Magnan v. Anaconda Industries, Inc.

• Decision Date: 03 July 1984
• Citation: 479 A.2d 781,193 Conn. 558
• Parties: , 117 L.R.R.M. (BNA) 2163, 101 Lab.Cas. P 55,485 George J. MAGNAN, Jr. v. ANACONDA INDUSTRIES, INC.
• Court: Connecticut Supreme Court

Page 781

479 A.2d 781

193 Conn. 558, 117 L.R.R.M. (BNA) 2163,

101 Lab.Cas. P 55,485

George J. MAGNAN, Jr. v. ANACONDA INDUSTRIES, INC.

Supreme Court of Connecticut.

Argued March 8, 1984.

Decided July 3, 1984.

Anthony M. Fitzgerald, Waterbury, for appellant (defendant).

Gerald P. Dwyer, New Haven, with whom, on the brief, was Kevin T. Gormley, New Haven, for appellee (plaintiff).

Before PETERS, ARTHUR H. HEALEY, PARSKEY, SHEA and GRILLO, JJ.

SHEA, Associate Justice.

The principal issue presented by this appeal is whether an employee, hired under a contract of indefinite duration, can maintain a cause of action in contract for breach of an implied covenant of good faith and fair dealing based wholly upon a discharge without just cause. Our conclusion is that he cannot.

The plaintiff, George Magnan, brought suit against his former employer of thirteen years, The Anaconda Company (hereinafter Anaconda), alleging in the first count of his amended complaint ¹ that he had been discharged in breach of an implied covenant of good faith, and in the second count, that his discharge was in retaliation for his refusal to sign a statement he claimed to be untrue. The jury returned a verdict for Magnan on the first count and for Anaconda on the second count. Anaconda filed a motion for judgment notwithstanding the verdict, which the trial court denied. Thereafter, Anaconda filed this appeal, claiming that the court erred in submitting the first count to the jury because (1) Connecticut law does not recognize the good faith limitation on the power to discharge an at-will employee, and (2) there was insufficient evidence to support the verdict on that count.

The jury could have reasonably found the following facts: During the summer of 1979, Anaconda was informed that certain managerial employees were engaging in illegal activities at the Ansonia plant. Paul A. Palmer, the employee relations manager, and Charles F. Ebert, a security investigator, were requested to investigate in order to ascertain whether managerial employees were involved, and if so how many. The investigation focused upon James Della Volpe, the yard foreman, and Jerry Host, the chief financial officer. Ebert had been told that Della Volpe had been providing certain managerial employees with company tools, lumber, and gas, all at company expense. Palmer and Ebert also discovered that a refrigerator originally purchased by Anaconda for use in Anaconda's company store had been located at Host's former residence. ²

Marcel J. Laliberte, a purchasing agent for Anaconda and the original custodian of the refrigerator, told Palmer and Ebert that sometime in February, 1978, Della Volpe had informed Laliberte that the refrigerator was needed in the boiler house. ³ Laliberte further stated that on the following day Della Volpe and the plaintiff Magnan, who was working temporarily in the yard under Della Volpe's supervision, came to the company store and picked up the refrigerator. Laliberte did not know, however, where the refrigerator was eventually delivered.

Aware that they would need Magnan's cooperation in order to establish Della Volpe's complicity in the theft of the refrigerator Palmer and Ebert approached Magnan on July 20, 1979, and questioned him concerning its removal. Thereafter, on July 23, Palmer requested that Magnan sign a statement admitting his own complicity in the theft of the refrigerator and implicating Della Volpe. Palmer, who had drawn up the statement, claimed that the statement was merely a summary of what Magnan had told Palmer and Ebert three days earlier. Magnan disagreed, however, and refused to sign the statement, even though he was told he would not be prosecuted, because he believed the statement did not accurately reflect what he had told Palmer and Ebert. ⁴ He was suspended from work on July 27 for refusing to sign the statement, and was discharged on August 16, 1979.

I

For four centuries, and perhaps longer, the law governing the relationship between employer and employee has undergone many revisions. In the sixteenth century a statute enacted in England prohibited an employer from discharging an employee "unless it be for some reasonable and sufficient cause or matter ...." Statute of Labourers, 5 Eliz. C. 4 (1562) reprinted in 6 Pickering's Statutes 159-60 (1763). ⁵ Although the statute was eventually repealed, English courts continued to hold that a contract of employment for an indefinite duration was presumptively for a term of one year; see 1 Blackstone, Commentaries 335 (1832); 25 Halsbury's Laws of England 480-81 (3d Ed. 1958); and permitted the employee to maintain a cause of action for breach of the employment contract. ⁶

Initial reception of the English rule was unsettled in America, ⁷ but by the late nineteenth century a vast majority of jurisdictions, relying upon a "busy and perhaps careless ... American treatise writer," ⁸ had adopted the position that an employment contract of indefinite duration was terminable at the will of either party "for good cause, for no cause or even for cause morally wrong ...." Payne v. Western & Atlantic R. Co., 81 Tenn. 507, 519-20 (1884), overruled on other grounds, Hutton v. Watters, 132 Tenn. 527, 179 S.W. 134 (1915). The rule, fostered in part by the predominant laissez-faire philosophy of the period, reserved to the employer absolute power to dismiss the employee, and was considered necessary to preserve the autonomy of managerial discretion in the work place and the freedom of the parties to make their own contract. See Coppage v. Kansas, 236 U.S. 1, 10, 35 S.Ct. 240, 242, 59 L.Ed. 441 (1915); Adair v. United States, 208 U.S. 161, 28 S.Ct. 277, 52 L.Ed. 436 (1908); Somers v. Cooley Chevrolet Co., 146 Conn. 627, 629, 153 A.2d 426 (1959); Fisher v. Jackson, 142 Conn. 734, 736, 118 A.2d 316 (1955); Boucher v. Godfrey, 119 Conn. 622, 627, 178 A. 655 (1935); see generally Feinman, "The Development of the Employment at Will Rule," 20 Amer.J.Leg.Hist. 118 (1976); Blades, "Employment at Will vs. Individual Freedom: On limiting the Abusive Exercise of Employer Power," 67 Colum.L.Rev. 1404 (1967); note, "Protecting at Will Employees Against Wrongful Discharge: The Duty to Terminate Only in Good Faith," 93 Harv.L.Rev. 1816 (1980).

In more recent years we have witnessed substantial erosion of the employment at will rule. Congress, recognizing that most individual employees are powerless to demand a term contract, ⁹ has protected the right of employees "to engage in ... concerted activities for the purpose of collective bargaining or other mutual aid or protection ...." 29 U.S.C. § 157. Collective bargaining agreements ordinarily contain provisions prohibiting dismissal without "cause" or "just cause" which now serve to protect a significant portion of the work force from groundless dismissal. ¹⁰ Government employees similarly enjoy protection from arbitrary discharge. ¹¹ Congress has also enacted statutes prohibiting employers from dismissing employees in retaliation for reporting employer activity in contravention of specific statutes. ¹² Many state statutes also restrict the employer's right to exercise a contractual power to dismiss an employee. ¹³

For those employees not protected by collective bargaining agreements, civil service statutes or other laws, the courts have occasionally found an implied promise to discharge only for cause in the circumstances of particular employment relationships. Sometimes the promise has been found in the representations contained in an employee relations manual or handbook. ¹⁴ In appropriate circumstances, such an agreement may arise when an employee, in reliance on an implied representation that the position will not arbitrarily be terminated, leaves his current employment, or otherwise acts in reasonable and significant reliance on the representation. These illustrations are not intended to encompass all of the situations in which an employment contract may be found not to be terminable at will. A majority of courts--including this one--have also approved a common law cause of action in tort for discharges "where the discharge contravenes a clear mandate of public policy." Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 474, 427 A.2d 385 (1980). ¹⁵ See Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980); Geary v. United States Steel Corporation, 456 Pa. 171, 319 A.2d 174 (1974); Ward v. Frito-Lay, Inc., 95 Wis.2d 372, 290 N.W.2d 536 (1980); see generally note, "Protecting Employees at Will Against Wrongful Discharge: The Public Policy Exception," 96 Harv.L.Rev. 1931 (1983); Weiss, "State by State: Chipping Away at Employment at Will," National L.J., Jan. 18, 1982, p. 26. (Twenty-two of the thirty states surveyed approve of the wrongful discharge tort). In the present case we are asked to adopt another emerging theory that limits the employer's right to discharge an at-will employee: the implied covenant of good faith and fair dealing. ¹⁶

II

The implied covenant of good faith and fair dealing has been applied by this court in a variety of contractual relationships, including: leases; Central New Haven Development Corporation v. La Crepe, Inc., 177 Conn. 212, 413 A.2d 840 (1979); insurance contracts; Hoyt v. Factory Mutual Liberty Ins. Co., 120 Conn. 156, 159, 179 A. 842 (1935); Bartlett v. Travelers Ins. Co., 117 Conn. 147, 155, 167 A. 180 (1933); cf. Grand Sheet Metal Products Co. v. Protection Mutual Ins. Co., 34 Conn.Sup. 46, 375 A.2d 428 (1977) (tortious breach of covenant of good faith); and construction contracts with provisions making payment conditional upon presentation of the architect's or engineer's certificate. See Grenier v. Compratt Construction Co., 189 Conn. 144, 148, 454 A.2d 1289 (1983).

The Restatement (Second) of Contracts similarly recognizes an implied covenant of good faith and fair dealing in every contract without limitation. See 2 Restatement (Second)...