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Novosel v. Nationwide Insurance Co.

decided: October 26, 1983.

JOHN NOVOSEL, APPELLANT
v.
NATIONWIDE INSURANCE COMPANY



On Appeal from the United States District Court for the Western District of Pennsylvania.

Adams, Hunter and Garth, Circuit Judges.

Author: Adams

Opinion OF THE COURT

ADAMS, Circuit Judge

This appeal presents us with the task of determining under what circumstances a federal court sitting in diversity under Pennsylvania law may intercede in a non-union employment relationship and limit the employer's ability to discharge employees. In his suit against Nationwide Insurance Company, John Novosel brought two separate claims, one sounding in tort, the other in contract. The tort claim turns on whether a cause of action is created by a discharge that contravenes either important public policies or rights conferred on employees as members of the citizenry at large. The contract claim raises the question whether an enforceable contractual right to long-term employment may be read into what has traditionally been termed an employment-at-will position. The district court, finding no cause of action to be stated, granted the employer's motion to dismiss both claims. Finding jurisdiction over this appeal under 28 U.S.C. ยง 1291, we vacate the district court's judgment and remand for further proceedings.

I

Novosel was an employee of Nationwide from December 1966 until November 18, 1981.*fn1 He had steadily advanced through the company's ranks in a career unmarred by reprimands or disciplinary action. At the time his employment was terminated, he was a district claims manager and one of three candidates for the position of division claims manager.

In late October 1981, a memorandum was circulated through Nationwide's offices soliciting the participation of all employees in an effort to lobby the Pennsylvania House of Representatives. Specifically, employees were instructed to clip, copy, and obtain signatures on coupons bearing the insignia of the Pennsylvania Committee for No-Fault Reform. This Committee was actively supporting the passage of House Bill 1285, the "No-Fault Reform Act," then before the state legislature.

The allegations of the complaint charge that the sole reason for Novosel's discharge was his refusal to participate in the lobbying effort and his privately stated opposition to the company's political stand. Novosel contends that the discharge for refusing to lobby the state legislature on the employer's behalf constituted the tort of wrongful discharge on the grounds it was willful, arbitrary, malicious and in bad faith, and that it was contrary to public policy. Alternatively, the complaint avers a breach of an implied contract promising continued long-term employment so long as Novosel's job performance remained satisfactory. Novosel sought damages, reinstatement and declaratory relief. Nationwide did not file an answer to the complaint; instead it presented a motion to dismiss. Following the submission of briefs on the motion to dismiss, and without benefit of either affidavits or oral argument, the district court granted the motion on January 14, 1983.

II

Considerable ferment surrounds the doctrine of employment-at-will.*fn2 Once the common-law cornerstone of employment relations not covered by either civil service laws or the National Labor Relations Act, the at-will doctrine has been significantly eroded by both tort and contract theories similar to those propounded by appellant in this case.*fn3 Already 29 states have granted some form of common law exceptions to the at-will doctrine; in addition, the courts of five other states as well as the District of Columbia have indicated their willingness to do so.*fn4

While cognizant of these developments, we are also mindful of the limitations placed upon a federal court sitting in diversity. As this Court has ruled, we are "not free to follow our own inclinations as to the manner in which the common law should develop. . . ." Bruffett v. Warner Communications, Inc., 692 F.2d 910, 918 (3d Cir. 1982). Thus, we are confined to the developments of the Pennsylvania common law which governs this case. At the same time, however, "a federal court must be sensitive to the doctrinal trends of the state whose law it applies, and the policies which inform the prior adjudication by the state courts." Becker v. Interstate Properties, 569 F.2d 1203, 1206 (3d Cir. 1977). Difficulties arise where

the highest state court has not yet authoritatively addressed the critical issue. Recent opinions of this Court make clear that our disposition of such cases must be governed by a prediction of how the state's highest court would decide were it confronted with the problem. Although some have characterized this assignment as speculative or crystal-ball gazing, nonetheless it is a task which we may not decline.

McKenna v. Ortho Pharmaceutical Corp., 622 F.2d 657, 661-62 (3d Cir. 1980) (footnote omitted).

The issue before us, then, is to determine whether the tort and contract claims proffered by the plaintiff state a sufficient cause of action under applicable Pennsylvania state law to survive a motion to dismiss.

III

Novosel's tort allegations raise two separate issues: first, whether a wrongful discharge claim is cognizable under Pennsylvania law; second, if such a claim can go forward under state law, by what standard is a court to determine whether the facts set forth in the complaint present a sufficient basis for a successful tort action.

A

The circumstances of the discharge presented by Novosel fall squarely within the range of activity recognized by the emerging tort case ...


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