Fitzgerald v. Salsbury Chemical, Inc.

• Decision Date: 06 July 2000
• Docket Number: No. 98-1492.,98-1492.
• Parties: Tom FITZGERALD, Appellant, v. SALSBURY CHEMICAL, INC. and Cambrex Corporation, Appellees
• Court: Iowa Supreme Court

613 N.W.2d 275

Tom FITZGERALD, Appellant, v. SALSBURY CHEMICAL, INC. and Cambrex Corporation, Appellees

No. 98-1492.

Supreme Court of Iowa.

July 6, 2000.

Pamela J. Prager of Finley, Alt, Smith, Scharnberg, Craig, Hilmes & Gaffney, P.C., Des Moines, for appellant.

Frank Harty and Thomas W. Foley of Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C., for appellees.

Considered en banc.

CADY, Justice.

In this appeal, we must decide whether a former employee presented a prima facie cause of action for wrongful termination in violation of public policy. The action was premised on the dual claim that the employee was discharged because he did not support his employer's decision to terminate another employee and the employer feared he intended to testify on behalf of the other employee in a potential lawsuit. We reverse the order entered by the district court granting summary judgment for the employer and remand the case for further proceedings.

I. Background Facts and Proceedings.

Tom Fitzgerald was employed by Salsbury Chemical, Inc. at its production plant in Charles City. Salsbury manufactures chemicals and pharmaceutical bulk actives. Fitzgerald was employed as a production foreman at the plant.

Fitzgerald was terminated from his employment with Salsbury on September 19, 1995. The termination followed an incident on August 30, 1995, involving a production worker named Richard Koresh. Koresh failed to properly monitor the temperature and pressure of a tank used to mix a chemical compound. His conduct created a potentially dangerous condition.

Koresh was suspended from his employment on September 4, 1995, after Salsbury conducted a preliminary investigation into the incident. He was ultimately terminated on September 19, 1995, a few hours prior to the time Fitzgerald was terminated. Fitzgerald was responsible for supervising Koresh on the date of the incident.

Salsbury asserted Fitzgerald was terminated for failing to properly supervise Koresh and to prevent the potentially dangerous incident. Fitzgerald, however, believed he was discharged because he did not support Salsbury's decision to discharge Koresh and Salsbury officials feared he would provide testimony in support of Koresh in the course of threatened legal action by Koresh.

The events supporting this claim extend back to August 15, 1995, when Koresh gave deposition testimony in a wrongful discharge action against Salsbury by a former employee named John Kelly. Kelly was terminated several years earlier, one day prior to his scheduled deposition in a wrongful death action against Salsbury by the estate of a former employee. The former employee died after a chemical compound he was mixing at the plant overheated and exploded. Salsbury claimed Kelly was terminated because his unsafe conduct caused the explosion. Kelly claimed he was terminated by Salsbury in an effort to cover up its culpability in the incident. During the deposition on August 15, 1995, Koresh contradicted earlier deposition testimony by two Salsbury management officials concerning the internal investigation of the work practices of Kelly. Koresh also testified he believed Kelly was a safe operator. Following the deposition, Koresh felt shunned by Salsbury management. He was also told by a foreman the company was going to find a way to fire him. After Koresh was suspended on September 4, 1995, he told a Salsbury official that he had hired an attorney and was "not going to be another John Kelly."

Fitzgerald engaged in a conversation with the plant operations manager on September 19, 1995, a few hours prior to the time he was told of his termination. The manager asked Fitzgerald what discipline he believed should result to Koresh because of the incident on August 30. Fitzgerald responded he did not believe it was fair to fire Koresh over a single mistake. Fitzgerald also indicated he did not believe Koresh should be fired in light of his long years of service to the company. The manager then informed Fitzgerald he needed to begin to think like a foreman if he was going to be one, and he needed to find out which side he was on. Fitzgerald was also informed the matter may result in a lawsuit. Fitzgerald does not claim he responded to the statements.

Fitzgerald instituted this wrongful discharge action against Salsbury. He alleged his termination violated a public policy of this state to protect workers who oppose the unlawful termination of a co-worker. Additionally, he claimed he was terminated because he intended to provide testimony in Koresh's future wrongful termination lawsuit that would be unfavorable to Salsbury and the company wanted to discredit his potential testimony as a disgruntled former employee. Fitzgerald claims Salsbury's motivation to terminate him violated the public policy of this state to provide truthful testimony in court proceedings.

The trial court dismissed the action following a hearing on the motion for summary judgment. It found no public policy of this state was implicated by the two factual claims urged by Fitzgerald. Although the trial court found the criminal statutes against committing and suborning perjury established a public policy prohibiting such conduct, it found no facts to show the criminal statutes had been violated by Salsbury.

II. Scope of Review.

Our review of a summary judgment ruling is for corrections of errors of law. Iowa R.App. P. 4; Kennedy v. Zimmermann, 601 N.W.2d 61, 63 (Iowa 1999). Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 237(c). Summary judgment is properly granted where the only controversy is the legal effect of the undisputed facts. Krause v. Krause, 589 N.W.2d 721, 724 (Iowa 1999). When the facts are not in dispute, we will simply decide whether the district court correctly applied the law to the undisputed facts before us. Iowa Tel. Ass'n v. City of Hawarden, 589 N.W.2d 245, 250 (Iowa 1999).

III. The Employer-Employee Relationship.

A. Employment At-Will.

Absent a valid contract of employment, an employment relationship is generally considered to be inherently indefinite and presumed to be at-will. See Anderson v. Douglas & Lomason Co., 540 N.W.2d 277, 281 (Iowa 1995)

. This means the employment relationship is terminable by either party "at any time, for any reason, or no reason at all." Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198, 202 (Iowa 1997). The roots of the at-will employment doctrine are more than a century old. It is said to have originated in an 1877 treatise by Horace Gray Wood, which articulated the rule in clear and appealing terms:

With us, the rule is inflexible, that a general or indefinite hiring is, prima facie, a hiring at will, and if the servant seeks to make it out a yearly hiring, the burden is upon him to establish it by proof .... [I]t is an indefinite hiring and is determinable at the will of either party.

Horace G. Wood, A Treatise on the Law of Master & Servant § 134, at 272 (1877). Despite its direct contradiction to the traditional English rule, the at-will rule was judicially adopted in New York, see Martin v. New York Life Ins. Co., 148 N.Y. 117, 42 N.E. 416, 417 (1895), and quickly became the prevailing rule throughout the country.¹ The United States Supreme Court gave the doctrine a boost in 1908 in Adair v. United States, when it found a federal law making it a crime to discharge an employee for being a member of a union violated due process guarantees of freedom of contract. Adair v. United States, 208 U.S. 161, 174-75, 28 S.Ct. 277, 280, 52 L.Ed. 436, 442 (1908) ("the right of the employee to quit the service of the employer, for whatever reason, is the same as the right of the employer, for whatever reason, to dispense with the services of the employee").

We too have long recognized that "indefinite employment may be abandoned at will by either party without incurring any liability." Harrod v. Wineman, 146 Iowa 718, 719, 125 N.W. 812, 813 (1910). Yet, the passage of time has begun to weaken this once powerful rule. The at-will employment doctrine first began to give way in 1937 when the United States Supreme Court abandoned the Adair holding and upheld the National Labor Relations Act which made it an unfair labor practice for an employer to consider membership in a union as a basis for hiring an employee. NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45-46, 57 S.Ct. 615, 628, 81 L.Ed. 893, 916 (1937). After this case, courts began to scrutinize the common law doctrine, and the erosion began. See Pennington, 68 Tu1. L.Rev. at 1589-90. As one court put it,

[t]he at will presumption, the citadel that once governed the field with such predictability, has been eroded of late by piecemeal attacks on both the contract and tort fronts and the entire field seems precariously perched on the brink of change.

Scott v. Extracorporeal Inc., 376 Pa.Super. 90, 545 A.2d 334, 336 (1988) (quoting Martin v. Capital Cities Media, Inc., 354 Pa.Super. 199, 511 A.2d 830, 834 (1986)).

In recent years three exceptions to the at-will employment doctrine have surfaced to add employee protections to the employer/employee relationship. Generally, these exceptions fall into three categories: (1) discharges in violation of public policy, (2) discharges in violation of employee handbooks which constitute a unilateral contract, and (3) discharges in violation of a covenant of good faith and fair dealing. See Anderson, 540 N.W.2d at 282

(citing Stephen F. Befort, Employee Handbooks & the Legal Effect of Disclaimers, 13 Indus. Rel. L.J. 326, 333-34 (1991/1992)).

We have only adopted the first two recognized exceptions to the doctrine. See Abrisz v. Pulley Freight Lines, Inc., 270 N.W.2d 454, 455 (Iowa 1978)

(we first recognized the possibility of public policy exception); Springer v. Weeks & Leo Co., 429 N.W.2d 558, 560 (Iowa 1988) (narrow public policy...