Opinion ID: 1161670
Heading Depth: 3
Heading Rank: 1

Heading: Did Fred Meyer Breach the Implied Covenant of Good Faith and Fair Dealing in Its Termination of Belluomini?

Text: Belluomini argues that although he was an at-will employee, Fred Meyer's personnel manual and sexual harassment policy, as reinforced by his March 1994 meeting with Fred Meyer managers, gave him pre-termination rightsboth express and implied ensuring that his managers would conduct a thorough investigation of any future accusations of sexual harassment before disciplining him. By failing to conduct such an investigation, Belluomini claims, they breached the implied covenant of good faith and fair dealing. Belluomini insists that he presented sufficient evidence in support of these allegations to survive a directed verdict motion. In reviewing a directed verdict, we consider the evidence in the light most favorable to the non-moving party and will affirm the verdict only if fair-minded jurors could not reach different conclusions. [1] All at-will contracts carry an implied covenant of good faith and fair dealing. [2] As we have stated, [t]his covenant does not lend itself to precise definition, [3] but essentially requires that employers treat like employees alike [4] and act in a manner which a reasonable person would regard as fair. [5] The implied covenant contains both a subjective and an objective component: the subjective, good faith component prohibits an employer from terminating an employee for the purpose of depriving the employee of the contract's benefits; the objective, fair dealing component prohibits the employer from dealing with the employee in a manner that a reasonable person would regard as unfair. [6] Belluomini focuses on the fair-dealing component of the implied covenant. He asserts that even if Fred Meyer had a good faith reason for terminating his employment, the company nevertheless breached the covenant by failing to follow its own termination procedures, which establish an independent obligation of fair dealing. [7] At trial Belluomini drew this procedural rights argument from Fred Meyer's sexual harassment policy, which outlined a three-step process of investigating complaints of sexual harassment. Step 1 provides that the supervisor or human resources department will interview the accuser; Step 2 directs the supervisor or the department to interview witnesses; Step 3 calls for an interview of the accused employee, stating in relevant part: The accused employee has certain rights do not assume (s)he is guilty before the investigation is complete. No employee should be disciplined for sexual harassment without being given an opportunity to present his/her side of the story. Belluomini attempted to show at trial that Fred Meyer violated Step 3 by firing him before hearing his side of the story and by denying him information regarding the complaints. On this evidence, Belluomini contends, a jury could have found a breach of the implied covenant. In response to the other reasons Fred Meyer gave for his terminationnon-sexual harassment, intimidation, threats against employees, and insubordination (all behavior to which the sexual harassment policy did not apply and for which termination therefore could be immediate)Belluomini now argues that Fred Meyer invented these reasons after the fact solely to justify depriving Belluomini of his rights under its sexual harassment policy. Fred Meyer responds that it has maintained all along that it terminated Belluomini both for sexual harassment and for intimidation and threats to employees, both male and femalefor which termination is automatic and immediate; it did not have to provide Belluomini with any pre-termination rights. According to Fred Meyer's employee responsibility form, signed by Belluomini, Employee Conduct Which Will Result In Immediate Termination Without Prior Warning includes [i]nsubordination, such as willfully disobeying the instructions of an authorized person-in-charge, or disrespectful conduct toward a supervisor or person-in-charge and [o]ther employment-related misconduct which is determined by the company to be of an equally serious nature. Fred Meyer points out that Belluomini introduced into evidence a memorandum by manager Vernon Brown that describes the variety of misconduct that formed the basis for the decision to terminate Belluomini. Fred Meyer further points out that at trial Belluomini explicitly denied arguing that he had been fired in bad faith; he insisted that the merits of his discharge were irrelevant and offered no refutation of the accusations against him. Thus Fred Meyer contends that undisputed evidence at trial established that Belluomini was fired for a number of reasons besides sexual harassment. We agree with Fred Meyer. The evidence that Belluomini introduced supported his claim that Fred Meyer did not follow all of its policies for termination of an employee for sexual harassment. But Belluomini did not dispute the evidence Fred Meyer introduced to show that it had also terminated him for insubordination, non-sexual harassment, and intimidationconduct for which Fred Meyer's personnel manual provides no procedures analogous to those that apply under its sexual harassment policy. It was uncontested at trial that Belluomini was an at-will employee and that except to the extent specified in the sexual harassment policy, Fred Meyer did not need good cause to fire him. Belluomini asserts no legal or factual theory under which the procedural rights accruing to an employee under the sexual harassment policy might extend to an at-will employee fired for other misconduct. Belluomini has insisted that Fred Meyer's actual reasons for firing him were irrelevant to his implied covenant claim, arguing that this claim only concerned the procedural fairness of his termination, not the underlying substantive justification. He stated in an affidavit to the trial court that what my accusers say I did to harass them and Fred Meyer's belief that I committed harassment are not particularly germane to the issue in my case for unjust discharge. Given Belluomini's express disavowal of any claim of bad faith against Fred Meyer, his attempt to resurrect this issue on appeal is unavailing. [8] At trial Belluomini failed to controvert substantial evidence showing that Fred Meyer had numerous valid reasons for discharge apart from sexual harassment and that it acted in good faith in ordering his termination. Under these circumstances, we hold that the superior court properly directed a verdict in favor of Fred Meyer on Belluomini's implied covenant claim.