Borse v. Piece Goods Shop, Inc., 91-1197

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Citation963 F.2d 611
Docket NumberNo. 91-1197,91-1197
Parties, 121 Lab.Cas. P 56,894, 122 Lab.Cas. P 57,001, 7 IER Cases 698, 7 IER Cases 800, 7 IER Cases 977 Sarah BORSE, Appellant, v. PIECE GOODS SHOP, INC.
Decision Date06 July 1992

Page 611

963 F.2d 611
60 USLW 2741, 121 Lab.Cas. P 56,894,
122 Lab.Cas. P 57,001,
7 IER Cases 698, 7 IER Cases 800, 7
IER Cases 977
Sarah BORSE, Appellant,
No. 91-1197.
United States Court of Appeals,
Third Circuit.
Argued July 31, 1991.
Decided May 13, 1992.
As Amended May 29, 1992.
Order on Denial of Rehearing July 6, 1992.

Page 613

Hyman Lovitz (argued), Sidney L. Gold, Philadelphia, Pa., for appellant.

Richard E. Santee, Jr. (argued), Bethlehem, Pa., for appellee.

Before BECKER, SCIRICA, and ROTH, Circuit Judges.


BECKER, Circuit Judge.

Plaintiff Sarah Borse brought suit against her former employer, Piece Goods Shop, Inc. ("the Shop"), in the district court for the Eastern District of Pennsylvania. She claimed that, by dismissing her when she refused to submit to urinalysis screening and personal property searches (conducted by her employer at the workplace pursuant to its drug and alcohol policy), the Shop violated a public policy that precludes employers from engaging in activities that violate their employees' rights to privacy and to freedom from unreasonable searches. Pursuant to Federal Rule of Civil Procedure 12(b)(6), the district court dismissed her complaint for failure to state a claim on which relief could be granted. This appeal requires us to decide whether an at-will employee who is discharged for refusing to consent to urinalysis screening for drug use and to searches of her personal property states a claim for wrongful discharge under Pennsylvania law.

Because we predict that, under certain circumstances, discharging a private-sector, at-will employee for refusal to consent to drug testing and to personal property searches may violate the public policy embodied in the Pennsylvania cases recognizing a cause of action for tortious invasion of privacy, and because the allegations of Borse's complaint are not sufficient for us to determine whether the facts of this case support such a claim, we will vacate the district court's order and remand with directions to grant leave to amend.


Because of the procedural posture of this case, we begin with a summary of the allegations of the complaint. Borse was employed as a sales clerk by the Piece Goods Shop for almost fifteen years. In January 1990, the Shop adopted a drug and alcohol policy which required its employees to sign a form giving their consent to urinalysis screening for drug use and to searches of their personal property located on the Shop's premises.

Borse refused to sign the consent form. On more than one occasion, she asserted that the drug and alcohol policy violated her right to privacy and her right to be free from unreasonable searches and seizures as guaranteed by the United States Constitution. The Shop continued to insist that she sign the form and threatened to discharge her unless she did. On February 9, 1990, the Shop terminated Borse's employment.

The complaint alleges that Borse was discharged in retaliation for her refusal to sign the consent form and for protesting the Shop's drug and alcohol policy. It asserts that her discharge violated a public policy, embodied in the First and Fourth Amendments to the United States Constitution, which precludes employers from engaging in activities that violate their employees' rights to privacy and to freedom from unreasonable searches of their persons and property. Plaintiff seeks compensatory damages for emotional distress, injury to reputation, loss of earnings, and diminished earning capacity. She also alleges that the discharge was willful and malicious and, accordingly, seeks punitive damages.



A. Choice of Law and Scope of Review

The district court's subject-matter jurisdiction was based on diversity of citizenship pursuant to 28 U.S.C. § 1332. The jurisdiction of this court is founded upon 28 U.S.C. § 1291.

Federal courts sitting in diversity must apply the substantive law of the state whose laws govern the action. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). Our review of the district court's prediction and application of Pennsylvania law is plenary. Smith v. Calgon Carbon Corp., 917 F.2d 1338, 1345 (3d Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1597, 113 L.Ed.2d 660 (1991). Because the Pennsylvania Supreme

Page 614

Court has not addressed the question whether discharging an at-will employee who refuses to consent to urinalysis and to searches of his or her personal property located on the employer's premises violates public policy, we must predict how that court would resolve the issue should it be called upon to do so. Smith, 917 F.2d at 1341; Robertson v. Allied Signal, Inc., 914 F.2d 360, 364 (3d Cir.1990). Although decisions by Pennsylvania's intermediate appellate courts are not conclusive in predicting how the state's highest court would decide an issue, they suggest how that court might decide and may constitute presumptive evidence of state law in appropriate circumstances. McGowan v. University of Scranton, 759 F.2d 287, 291 (3d Cir.1985).

B. Recognition of the Exception by the Pennsylvania Supreme Court

Ordinarily, Pennsylvania law does not provide a common-law cause of action for the wrongful discharge of an at-will employee. Rather, an employer "may discharge an employee with or without cause, at pleasure, unless restrained by some contract." Henry v. Pittsburgh & Lake Erie Railroad Co., 139 Pa. 289, 21 A. 157, 157 (1891) (quoted in Smith, 917 F.2d at 1341).

In Geary v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974), however, the Pennsylvania Supreme Court recognized the possibility that an action for wrongful discharge might lie when the firing of an at-will employee violates public policy. Geary, a salesperson, complained to his immediate superiors about the safety of his employer's product. After being told to "follow directions," Geary took his complaints to the vice-president in charge of the product. As a result, the company withdrew the product from the market, but discharged Geary.

Geary argued that an exception to the at-will doctrine was warranted in his case because his dismissal was contrary to public policy. The Pennsylvania Supreme Court disagreed, relying upon two factors to decide that Geary's case did not merit an exception. First, the court observed that Geary was not responsible for monitoring product safety and that he did not possess expertise in that area. 319 A.2d at 178-79. Second, the court noted that Geary had violated the internal chain of command by pressing his concerns before the vice-president. Id. at 179-80.

Summarizing its decision, the court stated:

It may be granted that there are areas of an employee's life in which his employer has no legitimate interest. An intrusion into one of these areas by virtue of the employer's power of discharge might plausibly give rise to a cause of action, particularly where some recognized facet of public policy is threatened.... [However, w]e hold only that where the complaint itself discloses a plausible and legitimate reason for terminating an at-will employment relationship and no clear mandate of public policy is violated thereby, an employee at will has no right of action against his employer for wrongful discharge.

Id. at 180. Courts construing Pennsylvania law have interpreted this language as implicitly recognizing that a cause of action for wrongful discharge exists in appropriate circumstances, even though the court refused to uphold such an action on the facts in Geary. See, for example, Woodson v. AMF Leisureland Centers, Inc., 842 F.2d 699 (3d Cir.1988) (upholding cause of action). See also Field v. Philadelphia Electric Co., 388 Pa.Super. 400, 565 A.2d 1170 (1989) (same); Hunter v. Port Authority of Allegheny County, 277 Pa.Super. 4, 419 A.2d 631 (1980) (same); Reuther v. Fowler & Williams, Inc., 255 Pa.Super. 28, 386 A.2d 119 (1978) (same).

The Pennsylvania Supreme Court did not revisit the validity of the public policy exception to the employment-at-will doctrine until fifteen years after Geary. In Clay v. Advanced Computer Applications, Inc., 522 Pa. 86, 559 A.2d 917 (1989), a married couple employed by the same company alleged that they were fired because the wife rejected the sexual advances of a company manager. The court held that their claims were barred because they had failed to seek recourse under the Pennsylvania Human Relations Act, which provides a statutory remedy for wrongful discharges based upon sexual harassment. The court did not deny that it had recognized a public policy exception to the employment-at-will doctrine in Geary, but it did stress the narrowness of that exception. The court stated:

A]s a general rule, there is no common law cause of action against an employer for termination of an at-will employment relationship.... Exceptions to this rule have been recognized only in the most limited of circumstances, where discharges of at-will employees would threaten clear mandates of public policy.... Nevertheless, inasmuch as appellees failed to pursue their exclusive statutory

Page 615

remedy for sexual harassment and discrimination in the workplace, they are precluded from relief.

Id. at 918-19 (citations omitted). 1

One year later, the Pennsylvania Supreme Court returned to the issue again. In Paul v. Lankenau Hospital, 524 Pa. 90, 569 A.2d 346 (1990), a doctor alleged that a hospital had forced him to resign because he removed five refrigerators, which he claimed that he was authorized to take. He argued that because he had permission to remove the refrigerators, the hospital was estopped from discharging him for taking them. The court held that the doctrine of equitable estoppel is not an exception to the employment-at-will doctrine. Id. 569 A.2d at 348. The court also appeared to...

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