses to testify untruthfully or incompletely in a court case.” Id. at 342 , 328 S.E. 2d at 826 .

The decision in Sides has been strictly construed. “Though the Sides court spoke in the broad terms of ‘public policy,’ its holding was actually very narrow.” Hogan v. Forsyth Country Club Co., 79 N.C. App. 483, 497-98 , 340 S.E. 2d 116, 125 , disc. rev. denied, 317 N.C. 334, 346 S.E. 2d 140 (1986). The only other reported decision in which a plaintiff has been found to have alleged a valid claim under the Sides exception is Williams v. Hillhaven Corp., 91 N.C. App. 35 , 370 S.E. 2d 423 (1988). The plaintiff, Williams, testified under subpoena at an unemployment compensation hearing on behalf of a nurse assistant who had been fired by plaintiff’s employer. Williams alleged that she was discharged after the hearing because of her truthful testimony in support of the claimant. The Court of Appeals found that Williams’ claim fell within the “same narrow exception” created by Sides that prohibits employers from discharging employees who refuse to perjure themselves. Id. at 39, 370 S.E. 2d at 425 . Thus, the only judicially recognized exception to the employment-at-will doctrine involves the refusal or failure to perjure oneself.

The North Carolina General Assembly has created at least five exceptions to the rule that an employer may discharge an at-will employee for any reason or for no reason. Under the Wage and Hour Act, employers are prohibited from discharging an employee for filing a complaint, and employees are entitled to pursue a remedy in state court for such a discharge. N.C.G.S. § 95-25.20 (1985). OSHA expressly prohibits an employer from discharging an *182 employee for filing a complaint under that statute and provides a remedy for the discharged employee in the form of reinstatement and back pay. N.C.G.S. § 95-130(8), (9) (1985). A remedy in money damages is provided for employees who are denied continuation of employment because of membership in a labor union. N.C.G.S. §§ 95-81, -83 (1985). An at-will employee has a course of action for discharge in retaliation for filing a workers’ compensation claim. N.C.G.S. § 97-6.1 (1985). Finally, under the Employment Security Law, any person who discharges or demotes an employee because the employee has testified or been summoned to testify in a proceeding brought under the statute is liable to the aggrieved party in a civil action. N.C.G.S. § 96-15.1 (1988). These are the specific instances to date in which the General Assembly has legislatively created exceptions to the at-will doctrine.

With the exception of employers demanding perjury, North Carolina courts have deferred to the General Assembly in the creation of exceptions to the at-will doctrine. Two Court of Appeals cases and two federal court cases serve to bear this out. In Trought v. Richardson, 78 N.C. App. 758 , 338 S.E. 2d 617 , disc. rev. denied, 316 N.C. 557 , 344 S.E. 2d 18 (1986), the plaintiff, Trought, was hired by Pitt County Memorial Hospital to serve as vice president for nursing services. Trought alleged that she was discharged because of personnel assignments she implemented to comply with the North Carolina Nursing Practice Act. Trought, unlike Coman, alleged that her discharge violated state law (as opposed to federal regulations). Even though Trought’s allegations created a disputed factual issue of whether her discharge violated state public policy, the court refused to extend the Sides exception to recognize Trought’s claim for wrongful discharge.

In Burrow v. Westinghouse Electric Corp., 88 N.C. App. 347 , 363 S.E. 2d 215 , disc. rev. denied, 322 N.C. Ill, 367 S.E. 2d 910 (1988), the plaintiff, Burrow, was employed as a tractor-trailer driver. Burrow alleged that he was terminated after he refused to violate federal regulations that prohibit drivers from operating their trucks when they are physically impaired. The Court of Appeals dismissed Burrow’s claim of wrongful discharge and stated: “[W]e find no authority for, and decline to adopt, plaintiff’s argument that violation of a federal regulation creates an exception to the employment at will doctrine in North Carolina.” Burrow v. Westinghouse Electric Corp., 88 N.C. App. at 354 , 363 S.E. 2d at 220 . The regulations alleged by Burrow and Coman are both contained in subchapter B of *183 the Federal Motor Carrier Safety regulations. 49 C.F.R. §§ 391.41 , 395.1 to 395.13 (1986).

In Guy v. Travenol Laboratories, Inc., 812 F. 2d 911 (4th Cir. 1987), the Fourth Circuit Court of Appeals, applying North Carolina law, held that a former supervisor at a drug manufacturing plant did not state a claim for wrongful discharge by alleging that he was terminated for refusing to falsify records required by federal regulations promulgated by the United States Food and Drug Administration. In Rupinsky v. Miller Brewing Co., 627 F. Supp. 1181 (W.D. Pa. 1986), a United States District Court in Pennsylvania, applying North Carolina law, also refused to recognize a cause of action for wrongful discharge despite plaintiff’s argument that his termination was designed to prevent union organization.

The state public policy that gave rise to the Sides exception was the threat to our state’s judicial system if witnesses could be fired from their employment for refusing to perjure themselves. The compelling reasons that influenced the Court of Appeals to open the courts to a plaintiff discharged for refusing to commit perjury do not exist to justify opening the courts to this plaintiff. No violation of state law is alleged. A federal forum already exists for redress of violations of federal regulations. With the labyrinth of federal regulations which attempt to govern every aspect of commercial life, we can justifiably fear a proliferation of lawsuits under this new exception created by the majority. It will most certainly create an “unwarranted source of trouble in the workplace,” if employers must fear a civil action every time an employee at will is terminated. Burrow v. Westinghouse Electric Corp., 88 N.C. App. at 354 , 363 S.E. 2d at 220 .

The majority has failed adequately to address the legitimate concerns of employers which must be balanced against the advantages to the discharged employee of the additional remedy provided by this new exception. Some of these concerns are: Any exception to the at-will doctrine which exposes him to the possibility of lawsuits makes an employer more reluctant to discharge an employee even if for good reason. Costs are involved in documenting just cause for termination and in producing evidence that an at-will employee was not terminated for a particular improper reason. If an unreliable or incompetent employee is retained out of fear of a lawsuit, morale problems arise which affect co-workers as well as the employer. Employers may be less willing to “take a chance” on a marginal ap *184 plicant if termination is made difficult. Employers will be less likely to discharge economically unnecessary employees.

In Whittaker v. Care-More, Inc., 621 S.W. 2d 395 (Tenn. App. 1981), the Tennessee court said this:

[B]ased upon our review of this area of the law we are compelled to note that any substantial change in the “employee-at-will” rule should first be microscopically analyzed regarding its effect on the commerce of this state. There must be protection from substantial impairment of the very legitimate interests of an employer in hiring and retaining the most qualified personnel available or the very foundation of the free enterprise system could be jeopardized.

. . . Tennessee has made enormous strides in recent years in its attraction of new industry of high quality designed to increase the average per capita income of its citizens and thus, better the quality of their lives. The impact on the continuation of such influx of new businesses should be carefully considered before any substantial modification is made in the employee-at-will rule.

Id. at 396-97 . The decision of the majority may indeed have an effect on the economic vitality of our state, particularly on the recruitment of new industry.

The legislature, and not this Court, is the proper body to make the appropriate analysis and strike a proper balance. Any abrogation of the at-will doctrine will necessarily require “line-drawing.” As the appellee’s brief points out, a large corporation such as IBM should probably be treated differently from the corner grocery store. And what should be done with the great bulk of employers who fall in between? Should arbitration be required in all or some cases? Should employees be treated differently depending on their longevity or their level of employment within the company? Should punitive damages be allowed? The commentators are in almost universal agreement that juries are unduly sympathetic to employees and unable to understand the management considerations necessary in terminating an employee. See Comment, Employment at Will: Just Cause Protection Through Mandatory Arbitration, 62 Wash. L. Rev. 151 (1987); Harrison, The Price of the Public Policy Modification of the Terminable-at-Will Rule, 34 Lab. L.J. 581 (1983).

*185 While the source of the rule may be questionable, a number of our cases have stated the doctrine in this manner: Where a contract of employment does not fix a definite term, it is terminable at the will of either party, with or without cause, except in those instances in which the employee is protected from discharge by statute. This precise language appears in each of the following cases: Smith v. Ford Motor Co., 289 N.C. 71, 80 , 221 S.E. 2d 282, 288 ; Buffaloe v. United Carolina Bank, 89 N.C. App. 693, 695 , 366 S.E. 2d 918, 920 (1988); Harris v. Duke Power Co., 83 N.C. App. 195, 197 , 349 S.E. 2d 394, 395 (1986), aff'd, 319 N.C. 627 , 356 S.E. 2d 357 (1987); Hogan v. Forsyth Country Club Co., 79 N.C. App. 483, 497 , 340 S.E. 2d 116, 125 , disc. rev. denied, 317 N.C. 334 , 346 S.E. 2d 140 (1986). See also 8 Strong’s N.C. Index 3d Master and Servant § 10 (1977).

While it may legitimately be argued that the employment-at-will doctrine was judicially created and thus may be judicially altered for sound legal reasons, it should not be altered by the courts for reasons of “public policy.” Courts are ill-equipped to determine what the public policy is or should be, whereas that is a basic reason for the existence of our legislature. Whether our economy should be burdened with a bad faith exception to the employment-at-will doctrine on “public policy” grounds is a question that under our Constitution must be decided, if at all, by our state legislature. Power Co. v. Membership Corp., 256 N.C. 62, 64 , 122 S.E. 2d 782, 784 (1961) (“Courts have no right to usurp legislative powers and by judicial decrees formulate public policy not declared by the Legislature”); DeFranco, Modification of the Employee at Will Doctrine — Balancing Judicial Development of the Common Law with the Legislative Prerogative to Declare Public Policy, 30 St. Louis U.L.J. 65 (1985). See also Henson v. Thomas, 231 N.C. 173, 176 , 56 S.E. 2d 432, 434 (1949) (“The ‘excelsior cry for a better system’ in order to keep step with the new conditions and spirit of a more progressive age must be made to the Legislature, rather than the courts”).

The California courts played a leading role in the recognition and development of the tort action for breach of an implied covenant of good faith as an exception to the employment-at-will doctrine. As could be expected, a trend of high verdicts and expensive settlements developed because of jury sympathy for plaintiffs who have been discharged from their jobs. This climate existed in California for a number of years. However, the Supreme Court of Cali *186 fornia, disapproving of long lines of court of appeals cases, has recently held. that a tort claim for wrongful discharge alleging an implied covenant of good faith would no longer be recognized. Therefore, the tort action for wrongful discharge and the possibility of punitive damages was put to rest in California. Foley v. Interactive Data Corp., 47 Cal. 3d 654 , 765 P. 2d 373 , 254 Cal. Rptr. 211 (1988). In that same case, the California court refused to extend any exception to the employment-at-will doctrine to employment contracts on public policy grounds, even in breach of contract actions (where punitive damages are not available) alleging a breach of good faith. As one writer has noted, “Concern for maintaining the predictability-of contract costs and the stability of the business community supported the majority’s decision to defer the problem to the legislature.” Bushman, Wrongful Discharge, Case and Com., May-June 1989, 3, at 6.

With regard to the statement of the majority that “our decision today is:in accord with the holding of most jurisdictions,” I note that the California court in Foley said this:

In fact, although Justice Broussard asserts that the weight of authority is in favor of granting a tort remedy, the clear majority of jursidictions [sic] have either expressly rejected the notion of tort damages for breach of the implied covenant in employment cases or impliedly done so by rejecting any application of the covenant in such a context.

Foley, 47 Cal. 3d at 686 , 765 P. 2d at 391 , 254 Cal. Rptr. at 229 (citation omitted).

It seems that the majority has outraced even the California court.

I vote to affirm the decision of the Court of Appeals.