Court Opinion

ID: 9706497
Source: CourtListenerOpinion
Date Created: 2023-08-26 01:44:57.239608+00
Date Added: 2024-06-11T18:22:22.603696
License: Public Domain

Boyle, J.
I respectfully dissent. I agree with the conclusion that the Legislature’s failure to provide for a setoff of unemployment benefits requires application of the collateral source rule. Although I agree with Justice Cavanagh’s result, I write separately to state my reasons for joining in that conclusion.
As. the majority recognizes, we have limited damages for the claim created in Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579; 292 NW2d 880 (1980), to those recoverable in contract. Ante at 625. However, I disagree that that limitation requires offset of the benefits in question. Ante at 630-631. The doctrinal foundation of the Toussaint claim is neither fish nor fowl, neither wholly contractual nor wholly fault-based. Thus, the answer to the question before us cannot be found in' rote application of the distinction *651between contract and tort.1 Fundamentally, Toussaint is a fault-based doctrine. Indeed, we have now explicitly recognized that the "legitimate expectations” prong of the Toussaint doctrine is an equitable principle "not based on traditional contract analysis.” Rood v General Dynamics Corp, 444 Mich 107, 137; 507 NW2d 591 (1993); Bullock v Automobile Club of Michigan, 432 Mich 472, 480; 444 NW2d 114 (1989); In re Certified Question, 432 Mich 438, 447-448; 443 NW2d 112 (1989). Likewise, principles that are not grounded in traditional contract law have been associated with Toussaint’s "implied contract” prong. Valentine v General American Credit, Inc, 420 Mich 256, 263; 362 NW2d 628 (1984). While Valentine held that a Toussaint claim is an action for breach of contract and not a tort action, 420 Mich 259, it also stated:
An employment contract will indeed often have a personal element. Employment is an important aspect of most persons’ lives, and the breach of an employment contract may result in emotional distress. The primary purpose in forming such contracts, however, is economic and not to secure the *652protection of personal interests. The psychic satisfaction of the employment is secondary. [420 Mich 263.]
At common law, employers could dismiss their employees at will "for good cause, for no cause or even for cause morally wrong, without being thereby guilty of legal wrong.” Payne v Western & A R Co, 81 Tenn 507, 519-520 (1884). Toussaint changed the common law, holding that personnel policies and practices could create a just-cause employment contract, even when no preemployment negotiations take place and there is no mutual assent on the subject of job security. 408 Mich 613. Toussaint imposes a duty on employers to "adhere[] to stated company policies and goals” and entitles plaintiffs to pursue a cause of action when employers breach this duty. 408 Mich 615. Although we have characterized Toussaint as a contract action for some purposes, we distort history if we fail to recognize that Toussaint’,s sole ratio decidendi is that, in some circumstances, termination at will is unfair. Thus, rejection of the collateral source rule in this context cannot rest on a semantic distinction between fault-based causes of action and Toussaint claims.
Secondly, Toussaint claims involve a contract for labor that may be fairly characterized as a judicially created cousin to an unfair labor practice in which the principle item of recovery is lost earnings, Valentine, supra. While based on statute, it has been recognized that unemployment benefits are not earnings under the National Labor Relations Act, Marshall Field & Co v NLRB, 318 US 253; 63 S Ct 585; 87 L Ed 744 (1943), or under title VII, which traces its damage roots to the labor act. Ford Motor Co v EEOC, 458 US 219, 228-230; 102 S Ct 3057; 73 L Ed 2d 721 (1982). These remedies *653are "make whole,” not punitive. However, because no consideration is given to collateral losses, "manifestly no consideration need be given to collateral benefits which employees may have received.” NLRB v Gullett Gin Co, 340 US 361, 364; 71 S Ct 337; 95 L Ed 337 (1951). Benefits paid by a third party are collateral benefits. Id. See, e.g., Craig v Y & Y Snacks, 721 F2d 77, 83 (CA 3, 1983) (title VII case); Hayes v Trulock, 51 Wash App 795, 804-805; 755 P2d 830 (1988) (wrongful discharge case).
Thirdly, allowing a setoff of the entire amount of unemployment benefits received by plaintiff is an overcredit. Ante at 637. Michigan employers do not pay into the unemployment benefits fund dollar for dollar what the employee takes out. As the majority accurately observes, "[t]he Legislature has developed a complex formula for the funding of unemployment compensation benefits.” Ante at 637-638 (emphasis added). In addition, although in some sense paid for by the employer in the form of a tax, the unemployment benefits were not paid by the employer to the plaintiff, but, rather, were paid by the state out of state funds. To judicially approve a full deduction to the employer is to grant more credit than is due and to preclude reimbursement of the fund.
Finally, and most importantly, we have not been provided any information that would permit a satisfactory formulation of the true amount paid by the employer or appellate review of that finding. Thus, the amount deducted would be essentially arbitrary, a factor that has influenced courts denying the claimed offset. Brown v A J Gerrard Mfg Co, 715 F2d 1549, 1551 (CA 11, 1983) (en banc).
These observations do not suggest that the Legislature could not provide for a full or partial credit or for recoupment by the state. They do *654suggest that the nature of the claim does not dictate offset by the judiciary and support my colleagues’ conclusion that the Legislature’s failure to do so indicates that it does not disapprove of Pennington v Whiting Tubular Products, Inc, 370 Mich 590; 122 NW2d 692 (1963).
The failure to amend the Employment Security Act, while amending the Worker’s Disability Compensation Act2 to require offset, may indicate a legislative conclusion that Michigan’s rating formula for unemployment benefits is not readily translatable to the judicial forum. It may indicate that the Legislature has balanced the loss as a result of overpayment in the relatively rare instances of Toussaint recovery against the transitional costs to the administrative scheme and determined that the cost of recoupment by the fund3 is not justified. In all events, the value of the credit and the entity to whom credit is due are questions peculiarly within the legislative sphere. The Legislature has not provided a setoff although it has corrected those overlapping benefits it perceives to be a problem. We are faced with a simple question: whether to permit a wronged party to retain recovery from a collateral source, or allow the party in the wrong a credit greater than that paid. I would affirm the decision of the Court of Appeals._

 Writing before the days of judicial expansion of protection against arbitrary discharge, McCormick recognized that a fundamental change may be impending and that
[t]his might be worked out conceivably through the recognition of the willful and unjustifiable discharge of an employee, even though employed for an indefinite term, upon false charges or from inadequate reason, as a tort, for which emotional and punitive damages might be given. Short of that, the courts might expand their measure of compensation for breach of the employment contract by recognizing that deprivation of a job, if more than a casual one, not only affects usually a man’s reputation and prestige, but ordinarily may so shake his sense of security as to inspire, even in men of firmness, deep fear and distress. It is a question of judicial statesmanship whether interests such as these should come to be recognized in measuring damages for wrongful discharge. [McCormick, Damages, § 163, pp 638-639 (emphasis in the original).]

MCL 418.358; MSA 17.237(358).

 Observing that authority refusing to reduce the employer’s liability by the amount of unemployment benefits "seems correct,” Professor Dobbs in his treatise says:
Though the employee should not keep both the damages and the unemployment benefits the unemployment benefit fund should be allowed to recover its payment when full damages are paid. By holding that the employer gets no credit for unemployment benefits, the courts make such a recovery by the benefit fund possible. [Dobbs, Remedies, § 12.25, pp 925-926.]