Title: Schuster v. Derocili et al.

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE
LINDA T. SCHUSTER,
)
)  No. 337, 2000
Plaintiff Below,
)
Appellant,
)  Court Below:  Superior Court
)  of the State of Delaware in
v.
)  and for Kent County
)
VALENTINO P. DEROCILI,
)  C.A. No. 99C-02-004 (WLW)
COMPLIANCE ENVIRONMENTAL,
)
INCORPORATED, a Delaware
)
Corporation,
)
)
Defendant Below
)
Appellees.
)
Submitted:  March 13, 2001
Decided:  June 15, 2001
Before VEASEY, Chief Justice, WALSH, HOLLAND, BERGER and STEELE,
Justices.
Upon appeal from the Superior Court.  REVERSED in part, AFFIRMED,
in part and REMANDED.
Scott E. Chambers, Schmittinger and Rodriguez, Dover, Delaware, for
appellant.
Jeremy W. Homer, Parkowski, Noble & Guerke, Dover, Delaware, for
appellees.
STEELE, Justice:
2
Linda T. Schuster, a former employee-at-will of Compliance Environmental
Incorporated, appeals the Superior Court’s grant of summary judgment to
Compliance and its president, Valentino P. Derocili.  Schuster argues that the
Superior Court erred when it found that termination of her at-will employment
based upon her refusal to submit to her employer’s alleged sexual advances did not
constitute a valid cause of action for breach of contract.  Schuster also argues that
Derocili slandered her when, during a meeting attended by Derocili, Schuster and
Schuster’s supervisor, Derocili stated that he terminated Schuster’s employment
because her work performance was substandard.
We find that the Superior Court erred when it found that Schuster’s
complaint did not allege a valid cause of action that Derocili had breached an
implied covenant of good faith and fair dealing contained in her at-will contract of
employment.  We further find that the Superior Court correctly dismissed
Schuster’s slander claim.  Therefore, we REVERSE in part, AFFIRM in part and
REMAND this case to the Superior Court for proceedings consistent with this
opinion.
I
On September 2, 1997, Schuster began working temporarily as an
administrative assistant for Compliance.  On October 13, 1997, Schuster began
working full-time for Compliance under a written employment agreement, which
3
could be terminated by either party giving thirty days written notice.  Schuster
worked primarily for Derocili, the president and controlling shareholder of
Compliance.
Schuster contends that Derocili began making sexual comments and
innuendos towards her several weeks after she began to work at Compliance.
Schuster contends that Derocili began touching her inappropriately by hugging her,
putting his hands on her chest and/or legs, putting his fingers between her cleavage
and attempting to kiss her on the lips.  Schuster contends that despite informing
Derocili that his conduct made her uncomfortable, he continued to make advances
towards her.  Schuster complained to two co-workers about Derocili, and after
consulting her pastor, she began recording Derocili’s conduct in a journal and
rejecting Derocili’s advances more forcefully.  Derocili admitted that there was
touching between him and Schuster but contends that Schuster “mischaracterizes”
the contact.
In December 1998, Derocili fired Schuster in a face-to-face meeting
attended by Brian Goff, Schuster’s supervisor.  At the meeting, Derocili handed
Schuster a termination memorandum that stated Schuster’s termination resulted
from substandard job performance.  Believing that the statements in the
memorandum were false and that Derocili actually terminated her merely for
refusing his sexual advances, Schuster refused to sign the memorandum.  Schuster
4
also contends that during the meeting, Derocili made slanderous remarks about her.
Goff testified at a deposition that Schuster’s work was “unsatisfactory in all
respects.”1   Schuster’s termination, however, came only seven days after she had
received a $500 performance-based bonus.  Schuster had also completed a ninety
day probationary period, received several pay raises and another performance-
based bonus during that time.
On February 4, 1999, Schuster filed this suit in the Superior Court.  On
March 8, 1999, Schuster filed a complaint with the Delaware Department of Labor.
The Department of Labor determined that Schuster failed to substantiate her
allegation that Derocili sexually harassed her and dismissed her complaint on
October 29, 1999.2  On June 15, 2000, the Superior Court granted Derocili’s
motion for summary judgment.  Schuster filed a timely notice of appeal.
II
This Court reviews “the grant of summary judgment de novo both as to the
facts and law in order to determine whether or not the undisputed facts entitled the
movant to judgment as a matter of law.”3  The Court must “examine the record to
determine whether, after viewing the facts in the light most favorable to the non-
                                          
1 Appx. to Appellee’s Op. Br. at A-30.
2 See Appx. to Appellee’s Op. Br. at A-20-23.
3 Mason v. United Services Automobile Association, Del. Supr., 697 A.2d 388, 392 (1997);
United Vanguard Fund, Inc. v. Take Care, Inc., Del. Supr., 693 A.2d 1076, 1079 (1997).
5
moving party, the moving party has demonstrated that no material issues of fact are
in dispute and it is entitled to judgment as a matter of law.”4
First, we address whether there exists a common law cause of action for
sexual harassment based upon a breach of the implied covenant of good faith and
fair dealing exception to the at-will employment doctrine where the termination is
alleged to have violated a recognized, legally cognizable public policy exception to
at-will employment.  Second, we determine whether the General Assembly
intended 19 Del.C. § 710 et. seq., Delaware’s Discrimination in Employment
Statute, to be the sole remedy for a claim of sexual harassment by a terminated
employee.  Third, we consider whether Schuster’s claim contains a viable cause of
action against Derocili for deceitfully manufacturing false grounds for her
dismissal.  Finally, we address Schuster’s slander claim.
III
May Schuster bring a common law cause of action for sexual harassment
based on a breach of an implied covenant of good faith and fair dealing exception
to the at-will employment doctrine because her employer terminated her contrary
to public policy?  Schuster argues that the Superior Court erred when it found that
                                          
4 Mason, at 392; Burkhart v. Davies, Del. Supr., 602 A.2d 56, 59 (1991).
6
19 Del. C. § 710 et. seq., the Delaware Discrimination in Employment Statute,
offers the exclusive remedy for her claim because, she argues, there is no legal
authority that filing a claim with the Department of Labor “is to the exclusion of
other remedies.”5  Schuster argues that “[w]hile 19 Del. C.  § 712 authorizes the
Department of Labor to prevent unlawful employment practices, it does not
abrogate an employee’s right to assert [a] private cause of action against the
employer.  Rather, it merely empowers the Department of Labor and the Attorney
General’s Office with enforcement powers against employers found to be in
violation of this subchapter.”6
The Superior Court found that Schuster failed to present a valid cause of
action because “Delaware has not recognized a common law cause of action for
employment discrimination, including sexual harassment”7 because there is already
a statutory scheme in place to address her claim.  The Superior Court stated that
“[t]he Delaware Legislature has adopted an employment discrimination statute that
is practically identical to its federal counterparts.”8  In so doing, “Delaware’s
employment discrimination statute outlines specific procedures that must be
                                          
5 Appellant’s Op. Br. at 14.
6 Id.
7 Del. Super., C.A. No. 99C-02-004, Witham, J. (June 15, 2000) Order at 5 (citing Wright v. ICI
Americas Inc., D. Del., 813 F. Supp. 1083, 1091 (1993); Drainer v. O’Donnell, Del. Super.,
C.A. No. 94C-08-062, Alford, J. (July 28, 1995)).
8 Order at 5 (citing 19 Del. C. § 710, et seq. and stating that these sections are “almost identical
to the provisions of Title VII of the federal Civil Rights Act of 1962, as amended).  Id. at n. 5.
7
followed to assert an employment discrimination claim.  Judicial review is only
available after a Delaware Department of Labor Review Board hearing.”9  The
Superior Court concluded that it lacked jurisdiction to hear Schuster’s claim
“because an elaborate statutory remedy is already in existence and has already
been utilized by [Schuster].”10  Schuster “may appeal the decision of the
[Department of Labor] but may not bring a separate tort claim at law because she
does not agree with the Department of Labor’s decision.”11
Delaware 
law 
prohibits 
employment 
discrimination, 
including
discrimination based on sex, in terms almost identical to Title VII of the 1964 Civil
Rights Act.12  In Delaware, unlawful employment practices are set forth in the
Delaware Discrimination in Employment Statute, which empowers the Department
of Labor to investigate allegations of discrimination, to conciliate disputes between
employers and employees and to issue remedial orders upon a finding of
discrimination.13  An aggrieved employee may file a claim of discrimination with
                                          
9 Order at 5 (citing Drainer, at 2).
10 Id. at 9.
11 Id.  Interestingly, while the Superior Court found that Schuster may not bring a separate tort
claim, Schuster, in fact, asserts a claim for a breach of contract under an implied covenant of
good faith and fair dealing.  Because Schuster did not bring a tort claim, we do not address that
issue.  See Lord, at 402-05 (dismissing a prima facie tort claim as being “inconsistent with the
employment at-will doctrine”); see also Konstantopoulos v. Westvaco Corp., Del. Supr., 690
A.2d 936, 937 (1996) (holding that “the Delaware Worker’s Compensation Act precludes an
employee from asserting a common law tort claim against her employer for a claim of sexual
harassment”).  Further, we note that Schuster brought this action before she filed with the
Department of Labor and, therefore, before it dismissed her claim under 19 Del. C. § 710.
12 Compare 19 Del. C. § 711 with 42 U.S.C. § 2000e-2.
13 19 Del. C. § 710 et. seq.
8
the Delaware Department of Labor.14  The statute authorizes the Department of
Labor to serve the charge upon the employer and investigate it.15  If the
Department of Labor determines that there is reasonable cause to believe that the
charge is true, it will initially attempt to secure voluntary compliance through
informal methods of conciliation and persuasion.16  If the Department of Labor
determines that voluntary compliance and conciliation are not possible, it will issue
a complaint and institute proceedings before a review board.17  The review board
then conducts a hearing and orders the appropriate relief.18  Any complainant
aggrieved by the decision of the review board may obtain judicial review.19
Judicial review is initiated by filing a petition in the Court of Chancery within
thirty days of the decision of the review board.20  The Court of Chancery has the
authority to enforce the review board’s order, as well as to reverse or modify the
review board’s order if substantial rights of the petitioner have been prejudiced.21
The Court of Chancery has authority to grant temporary relief and restraining
orders it deems just.22  It may also award attorney’s fees.23
                                          
14 Id. at § 712(b).
15 Id.
16 Id. at § 712(c).
17 Id. at § 712(e).
18 Id. at § 712(g).
19 Id. at § 712(h).
20 Id.
21 Id.
22 Id.
23 Id. at § 712(j).
9
In this case, the Department of Labor dismissed Schuster’s charge that
Derocili terminated her because she refused to submit to his alleged sexual
advances.  The issue then is whether Schuster may continue her common law cause
of action independently of the Department of Labor’s proceedings.  The Superior
Court relied on Ayres v. Jacobs & Crumplar, P.A.24 and Drainer v. O’Donnell25 to
support its view that Schuster may not continue her common law cause of action
because the statutory proceedings provide the exclusive remedy for her
discrimination claim.  The Superior Court carefully relied on precedent and
followed the case law then existing in this State.  Because this case presents a
unique procedural and factual scenario, it is important to discuss the development
of earlier cases in order to clarify Delaware law.
In Ayres, the plaintiff asserted a discrimination claim, among others, based
on state and federal statutes as well as a discrimination claim based on an alleged
breach of an implied covenant of good faith and fair dealing.  After holding
plaintiff’s statutory discrimination claim time-barred for failing to file within the
two-year statute of limitations, the court denied plaintiff’s claim for breach of a
covenant of good faith and fair dealing, holding that a plaintiff could not use an
alleged breach of the covenant, which has a three-year statute of limitations, to
                                          
24 Del. Super., C.A. No. 96C-07-258 (WTQ), 1996 WL 769331, Quillen, J. (Dec. 31, 1996).
25 Del. Super., C.A. No. 94C-08-062, Alford, J. (July 28, 1995).
10
escape the two-year statute of limitations on racial discrimination imposed by 42
U.S.C. § 1981 and § 1983.26  The court in Ayres stated that if it were to recognize a
cause of action for racial discrimination based upon an alleged breach of an
implied covenant of good faith and fair dealing, “it would allow a plaintiff to
escape the established two-year personal injury statute of limitations on racial
discrimination claims in employment, e.g. § 1981 and § 1983 claims, simply by
couching her allegations of racial discrimination in terms of a breach of an implied
contractual obligation.”27  Schuster distinguishes Ayres, arguing that she had no
federal sexual discrimination claim because Compliance does not meet the
definition of employer, under 42 U.S.C. § 2000e(b), which sets a threshold of at
least fifteen employees.  She also argues that she is not attempting to avoid the bar
of any applicable statute of limitations.
The court in Ayres relied on Finch v. Hercules Inc.,28 a 1992 case decided
by the United States Court for the District of Delaware, which, along with several
other cases decided before and after Finch, suggests that Delaware law generally
would reject common law causes of action for employment discrimination,
including a cause of action based on a breach of an implied covenant of good faith
and fair dealing.
                                          
26 Ayres’ federal claim was dismissed for improper service of process.
27 Id. at *12.
28 D. Del., 809 F. Supp. 309 (1992).
11
In Finch, the plaintiff argued that Hercules terminated him in violation of
the public policy against employment discrimination based on age.  The Delaware
District Court, finding that the Delaware Supreme Court had not yet decided the
issue, predicted that this Court “would not create a common law public policy
exception to the employment at-will doctrine where there is in place an elaborate
statutory scheme addressing the same public policy concerns.”29  In the same year,
this Court decided Merrill v. Crothall-American, Inc.,30 the first case, in fact, in
which this Court recognized that an implied covenant of good faith and fair dealing
may be breached in some circumstances for the termination of an at-will
employee.31  In 1996, this Court decided DuPont v. Pressman32, which catalogued
actionable claims that could be maintained for breaches of an implied covenant of
good faith and fair dealing into four categories. 33  They include violations of
public policy and terminations based upon fictitious grounds.
                                          
29 Id. at 312.
30 Del. Supr., 606 A.2d 96 (1992).
31 See Merrill, at 101 (holding that “every employment contract made under laws of this State,
consonant with general principles of contract law, includes an implied covenant of good faith
and fair dealing”).  Id.
32 Del. Supr., 679 A.2d 436, 441-44 (1996).
33 See Lord v. Souder, Del. Supr., 748 A.2d 395, 400 (2000).  The four categories are: (i) where
the termination violated public policy; (ii) where the employer misrepresented an important fact
and the employee relied thereon either to accept a new position or remain in a present one; (iii)
where the employer used its superior bargaining power to deprive an employee of clearly
identifiable compensation related to the employee’s past service; (iv) where the employer
falsified or manipulated employment records to create fictitious grounds for termination.
12
In Williams v. Caruso34 the Delaware District Court, relying on the rationale
in Finch, dismissed the plaintiff’s claim that her employer terminated her
employment in retaliation for her sexual harassment complaint, which she had
argued violated public policy.  The court found that the plaintiff, Williams, had not
“stated a claim for breach of the implied covenant of good faith and fair dealing
under existing case law.”35
In Drainer, the Superior Court dismissed Drainer’s complaint that she
resigned after her employer failed to address properly an incident of sexual
harassment.  The Superior Court held that it lacked subject matter jurisdiction over
Drainer’s as well as any sexual harassment claim because “Delaware has not
recognized a common law cause of action for employment discrimination,
including sexual harassment.”36  The Superior Court continued stating,
“Delaware’s employment discrimination statute outlines specific procedures that
must be followed to assert an employment discrimination claim.  Judicial review is
only available after a Delaware Department of Labor Review Board hearing.”37
                                          
34 D. Del., 966 F. Supp. 287 (1997).
35 Id. at 292.  It is also important to note that the court in Williams held that 19 Del. C. § 726
precluded Williams from bringing a claim based on retaliatory discharge.  While section 726
does address retaliatory discharge, it addresses it only in the context of employment
discrimination based on handicapped persons.  See 19 Del. C. § 720 et. seq., Delaware’s
Handicapped Persons Employment Protection Act.
36 Id. at *2 (citing Wright, 813 F. Supp. at 1091; Chalawsky v. Sun Refining and Marketing
Co., Inc., D. Del., 733 F. Supp. 791, 799 (1990)).
37 Id.
13
The court in Drainer relied on Wright v. ICI Americas Inc.  In Wright, the
Delaware District Court dismissed Wright’s state law claim that Wright brought
directly under 19 Del. C. § 711.  The District Court reviewed section 712 and
determined that “[n]owhere, within this detailed statutory framework is there even
a suggestion of private remedies for aggrieved employees.”38  The District Court
found that it would “not presume that the Delaware legislature intended remedies it
did not include in the statute.”39
The Wright court in turn relied on Chalawsky v. Sun Refining and
Marketing Co. Inc.,40 which dismissed a state law claim for age discrimination
brought directly under 19 Del. C. § 711.  After explaining that the Department of
Labor review board had dismissed Chalawsky’s case, the District Court found that
Chalawsky did not have a right to sue under sections 711 and 712 because he had
exhausted his state remedies.41
Schuster does not assert that her claim arises directly from section 711.
Instead she asserts a common law claim for a breach of an implied covenant of
good faith and fair dealing derived from her contract of employment.  Therefore
we do not decide that a plaintiff may assert a private cause of action for
                                          
38 Wright, at 1091.
39 Id.  (citing Chalawsky, at 799).
40 D. Del. 733 F. Supp. 791 (1990).
41 Id. at 799.
14
employment discrimination based on sexual harassment on the theory that the
Delaware legislature “intended [such] remedies” under Sections 711 and 712.42
We do today, for the first time, decide that a person may assert a cause of action
for breach of an implied covenant of good faith based upon a termination alleged
to have resulted from a refusal to condone sexual advances.  This private cause of
action flows directly from Delaware’s clear and firmly rooted public policy to
deter, prevent and punish sexual harassment in the workplace.
Schuster contends that Derocili owed her certain obligations regarding her
at-will employment contract under an implied covenant of good faith and fair
dealing.  Schuster contends that Derocili violated that implied covenant of good
faith and fair dealing contained in her at-will employment contract when he
allegedly terminated her employment as a result of her refusal to submit to his
sexual advances.  Schuster argues that she may enforce the public policy of this
                                          
42 Mann v. Oppenheimer & Co., Del. Supr., 517 A.2d 1056, 1064-66 (1986) (adopting test
applied by the U.S. Supreme Court in Cort v. Ash, 422 U.S. 66, 78 (1975)).  The three-part test
asks whether:  (1) Is the plaintiff a member of the class for whose special benefit the statute was
enacted?  (2) Is there any indication of a legislative intent, express or implied, to create a private
remedy or deny one?  (3) Is it consistent with the underlying purpose of the legislative plan to
imply a private remedy? See also, Brett v. Berkowitz, Del. Supr., 706 A.2d 509 (1998) (holding
plaintiff may not bring private cause of action under the criminal statute criminalizing sexual
harassment; see generally, Miller v. Spicer, 602 A.2d 65, 67-68 (1991) (finding no private cause
of action under Delaware’s Equal Accommodation Act, 6 Del. C. § 4501 et. seq.); but see Heller
v. Dover Warehouse Market, Inc., Del. Supr., 515 A.2d 178 (1986) (holding private cause of
action consistent with underlying purposes of 19 Del. C. § 704, Delaware’s anti-polygraph
statute, as well as promoting the policy of the statute to assure its effectiveness).
15
State by bringing an action against her employer based upon his breach of this
implied covenant of good faith and fair dealing.
Schuster argues that sexual harassment in the workplace violates the public
policy expressed in 19 Del. C. § 711, which prohibits discrimination in
employment practices, including discharge of any individual because of sex and 11
Del. C. § 673, which criminalizes sexual harassment.43  Schuster concludes that her
allegations that her employer violated Section 711 and Section 673, in addition to
other criminal statutes she lists,44 identify an explicit and recognizable public
policy, which she as an employee had an interest in advancing in order to prevent
sexual harassment in her own workplace.  We agree.
In DuPont v. Pressman, we held that an employee was entitled to recover
damages for wrongful termination based on fictitious grounds, as an application of
the good faith and fair dealing exception to the employment-at-will doctrine.45  In
doing so, we also held that the employee in that case was not entitled to recover
                                          
43 A 1990 Delaware law criminalized sexual harassment generally.  The statute defines sexual
harassment to be when a person “threatens to engage in conduct likely to result in the
commission of a sexual offense against any person” or when a person “suggests, solicits,
requests, commands, importunes or otherwise attempts to induce another person to have sexual
contact or sexual intercourse or unlawful sexual penetration with him, knowing that he is thereby
likely to cause annoyance, offense or alarm to that person.”  Section 673(1)-(2).
44 Schuster lists offensive touching, unlawful sexual contact in the third degree, lewdness,
prostitution and patronizing a prostitute.  Appellant’s Op. Br. at 8.
45 679 A.2d at 442-44.
16
under the public policy exception recognized in some cases “since he does not
identify an explicit and recognizable public policy.”46
Because of our  holding in Pressman on the inapplicability of the public
policy exception to the facts of that case, Pressman did not involve the issue of the
employee’s standing to assert the public policy exception.  In cataloguing the
various exceptions to the employment-at-will doctrine, we cited several cases
applying the public policy exceptions,47 including the Court of Chancery decision
in Shearin v. E.F. Hutton Group, Inc., where that Court recognized that the public
policy exception may apply to a lawyer-employee wrongfully fired for refusing to
violate her ethical duties.48  In Shearin, the lawyer-employee had an independent
professional duty as a member of the bar under the Delaware Lawyers’ Model
Rules of Professional Conduct to advance or sustain compliance with ethical
principles.49
We recognize that the Delaware Discrimination in Employment Statute
establishes a procedural scheme within which employees may assert discrimination
                                          
46 Id. at 442.
47 Id. at n. 13.
48 Del.Ch., 652 A.2d 578, 587-89 (1994) (an employee asserting the public policy exception
“must assert a public interest recognized by some legislative, administrative or judicial authority,
and the employee must occupy a position with responsibility for that particular interest.”).
49 We note that this Court in Lord v. Souder, Del. Supr., 748 A.2d 393, 401 (2000), referred
incorrectly to the two-part test as a Pressman “holding.”  Nevertheless, the Souder Court held
correctly that the four exceptions to the employment-at-will doctrine noted in dicta in Pressman
are exclusive.  In Souder, the plaintiff who was not a victim of defalcations by another employee
17
claims.  It outlines the procedure to be used in effectuating a discrimination claim,
including appellate review, as well as the authority of the Department of Labor to
enforce the statute’s mandate.  The statute, however, is silent on whether a plaintiff
may file a separate cause of action independently of the statute.  The statute neither
explicitly includes nor explicitly proscribes a separate cause of action based on a
common law claim for breach of contract.  While this Court will not “engraft upon
a statute language which has been clearly excluded therefrom by the Legislature,”50
because of the insidious nature of sexual harassment in the workplace, we conclude
that the General Assembly intended to combat sexual harassment in an expansive
rather than restrictive scheme.  The statute in question does not explicitly state that
the remedies contained within it are exclusive to all others, therefore, it is entirely
consistent with the General Assembly’s intention to promote civilized conduct in
the workplace to allow private causes of action for breach of contract based upon
termination solely caused by a failure to respond to unwanted sexual advances by
an employer.
The Delaware General Assembly could have written the provisions of
Section 712 to preclude any common law cause of action.  Delaware’s Workers’
                                                                                                                                       
or a manager charged with a duty by the organization to enforce honesty in the conduct of other
employees did not have standing to assert the public policy exception.
50 See General Motor Corp. v. Burgess, Del. Supr, 545 A.2d 1186, 1191 (1988) (citing Giuricicg
v. Emtrol, 449 A.2d 232, 238 (1982)).
18
Compensation Statute is an ideal example of the General Assembly’s intention to
preclude common law claims, when it chooses to do so.  Title 19 Del. C. § 2304
states that every employer and employee, adult and minor, “except as expressly
excluded in this chapter, shall be bound by this chapter respectively to pay and to
accept compensation for personal injury or death by accident arising out of and in
the course of employment, regardless of the question of negligence and to the
exclusion of all other rights and remedies.”  This section has been held to preclude
common law claims based on the Worker’s Compensation Statute.51  Exceptions
have been found only where the claim is based on a bad faith breach of contract,
such as an insurer’s delay in making payments.52
IV
Whether sexual harassment in the workplace violates the public policy of
this State is not in dispute.  The issue in dispute here is whether Schuster occupied
a position with responsibility for implementing this State’s public policy to combat
sexual harassment in the workplace.
In its Order granting Derocili summary judgment, the Superior Court found
that Schuster failed to assert a responsibility for implementing a recognized public
                                          
51 See Kofron v. Amoco Chems. Corp., Del. Supr., 441 A.2d 226 (1982); Diamond State Tel.
Co. v. University of Delaware, Del. Supr., 269 A.2d 52 (1970); GMC v. McNemar, Del. Supr.,
202 A.2d 803 (1964).
52 See, e.g., Pierce v. International Ins. Co. of Illinois, Del. Supr., 671 A.2d 1361 (1995).
19
interest.  The Superior Court stated that Schuster “must satisfy a two-part test to
demonstrate a breach of the covenant of good faith and fair dealing under the
public policy category: (1) the employee must assert a public interest recognized
by some legislative, administrative or judicial authority and (2) the employee must
occupy a position with responsibility for advancing or sustaining that particular
interest.”53  The Superior Court found that Schuster “has not, and cannot,
demonstrate to the Court that she has the responsibility for implementing a
recognized public interest; therefore, her public policy exception claim must
fail.”54  We disagree and hold that nothing in Pressman or Souder is a bar to this
plaintiff’s standing to enforce the public policy exception.
Schuster contends that because she was as an employee to whom Derocili
allegedly made sexual advances, she necessarily occupied a position with
responsibility for advancing public policy condemning that conduct.  She argues
that if in fact the statutory remedy is not exclusive, and there exists a private cause
of action in contract, then if she cannot assert the public policy designed to protect
her by asserting that common law cause of action, it would be legally impossible
for any person similarly situated to enforce the public policy exception asserted
here.  The common law private cause of action would be meaningless. We agree.
                                          
53 Opinion at 7 (citing Pressman, at 442).
54 Id. at 8 (citing Lord, at 401).
20
Unlike the plaintiff in Lord v. Souder who was not a victim of a wrong proscribed
by public policy or a manager charged with a duty to enforce rules of the
organization, Shuster is an alleged victim directly injured by the alleged public
policy breach.  Accordingly, she has standing.
Because at-will employment has such a deep-rooted history, few exceptions
have been created.  One exception is where termination violates public policy.
Many cases in which the plaintiff argued that the termination violated public policy
involved a plaintiff who objected to certain business decisions or refused to
perform work-related duties because those business decisions and work-related
duties violated public policy.55  Combating sexual harassment in the workplace,
however, has nothing to do with deterring or thwarting a company from pursuing
its legitimate business goals.
Sexual harassment in the workplace is a systemic social problem that
involves a personal assault on the recipient.  Preventing it is of immense social
value, and combating it promotes the public policy of this State.  As such, the
unfortunate recipient of unwelcomed sexual advances holds a position of
responsibility contemplated by the public policy exception.  We do not believe that
                                          
55 See, e.g., Pierce v. Ortho Pharmaceutical Corp., N.J., 417 A.2d 505 (1980) (involving
physician discharged for refusing to conduct research using a substance physician personally
opposed); Sheets v. Teddy’s Frosted Foods, Conn., 427 A.2d 385 (1980) (involving quality
control director discharged for identifying deviations from company standards); Geary v. U. S.
Steel Corp., Pa. 319 A.2d 174 (1974) (involving steel salesman discharged for protesting the sale
of unsafe product).
21
standing to assert a claim for sexual harassment is confined to human resource or
compliance officers who are duty bound by the organization and the law to enforce
standards of conduct within a business and thereby excludes alleged victims of
sexual harassment from standing.  Therefore, we find that Schuster occupied a
position with responsibility for advancing Delaware’s policy of preventing sexual
harassment in the workplace.56
Our recognition of this compelling necessary exception in no way
constitutes an overbroad application of the implied covenant of good faith and fair
dealing that could thereby swallow the at-will employment doctrine and effectively
end at-will employment.  We merely recognize a common law cause of action that
provides employees with an important weapon to advance Delaware’s avowed
policy to assure civilized conduct in the workplace.
We hold, therefore, that Delaware recognizes a common law cause of action
for a breach of a covenant of good faith and fair dealing implied in an at-will
employment contract where a plaintiff alleges that her termination directly resulted
from her refusal to succumb to sexual harassment in the workplace.
                                          
56 We agree with the approach taken by the New Hampshire Supreme Court in Monge v. Beebe
Rubber Co.  In Monge, the New Hampshire Supreme Court held that an employer breached the
covenant of good faith and fair dealing when it terminated an employee for refusing the sexual
demands of her foreman.  We believe that Delaware’s public policy should be interpreted to
encourage every employee to resist sexual harassment and to combat it vigorously.
22
V
We next consider whether Schuster has a valid cause of action implied from
her complaint’s allegations that Derocili deceitfully manufactured false grounds for
her dismissal or manipulated employment records to create fictitious grounds for
termination.  Pressman suggests that a cause of action may arise from “acts of the
employer manifesting bad faith or unfair dealing achieved by deceit or
misrepresentation in falsifying or manipulating a record to create fictitious grounds
to terminate employment.”57  Schuster alleged that Derocili contrived fictitious
reasons of poor work quality to support her employment termination.  Given that
she asserted receiving performance-based bonuses as well as passing the required
probationary period, there exists a material issue of fact in dispute.  Viewing the
facts of this case in a light most favorable to Schuster, it appears that she has made
a prima facie claim that she has suffered harm derived “from [Derocili’s alleged]
creation of false grounds and manufacturing a record in order to establish a
fictitious basis for termination.”58  Schuster has presented evidence that a jury may
believe that Derocili “did these acts, and did them intentionally, [therefore,] they
amounted to a breach of the Covenant.”59  We therefore grant Schuster, on remand,
leave to amend her complaint to include a cause of action that Derocili violated an
                                          
57 See Pressman, 679 A.2d at 443-44; see also Lord, 748 A.2d at 400.
58 See Pressman, at 444.
59 Id.
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implied covenant of good faith and fair dealing when he allegedly falsified or
misrepresented the record to create fictitious grounds to terminate Schuster’s
employment.
VI
Schuster also argues that Derocili committed slander per se when he
qualified her work as substandard in the presence of her co-worker, Goff.60
Derocili argues that Schuster fails to show damage to her reputation in the
community.  Specifically, we find that Schuster’s claim necessarily fails because it
lacks publication, a necessary element to support a claim of slander.61  The
statements were made solely in the presence of Schuster and her supervisors.
There is no evidence in the record that these statements were published to any third
party.  We therefore AFFIRM the Superior Court’s grant of summary judgment on
the defamation by slander claim.
VII
We hold that Schuster’s complaint alleged a valid cause of action for breach
of an implied covenant of good faith and fair dealing arising from her at-will
employment contract based upon her refusal to succumb to alleged sexual
                                          
60 Schuster contends that Derocili defamed her by making a statement that maligned her in her
business or trade, one of the four slander per se categories in Spence v. Funk, Del. Supr., 396
A.2d 967, 970 (1978).
61 See Henry v. Delaware Law School of Widener University, Del. Ch., C.A. No. 8837, Lamb,
V.C. (Jan. 12, 1998) aff’d, Del. Supr., 718 A.2d 527 (1998) (affirming Court of Chancery finding
24
advances made by her employer in the workplace.  Sexual harassment in the
workplace violates not only the statute against discriminatory discharge based on
sex, it also violates the criminal laws and therefore the public policy of this State to
prevent and combat sexual harassment.62  Because Schuster’s employer directed
unwanted sexual advances to Schuster personally, she had an individual
responsibility to prevent or combat sexual harassment in her workplace.  Further,
her complaint contains sufficient facts to justify a cause of action based upon an
allegation that Derocili deceitfully manufactured a false basis for her termination.
Schuster’s complaint does, therefore, state causes of action with genuine issues of
material fact in dispute and Derocili was not entitled to summary judgment.  We
therefore REVERSE the Superior Court in part, AFFIRM, in part and REMAND
this case for proceedings consistent with this opinion.
                                                                                                                                       
that assuming statements were defamatory, liability will not attach unless plaintiff establishes an
unprivileged communication of the statements to a third party).
62 It is important to distinguish this case from Brett v. Berkowitz, Del. Supr., 706 A.2d 509
(1998) in which this Court determined that no private cause of action exists for sexual
harassment based upon 11 Del. C. § 673, which criminalizes sexual harassment.  In this case, it is
the violation of the public policy embedded in the implied covenant of good faith and fair
dealing that gives rise to the cause of action not the criminal statute.