Opinion ID: 1998182
Heading Depth: 1
Heading Rank: 1

Heading: discharge for cause

Text: Section 34-03-01, N.D.C.C., provides:  34-03-01. Termination of employment at willNotice required. An employment having no specified term may be terminated at the will of either party on notice to the other, except when otherwise provided by this title. The trial court instructed the jury that: North Dakota law recognizes an implied covenant of good faith and fair dealing in all contracts. In employment contracts, this means that neither party may do anything in bad faith that will injure the rights of the other to receive the benefits of the employment agreement. In order for Wayne Wadeson to prevail on this count, the preponderance of the evidence must show that he was dealt with unfairly and in bad faith in the termination of his employment contract. Factors which you may consider in determining whether Defendants breached their duty of good faith and fair dealing to Wayne Wadeson are duration of employment, commendations and promotions or lack thereof, employee evaluations, job performance, existing personnel policies, and any assurances or representations by the defendants that shows an implied promise by the employer not to act arbitrarily or unfairly in terminating his employment contract. The law, however, does not forbid a termination for legal cause related to the employer's legitimate interest in running the business. Wadeson does not complain of that instruction and says it was required under one of his theories of recovery. American Family, while arguing that the instruction went beyond North Dakota statutory requirements, concedes that the instruction is consistent with good faith rules adopted by other jurisdictions in cases dealing with allegations of wrongful discharge from employment. In the special verdict form, the jury was asked and responded as follows on this matter: D. Did the Defendants fail to deal in good faith and fairly in their termination of Wayne Wadeson? ANSWER: No. Because the jury found that American Family did not fail to deal in good faith and fairly in the termination of Wadeson, it is clear that American Family was not prejudiced by the instruction. Therefore, it is unnecessary for us to decide whether or not the jury was properly instructed on the matter of good faith and fair dealing. Asserting that he provided consideration independent of the personal services he was to perform, Wadeson argues that the trial court erred in refusing to instruct the jury on his theory that he could be discharged only for good cause. Wadeson relies on Cleary v. American Airlines, Inc., 111 Cal.App.3d 443, 168 Cal. Rptr. 722 (1980), Rabago-Alvarez v. Dart Industries, Inc., 55 Cal.App.3d 91, 127 Cal. Rptr. 222 (1976), Hrab v. Hayes-Albion Corp., 103 Mich.App. 90, 302 N.W.2d 606 (1981), Bussard v. College of Saint Thomas, Inc., 294 Minn. 215, 200 N.W.2d 155 (1972), and Pollock v. Welcome Wagon International, Inc., 199 F.Supp. 8 (D.N.D. 1961), for the proposition that one who has given independent or special consideration can only be discharged from his employment for good cause. We are not persuaded that those decisions compel the conclusion that Wadeson could be discharged only for good cause. In Rabago-Alvarez, supra, the plaintiff's employer had specifically assured her that she would not be discharged arbitrarily but only for good cause. Cleary, Hrab, Bussard, and Pollock, supra, merely allowed the plaintiff in each case an opportunity to attempt to prove a wrongful discharge by reversing a judgment entered on an order sustaining a demurrer, reversing a summary judgment, or denying a motion for summary judgment. The Cleary court did not apply the independent consideration rule in construing California Labor Code § 2922 (formerly Cal.Civ.C. § 1999, from which our § 34-03-01, N.D.C.C., was derived). After quoting the independent consideration rule set forth in 1 Witkin, Summary of California Law § 197, pp. 790-791 (8th ed. 1973) that ... [a] contract for `permanent employment' calls for the following distinction: (a) If it is supported by some independent consideration, it is not terminable at will, ... If not terminable at will, it is construed as an agreement for employment for a reasonable period...., the court noted that But only a few California courts have utilized the `independent consideration' qualification as justification for imposing liability on an employer for wrongful discharge. Cleary, supra, 168 Cal.Rptr. at 725-726. The court went on to embrace the rule stated in Patterson v. Philco Corp., 252 Cal.App.2d 63, 65, 60 Cal.Rptr. 110 (1967): `... The employer may be subject to damages for terminating the contract at will when such termination would be a violation of (a) public policy [citation], (b) a statute [citations], or (c) when the employee was engaged contractually to serve so long as he performed to the satisfaction of the employer [citation].' In our view, the Patterson summary more accurately defines the present state of the law. Cleary, supra, 168 Cal. Rptr. at 726. Without referring to § 34-03-01, N.D. C.C., we said in Syllabus 2, Sand v. Queen City Packing Company, 108 N.W.2d 448 (N.D.1961), that In the absence of a statute to the contrary, an employer has the right to discharge his employees, with or without cause, ... While we recognize that there have been inroads on the absolute right of an employer to terminate at-will employees ( Cleary, supra, 168 Cal. Rptr. at 726), none have been so wide or so deep as to support Wadeson's theory that he could be discharged only for good cause. The independent consideration that Wadeson points to in support of his argument that he could be discharged only for good cause consists of ... investing very substantial amounts of his money each year in the building of his district sales force. His annual investment would be at least $15,000.00 to $20,000.00 per year in recent times.... As evidence thereof, Wadeson points to copies of his U.S. Individual Income Tax Returns showing deductions for business expenses for such things as cash awards and prizes he offered as special incentives to his agents, automobile expenses (including depreciation), advertising, postage, supplies, telephone, promotion, travel, entertainment, utilities, repairs, insurance, and depreciation on a house. Even if we were inclined to adopt independent consideration as an exception to the terminable at-will rule in an appropriate case, we do not do so in this case. The types of things that Wadeson points to do not constitute independent consideration for his employment. While Wadeson's investment of money in building his district may have inured to the benefit of American Family, it is also clear that Wadeson stood to gain financially if his agents improved their efforts and sold more insurance. Wadeson testified that building his sales force for future years would benefit me and larger or future larger annual incomes plus a much larger retirement check. In addition, the district manager's agreement entered into by Wadeson and American Family specifically provides in Section 2: 2. The Manager accepts the appointment and agrees: a. To recruit, train, supervise and motivate agents in his district, subject to the direction of the Companies. b. To promote effectively the sale of all of the kinds of insurance and loans written by the Companies.       f. To pay all expenses incurred by him in the performance of his duties under this agreement, except as herein otherwise provided.... The fact that American Family publications represented employment with American Family as a `lifetime opportunity' and `permanent and stable business', as Wadeson asserts, does not bring Wadeson's employment within the scope of cases such as Rabago-Alvarez v. Dart Industries, Inc., supra , where the employer had specifically said that discharge would only be for good cause. We do not read such statements used in recruiting new agents to be promises either of permanent employment or that one will be discharged only for good cause. Further, the district manager's agreement provides that it may be terminated by any party as to its interest by giving written notice to the other and that any alteration or modification of its terms must be made by an agreement in writing signed by the parties. Nor has Wadeson pointed to any public policy or statute, other than that discussed in the next section of this opinion, to the contrary so as to fall within the scope of cases such as Sand v. Queen City Packing Company, supra , or Patterson v. Philco Corp., supra . The instruction given on an implied covenant of good faith and fair dealing was as favorable to Wadeson as he was entitled to under the evidence. ... The good faith standard offers the flexibility necessary to deal with basic considerations such as length of service, past job performance, type or level of employment, and the economic condition or needs of the firm.... A good faith standard does not force employers to retain workers who are clearly unsatisfactory; the goal should be to limit the employer's discretionary power in order to prevent bad faith discharges, not to give employees permanent job security.... Note, Protecting At Will Employees Against Wrongful Discharge: The Duty To Terminate Only In Good Faith, 93 Harvard Law Review 1816, 1840 (1980). The evidence did not warrant an instruction on Wadeson's theory that he could be discharged only for good cause. Error cannot be based on refusal to give requested instructions to the jury which are not warranted by the evidence. Syllabus 3, Munro v. Privratsky, 209 N.W.2d 745 (N.D.1973). The trial court did not err in failing to give an instruction on Wadeson's theory that he could only be discharged for good cause.