NO. 84-437

IN THE SUPREME COURTOF THE STATEOF MONTANA
1989

F. CLIFFORD HOBBS, Plaintiff andAppellant,-vsPACIFIC HIDEAND FUR DEPOT, a Montana corporation,
Defendantand Respondent.

APPEAL FROM: District Court of the Eighth Judicial District, Inand for the Countyof Cascade, TheHonorable Joel G. Roth, Judgepresiding.

COUNSEL OF RECORD:

For -: CharlesR. Johnson; Marra,Wenz, Johnson & Hopkins, GreatFalls,Montana J. Marquis Eastwood, StephenD. Bell; Dorsey & Whitney, Minneapolis,Minnesota 

# alu For Hesponnent:

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Tom L. Lewis;Regnier, Lewis & Roland, Great Falls, Montana Kenneth R. Olson;Rai-z& Olson, Great Falls,Montana

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, - : ! {- ! LC- . . ,,i Submitted.: May 12, 1988 Decided: March 31, 1989

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### Mr. Justice John C. Sheehy delivered the Opinion of the Court.

F. 

### Clifford Hohbs sued Pacific Hide and Fur Depot for his claimed wrongful discharge from employment in the District Court, Eighth Judicial District, Cascade County. His theories of recovery, which were submitted to the jury, included actual fraud, constructive fraud, hreach of the implied covenant of good faith and fair dealing, and negligentmisrepresentation. The jury verdict found against Hobbs on all of the theories of recovery, and, judgment havingbeen rendered thereon in favorof the defendant, Hobhs appealed from the judgment to this Court. We reverse and remand fornew trialas to the claim forbreach of an implied covenant of good faith and fairdealing,and affirm as to all other claims for relief. The reasons follow. Pacific Hide and Fur Depot is aMontana corporation that recycles scrap iron, copper, brass and aluminum, buys and sells cattle and game hides, fur, and sells steel, farm products and hardware. It has corporate offices in Great Falls, Montana, and 32 

### operating branches in the states of Montana, Wyoming, Idaho, Washington and Oregon. Its president at the time of the discharge of Hobbs was Joe Thiebes, Jr., who died on May 

### 1, 1982, two years before trial. Pacific had 450 

### employees in 1981. In 1983,Pacific reduced itswork force to 350 employees. Clifford Hobbs began his employment with Pacific in December, 1978. At that time, he had been employed in the retail steel industry for approximately 15years. Hehad met Roqer Palmer, Pacific's Billings branch manager and apparently came in the fall of 1978 to Great Falls for an

### employment interview. Hobbs claims that Palmer represented to him that he would have a bright future and job securitv with Pacific as long ashe competentlyperformed his job. He claims he was promised substantial salary, stock in the company,annual bonuses, and opportunity for advancement. He claims that these promises induced him to leave his employment with Wisconsin Steel, to move his family from Denver to Great Falls and to accept theposition of director of corporatepurchasing for Pacific. Hobbs maintains that Palmer made other promises which need not be enumerated here except to say that Hobbs claims hewaspainted a glowing future. After Hobbs went to work for Pacific, substantial frictiondeveloped between Palmer and Hobbs. Nonetheless, on August 14, 1980, he was promoted and given additional responsibility as manager of Branch 1 Steel in Great Falls. Although he was now holding two management jobs, as director of corporate purchasing, and as manager of Branch 1 

### Steel, Hobbs contended thathis compensationwas substantially below other branch managers. He also contendshe never received a promised substantial increase inhisbonus. Under his employment, Hobbs was required to report to Palmer,although other employeesat the same management level reported directly to the president or vice president of Pacific. Palmer continued to be disruptive, and on one occasion, increased the price of a contract by two percent

over a firm price that Hohbs had negotiated. This action resulted in the discipline of Palmer, and his removal as superior of Hobbs, after which Roger Palmer told Cliff Hobbs that Palmerwas "going to gethim." A few months later, however, the executive vice president placed Roger Palmer back over the purchasing department and required Hobbs to report directly to Palmer.

### By April 15, 1981, the executive vice president and Palmer determined that Hobbs would handle only purchasing, and he would again report to Roger Palmer. Other managers reported having trouble with Palmer. Hobbs was terminated from his employment on September 15, 1981, without prior notice. The decision to terminate Hobbs was made after ameeting between Thiebes, Vosburg, the executive vice president, and Palmer on September 15, 1981. At the same time, Thiebes circulated a letter to the other managers stating that Hobbshad not worked out as manager of Branch 1, although he had done an excellent job in purchasing. The letter stated it was a "subject lesson" to all managers, andwent on to state that the conflicts between Palmerand Hobbs "should now be resolved." Hobbs maintains that during the trial it was demonstrated that the problems at Branch 1,a drop in sales, low margin on sales, and a write-off of bad debts were not Hobbs

### ' fault. No other management level official was terminated. Hobbs also claims that other managers, before and after his termination, had worse records, but were not fired. Roger Pal-merwas terminated from the company in May, 1982, apparently because of unresolved intra-company conflicts with othermanagers. Other pertinent facts will appear under the issues to which theypertain. I 

### Hobbs' first attack is upon instructions given to the jury relating to the theory ofbreach of the implied covenant 

### of good faith and fair dealing. Hobbs contends that the given instructions were inadequate,placed an improperburden of proof upon the plaintiff, and amounted to a directed verdict in favor of the defendant upon the issue. From our

### examination, we find the instructions inadequate, confusing andmisleading,and therefore requiringreversal. First, a resumeofpertinent cases from this Court is in order. In Gatesv. Life ofMontana Insurance Company (1982), 196 Mont. 178, 638 P.2d 1063 (Gates I), we had an employee - 

### who was hired under an oral contract of indefinite duration. After shewas employed,the employer issued ahandbook, which assured employees that they would be given a hearing before termination. Gates was fired without a hearing. The employer claimed the right to discharge Gates without a hearing because she was an at-will employee. This Court reversed a summary judgment in favor of the employer,say;-ng:



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# .. The circumstances of this case are that the employee entered into an employment contract terminable at thewill of eitherparty at any time. The employer later promulgated a handbook of personnel policies establishing certain procedures with regard to terminations. The employerneed not have done so, hut presumably sought to secure an orderly, cooperative and loyal work force by establishing uniform policies. The employee, having faith that shewould be treated fairly, then developed the peace of mind associated with job security. If the employerhas failed to follow its ownpolicies, thepeace ofmind of its employees is shattered and an injustice isdone.

We hold that a covenant of good faith and fair dealing was implied in the employment contract of the appellant

# ..

# . Gates, 638

### P.2d at 1067. On remand to the District Court, Gates' casewas tried before a jury,which resulted in a verdict in her favor for both compensatory and punitive damages. In Gates

### v. Life of Montana InsuranceCompany (1983),205 Mont. 304, 668P.2d 213

(Gates 

### - 11), we sustained the punitive damage award on the grounds that a breach of an implied covenant for good faith and fair dealing in employment constituted a tort.

### Dare v. Montana PetroleumMarketing Companywas decided by this Court in 1984. 212 Mont. 274, 687 P.2d 1-015. The District Court had granted summary judgment against Dare because no handbook existed, such as in Gates. This Court stated:



# . .

# .We conclude that the District Court construed Gates too narrowly. 

### -- Whether a covenant of good faith and fair dealing is implied in the particular case depend.s upon objective manifestations the employer giving 

### - rise to the employees' reasonable belief thathe or she has job security and will be treated fairly. Gates, 638 at 1067, 39 St.Rep. at 20. Thepresence of such facts indicates that the term of employment has gone beyond the indefinite period contemplated in the at will employment statute, section 39-2-503,MCA, and is foundedupon somemore secure and objective basis. In such cases, the implied covenant protects the investment of the employee who in good faith accepts and maintains employment reasonably believing their job is secure so long as they perform their duties satisfactorily. Such an employee is protected from bad faith or unfair treatmentby the employer towhich the employeemay be subject due to the inherent inequality of bargaining power present in many employment relationships. The implied covenant seeks to strike a balance between the interests of the employer in controlling the work force and the interests of the employee in job security. Gates, 638P.2d at 1066-67,39 St.Rep. at 20.

We hold that an employment handbook aspromulgated by the employer in Gates is not essential to a cause of action for breach of the implied covenant of good faithand fairdealing. Implicationof the covenant depends upon existence of objective manifestations

# w the employer giving-rise to the employees reasonable belief that he or shehas job security and will be treated fairly. (Emphasis supplied.) 

### Dare, 687P.2d at 1020.In Crenshaw 

### v. Rozeman Deaconess Hospital (19841, 213 Mont. 488, 693 P.2d 487, this Courtheld that a probationary employee was owed the duty of good faith under Gates 

### - I, and that the duty coexisted with the right to terminate an at-will employee. This Court said:



# . ..This requirement of good faith and fair dealing does not conflict with section 39-2-503, MCA, [the at-will employment statute1 but merely supplements it. Employers can still terminate untenured employees at-will and without notice. They simplymay not do so inbad faith or unfairly without becoming liable fordamages. Crenshaw, 693 P.2d at 492. See also, Nye 

### v. Montana Livestock Department (1982), 196 Mont. 222, 639 P.2d 498. The natureof an implied covenantof good faithand fair dealing in a contract was described by this Court in Nicholson v. United Pacific Insurance Company (Mont. 1985)

### , 710P.2d 1342, 42 St.Rep. 1822. Therewe said part:



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# ..but whether performing or breaching, each party has a justifiable expectation that the other will act as a reasonableperson. (Citing a case.) The nature and extent of an implied covenant of good faith and fair dealing is measured - in - a particular contract

# -- by the justifiable expectations of the parties. Where oneparty acts arbitrarily, caprici~usly, orunreasonably,that conduct exceeds the justifiable expectations of the second party. The second party then should be compensated for damages resulting from the other's culpable conduct. (Emphasissupplied.)

The District Court in this case before 

### us gave two instructions that related to the issue of the implied covenantand good faith and fair dealing: COURT'S INSTRUCTIONNO. 

### 17 

### -- Mr. Hobbs has made claims concerning his dismissal from employment with Pacific Hide and Fur. You should understand that generally an employmentcontract for an indefinite term or period may be terminated at any time by either party, provided that party gives notice to the other. However, no prior notice is required, so that an employer or emplovee may tell the other that the employment contract is terminated on the same day notice is given. If you find thatMr. Hobbs and Pacifichad an employment contract with no specified term, then Pacific had the right to terminate Mr. Hobbs's employment at any time and for any reason. That is the general rule. I will now instructyou on the causesof action for breach of the implied covenant of good faith and fair dealing. If you find that Mr. Hobbs has proven by a preponderance of the evidence that the defendant breached the implied covenant of good faith and fair dealing, then you may find forMr. Hobbs. But if not, thenyoumust apply the general rule that an employment contract can be terminated for any reason or no reason at all. Good cause need not be shown for the termination.

An employer is entitled to be motivated by and to serve its own legitimate business interests; an employer must have wide latitude in deciding whom itwill employ in the face of the uncertainties of the business world; and an employer needs flexibility in the face of changing circumstances.

COURT'S INSTRUCTION

### NO. 19 

### -- You are instructed that the defendant Pacific Hide and Fur Depot owed plaintiff Clifford Hobbs an implied-in-law duty of good faith and fair dealing arising out of the emplover/employee relationship that existed between the parties. In considering whether the defendant acted in bad faith in the manner in which plaintiff Clifford Hobbs was treated during the employment relationship and at the time the plaintiff was discharged, you should consider all the evidence which tends to establish either good faith or bad faith. If you find that the defendant has violated this obligation imposed by law, theplaintiff is entitled tobe compensated for all detriment or injury proximately caused therebywhether that detriment or injury couldhave been anticipated or not.Taken together, the court's instructions failed to tell the jury the nature and extent of the implied covenant of good faith and fair dealing. The instructions informed the jury that as a matter of lawPacific owed Hobbsan implied in lawduty of good faith and fairdealing, but did not tell the jury that the implied covenant is measured in a particular contract by the justifiable expectations of the parties. Nicholson, supra. We therefore hold that the cause must be reversed for the failure to give proper instructionson this issue. A party has a right to have instructions given which are adaptable to his theory of the case. Northwestern Union Trust Company 

### v. Worm (1983), 204 Mont. 

### 184, 663 P.2d 325. Without binding either counsel or the District Court on retrial, we suggest that instructions to the jury might properly include the following: Montana statutory law provides that an employment relationship having no specific duration may be terminated at the will of eitherparty onnotice to the other. This is referred to as the at-will employmentdoctrine.
However, if there are objective manifestations by the employer giving rise to a reasonablebelief on the part of the employee that he has job security and will be treated fairly, the right of the employer to terminate the employee at will is limited by a covenant of good faith and fair dealing which the law implies into the employment relationship. An employer may still terminate an employeeatwill andwithout prior notice; however, the implied covenantof good faith and fairdealing requires the employer to have a fair and honest reason for termination,and not to act arbitrarily, capriciously orunreasonably. In this case the covenant of good faith and fair dealing is implied into the employment relationship,and you are instructed that a breach 

### of this covenant would render the employer liable to the employee for damages.In determining whether the defendant violated the duty of good faith and fair dealing, youmust balance the interests of the defendant in controlling its work forcewith the interestof the plaintiff in job security. An employer such as Pacific is entitled to bemotivated by and to serve its own legitimate business interest, and must be given discretion in determining who itwill employ and retain in employment. Thus, if the employer is motivated to discharge the employee for reasons unfair or not honest, the employee is entitled to recover damages proximately caused by the breach. On the other hand, if the employer was motivated by honest business reasons in discharging the employee, the employer had the right to terminate the employment on the same day as notice is given for the discharge.

Hobbs maintains that the District Court committed reversible error hy the manner in which it controlled the discovery and pretrial proceedings in this case. There are two items of pretrial discovery that ought to Se made available to Hobbs before any subsequent retrial.. Prior to the trial in the District Court, Hobbs requested of the defendant corporation that it produce two copies of all federal and state income tax records of the defendant corporation for the years 

### 1979 through 1982. Inasmuch as Thiebes' letter terminating Hobbs represented that one of the reasons for the termination was difficult economic times adversely affecting his financial standing in the corporation, the income tax records of the corporation were relevant to the reasons stated. Rule 26(b)(1)

## , M.R.Civ.P. It appears that Hobbswas entitled to production of these documents for his pretrial preparation, and for use at the trial asevidence.Also prior to the trial in the District Court, Hobhs requested of the defendant corporation information as to the salary and annual bonuses paid to all of thebranch managers of the corporation during 1979, 1980 and 1981. The court granted, after objection, the motion as to the salary and annual bonuses paid to the branch managers of Branches 

### 1, 2 and 40,and as to the other five branch managers of branches that sold steel in 1979, 1980 and 1981, those who received thehighest salary and annualbonuses in said years. During the trial, counsel for Pacific, in cross-examining Mr. Carestia, Hobbs' financial expert, used information relating to the salaries and bonuses of branch managers for the additional years of 1982 and 1983. An argument ensued between counsel before the court in chambers

as to whether the informationrelating to the years 1982 and 1983 had improperlybeenwithheld from Hobbs' counsel so that it was impossible to advise Carestia, prior to the trial, of such information in the preparation of his testimony. The record is not clear to us as to which counsel was correct with respect to whether the information had been requestedor supplied in time. In any future retrial of this cause, we direct that upon a proper request for discovery, information that may be used 

### by either party in direct or cross-examination of witnessesmust be supplied in accordance with the request forproduction. In this case, the District Court permitted the corporation's counsel to cross-examine Carestia on information which had not been supplied to the expert. The court felt that the jury was aware of the fact that the witness did not have the information that he was being questioned about and that on redirect examination by Hobbs' counsel, the jury would be made well aware of it. On that basis, the District Court permitted the cross-examination

### over objection. It is probable that the District Court was unable, as we are unable, to determine which of the parties

was right as to the extent of the request for the production of documents. In any event, this issue can be obviated on retrial if, on proper request forproduction, information is exchanged as to documents that will be used either fordirect or cross-examination of eitherparties'witnesses on retrial. The objective of the District Court in controlling and regulating discovery is to insure a fair trial to a11 concerned, neither according one party an unfair advantage

nor placing the other at a disadvantage. Massaro v. Dunham

(1979), 184 Mont. 400, 603 P.2d 249; Lindberg v. Leatham Rros., Inc. (1985),215Mont. 11, 693P.2d 1234. We find no merit in other issues raised 

### hy Hobbs as to discovery as regulated by the District Court, and it is unnecessary to set them forthhere. 111 At the time of the trial in this cause in the District Court, the corporation president involved in terminating Hobbs had died. In the course of the trial, through several witnesses, statements made by the deceased Thiebes to those witnesses were permitted into evidence. Hobbs raises a general objection to thiskind of evidence,claiminghearsay. At issue in this case, as indicated in the proposed instructions foregoing,iswhether the employerwasmotivated to discharge the employee for reasons unfair or not honest,

as a breach of the implied covenant of good faith and fair dealing. Therefore, the facts relating to themethod used by the deceased Thiehes in deciding to terminate Hobbs were relevant to those issues. Thus, it may be that statements made by Thiebes to others relating to the discharge of Hobbs would he indicativeof the facts consideredby him in makingthe discharge, as to whether he was acting fairly and honestly. V7hether a witness is available or not, under Rule 803(3),M.R.Evid., statementsare not excluded by thehearsay rule if those statements indicate the then existing mental, emotional or physical condition of the declarant. When a declarant is unavaj-lable as a witness, as for reason of death,Rule 804(a)(4),his statements are not excluded by the hearsay rule if there are comparable circumstantial guarantees of trustworthiness. Rule 804(a)(b)

### (5)

## ,M.R.Evid. Whether there are circumstantial guarantees of trustworthiness is amatter fordeterminationby the District Court in the first instance which will be upheld in this Court absent an abuse ofdiscretion. In any retrial of this case, those rules should guide the District Court in considering whether to admit such statements. IV Hobbs objects to an instruction given by the District Court on the subjectof constructive fraud on the ground that it was repetitious and misleading. The District Court submitted the issue of constructive fraud to the jury in a special interrogatory and the jury responded that the defendant had not committed constructive fraud whichwas the proximate cause

### of thedamages toHobbs. We do not comment on the instruction given by the District Court in this case for the reason that we find plaintiff's theory or basis for constructive fraud is not proper1.y conceived in this case. Statements were made 

### by Palmer to Hobhs before his employment that Pacific was a "gold mine," that Palmer was offering to Hobbs the "opportunity of a lifetime," and that Hobbs would be reporting directly to the president or executive vicepresident of the company and not to Palmer. Such statements are not the source of plaintiff's problems in this case nor are they demonstrahl-yfalse. The statements may arguably have given rise to justifiable expectations in Hobbs about his employment, but they do not constitute a basis for constructive fraud. It is true that defendant's fraudulent intent is not a necessary element inan action against it for constructive fraud,

### 5 28-2-406(I),MCA, nor must there exist a fiduciary or confidential relationship between the pl-aintiffand the defendant, Mends v. Dykstra (1981), 195 Mont. 440, 449-50, 637 P.2d 502, 507-08. Here, however, given the statements made, their nature, and the circumstances existing between the parties at the time the statements were made, Hobbs can show no duty imposed on Pal-meror any other officer of Pacific "to speak out on the circumstances," indicating that the statements were false or misleading and shouldnot be relied on. Palmer seems only to have expressed his opinion,belief or judgmenton the matters stated and not necessarily statementsof positive fact. See Restatement (Second) of Torts 

### 5 53821 Comments a-g (1977). These statements do not have in them the elements of concealment or falsity that characterize the statements or representations which led to the contract in McGregor IT. Momrner (Mont. 1986), 714P.2d 536, 43 St.Rep. 206, upon which case Hobbs relies on appeal. 

### v Accordingly, the judgment of the District Court in this case is reversed, and the cause remanded for retrial in accordance with thisOpinion. Cosfs toplaintiff.

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/ / Justice ( We Concur:

# A

Chief Justice

JusticesMr. JusticeFred J. Weber dissents:

The majority concludes thatreversal isrequired inthis

casebecause the instructions didnot tellthejury that the implied covenant ismeasured by the justifiable expectations of the parties. This conclusion isbased upon Nicholson v. United PacificInsurance Company (Mont. 1985),710 P.2d 1342, 42 St.Rep. 1822. It seems inappropriate to apply a legal theory which had not yet been statedby this Court. In the present case, the jury instructions were given on May 1, 1984, nearly one year prior tothe 1985Nicholson decision. I conclude there is no reversible error, and I would affirm thejury verdict and judgment forthedefendant. The facts stated inthemajority opinion present a very favorable picture of the plaintiff's claim. No facts are presented which suggest a basis forthejurv verdict for the defendant. However, the record demonstrates there were approximately 30 witnesses who testified in behalf of the defendant during a month long trial. I believe it appropriate to set forth some of the factswhich support the iury's verdict. When plaintiff firstwent towork for Pacific Hide and Fur Depot (Pacific), Mr. Palmer testified that Mr. Thiebes authorized him tooffer plaintiff a 532,000 per year salary plus an unknown bonus. There is no testimony from Pacific that anyone represented to plaintiff that he would receive any higher salary. Furthermore, plaintiff himself testified that he realized any bonus he might receive would be discretionarywithMr. Thiebes andwould have tobe approved by Mr. Thiebes prior to receipt. Mr. Palmer also testified that plaintiff said he was anxious to leave Colorado and move to Yontana. This testimony is relevant in considering the argument that the plaintiff was enticed tomove his familyfrom Denver to Great Falls based upon Pacific's representations of a "glowing future." SeveralPacific employees testified as to the dissension betweenplaintiffand Mr. Palmer and the disruptive effect it had on the purchasing department under plaintiff's supervision. TheVice-president of Pacific testified that plaintiff had an obsession with Mr. Palmer's interference with the purchasing department. An agent within the department testified to the effect that plaintiff was very candid about his dislike of Mr. Palmer and his disapproval of Mr. Palmer's ideas and the way he did things. Another purchasing agent testified that employees within the department found plaintiff tobe harsh and abusive,and that under his supervision, thedepartmenthad experienced a considerable loss ofmorale. The agent testified that he had considered resigning due to the pressure of having to work for plaintiff and had expressed that inclination to Mr. Thiebes. Plaintiff agreed that the problems he had with Mr. Palmer created confusion within the corporation and that the confusion spilled over into other corporatebranches. Witnesses testified that the plaintiff frequently complained abouthis immediate supervisor to individuals outside the company. These complaints were expressed to one individual who testified that because of plaintiff's statements, he formed a negative opinion ofMr. Palmer, and he believed that plaintiff's statements were destructive to the interests of Pacific. Another individualunrelated to the company testified that plaintiff's preoccupation with Mr. Palmer and his constant talk about the innerworkings of Pacific demonstrated a lack of professionalism. At one point, plaintiff told this individual about an "ultimatum" which he had given Mr. Thiebes a few months prior to his termination, indicating that "the situationwas unworkable" and that "itwill eitherhe Roger or him, and that was the way he wanted to resolve it." The record contains substantialevidence that theplaintiff had been advised of the need to cooperate with Mr. Palmer, his superior, and that if his performance did not improve, the plaintiff could be terminated. The evidence further demonstrated that shortly thereafter, the plaintiff contacted another steel company concerning alternative employment, and this contactwasmade prior to his termination by Pacific. Mr. Thiebes ultimately made the decision to terminate the plaintiff. Because Mr. Thiebes died prior to trial, we

are not able to ascertainall of his reasons for the termination. The record does establish that Mr. Thiebes was well

aware of the prohl-emsbetween the plaintiff and Mr. Palmer. He had also been told that the purchasing department was experiencingmorale problems and that an employeewas considering resignation. Supervisory employees of Pacific had indicated to Mr. Thiebes that if Pacific had to choose between the plaintiff and Mr. Palmer, it would 

### be wise to terminate the plaintiff and retain Mr. Palmer. Mr. Palmer

was described by several other Pacific empl.oyees as being

more knowledgeable of the steel business and more dedicated to thatbusiness thanwas theplaintiff. Otherkey employeestestified that theplaintiff experienced a lack of effort when he was managing branch I of the steel business as well corporate purchasing. Mr. Thiebes' letter of termination stated that the economic times and the plaintiff's inability to manage branch I along with his purchasing duties were the primarv causes for his termination. Such evidence supports the contention of the defendant that its decision to terminate the plaintiff was a soundbusiness decision. The jury accepted that idea, as d-emonstratedby the followingquestionpresented to it:

Do you find that defendant Pacific Hide and Fur breached an implied covenantofqood faithand fair dealing to thi plaintiff, which was a proximate cause ofdamages toplaintiff Clifford Hobbs? To that question the jury answered, "No." There is clearly substantial evidence to support the conclusion of the jury. Ido not find a factual basis for trial reversal. In ordering a retrial, I note that almost 8 years have passed since the date of termination and 5 years since the trial. We are posing a difficult trial problem for all parties by the present reversal. The basic reason for reversal stated in part I of the majority opinion is that the instructions were inadequate. The problem instructions were 

### 17 and 19. Instruction 

### 19 stated:

You are instructed that the defendant Pacific Hide and Fur Depot owed plaintiff Clifford Hobbs an implied-in-law duty of good faith and fairdealing arising out of the employer/employee relationship that existed between the parties. In considering whether the defendant acted in bad faith in the manner inwhich plaintiffClifford Hobbs was treated during the employment relationship and at the time the plaintiff was discharged, you should consider all the evidence which tends to establish either good faith or bad faith. If you find that the defendant has violated this obligation imposed by law,theplaintiff is entitl-edto be compensated For all detriment or injury proximately caused therebywhether that detriment or injury couldhave been anticipated or not.
The instruction stated that the District Court concluded that the duty of good faith and fair dealing did arise in the present contract. As a result there was no need to require the iury to weigh any circumstances to determine if such acovenant was appropriate. The majority refers to Gates I, pointing to the circumstancesunder which a covenant of good faith and fairdealing may be implied. That does not appear relevant where the District Court already concluded that the covenant did arise in the present contract. In a similar manner, the majority refers to Dare with emphasis upon the objective manifestationsby an employer fromwhich the covenant may be implied. Again, that does not appear relevant where the trial court had already reached that conclusion. As previously mentioned, that "measurement" of the justifiable expectations of the partieshad not been enunciatedby this Court at the time of trial. While theNicholson wording was notused in thepresent case,it seems tome that instruction 19 containsa good explanationof the duty. That instruction stated that in considering whether the defendant acted inbad faith, the jury may consider themanner in which the plaintiffwas treated during the employment relationship and 

### ---- at the time the plaintiff was discharged. The instruction furtheremphasizes that the iurv should consider 

### -- all the evidence which tends to establish either good or bad faith. It endswith the statement that if the jury finds the defendant has violated this obligation, the plaintiff is entitled to compensation for all injury proximately caused by that violation. Iconclude this isa fair statement of the lawas it existed andwas available to the trial judge and attorneys during the 1984trial. The jury was also instructed on the nature of the at-will employment contract and how the cause of action for breach of the implied covenant interplays with that relationship in instruction 

### 17which states in part that:

If you find thatMr. Hobbs has proven by apreponderanceofthe evidence that the defendantbreached the implied covenant of good faith and fairdealing, then you must find forMr. Hobbs. But if not, then you must apply the general rule that an employment contract can be terminated for any reasonorno reasonat all.

I conclude there is no basis for reversal because of the wording of jury instructions 

### 17and 19. Iwould affirm the verdict of the jury and the judgment of theDistrictCourt.

Mr. Justice L. C. Gulbra the foregoing dissent.