Opinion ID: 2624923
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: The issue presented on appeal is a question of law which we review de novo. Wilson Court Ltd. P'ship v. Tony Maroni's, Inc., 134 Wash.2d 692, 698, 952 P.2d 590 (1998). In Washington, the general rule is that an employer can discharge an at-will employee for no cause, good cause or even cause morally wrong without fear of liability. Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 226, 685 P.2d 1081 (1984). Conversely, in the absence of a contract stating otherwise, an employee has the absolute right to abandon his or her employment at-will. This common law at-will employment doctrine has been the background employment rule in Washington since at least 1928. See Davidson v. Mackall-Paine Veneer Co., 149 Wash. 685, 688, 271 P. 878 (1928); see also Prescott v. Puget Sound Bridge & Dredging Co., 40 Wash. 354, 357, 82 P. 606 (1905) (Mount, C.J., dissenting) (where [an employment] contract is general and for an indefinite time, it is terminable at will.). As a device of the common law, the doctrine is subject to modification by the legislature, the courts, and the parties themselves. However, absent statutory, judicial, or contractual modifications to the employment relationship, the at-will employment doctrine limits an employee's reasonable expectations to compensation for work performed. Thompson, 102 Wash.2d at 228-29, 685 P.2d 1081. There are three recognized exceptions to the general at-will employment rule. First, both Congress and the Washington State Legislature have modified the employment at-will doctrine by limiting employers' rights to discharge employees. See National Labor Relations Act, 29 U.S.C. § 158(a)(1) (1994); Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a)(1) (1994); chapter 49.60 RCW (Washington's law against discrimination); see also chapter 49.12 RCW (prohibiting discharge of employees for testifying in investigations regarding labor conditions, worker earnings, or sex discrimination); RCW 49.44.090 (prohibiting discharge of employee for being age 40 and over). These laws create an exception to an employer's right to discharge an employee by establishing and protecting the employee's rights in those specific situations. The Legislature has specifically authorized lost earnings as damages when an employer wrongfully discriminates against an employee. See RCW 49.60.030(2) (creating cause of action allowing discrimination victims to sue for actual damages); Xieng v. Peoples Nat'l Bank of Wash., 63 Wash.App. 572, 583, 821 P.2d 520 (1991) (Actual damages include `damages for injury in fact, as distinguished from exemplary, nominal or punitive damages.' (quoting Ellingson v. Spokane Mortgage Co., 19 Wash.App. 48, 58, 573 P.2d 389 (1978))), aff'd, 120 Wash.2d 512, 844 P.2d 389 (1993). The Xieng court noted that lost earnings are a type of actual damages awarded in Title 7 employment discrimination suits which compensates victims `for the continuing future effects of discrimination[.]' Xieng, 63 Wash.App. at 583, 821 P.2d 520 (quoting Pitre v. W. Elec. Co., 843 F.2d 1262, 1278 (10th Cir.1988)). Second, we have recognized a narrow public policy exception to an employer's right to discharge an employee. See Smith v. Bates Technical Coll., 139 Wash.2d 793, 991 P.2d 1135 (2000) (public policy exception to for-cause employees); Gardner v. Loomis Armored, Inc., 128 Wash.2d 931, 913 P.2d 377 (1996) (discharge of armored truck driver who abandoned post to prevent murder violated public policy). Under this exception, an employer does not have the right to discharge an employee when the termination would frustrate a clear manifestation of public policy. Smith, 139 Wash.2d at 804-08, 991 P.2d 1135; Gardner, 128 Wash.2d at 949-50, 913 P.2d 377. By recognizing this public policy exception, this court expressed its unwillingness to shield an employer's action which otherwise frustrates a clear manifestation of public policy. Thompson, 102 Wash.2d at 231, 685 P.2d 1081. Absent reinstatement, awarding a wrongfully terminated employee his or her lost earnings is the only reliable method of remedying the employee's injury. Lost earnings are available in these claims because an action for discharge in violation of public policy sounds in tort. Damages is a term used in torts to denote an award made to a person by a competent judicial tribunal ... because of a legal wrong done to him by another. Restatement (Second) of Torts § 902 cmt. a (1979). Tort actions are maintainable for a variety of reasons: to compensate injured parties; to determine parties' rights; to punish wrongdoers and deter wrongful conduct; and to vindicate parties and deter retaliation. Restatement (Second) of Torts § 901. The measure of damages in tort [is] based upon the purposes for which actions of tort are maintainable. Restatement (Second) of Torts § 901. Awarding lost earnings to an employee discharged in violation of public policy compensates the employee's pecuniary loss, punishes the employer and deters future wrongful discharges, and vindicates the employee's actions that gave rise to the initial termination. The fact such a remedy exists is not a testament to the ease with which it can be calculated. Rather, such a remedy reflects an understanding that if it were unavailable, the courts could not enforce sound public policy by remedying legal wrongs. Third, employers and employees can contractually modify the at-will employment relationship, eschewing the common law rule in favor of negotiated rights and liabilities. Thompson, 102 Wash.2d at 228-30, 685 P.2d 1081. An employer can bargain away its right to discharge an employee without cause by contracting not to do so. Thompson, 102 Wash.2d at 228, 685 P.2d 1081. The law governing this exception is not a species of the employment at-will doctrine; it is the law of contracts. Therefore, the law of contracts governs an injured party's right to recover damages under this exception. Thompson, 102 Wash.2d at 230-32, 685 P.2d 1081. Unlike a wrongful discharge, a breach of contract is neither immoral nor wrongful; it is simply a broken promise. See Thompson, 102 Wash.2d at 231-32, 685 P.2d 1081. Ford's claim is based on Trendwest's breach of contract to rehire him as an at-will employee. To the extent possible, the law of contracts seeks to protect an injured party's reasonably expected benefit of the bargain: Contract damages are ordinarily based on the injured party's expectation interest and are intended to give that party the benefit of the bargain by awarding him or her a sum of money that will, to the extent possible, put the injured party in as good a position as that party would have been in had the contract been performed. Mason v. Mortgage Am., Inc., 114 Wash.2d 842, 849, 792 P.2d 142 (1990). The central objective behind the system of contract remedies is compensatory, not punitive. Punishment of a promisor for having broken his promise has no justification on either economic or other grounds.... Restatement (Second) of Contracts § 356 cmt. a (1981). See also Restatement (Second) of Contracts § 355 cmt. a (courts in contract cases do not award damages to punish the party in breach or to serve as an example to others unless the conduct constituting the breach is also a tort for which punitive damages are recoverable.). Employment contracts are governed by the same rules as other contracts. Kloss v. Honeywell, Inc., 77 Wash.App. 294, 298, 890 P.2d 480 (1995). Thus, Ford argues, once the breach of contract was established, Ford's damages were limited only by their foreseeability. See Gaglidari v. Denny's Rests., Inc. 117 Wash.2d 426, 446, 815 P.2d 1362 (1991) (damages recoverable for a breach of contract are those which `may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from [the] breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.' (quoting Hadley v. Baxendale, 9 Ex. 341, 354, 156 Eng. Rep. 145, 151 (1854))). But a contract confers no greater rights on a party than it bargains for. In other words, a party to a contract has a contractual right only to that which it bargained forits reasonable expectation. The parties do not dispute Ford bargained for at-will employment, nor does Ford dispute Trendwest could have hired him as an at-will employee and then immediately fired him without fear of liability. An employee's expectations under an employment at-will contract are no different from the employment itself. Although Ford presents compelling facts that suggest he was treated unfairly by Trendwest, we are unwilling to abandon the long-standing distinction between at-will employment and for-cause employment. Since we are dealing with an at-will employment contract for hire and not a for-cause employment contract for hire, the question is whether we should treat the breach of one different from the breach of the other. The answer is yes, and the reason is because if we treat them the same (i.e., if the breach of either gives rise to expectation damages), there will be no difference between at-will or for-cause employment. When the parties contracted for at-will employment, Ford had no greater expectations than an at-will employee, and Trendwest had no fewer rights than an at-will employer. The contract did not modify the at-will employment relationship, and Ford's claim does not fall within a recognized exception to the employment at-will doctrine. Ford does not allege his discharge was discriminatory nor does he claim it violated public policy. Although Ford entered into a contract with Trendwest, neither party bargained for something other than employment at-will. Nothing in this contract changed the at-will employment relationship. The Court of Appeals in Bakotich reached the right result but for the wrong reasons. The court held that in a breach of an employment at-will contract case, anticipated lost earnings evidence is highly speculative and [therefore] properly excluded by the trial court. Bakotich, 91 Wash.App. at 316-17, 957 P.2d 275. But to simply characterize lost earnings as speculative does not fairly explain why they are available to remedy a wrongful discharge but not a breach of contract. We hold lost earnings cannot measure damages for the breach of an employment at-will contract because the parties to such a contract do not bargain for future earnings. By its very nature, at-will employment precludes an expectation of future earnings. Because Ford did not bargain for future earnings, he cannot claim they measure the harm he sustained by Trendwest's breach. To hold that Ford reasonably expected future earnings under his employment at-will contract would create a new exception to the at-will employment doctrine not supported in law. [4] Other courts have reached the same result. [5] The Michigan Court of Appeals addressed an almost identical factual situation and reached the same conclusion. Sepanske v. Bendix Corp., 147 Mich.App. 819, 384 N.W.2d 54 (1985) (per curiam). In that case, Sepanske left his employment at-will position after relying on Bendix's promise to rehire him in an equal or better position. Sepanske, 147 Mich.App. at 822-23, 384 N.W.2d 54. A jury found Bendix breached its contract, but the appellate court limited Sepanske's damages to a nominal amount. The court held Sepanske contracted for at-will employment and he had no actionable expectation that any such restoration would be permanent. Sepanske, 147 Mich.App. at 829, 384 N.W.2d 54. Because an employer can alter or terminate at-will employment without consequence, [t]here [was] no tangible basis upon which [to assess] damages where plaintiff's expectation was for an at-will position which could have been changed or from which he could have been terminated without consequence. Sepanske, 147 Mich. App. at 829, 384 N.W.2d 54. We agree with this analysis. Sepanske is consistent with our case law, and Ford has cited no authority to support his argument that a party to an employment at-will contract is entitled to future earnings. Ford, therefore, falls under the default rule: an employer can discharge an at-will employee for no cause, good cause or even cause morally wrong without fear of liability. Thompson, 102 Wash.2d at 226, 685 P.2d 1081.