Donahue v. Federal Exp. Corp.

• Decision Date: 09 May 2000
• Parties: Brion O. DONAHUE, Appellant, v. FEDERAL EXPRESS CORPORATION and Robert W. Marshall, Appellees.
• Court: Pennsylvania Superior Court

753 A.2d 238

2000 Pa. Super. 146

Brion O. DONAHUE, Appellant, v. FEDERAL EXPRESS CORPORATION and Robert W. Marshall, Appellees.

Superior Court of Pennsylvania.

Submitted January 10, 2000.

Filed May 9, 2000.

Angelo E. Quaranta, Pittsburgh, for appellant.

Peter J. Ennis, Pittsburgh, for appellee. Before McEWEN, President Judge, LALLY-GREEN, J., and CIRILLO, President Judge Emeritus.

LALLY-GREEN, J.:

¶ 1 In this employment case, Appellant Brion O. Donahue appeals from the order dated April 29, 1999, granting preliminary objections in the nature of a demurrer filed by Defendants/Appellees Federal Express Corporation ("FedEx") and Robert W. Marshall and entering judgment in Appellees' favor. We affirm.

¶ 2 On January 22, 1999, Appellant filed a complaint against FedEx and Marshall, alleging the following. Appellant was a FedEx employee from November 1979 until January 1997. Complaint, Docket Entry 1, ¶ 4. Appellant's final position was Commercial MX Service Administrator. Id. Marshall was Appellant's immediate supervisor. Id., ¶ 3.

¶ 3 Appellant questioned numerous invoices which did not comport with repair orders in his department. Id., ¶ 6. Appellant also called FedEx's attention to other improprieties, such as FedEx's failure to pay invoices and Marshall's practice of directing auto body work to a Cleveland auto body shop owned by a person with whom Marshall vacationed. Id., ¶ 12. After Appellant complained to Marshall about the invoice-discrepancy issue, Marshall accused Appellant of gross misconduct. Id., ¶ 6. Specifically, Appellant was accused of making a racial remark in front of another FedEx employee, and was accused of making derogatory remarks about Marshall to vendors and others. Id., ¶ 7. In the months leading to his discharge, FedEx management denied Appellant the clerical assistance that he requested, gave Appellant additional duties of tire purchasing and file maintenance, and ordered Appellant to falsify data to meet administrative requirements. Id., ¶ 8.

¶ 4 FedEx has a Guaranteed Fair Treatment Procedure ("GFTP") for employee grievances. Id., ¶ 5. Appellant appealed his termination through Step 1 of the GFTP. Id. FedEx management upheld the termination, concluding that Appellant violated FedEx's Acceptable Conduct Policy. Id., ¶ 10 & Exhibit D. Appellant appealed through Step 2 of the GFTP, alleging that Marshall was seeking retribution for exposing the vendor non-payment issue. Id., ¶ 11 and Exhibit E. FedEx management again upheld the termination. Id., ¶ 13. Finally, Appellant appealed through Step 3 of the GFTP, alleging that FedEx accused him of making unprofessional remarks, "but did not identify the purported comments, nor give [Appellant] the opportunity to deny the same." Id., ¶ 14. Again, FedEx management upheld the termination. Id., ¶ 16.

¶ 5 In Count 1 of his complaint, labeled "Wrongful Termination," Appellant alleges: (1) FedEx breached the implied covenant of good faith and fair dealing in at-will employment contracts; (2) FedEx violated public policy insofar as the termination violates the Pennsylvania Human Relations Act ("PHRA"), 43 P.S. § 951 et seq.; (3) Appellant supplied sufficient additional consideration to remove his status from that of an at-will employee; and (4) FedEx violated public policy by retaliating against him for lodging complaints against Marshall. Id., ¶ 19.

¶ 6 Count 2 of the complaint alleges that FedEx violated the PHRA. Id., ¶¶ 21-26. Count 3 alleges that Marshall intentionally interfered with Appellant's contractual relations with FedEx, and that Marshall and FedEx defamed Appellant. Id., ¶¶ 27-35. Count 4 alleges that FedEx breached its implied employment contract with Appellant. Id., ¶%7 36-38.¹

¶ 7 On March 17, 1999, FedEx and Marshall filed preliminary objections in the nature of a demurrer. Docket Entry 3. Appellant filed a responsive brief. Docket Entry 5. On April 29, 1999, the esteemed trial court, the Honorable Eugene Strassburger, granted the preliminary objections and entered judgment in favor of FedEx and Marshall. This appeal followed.²

¶ 8 Appellant raises four issues on appeal:

I. Whether the court below erred in granting Preliminary Objections where appellant raised [the] breach of the duty of good faith and fair dealing exception to [the] at-will employment rule.

II. Whether the court below erred in granting Preliminary Objections where [the] doctrine of necessary implication dictated that parties in an employment relationship do and perform those things that according to reason and justice they should do in order to carry out the employment relationship.

III. Whether the court below erred in granting Preliminary Objections where [the] Guaranteed Fair Treatment Procedure of employer created a promise to dismiss only for cause.[³]

IV. Whether the court below erred in granting Preliminary Objections where appellant alleges employer specifically intended to harm appellant.

Appellant's Brief at 3.

¶ 9 Our standard and scope of review are well settled.

Our standard of review mandates that on an appeal from an order sustaining preliminary objections which would result in the dismissal of suit, we accept as true all well-pleaded material facts set forth in the Appellant['s] complaint and all reasonable inferences which may be drawn from those facts. This standard is equally applicable to our review of PO's in the nature of a demurrer. Where, as here, upholding sustained preliminary objections would result in the dismissal of an action, we may do so only in cases that are clear and free from doubt. To be clear and free from doubt that dismissal is appropriate, it must appear with certainty that the law would not permit recovery by the plaintiff upon the facts averred. Any doubt should be resolved by a refusal to sustain the objections.

We review for merit and correctness— that is to say, for an abuse of discretion or an error of law. This case was dismissed at the preliminary objections stage on issues of law; our scope of review is thus plenary.

Ellenbogen v. PNC Bank N.A., 731 A.2d 175, 181 (Pa.Super.1999) (citations and footnote omitted).

¶ 10 First, Appellant argues that the trial court erred by dismissing his claim for breach of the implied duty of good faith and fair dealing. Specifically, Appellant claims that FedEx breached this duty "by terminating him in contravention of its GFTP and engaging in a sham review of his conduct in the GFTP." Appellant's Brief at 10. ¶ 11 Every contract in Pennsylvania imposes on each party a duty of good faith and fair dealing in its performance and its enforcement. Kaplan v. Cablevision of Pa., Inc., 448 Pa.Super. 306, 671 A.2d 716, 722 (1996),appeal denied, 546 Pa. 645, 683 A.2d 883 (1996), citing, inter alia, Somers v. Somers, 418 Pa.Super. 131, 613 A.2d 1211, 1213 (1992),

appeal denied, 533 Pa. 652, 624 A.2d 111 (1993). Good faith has been defined as "honesty in fact in the conduct or transaction concerned." Kaplan, 671 A.2d at 722. Appellant relies on Somers for the proposition that the implied duty of good faith and fair dealing applies to at-will employment relationships.

¶ 12 In that case, plaintiff Somers entered into an at-will employment relationship (as a consultant) with a corporation. The consulting contract further provided that if net profits were realized from a particular project, Somers would receive 50% of the profits. Somers, 613 A.2d at 1212. In order for profits to be realized, it was necessary for the corporation to resolve a claim with a third party. Id. Somers and the corporation disagreed as to how to handle this claim; as a result, Somers was fired. Id. Moreover, Somers alleged that the corporation showed a lack of good faith and due diligence in resolving its dispute with the third party, and in settling the claim for significantly less than was owed, thereby depriving him of approximately $3 million as his share of the proceeds. Id. at 1215. The trial court dismissed Somers' claim for breach of the implied duty of good faith and fair dealing.

¶ 13 This Court reversed, stating that "the duty to perform contractual obligations in good faith does not evaporate merely because the contract is an employment contract, and the employee has been held to be an employee at will." Id. at 1213, citing Baker v. Lafayette College, 350 Pa.Super. 68, 504 A.2d 247 (1986), affirmed, 516 Pa. 291, 532 A.2d 399 (1987), and Jacobs v. Kraft Cheese Co., 310 Pa. 75, 164 A. 774 (1933).⁴ We concluded that Somers should have the opportunity to establish that the corporation acted in bad faith when it settled the claim in such a manner as to deprive him of his fair share of the profits related to the project. Somers, 613 A.2d at 1215.

¶ 14 Somers and the cases cited therein provide that, in an at-will employment relationship, the duty of good faith and fair dealing applies to those contractual terms that exist beyond the at-will employment relationship. For example, the plaintiff in Somers could recover for breach of implied duties connected to the profit sharing provision, but could not recover for the termination per se.

¶ 15 Baker involved a two-year employment contract between a college and a professor. The college's faculty handbook, which was explicitly made part of the contract itself, obliged the college to conduct an honest and meaningful evaluation of the professor's performance before deciding whether or not to extend the contract beyond its original term. Baker, 504 A.2d at 255.

¶ 16 The Court affirmed the grant of summary judgment in favor of the college and held that the implied duty of good faith and fair dealing applied to this reevaluation provision.⁵Id. Thus, the college was contractually obligated "to render a sincere and substantial performance of these contractual undertakings, complying with the spirit as well as the letter of the contract." Id. The Baker Court stressed that its holding was narrowly tailored to the facts of that case:

We emphasize

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