Court Opinion

ID: 9600700
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:30:31.341838+00
Date Added: 2024-06-11T09:17:18.537513
License: Public Domain

Springer, J.,
dissenting:
About a month ago, this court issued its opinion in the case of Yeager v. Harrah’s, 111 Nev. 830, 897 P.2d 1093 (1995), in which it refused to let a Harrah’s employee have a jury trial because he did not furnish any corroborative evidence to establish that his contract with Harrah’s would not permit Harrah’s to terminate him without cause. I dissented in Yeager because the employee in that case offered ample evidence to support his employment contract and because I did not think that an employee should be thrown out of court simply because he had supplied no corroborative evidence to back up his own testimony. The injustice suffered by Mr. Yeager is mild compared to the injustice suffered by Mr. Martin in the present case. Mr. Martin was terminated for cause, yet this court characterizes him as an at-will employee as a matter of law and denies to Martin, too, his right to a jury trial on the factual issues relating to the nature of his employment contract.
Making employees furnish corroboration in employment contract cases and calling an employee who was terminated for cause an at-will employee as a matter of law represents to me a radical shift in the employer-employee law of this state. This shift (as I shall explain in this dissent) is brought about by one justice who has decided to switch his vote from his previous position and to join the position espoused by the dissent in D’Angelo v. Gardner and Western States Minerals Corp. v. Jones, 107 Nev. 704, 819 P.2d 206 (1991) (cited as D’Angelo) and Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d 261 (1983).
The question of whether Sears could fire Martin only for cause or had the right to fire him “at-will” is a complex question involving issues of fact that should go to a jury. By holding that Martin was at the time of his dismissal an at-will employee as a matter of law, this court is ignoring the factual issues inherent in this dispute and is denying to Martin his right to a jury trial. *933Martin is entitled to have the opportunity to prove to a jury that although Sears may have hired him as an at-will employee twenty-four years ago, over the years his employment with Sears ripened into a contract of continued employment so that Sears did not have the right to terminate his employment without cause.
Sears’ position is that Martin was hired twenty-four years ago as an at-will employee and that Martin’s employment status has remained the same. Sears claims that Martin, as a matter of law, could not and did not acquire any employment rights during his time with Sears and that the company could fire him any time it wanted to and without having any reason for doing so. The major flaw in Sears’ position and with its claim to a right to terminate Martin without cause is that, in fact, Sears terminated Martin for cause after giving notice to Martin of the company’s intention to terminate him for cause (the cause being, “documented misconduct”). If Sears believed it had the right to fire Martin only for cause and went about firing Martin for cause, then quite plausibly a jury might conclude from this fact alone that Sears had the right to fire Martin only if it had cause for doing so. If Sears believed that it could only dismiss Martin for cause, then a jury could believe the same.
Given the relationship that developed between Sears and Martin over the twenty-four-year employment period and given the reality that Sears did, in fact, terminate Martin for cause, about the only way that Sears could prevail, if the case went to trial, would be to show that once Sears hires an employee at-will, that employee remains at-will forever and may never be eligible for any other employment status. Martin would counter Sears’ claims by offering proof to the effect that although he was originally hired at-will, he later became entitled to certain privileges not accorded to newly-hired at-will employees, privileges which included the right to be terminated by no one other than a company vice-president and the right to remain on the job unless good cause was shown to terminate him.
As I see it, neither Sears’ position (once at-will, always at-will) nor Martin’s position (an at-will employment has ripened into a dismissal-only-for-cause employment) can be established as a matter of law. There are too many fact variables that must be resolved.1
*934In his concurring opinion Justice-Rose points to the fact that the documents presented by Sears at the time the company employed Martin “all spell out, in unambiguous terms, that Sears employees are employed at-will.” He then cites the following language in the Sears personnel manual.
The representations referring to causes for termination are not intended as any limitation on Sears termination authority, and should not give rise to any expectations of continued employment where such causes are not present.
I would agree with Justice Rose that Martin was at the time of his hiring “employed at-will,” but I would point out that Martin •is not contending that the statements in the employment documents relating to termination created any “limitation on Sears termination authority,” at the time Sears hired him. Everyone understands that on the day Martin was hired, he was an at-will employee and could be fired without cause. Martin is not saying that merely because the manual contained a list of “causes” for termination, this entry in the manual, of itself, endows him with contract rather than at-will status. Martin could not plausibly make such a contention because the manual does specify that at the time he was employed by Sears he was hired as an at-will employee. What Martin is contending is that after he was there for a while, Sears recognized and Martin accepted a change in Martin’s employment status and that Martin had attained certain contractual employment rights. There came a time during Martin’s employment with Sears when he could be terminated only by a vice-president of the company and when termination “required that a reason be given” for his termination. At the time he was terminated Martin had accumulated a bundle of rights that he did not have when he signed-on with Sears as an at-will *935employee. Recognizing these rights, Sears decided, after twenty-four years of service, to fire Martin for cause — for being dishonest. Having made that decision, Sears’ own rules prevented termination of Martin except at the hands of a company vice-president and then only when (1) Sears gave Martin the reason for the termination, and (2) in cases where the cause was dishonesty, Sears could prove either an admission of guilt or “conclusive evidence” of the dishonesty.
To hold that because Martin was hired as an at-will employee he must remain in this status forever is to ignore American Bank Stationery v. Farmer, 106 Nev. 698, 701, 799 P.2d 1100, 1101 (1990), which provides for situations like the present one and for the later adoption by the employer and the employee of an “implied contract. . . that [the] employer would fire him only for cause.” Under D’Angelo, an employee is entitled to show that the dealings and practices of the employer and the employee during the term of employment may support a jury finding that an employer had assumed contractual obligations not to discharge an employee except for cause. Sears acknowledged and carried out its obligations to notify Martin of the cause of his termination and undertook to prove dishonesty by “conclusive evidence.”
I have a hard time understanding how Justice Rose can now say that, under D ’Angelo, Martin does not even have the right to go to a jury on the factual issues relating to Martin’s employment status. Justice Rose ruled with the majority in D’Angelo and held that an employee is entitled to go to a jury on these kinds of issues. Although I agree with Justice Rose that “firing someone who fails to follow company policy or mishandles cash does not violate Nevada’s public policy” (Concurring Opinion at 4), I strongly disagree with Justice Rose’s opinion that Martin should be denied his right to a trial and denied his right to prove to Sears and to the world that he was not, as Sears has charged, guilty of dishonesty on the job.
I, of course, realize that our cases hold that “general expressions of job longevity” and the mere presence of “established disciplinary procedure[s] ” are not “sufficient to establish a prima facie case rebutting the at-will employment presumption.” Vancheri v. GNLV Corp., 105 Nev. 417, 422, 777 P.2d 366, 370 (1989). Martin, however, is not relying on general expressions of longevity or on the mere fact that disciplinary procedures were prescribed. Martin asks only for the right under D’Angelo and American Bank Stationery to prove to a jury that a contract of continued employment existed between Sears and him. Proof of such a contract is evidenced by the changes in Martin’s status that evolved during the term of his employment and by conduct on the part of Sears which is inconsistent with Martin’s being an at-will *936employee. Sears did not consider Martin as an at-will employee (Sears did not dismiss him at-will). Sears appears to me to have agreed expressly or impliedly to dismiss Martin only for cause.

Overruling D ’Angelo

Two years ago we decided to consolidate two wrongful discharge cases, D’Angelo v. Gardner and Western States Minerals Corp. v. Jones, 107 Nev. 704, 819 P.2d 206 (1991). In these opinions, the members of this court engaged for some fifty-eight pages in a debate on the meaning of “at-will” as the term relates to relatively long-term employees who lay claim, by reason of their tenure and their past dealings with their employers, to something more than an at-will job in which their employers are permitted to cast them off without any particular reasons for doing so, after long years of faithful service. A majority of this court held that Mr. D’Angelo, a twelve-year employee, had made out a triable jury case that he was not, at the time that his employer dismissed him, an at-will employee and that his employer had, during the employment period, assumed an “obligation of continued employment” which protected D’Angelo against whimsical at-will dismissal. Id. at 711, 819 P.2d at 211. D ’Angelo stands for the proposition that even in the absence of an express contract of continued employment, an at-will employment may grow into an employment relationship in which an employer has a “contractual obligation not to discharge the employee without first abiding by the conditions relating to dismissal which are . . . inferable from the dealings and practices of the parties.” Id. at 709, 819 P.2d at 209 (emphasis added).
Despite the kind of urgent protestations that were set forth by two of the justices in the D ’Angelo dissent, the law in this state has, for the past ten years2 and until today, remained constant: Even though employment relationships are presumed to be at-will, a contractual relationship as to tenure may be inferred from the dealings and practices of the parties, and an employee is entitled “to present evidence that the parties decided to forego ‘at-will’ status and enter into a contract relative to employment termination.” Id. at 708 n.3, 819 P.2d at 209 n.3.
I would be much more tolerant of the Majority’s abrupt change of position in employment law if it had acted in accordance with accepted judicial process and had expressly overruled the employee-rights jurisprudence of the past. As things now stand, no one really knows what our employment law stands for or what it means. I am saddened that such a radical change in our law must come about only two years after D ’Angelo merely because *937one of our justices, Justice Rose, has joined the position of the two dissenting justices in D’Angelo. We are back again on the at-will see-saw.

Understanding Martin’s Dismissal

To get a real grasp of what this case is all about, it is helpful to examine why Martin was targeted for dismissal. Martin’s dismissal was part of an organized plan by Sears to purge middle-management employees. In 1982, in order to make cut-backs in personnel costs, Sears adopted a plan for reducing its complement of permanent employees. By eliminating long-term employees and hiring new or part-time employees Sears believed that it would be able, overall, to pay lower salaries and to pay out less in salaries, profit sharing and other employee benefits, including retirement benefits. This employee-reduction plan had a name: “Ideal Basic Organization.”
Martin had been with Sears for twenty-four years at the time the company targeted him for annihilation under its “dreaded” (to quote Martin’s testimony) Ideal Basic Organization (IBO) plan. In order to further the goals of the IBO, Sears made what could very well appear to a jury as a pretextual and insubstantial charge of minor improprieties3 against Martin and dredged up some stale, minor rule violations out of Martin’s long employment past and used these violations as an excuse to terminate him for cause. The manner in which Sears effectuated its IBO plan in Martin’s case was that the company chose not to fire him outright and honestly but, rather, to force him to quit by reducing him in rank and salary so that after twenty-four years of service to Sears, *938the company ordered him back to about the same position that he was in when he first joined the Sears organization. Martin may have both a contract claim and a tort claim against Sears because of the way Sears treated him; and the trial court should not have entered judgment against him without giving him a trial.
Evidence in this case would support a conclusion that Martin’s employment relationship with Sears changed over the years. As a senior, managerial employee, Martin could not be terminated without the approval of a vice-president. It was because of this status that a Sears vice-president interfered with the process of dismissing Martin for cause and ruled that even in light of the charges of “documented misconduct” levied against Martin, the vice-president would “not allow [Martin’s accusers] to terminate him.” It would appear that Martin had reached a point in his relationship with Sears at which no one had the understanding or belief that he could be tossed away like an old shoe. To me it is highly probable that Sears management itself believed it could terminate Martin only if the company were able to prove conclusively “documented misconduct.”4
Employee misconduct is a serious charge; and, according to the Sears personnel manual, an employee may not be “released [for documented misconduct] unless the unit has a written statement signed by the employee admitting the act, or there is other conclusive evidence of the act.”5 (Emphasis added.) Since Martin *939made no written admissions of fault, it follows then that Sears, by the language of its own manual, had to prove its case against Martin by “conclusive evidence” before he could be “released.” It is hard to say whether this “conclusive” burden of proof is comparable to the beyond a reasonable doubt standard or the standard of clear and convincing evidence, but in either event Sears imposes on itself a heavy burden when it decides to discharge an employee for cause on charges of employee “misconduct.” In this regard I would point out first that if Sears really believed that Martin was an at-will employee, it is not likely that it would have undertaken to marshal “conclusive evidence” that Martin was guilty of “misconduct.” Secondly, I would say (although it really has no bearing on the question of whether Martin was an at-will employee as a matter of law) that it is plain from the record that there is no “conclusive” evidence that Martin was guilty of the type of wrongdoing that would have justified Sears in dismissing for cause this twenty-four year, permanent employee. Sears agrees that there was insufficient cause to terminate Martin. Sears’ counsel informs us that a Sears vice-president acknowledged: “No, you can demote him but I’m not going to allow you to terminate him.” I must assume from this statement that there were not sufficient grounds “to terminate” Martin. Whether, of course, demoting Martin to an entry-level employee was, in fact, the same as terminating him is a question that must be answered by a factfinder.6
In short, if the newly-aligned Majority of this court had not decided (without actually saying so) to overrule D ’Angelo and to refuse to permit a dismiss-only-for-cause employment contract to be “infer[red] from the dealings and practices of the parties,” this case would have to be sent back for a jury trial. D’Angelo, 107 Nev. at 709, 819 P.2d at 209. There are a number of dealings *940and practices of these parties from which a cause-only relationship could be inferred. The most telling of all are the “dealings and practices” engaged in by Sears when it decided to get rid of Martin.
Before I go on to consider Sears’ tort liability, I want to conclude by stressing the fact that, in its dealings with Martin, Sears never pretended that after all those years with the company it still had the right to fire Martin without cause. Surely employers can put into their handbooks and hiring documents a declaration that employment is to be at-will, but at-will at the time of hiring is not necessarily at-will forever.7

Bad Faith Discharge

Martin cannot state a tort action for breach of the implied covenant of good faith and fair dealing in this case unless he can first establish a contract of continued employment. See K Mart Corp. v. Ponsock, 103 Nev. 39, 47-52, 732 P.2d 1364, 1369-73 (1987). Should Martin establish a contractual right that goes beyond mere employment at-will, he is then in a position to make out a prima facie bad-faith discharge case.
The present case is controlled by Ponsock. In Ponsock, an at-will employee who had later become a permanent contract employee was fired based upon his employer’s “improper motive of defeating contractual retirement benefits.” Id. at 48, 732 P.2d at 1370. In a manner similar to the present case, K Mart decided to get rid of Mr. Ponsock because he was a well-paid, long-term employee whom K Mart had decided for its own purposes to terminate just as his retirement plan was due to vest. As Sears appears to have done in the present case, K Mart formulated a plan to terminate Ponsock for a contrived cause, thus eliminating Ponsock’s retirement entitlement and at the same time avoiding possible contractual claims that Ponsock might have against K *941Mart for wrongfully terminating his employment without cause. The cause that K Mart dreamt up to get rid of Ponsock was that Ponsock had violated company policy by sprucing up the battery cover on his company fork-lift with a little paint that Ponsock found in a refuse can. The K Mart scheme for termination of Ponsock on this subterfuge backfired, however, and the company ended up paying not only contractual damages but also tort damages for breach of the implied covenant of good faith and fair dealing.
I do not see how it can be said, if Martin can establish contractual rights to continued employment at Sears, that he failed in this case to make out a prima facie case for a tort claim under the Ponsock doctrine. The Ponsock doctrine was based on evidence in that case that Mr. Ponsock was wrongfully terminated “in order to save having to pay him retirement benefits provided for in the employment contract.” Ponsock, 103 Nev. at 42, 732 P.2d at 1365.
Drawing every reasonable inference in Martin’s favor, I see the same pattern in this case that I saw in Ponsock. Sears was not being honest. Martin was dismissed in accordance with a concerted plan by Sears to relieve itself of the financial burden inherent in keeping long-term employees, but Sears did not frankly say to Martin: “You do not fit into our employment scheme under our new Ideal Basic Organization policy; so you must go.” It is certainly arguable from the evidence in this case that Sears invented a phoney “cause” for getting rid of Martin that is very much like the battery-cover and paint story invented by K Mart when it wanted to get rid of Mr. Ponsock.8 If Sears had merely decided to get rid of Martin, and had forthrightly fired the man, his only claim would have been for breach of contract. There is evidence here, however, that Sears engaged in the same kind of subterfuge and bad faith that was used in Ponsock; and this is a basis for concluding that Sears might have acted tortiously.
In the Ponsock case we compared certain kinds of employment contract cases to insurance bad faith cases and, relying on this comparison, required, in bad faith employment cases, that the plaintiff be able to establish a “special relationship” between employer and employee that grew out of long-term employment and the employee’s reliance, as a “trusting party,” on the employer’s good faith in dealing with the employee. To my mind, if we were to accept all of Martin’s claims in the light most *942favorable to him (as we must), this is a much stronger tort case than Ponsock, and one that cries out more loudly for justice. Martin had been with Sears for twenty-four years, while Mr. Ponsock had been employed less than ten years. Additionally, Martin’s relationship with Sears was closer and involved more reliance on the employer’s good faith than that of K Mart and Mr. Ponsock. The record shows that Martin intended to make working for Sears his life work. Martin loved Sears and planned to stay there for life. He was proud to be a member of the Sears team — that is, until the “dreaded” Ideal Basic Organization plan became focused on- him.
Tort remedies were allowed in Ponsock because K Mart’s conduct went “beyond the bounds of ordinary liability for breach of contract.” 103 Nev. at 48, 732 P.2d at 1370. The same principle applies here, only more so. To save money and to try to avoid the possible eventuality of Martin’s recovering contract damages against Sears for wrongful discharge, a jury could reasonably find that Sears committed two bad faith acts: First, that Sears introduced a contrived “cause” to justify the termination of Martin (“documented misconduct”). Second, that instead of actually firing him, Sears used another subterfuge, “demotion” — “We’ll make it so miserable for you, you can’t possibly stay on.” Such actions by Sears would support a Ponsock bad-faith tort action.
Although we said in Ponsock that the case represented a “fact-specific instance of discharge by a large, nationwide employer of an employee in bad faith for the improper motive of defeating contractual retirement benefits,” 103 Nev. at 48, 732 P.2d at 1370, there is no reason why the Ponsock doctrine should be limited to bad faith cases in which only a single benefit of longevity, deprivation of retirement benefits, is involved.9 If, as one version of the facts in this case portrays, Sears, strictly for its own economic motives, deceived Martin and oppressively deprived him of his employee rights, it is not hard to construct a bad faith tort action out of this kind of corporate conduct: Sears would then have tortiously and intentionally deprived Martin of his life’s career, his income, the hard-earned benefits of employment longevity, and retirement benefits.
Martin has made out a prima facie case of breach of a contract of continued employment and of the tort of bad faith discharge. Summary judgment should never have been granted in this case. I would reverse and remand for trial on both the contract claim and the tort claim.

As I have maintained in the text of this dissent, the most persuasive evidence in this case in favor of Martin’s position is that Sears itself acted on the assumption that it could terminate Martin only if it had cause for doing so. I would note in addition that Sears’ written employment policy “requires that reasons for each such termination be clearly explained to the employee. Reasons for release should be documented.” Further, “[t]he Company has established certain procedures which are outlined in paragraph 2303 for *934handling these cases to make certain that every employee is treated fairly.” Given other language in Sears’ employment documents, Sears could probably argue successfully that newly-hired employees are at-will and that such language was a gratuitous and non-binding expression of intention which gives no enforceable rights to employees at the time they are hired. This argument must give way, however, in a case like this, when Sears actually undertakes the for-cause termination procedures, gives Martin notice of the “reasons for . . . termination” and goes about trying to prove “by conclusive evidence” that Martin was guilty of “misconduct.” If Sears had asserted its right to terminate Martin as an at-will employee and merely said, “You’re fired,” this would be a different case. Instead of doing this, Sears elected to prove cause by “conclusive evidence” by showing that Martin was guilty of “misconduct” in the form of dishonesty. It is hard for me to understand how Sears can straight-facedly maintain its employment-at-will position under these circumstances. I say in the text that both Sears and Martin have failed to establish their position as a matter of law, but to my mind, Martin has come very close to establishing his right to be terminated only for cause, as a matter of law.

Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d 261 (1983).

According to the record, Martin’s co-workers, Mike Flaherty and Mike Bergie, had told Martin about some money that had come into the Meadows Mall store’s restitution account. Mr. Flaherty suggested that the money be used to purchase maintenance agreements on in-store display of TVs and VCRs. An increase in the number of maintenance agreements sold would look good for the store. Martin took the idea to Ernie Staley, store manager, who gave his approval, and arrangements were made for the transaction. Jeff White, security manager, disapproved of this procedure and contacted a Sears Los Angeles group manager about it. This was the nature of the “misconduct” that led ultimately to Sears charging Martin with “misconduct.” That concurring Justice Rose would suggest that Martin was guilty of a “serious crime” under these circumstances, and suggest that he was subject to termination for criminal conduct is in my view a misreading of this case.
Martin’s position is simply that Sears did not have the right to fire him without cause and that the company proceeded under this assumption. Sears backed down on its charges of “documented misconduct” and instead forced Martin’s resignation by “demoting” him to an entry level job. Whether Martin was in fact a treacherous criminal or simply a man who was trying to look good in an intra-company sales competition is certainly a question of disputed fact that a factfinder should resolve.

Martin was disciplined under the Sears handbook for “documented misconduct.” The Concurring Opinion recognizes that Martin was disciplined for cause (something that would be entirely unnecessary in the case of an at-will employee) when it characterizes Martin as a felon and points out that there is “no public policy against demoting or terminating an employee who commits a felony . . .,” that is to say no public policy against dismissing such an employee for cause. This is exactly my point, there is no public policy against Sears’ terminating an employee who commits a felony on the job. Sears had every right to terminate Martin under the terms of the employee handbook if the company could have proved cause for termination by “conclusive evidence of the acts.” It is logical to conclude from the evidence in this case that Sears did not have the right to terminate Martin, absent conclusive proof of wrongdoing. Sears apparently fully understood this point, or it would not have gone ahead with its charges of misconduct against Martin. Unable to prove misconduct which warranted dismissal, Sears went ahead with its IBO plan and got rid of Martin anyway through the pretext of demoting him. Others may not see the facts in this light, but to rule that Martin had no contractual rights of any kind, as a matter of law, is clearly contrary to the facts and contrary to the wrongful discharge jurisprudence of this state prior to the realignment of judges referred to in the body of this Dissent.

Modern corporate management, as a rule, wisely recognizes that fair treatment of workers is not only morally right but also is practically effective and translates into loyalty and productivity on the part of workers. Many corporate employers, like Sears, establish policies and systems of performance evaluation, progressive discipline, termination for cause, and internal *939grievance resolution. These enlightened policies and procedures are not consistent with an untrammelled employer’s right to terminate any employee “for good cause, for no cause or even for cause morally wrong.” Payne v. W. & Atl. R. R. Co., 82 Tenn. 517 (1884). Giving employees a policy statement or employees’ bill of rights and then insisting that those rights can be withdrawn at any time and at the “will” of the employer is hypocritically unjust and out of harmony with present-day thinking in the field of labor relations, whether from the employer’s or the employee’s perspective.

See, e.g., Young v. Southwestern Sav. & Loan Ass’n, 509 F.2d 140, 144 (5th Cir. 1975), in which constructive discharge was defined in terms of an employer’s “deliberately makfing] an employee’s working conditions so intolerable that the employee is forced into an involuntary resignation.” Although there may be some room for thinking otherwise, certainly a factfinder would be justified in finding that getting rid of this permanent employee was what Sears intended, and that forcing Martin into such an obviously unacceptable, low-paying entry job can be seen as just part of Sears’ oppressive way of carrying out its IBO plan to terminate the Martins in the company.

We have expressly recognized that there are instances in which at-will hiring ripens into an employment contract. See K Mart Corp. v. Ponsock, 103 Nev. 39, 732 P.2d 1364 (1987). In Ponsock, the employee started out as an at-will employee and after years of service gained certain enforceable contractual rights to continued employment. As we noted in D’Angelo:
Employment contracts are ordinarily and presumably contracts which are terminable at-will; however, an employer may expressly or impliedly agree with an employee that employment is to be for an indefinite term and may be terminated only for cause or only in accordance with established policies or procedures. We have called this a contract of “continued employment!,] ” a contract which an employee can enforce in accordance with its terms.
D’Angelo, 107 Nev. at 711-12, 819 P.2d at 211. The Majority recognizes that “employers and employees remain free to contractually modify an employee’s at will status.”

It can be inferred from this record that one of the ruses which Sears allegedly instigated under the IBO plan was to transfer senior employees to inferior jobs with inferior pay and thus force them out of Sears employment.

Sears’ wrongful termination of Martin certainly resulted in a diminution of his retirement benefits. This would seem to put this case within the Ponsock rule, even it we were to construe it very narrowly.