Small v. Springs Industries, Inc., 23149

CourtUnited States State Supreme Court of South Carolina
Citation388 S.E.2d 808,300 S.C. 481
Decision Date15 May 1989
Docket NumberNo. 23149,23149
Parties, 115 Lab.Cas. P 56,241, 5 IER Cases 145 Kathy SMALL, Respondent, v. SPRINGS INDUSTRIES, INC., Appellant. . Heard

David A. White and Benjamin A. Johnson, of Roddey, Carpenter & White, P.A., Rock Hill, J. Spratt White and Christopher S. Barnard, of Legal Dept., Springs Industries, Inc., Fort Mill, and Kenneth E. Young, of Nelson, Mullins, Riley & Scarborough, Greenville, for appellant.

Herbert W. Louthian and Herbert W. Louthian, Jr., of Louthian & Louthian, Columbia, for respondent.

TOAL, Justice:

In Small v. Springs Industries, Inc., 292 S.C. 481, 357 S.E.2d 452 (1987), (Small I) this Court upheld a jury verdict, finding Springs Industries, Inc. was liable to Small for the damages resulting from its breach of contract, but remanded the issue of damages reversing the jury's award of $300,000 as excessive. The present appeal by Springs Industries, Inc. is from the remanded damages trial in which the jury awarded Small $100,000. We affirm.

FACTS

Small was employed for eight years as a spinner with Springs Industries, Inc. (Springs). Springs' employee handbook set out a four step procedure for firing employees. Springs discharged Small without following the procedures outlined in its handbook. Small brought suit against Springs for breach of contract arguing that her at-will employment status was altered by the provisions of the employee handbook. In the first trial, the jury found that Springs had breached a contract with Small and was liable for the damages resulting from its breach. This Court affirmed the liability issue and remanded the issue of damages for a new trial.

Following this Court's Small I opinion, Springs made an alleged unconditional offer of reemployment to Small. The offer proposed to reinstate Small to her previous position, restore her seniority and waive the normal physical examination requirement. The offer specified that "[i]n all other respects [her] employment will be identical to that of other hourly-paid employees." Small would also be given a "clean" disciplinary record. This offer of reinstatement was not conditioned on settlement of the pending litigation between the parties. Small refused the offer.

On retrial, the jury awarded Small $100,000 in damages. This appeal by Springs followed.

DISCUSSION
1. Wrongful Termination and Damages

An individual working for an employer under a contract of employment for an indefinite period can be terminated at will. Shealy v. Fowler, 182 S.C. 81, 188 S.E. 499 (1936). At-will employment is generally terminable by either party at any time, for any reason or for no reason at all. Todd v. South Carolina Farm Bureau Mut. Ins. Co., 276 S.C. 284, 278 S.E.2d 607 (1981), appeal after remand, 283 S.C. 155, 321 S.E.2d 602 (Ct.App.1984), writ granted in part, 285 S.C. 84, 328 S.E.2d 479 (1985), quashed, 287 S.C. 190, 336 S.E.2d 472 (1985). The termination of an at-will employee normally does not give rise to cause of action for breach of contract. Hudson v. Zenith Engraving Co., Inc., 273 S.C. 766, 259 S.E.2d 812 (1979). However, in certain limited situations, an employer's discharge of an at-will employee may give rise to a cause of action for wrongful discharge such as where the at-will status of the employee is altered by the terms of an employee handbook, Small v. Springs Industries, Inc., 292 S.C. 481, 357 S.E.2d 452 (1987), or where the discharge violates a clear mandate of public policy. Ludwick v. This Minute of Carolina, Inc., 287 S.C. 219, 337 S.E.2d 213 (1985).

A wrongfully discharged employee suing for breach of contract is entitled to receive the amount of the employees' net losses caused by the employer's breach. Restatement (Second) of Agency § 455 (1958) (hereinafter Restatement); 11 S. Williston, A Treatise on the Law of Contracts § 1358 (3rd Ed. Jaeger) (hereinafter Williston). Such losses may include back pay as well as future damages. Williston § 1361.

2. Mitigation of Damages

The doctrine of avoidable consequences operates in wrongful discharge actions, as in others, to permit a wrongfully discharged employee to recover only damages for losses which, in the exercise of due diligence, he could not avoid. Williston § 1359; 5 A. Corbin, Corbin on Contracts § 1095 (1964); Restatement § 455 comment d. The employee's so-called duty to mitigate his damages permits the employee to recover the amount of his losses caused by the employer's breach reduced by the amount the employee obtains, or through reasonable diligence could have obtained, from other suitable employment. Id. A sizable body of law has developed defining the types of other employment an employee must accept under particular circumstances in order to mitigate his damages. See generally Annotation, Nature of Alternative Employment Which Employee Must Accept to Minimize Damages For Wrongful Discharge, 44 A.L.R.3d 629 (1972). Whether an employee has fully mitigated his damages is a question of fact. Mixon v. Rossiter, 223 S.C. 47, 74 S.E.2d 46 (1953).

3. Offer of Reemployment
(a) Bona Fide Offer

One source of employment which may serve to break the chain of causation in an employee's damages is an offer of reemployment by the wrongfully discharging employer. As a general rule, a wrongfully discharged employee must accept an employer's good faith, bona fide offer of reemployment. Restatement § 455 comment d; Williston § 1359. In order to qualify as a bona fide offer of reemployment, the wrongfully discharging employer's offer must reinstate the employee to the same or a substantially similar position at the same pay. Flickema v. Henry Kraker Co., 252 Mich. 406, 233 N.W. 362 (1930). The offer must not require the employee to waive his legal right to pursue his cause of action for wrongful discharge. University of Alaska v. Chauvin, 521 P.2d 1234 (Alaska 1974).

The burden of proof is upon the employer to show that an offer of reemployment is bona fide on its face. The defendant carries this burden if it defends its liability for damages on the ground of a bona fide offer to reemploy. Flickema v. Henry Kraker Co., 252 Mich. 406, 233 N.W. 362 (1930).

(b) Good Faith and Reasonable Refusal

The existence of a facially bona fide offer of reemployment does not necessarily limit the employee's damages to the date of the offer. An employee may refuse an offer of reemployment without suffering diminution of his damages where there is a reasonable ground for the employee's refusal, such as where something has occurred to render further association between the parties offensive or degrading to the employee or where other circumstances exist which would make such a renewal of services inequitable. See Mitchell v. Toale, 25 S.C. 238 (1886) (a master dismissing a servant has no right to recall at any time and under all circumstances after dismissal on pain of forfeiting all right to recover); Saunders v. Anderson, 20 S.C.L. 486 (1834) (impliedly recognizing this rule); see also Gray v. Pacific Suction Cleaner Co., 171 Cal. 234, 155 P. 469 (1915); Schisler v. Perfection Milker Co., 193 Minn. 160, 258 N.W. 17 (1934); Price v. Davis, 187 Mo.App. 1, 173 S.W. 64 (1915); Restatement § 455 comment d; Williston § 1359; see generally Annotation, Employer's Offer to Take Back Employee Wrongfully Discharged as Affecting Former's Liability, 72 A.L.R. 1049 (1931); 22 Am.Jur.2d Damages § 522 (1988). Further, an employee may show the offer, bona fide on its face, is not made in good faith. Gray v. Pacific Suction Cleaner Co., 171 Cal. 234, 155 P. 469 (1915).

Whether an offer of reemployment is made in bad faith and whether a wrongfully discharged employee's refusal to accept an unconditional offer of reemployment is reasonable are questions to be determined by the fact finder. Restatement § 455 comment d. The burden of proof is upon the employee to make these showings, as the defendant has carried its burden by making a showing of a facially bona fide offer of reemployment.

Springs argues that this Court should reject the general rule relating to a wrongfully discharged employee's duty to mitigate damages and require that employees must accept a facially unconditional offer of reemployment made by the employer or suffer diminution of their damages awards, irrespective of the reasonableness or good faith of the offer. We are convinced the majority rule, recognized by this Court over one hundred and fifty years ago, is the better rule.

4. Trial Court's Instructions to the Jury

The jury was thoroughly and properly instructed by the trial court that Small was entitled to recover only those compensatory damages which had been established by the preponderance of the evidence. The trial court instructed the jury that in order to determine the amount of Small's damages, they must determine with reasonable certainty how long Small would have continued to be employed by Springs but for the wrongful discharge. The trial court emphasized that plaintiff's employment status was at-will. Further, the trial court instructed the jury that Small was not entitled to conjectural or speculative damages. The trial judge charged the jury that Small's damages should be reduced by any amounts she obtained or could have obtained through reasonable diligence from other employment.

Specifically, with respect to Springs' offer of reemployment, the trial court instructed that in deciding whether Small reasonably rejected Springs' offer, the jury should consider: first, whether the offer was to return Small to the same or a substantially similar position to that from which she was discharged; second, whether the offer required a waiver or modification of the employee's rights under the original contract; and third, whether anything had occurred which would render further association between the parties offensive or degrading to Small.

5. Standard of Review

As a contract action, this is an...

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