Horn v. New York Times

• Decision Date: 25 February 2003
• Citation: 100 N.Y.2d 85,790 N.E.2d 753,760 N.Y.S.2d 378
• Parties: SHEILA E. HORN, Respondent, v. NEW YORK TIMES, Appellant.
• Court: New York Court of Appeals Court of Appeals

100 N.Y.2d 85

790 N.E.2d 753

760 N.Y.S.2d 378

SHEILA E. HORN, Respondent, v. NEW YORK TIMES, Appellant.

Court of Appeals of the State of New York.

Argued January 15, 2003.

Decided February 25, 2003.

Proskauer Rose LLP, New York City (Bernard M. Plum, John F. Fullerton III and Michael R. Marra of counsel), for appellant.

Goodman & Zuchlewski LLP, New York City (Pearl Zuchlewski and Geoffrey A. Mort of counsel), for respondent. Holland & Knight LLP, New York City (Frederick D. Braid of counsel), and Jaye Pershing Johnson for New York City Partnership, amicus curiae.

Stein & Schonfeld, Garden City (Seth P. Stein and Robert L. Schonfeld of counsel), for New York State Psychiatric Association, Inc., and others, amici curiae.

Kudman Trachten LLP, New York City (Gary Trachten of counsel), for National Employment Lawyers Association/New York, amicus curiae. Donald R. Moy, Lake Success, for Medical Society of the State of New York and others, amici curiae.

Rice & Justice, Albany (John Carter Rice, Lawrence P. Justice and Bradley F. Rice of counsel), for Business Council of New York State, Inc., amicus curiae.

Judges CIPARICK, WESLEY, ROSENBLATT and GRAFFEO concur with Judge READ; Judge

SMITH dissents and votes to affirm in a separate opinion; Chief Judge KAYE taking no part.

OPINION OF THE COURT

READ, J.

At issue in this appeal is whether the narrow exception to the at-will employment doctrine adopted in Wieder v Skala (80 NY2d 628 [1992]) encompasses a physician employed by a nonmedical employer. For the reasons that follow, we conclude that it does not and decline to expand the Wieder exception to do so. Accordingly, we reverse.

I.

In her complaint, Sheila E. Horn, D.O., formerly the Associate Medical Director of the Medical Department of the New York Times, alleges that her "primary responsibilities" in this position "were to provide medical care, treatment and advice to employees of the Times. Among other things, * * * determining if injuries suffered by Times employees were work-related, thus making the employees eligible for Worker's Compensation payments." She worked at the Times' main building in midtown Manhattan, along with the Medical Director, a physician's assistant, two nurses and three professional social workers.

According to Horn, on "frequent occasions" personnel in the Times' Labor Relations, Legal and Human Resources Departments directed her to provide them with confidential medical records of employees without the employees' consent or knowledge. She also claims that personnel in the Times' Human Resources Department instructed her to misinform employees whether their injuries and illnesses were work-related so as to curtail the number of workers' compensation claims filed against the newspaper.

Horn "consulted with the New York State Department of Health and other authorities" about "the propriety and legality" of these directives. The Department of Health supposedly advised her that "if a physician releases patient information and/or medical records without the consent of the patient, except under certain, narrowly-defined circumstances, that physician is violating several provisions of state law, the Code of Ethical Conduct of the American College of Occupational and Environmental Medicine, the Americans With Disabilities Act, and various federal regulations." Accordingly, Horn disregarded her employer's orders and refused to share patient information or records with nonmedical Times personnel without patient consent or knowledge.

In April 1999, the Times decided to restructure its Medical Department, resulting in the "phas[ing] out" of the positions occupied by Horn and the Medical Director and physician's assistant with whom she had worked, but not those of other professional personnel in the Medical Department. Horn contends that this restructuring and the Times' outsourcing of certain medical services were mere pretexts; that the Times, in fact, undertook these actions in order to get rid of her because she was viewed as a troublemaker.

Horn contends that her contract of employment with the Times "implied the fundamental understanding, which requires no written expression, that the physician will conduct her practice on the employer's behalf in accordance with the ethical standards of the medical profession" (emphasis added). She alleges that the Times terminated her employment because she resisted management's entreaties to trench upon patient confidentiality in violation of unexpressed but commonly understood ethical standards, and seeks compensatory and punitive damages for breach of contract.

The Times made a preanswer motion to dismiss Horn's complaint for failure to state a cause of action. Supreme Court denied the motion as to the first cause of action for breach of contract. Characterizing the issue presented as "whether the exception enunciated in Wieder v Skala (80 NY2d 628 [1992]) to New York's rule relating to employment at will should be extended to a physician employed by a nonmedical entity," Supreme Court concluded that it should (186 Misc 2d 469, 470 [2000]).¹ The Appellate Division affirmed, with two Justices dissenting (293 AD2d 1 [2002]), and subsequently certified the following question to this Court: "Was the order of [the Appellate Division], which affirmed the order of the Supreme Court, properly made?"

II.

The traditional American common-law rule undergirding employment relationships, which we adopted in Martin v New York Life Ins. Co. (148 NY 117 [1895]), is the presumption that employment for an indefinite or unspecified term is at will and may be freely terminated by either party at any time without cause or notice. While the twentieth century featured significant statutory inroads into the presumption of at-will employment, most notably with passage of the National Labor Relations Act in 1935 and title VII of the Civil Rights Act of 1964, American courts have proved chary of creating common-law exceptions to the rule and reluctant to expand any exceptions once fashioned (see Summers, Employment at Will in the United States: The Divine Right of Employers, 3 U Pa J Lab & Emp L 65 [2000]). Our own jurisprudence reflects this pattern, as a brief examination of our major cases over the last 20 years illustrates.

In Weiner v McGraw-Hill, Inc. (57 NY2d 458 [1982]), plaintiff Weiner alleged that he was induced to leave his former employer for McGraw-Hill by assurances of job security. He claimed that he signed and submitted a McGraw form job application specifying that his employment was subject to McGraw's handbook on personnel policies and procedures, which represented that McGraw would "resort to dismissal for just and sufficient cause only, and only after all practical steps toward rehabilitation or salvage of the employee have been taken and failed" (id. at 460); that he relied on these undertakings in good faith when he left his former employer to work for McGraw, thereby forfeiting accrued fringe benefits and foregoing a promised salary increase; that he routinely rejected other offers of employment to remain at McGraw because of these assurances; and that he was instructed by his supervisors to adhere strictly to the handbook's procedures when considering the dismissal of subordinates. When Weiner was subsequently dismissed without just cause or an opportunity for rehabilitation, we found these cumulative factors sufficient to state a cause of action for breach of contract.

A scant four months later in Murphy v American Home Prods. Corp. (58 NY2d 293 [1983]), we considered whether a long-tenured corporate employee allegedly discharged in part² for reporting accounting improprieties to top management had stated a cause of action in tort for abusive discharge, or in contract for breach of an implied covenant of good faith and fair dealing. Plaintiff Murphy, an assistant treasurer in a corporation, urged us to recognize the tort of abusive or wrongful discharge of an at-will employee, pointing out that other jurisdictions had done so where employees were dismissed in retaliation for employee conduct protected by public policy.

Judge Jones, writing for the majority, emphatically turned down Murphy's invitation, "being of the opinion that such a significant change in our law is best left to the Legislature," which is well-situated "to discern the public will, to examine the variety of pertinent considerations, to elicit the views of the various segments of the community that would be directly affected and in any event critically interested, and to investigate and anticipate the impact of" any major change in the at-will employment rule (id. at 301, 302). In short, if this rule were "to be tempered, it should be accomplished through a principled statutory scheme, adopted after opportunity for public ventilation, rather than in consequence of judicial resolution of the partisan arguments of individual adversarial litigants" (id. at 302).

Murphy further argued that the law implies a covenant of good faith and fair dealing in all contracts, including employment contracts of indefinite duration; that he was required to disclose accounting improprieties by virtue of his terms of employment; and therefore that his employer's discharge of him for having done so constituted a breach of contract. Citing the venerable case of Wood v Duff-Gordon (222 NY 88 [1917]), Judge Jones acknowledged that New York recognizes an implied and enforceable obligation of good faith and fair dealing on the part of a party to a contract in appropriate circumstances; however,

"[i]n such instances the implied obligation is in aid and furtherance of other terms of the agreement of the parties. No obligation can be implied, however, which would be inconsistent with other terms of the contractual relationship. * * * [U]nder New York law as it now stands, absent a constitutionally impermissible purpose, a statutory proscription, or an express limitation in the individual

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