Appeal From Judgment, Court of Common Pleas, Civil Division, Philadelphia County at No. 3656 January Term, 1978
Arlene G. Simolike, Philadelphia, for appellant.
Keith D. Heinold, Philadelphia, for appellee.
Cavanaugh, Beck and Tamilia, JJ. Beck, J., files concurring opinion.
[ 350 Pa. Super. Page 186]
Oscar Darlington appeals from the judgment n.o.v. entered on September 30, 1983 in the Court of Common Pleas of Philadelphia County. We affirm.
Darlington had been employed as an engineer for General Electric for fifteen years when, in 1976, he was accused of
[ 350 Pa. Super. Page 187]
certain expense and phone account irregularities and was subsequently discharged. Darlington brought suit contesting the discharge, and a trial was held in March of 1983 before the Honorable Murray C. Goldman and a jury. The jury returned a verdict for Darlington and assessed damages against General Electric in the amount of $100,000.00. General Electric then sought a judgment n.o.v. and a new trial. Oral argument on these motions was heard before Judge Goldman on September 14, 1983. On September 30th of the same year, the judge granted General Electric's motion for judgment n.o.v. and dismissed the motion for a new trial as moot. This appeal followed.
Our scope of review in this case is as follows: "On an appeal from the entry of a judgment n.o.v., all of the evidence and the reasonable inferences therefrom must be viewed in the light most favorable to the verdict-winner." Handfinger v. Philadelphia Gas Works, 439 Pa. 130, 132, 266 A.2d 769, 771 (1970). "A judgment n.o.v. should be entered only in a clear case and any doubts should be resolved in favor of the verdict." Atkins v. Urban Redevelopment Authority of Pittsburgh, 489 Pa. 344, 351, 414 A.2d 100, 103 (1980). It is not our function on appeal to retry the case or to arrive at our own conclusions as to questions of fact.
In the instant case, appellant Oscar Darlington contends that his employment at General Electric was not "at-will" and that his discharge was in contravention of an employment contract entered into at the time he was hired. He also alleges that the manner in which the company effected his discharge constitutes a wrongful discharge.
The facts, viewed in the light most favorable to the appellant as verdict winner, are as follows. In late 1961, appellant and General Electric entered into an employment contract. Appellant, a professional engineer was already several years into his career when he was recruited to work for General Electric. At his job interview with the Manager of Professional Recruitment, Anthony J. Marini, a discussion ensued concerning appellant's intent to settle into a
[ 350 Pa. Super. Page 188]
company with a long range program for engineers with skill and experience similar to his. Marini outlined "in some detail" the procedures that would be followed in the event that a problem arose. Marini gave appellant a pamphlet which contained a description of the procedures and also informed him of provisions for transfer in case a "problem" arose. (Appellant subsequently took advantage of the transfer provision.) Marini testified that General Electric agreed to employ appellant for so long as performance on both sides was satisfactory. However, in 1976, company officials accused appellant of certain expense and phone account violations. Appellant's position was that he did not knowingly and deliberately engage in the impermissible conduct he was charged with but was merely following company policy as he knew it. The company subsequently discharged appellant.
Appellant alleges that his discharge was in contravention of an employment contract entered into at the time he was hired in 1961 which provided that the term of his employment was to be for a reasonable length of time. If such a contract existed, and if the reasonable time had not passed, appellant's employment could not have been terminated at-will but could only have been rightfully severed with "just cause." Before assessing the merits of this controversy, we must first briefly examine the history of employment at-will.
Since at least 1891, Pennsylvania courts have recognized the rule that, absent a contract, employees may be discharged at any time, for any reason, or for no reason at all. Henry v. Pittsburgh & Lake Erie Railroad Co., 139 Pa. 289, 21 A. 157 (1891). See also Forman v. BRI Corporation, 532 F.Supp. 49 (E.D.Pa.1982); Rogers v. International Business Machines Corporation, 500 F.Supp. 867 (W.D.Pa.1980); Linn v. Employers' Reinsurance Corporation, 397 Pa. 153, 153 A.2d 483 (1959); Fawcett v. Monongahela Railway Company, 391 Pa. 134, 137 A.2d 768 (1958); McKinney v. Armco Steel Corporation, 270 F.Supp. 360 (W.D.Pa.1967).
[ 350 Pa. Super. Page 189]
Every employment relationship is also a contractual relationship. Even at-will employment is formed by contract. The type of employment (the duration and the permissible grounds for discharge) is determined by the type of contract entered into. In the absence of an express understanding between employer and employee concerning the duration of their contract, there has always been considerable difficulty in providing the appropriate legal reaction to employee dismissal. As early as 1562, an English statute prohibited the discharge of an employee "unless it be for some reasonable and sufficient cause or matter . . . ." Statute of Labourers, 5 Eliz. c. 4 (1562) (found in 6 Pickering's Statutes 159-160 (1763)). When the statute was repealed, English courts continued to insist that a contract of employment for an indefinite term was presumed to be a contract for one year. See 1 Blackstone, Commentaries 335 (1832). That view was accepted by some American courts and rejected by others. See Feinman, The Development of The Employment At Will Rule, 20 J.Amer.L.Hist. 118 (1976). The dominant American position started to become clear at the end of the nineteenth century: an employment contract of indefinite duration was deemed to be terminable at will for any cause or no cause, regardless of the "morality" of the situation. There is little question that the rationale for the prevailing rule was based on the assumption that it was necessary to preserve managerial discretion in the work place and to maintain freedom of contract. The dominant philosophy of freedom of contract failed to consider the lack of bargaining power in an individual employee, i.e., that there can be no freedom of contract between parties of grossly unequal bargaining power. Since that time, there has been a growing recognition of that fact as evidenced by numerous Congressional mandates allowing collective bargaining which result in agreements precluding arbitrary dismissal of employees. See e.g., 5 U.S.C. § 7513 which requires "such cause as will promote the efficiency of the service" to be shown to dismiss a civil servant. Other Congressional directives preclude dismissal of employees in retaliation for reporting employee activity which violates
[ 350 Pa. Super. Page 190]
certain statutes. See e.g., Occupational Safety and Health Act, 29 U.S.C. § 660 and the Fair Labor Standards Act, 29 U.S.C. § 215. Over the years, the presumption of "at-will" employment has afforded courts and counsel alike the solace of certainty inherent in any iron-clad rule. In recent years, however, it has been frequently suggested that the presumption is an antiquated remnant of a by-gone era. The at-will presumption flourished in the laissez-faire climate of the latter part of the last century. The philosophy of "freedom of contract", of which the at-will presumption was a manifestation, served to fuel the furnace of the free enterprise system. Because commerce was king, laws were tailored to facilitate business and courts were very much disinclined to impede the natural workings of the free enterprise system. Thus, laws were developed whereby courts largely left business decisions to businessmen. It has been noted with some degree of frequency, however, that since the age of unrestricted laissez-faire economics has passed, the at-will presumption should no longer be adhered to with "unquestioned deference." See Woolley v. Hoffmann-LaRoche, Inc., 99 N.J. 284, 491 A.2d 1257 (1985). The presumption has been called "a stubborn progeny" of the common law, "an anachronism." Pierce, Mann and Roberts, Employee Termination At Will: A Principled Approach, 28 Vill.L.Rev. 1 (1982). In recent years, courts have become increasingly willing to afford the discharged employee relief based on ever-widening theories grounded in contract and also on causes of action sounding in tort. But, despite the expanding bases upon which courts now afford relief to discharged employees, they still exhibit a predilection for precedent and a corresponding reluctance to effect the wholesale elimination of the at-will presumption. Courts have, in fact, only impinged on the presumption in gradual, piecemeal ways. "[A]bsent a statutory or contractual provision, the employers' right to hire and fire is virtually absolute." O'Neill v. ARA Services, Inc., 457 F.Supp. 182, 186 (E.D.Pa.1978). The citadel of the at-will presumption has been eroded of late, but it has not been toppled. Perhaps the time has come for employees to be
[ 350 Pa. Super. Page 191]
given greater protection in this area. This was the opinion of one commentator, who cautioned, however, that "Pennsylvania courts . . . should at this time avoid further modification of the at-will employment relationship. Restraint should be observed to minimize the adverse effects that any complete abrogation might have on employment, productive efficiency, and overburdening of the judicial process with additional cases. Time and thought should be given now to whether abrogation of the doctrine should occur through 'judicial erosion' or 'legislative mandate.'" K.H. Decker, At-Will Employment in Pennsylvania -- A Proposal For Its Abolition and Statutory Regulation, 87 Dickinson L.Rev. 477, 479 (1983). In the Report of the Committee on Labor and Employment Law of the Association of the Bar of the City of New York, At-Will Employment and the Problem of Unjust Dismissal, 36 Rec. A.B.City N.Y. 157, 184 (1981), (as quoted in Judge Gibbon's dissent in Bruffett v. Warner Communications, Inc., 692 F.2d 910, 922-23 (3d Cir.1982)), the Committee attacks the at-will rule as no longer appropriately dealing with employment relations:
"The modern reality of relative immobility in the labor market, encouraged by a web of ties that bind the employee to the job, places in question a doctrine that rests on a theoretical non-mutuality of obligation, and may have the effect of empowering the employer to work considerable unfairness in particular cases or to use the discharge weapon to subvert established policies.
"Some commentators have urged that all employees in this country should enjoy general protections against discharge without 'just cause.' Such a change would be most appropriately accomplished by legislation." (Emphasis added.)
Even had we been asked to review the question of whether the at-will presumption should be abrogated, we are not at liberty to so hold given our Supreme Court's stance on the issue. See Geary v. United States Steel Corporation, 456 Pa. 171, 319 A.2d 174 (1974). Moreover, we believe that if terminable-at-will contracts are to be forbidden, the judicial
[ 350 Pa. Super. Page 192]
process may be an inappropriate forum for such sweeping policy change.
The first issue we must address is whether the discharged employee, Oscar Darlington, has overcome the at-will presumption by presenting evidence which, when viewed in the light most favorable to him as verdict winner, shows that he and General Electric contracted for something other than at-will employment, and that he is entitled to relief based on such contract.
Appellant argues that he and General Electric entered into a contract for a reasonable length of time. In support of this, he cites the following: Appellant sought a professional position at General Electric and was offered employment in a program involving a new space engineering facility which dealt with long-term government projects. "Flexibility" on the part of his employers was stressed, as was an employer commitment to work through any employer-employee problem which might arise. When a problem did arise (the alleged account violations), appellant was asked to provide explanations for some of his suspect conduct. This company action, according to appellant, serves to clarify the parties' intent that he could only be discharged for just cause. Moreover, Mr. Marini, Manager of Professional Recruitment, testified that his role was to insure that appellant was given a fair hearing.
At trial, Marini disclaimed authority to bind the company to a contract for any specific duration. However, he testified that he had the authority to state the terms of salary and project assignment to the new employee. Even if General Electric did not afford Marini express authority to bind the company to a contract for a specific duration, it may have clothed him with apparent authority to do so. "Apparent authority may . . . arise because the agent has been placed in such a position that a person of ordinary prudence, who was conversant with the nature of the particular business and its usages, would be justified in believing that the agent was authorized." W.E. Sell, Sell on Agency § 35 (1975). However, we need not inquire as to whether
[ 350 Pa. Super. Page 193]
General Electric placed Mr. Marini in a position of apparent authority because even if it did, we find no evidence that appellant was discharged in contravention of a contract.
"There is much litigation in service contracts over the length of the term of employment. This is due to the fact that employment contracts . . . are usually very informal, with brevity in wording and much uncertainty in meaning." 3A Corbin, Contracts § 684 (1960). "The formation of the relationship of master and servant or employer and employee is in general determined by the principles governing the formation of other contracts." 53 Am.Jur.2d Master and Servant § 17 (1970).
"[I]t is the intention of the parties which is the ultimate guide, and, in order to ascertain that intention, the court may take into consideration the surrounding circumstances, the situation of the parties, the objects they apparently have in view, and the nature of the subject matter of the agreement. Thus, contracts which do not fix a definite time for the duration of the relationship which they create are sometimes construed as providing for a reasonable time or some particular period inferred from the nature and surrounding circumstances of the undertaking."
Price v. Confair, 366 Pa. 538, 542, 79 A.2d 224, 226 (1951). See also Lubrecht v. Laurel Stripping Company, 387 Pa. 393, 127 A.2d 687 (1956); Slonaker v. P.G. Pub. Co., 338 Pa. 292, 13 A.2d 48 (1940); Forman v. BRI Corporation, 532 F.Supp. 49 (E.D.Pa.1982); Restatement (Second) of Agency § 442 Comment A. "Where one party to [an employment] contract asserts that the parties intended for it to run for some reasonable time, they must establish 'something in the nature and circumstances of the undertaking which would create [such an] inference.'" Forman v. BRI Corporation, 532 F.Supp. at 50 (E.D.Pa.1982) (citation omitted).
Rather than singling out any lone factor, appellant contends that the totality of circumstances surrounding his hiring evinces the parties' intent that the employment was
[ 350 Pa. Super. Page 194]
to be for a reasonable length of time. An implied promise to discharge an employee only for cause may arise in various ways. The employee may justifiably rely upon an implied promise that the employment will be terminated only for cause. Certainly, if the employee was induced to leave his former employment with the assurance that he would not be dismissed without cause in the new employment, there is a bargained-for-exchange amounting to consideration which binds the new employer to its promise not to dismiss absent cause. In such a situation, the promise induced the detriment and the detriment induced the promise so that the necessary elements of consideration are present. (The classic statement of both requirements is found in the opinion of Mr. Justice Holmes in Wisconsin & Michigan Ry. v. Powers, 191 U.S. 379, 24 S.Ct. 107, 48 L.Ed. 229 (1903)). A promise inducing detrimental reliance may also be enforceable if the elements of § 90 of the Restatement (Second) of Contracts are present. However, the mere fact that an employee surrendered his or her former position does not necessarily suggest that the employer-promisor should have contemplated such reliance. Appellant implies that his fifteen years service is not a reasonable length of time. He does not say what would be a reasonable length of time. We find it elementary contract law that if the contract is for a reasonable length of time, after such a period has passed, the employer should be able to discharge the employee at will. We do not believe that a hiring for a reasonable length of time means ...