Vetter v. Cam Wal Elec. Co-Op., Inc.

• Citation: 711 N.W.2d 612,2006 SD 21
• Decision Date: 08 March 2006
• Docket Number: No. 23684.,23684.
• Parties: Roger VETTER, Plaintiff and Appellee, v. CAM WAL ELECTRIC COOPERATIVE, INC., Defendant and Appellant.
• Court: Supreme Court of South Dakota

711 N.W.2d 612

2006 SD 21

Roger VETTER, Plaintiff and Appellee, v. CAM WAL ELECTRIC COOPERATIVE, INC., Defendant and Appellant.

No. 23684.

Supreme Court of South Dakota.

Argued January 10, 2006.

Decided March 08, 2006.

Thomas W. Clayton, Clayton Law Office, Sioux Falls, SD, for plaintiff and appellee.

Richard D. Casey, Nicole Nachtigal Emerson of Lynn, Jackson, Shultz & Lebrun, P.C., Sioux Falls, SD, for defendant and appellant.

KONENKAMP, Justice.

[¶ 1.] Must an employer establish that an employee actually committed misconduct in order to demonstrate good cause to fire the employee? In this wrongful termination suit, the employer requested a jury instruction that would have limited the jury's role in reviewing the factual basis for the employer's decision to fire its employee. With this proposed instruction, the jury would not decide whether the employee had in fact committed an infraction justifying termination. Rather, the jury would decide only whether the employer, acting in good faith after an appropriate investigation, had reasonable grounds for believing that the employee had committed the infraction. The circuit court refused the instruction, and the jury returned a verdict against the employer. On the employer's appeal, we conclude that because this proposed instruction would have contravened the employee termination provisions of the collective bargaining agreement, the court did not err in refusing to give it. Therefore, we affirm.

Background

[¶ 2.] On September 9, 2002, after almost thirty years as a lineman for Cam Wal Electric Cooperative, Inc., Roger Vetter was fired for violating Cam Wal's policy against drinking alcohol on company property. Vetter was aware of this policy, but asserted that during all the years he worked for the company, except for one brief period, "employees and management consistently drank beer and alcoholic beverages together on the premises."

[¶ 3.] The circumstances leading to Vetter's termination began on Friday, July 19, 2002, near the end of the workday. Vetter and another employee, Shawn Schmidt, had just returned after working in the field. Vetter's time sheet showed that he had worked ten hours that day. At that point, Vetter thought that "[w]ith no more work assignments, and with the truck put away and time cards filled in, their day's work was now over." Vetter and Schmidt decided to look up some information on the company computers. On their way, they grabbed two beers each from a refrigerator in the Cam Wal social room.

[¶ 4.] When the general manager, Jeff Bonn, observed Vetter and Schmidt with the beers, he said nothing about it, but engaged them in general conversation. The next day, however, Bonn checked both employees' time records and the browser histories from the computers they used to see if Vetter and Schmidt were "off the clock" when they were drinking at work. Because the computer history revealed that a website had been visited at 5:05 p.m. and the time cards indicated 5:30 p.m. as the end of Vetter and Schmidt's day, Bonn believed that they violated the company's no drinking policy.

[¶ 5.] Bonn contacted Cam Wal's corporate attorney. After conferring with Bonn, the attorney interviewed Vetter and Schmidt on July 23, 2002. Then, one week later, Vetter and Schmidt each received written notice that they had violated Article IX, section 1.c.(7) of the Collective Bargaining Agreement between Cam Wal and Local No. 426 of the Internal Brotherhood of Electrical Workers, AFL-CIO. That provision forbade the "[u]se of intoxicating liquor on the job or in/on Cooperative property." On September 9, 2002, Vetter and Schmidt were fired. Along with his job, Vetter lost his health insurance, life insurance, vacation pay, holiday pay, retirement benefits, and savings program. In later explaining its decision, Cam Wal said that it "had reasonable grounds for believing [that] misconduct occurred and otherwise acted fairly, honestly and in good faith[.]"

[¶ 6.] Vetter brought suit against Cam Wal, alleging wrongful termination in violation of the terms of the collective bargaining agreement. He claimed that Cam Wal discharged him "arbitrarily" and "unfairly," in violation of Article IV, section 2 of the agreement. He also averred that the company waived its right to enforce the no drinking policy in the contract when it knowingly allowed employees and management to drink on the premises. He contended that Cam Wal should be estopped from exercising its right under the agreement to fire him because of the company's own conduct in allowing violations to occur in the past without consequence.

[¶ 7.] According to Vetter, "[d]rinking alcohol on Cam Wal premises was a commonplace occurrence." In Vetter's recollection after thirty years at Cam Wal, the only period during which drinking on the premises was forbidden was when Brad Scott was Cam Wal's general manager. During his tenure, Scott announced that drinking at Cam Wal would no longer be allowed. After Scott left, however, Vetter recalled that the drinking started again. This included the time Bonn was the general manager. Bonn conceded that alcohol had been consumed on the company premises in the past, but he said, "It was always after hours. It was rare occasions."

[¶ 8.] The beer Vetter and Schmidt obtained came from the refrigerator in the Cam Wal social room and was purchased by Cam Wal for a company picnic the previous summer. Cam Wal allowed the beer to be stored there, even though there was a company policy prohibiting alcohol in Cam Wal's social room. Vetter testified that Bonn knew the beer was stored there. He also said that the linemen would "walk up to the social room, grab a beer or more, and bring it back to the linemen's room to drink."

[¶ 9.] At trial, Cam Wal requested a jury instruction on what it believed should be the jury's limited fact finding role in wrongful termination cases. But the court declined to instruct the jury on this theory. Under the court's instructions, Vetter had the burden of proving that an agreement existed, that it was breached, and that he was damaged. He also had the burden to prove waiver and estoppel. At the close of the case, the jury returned a verdict for Vetter for $290,000 plus interest. On appeal, Cam Wal asserts that the jury instructions were insufficient, incorrect, and prejudicial.

Standard of Review

[¶ 10.] Before we begin our analysis, we take this opportunity to clarify our standard of review on jury instructions. A trial court has discretion in the wording and arrangement of its jury instructions, and therefore we generally review a trial court's decision to grant or deny a particular instruction under the abuse of discretion standard. See Luke v. Deal, 2005 SD 6, ¶ 11, 692 N.W.2d 165, 168; Parker v. Casa Del Rey-Rapid City, Inc., 2002 SD 29, ¶ 5, 641 N.W.2d 112, 116. However, no court has discretion to give incorrect, misleading, conflicting, or confusing instructions: to do so constitutes reversible error if it is shown not only that the instructions were erroneous, but also that they were prejudicial. First Premier Bank v. Kolcraft Enterprises, Inc., 2004 SD 92, ¶ 40, 686 N.W.2d 430, 448 (citations omitted). Erroneous instructions are prejudicial under SDCL 15-6-61 when in all probability they produced some effect upon the verdict and were harmful to the substantial rights of a party. Accordingly, when the question is whether a jury was properly instructed overall, that issue becomes a question of law reviewable de novo.¹ Under this de novo standard, "we construe jury instructions as a whole to learn if they provided a full and correct statement of the law." Id. 2004 SD 92, ¶ 40, 686 N.W.2d at 448 (quoting State v. Frazier, 2001 SD 19, ¶ 35, 622 N.W.2d 246, 259 (citations omitted)).

Analysis and Decision

[¶ 11.] Cam Wal believes that employers must be afforded discretion in making decisions to discharge employees for cause, without the threat of juries second guessing their business judgments. Thus, Cam Wal asks us to adopt the good-faith standard created by the California Supreme Court in Cotran v. Rollins, Hudig Hall Int'l, Inc., 17 Cal.4th 93, 69 Cal. Rptr.2d 900, 948 P.2d 412 (1998). Under this standard, a jury in a wrongful termination case determines whether the employer, acting in good faith and following a reasonable investigation, had sufficient grounds for believing that cause existed to justify the employee's termination. See id. at 423. But the jury would not decide whether the employee actually committed the infraction giving rise to the termination. Absent this standard, Cam Wal believes that the jury here was effectively placed in the position of being a "super-personnel department," allowing the jurors to decide what the appropriate discipline should have been based on their own interpretation of the facts.

[¶ 12.] In Cotran, a case of an implied employment agreement not to terminate except for good cause, the employee was fired after his employer investigated and substantiated allegations that the employee had sexually harassed two fellow employees. 948 P.2d at 415. Cotran denied that he committed the sexual harassment and brought suit against his employer for wrongful termination. His employment was not controlled by an express agreement, but the lower court interpreted a letter sent from the employer to Cotran to hold that he could not be terminated unless good or just cause existed. Id. at 414 n. 1. Then, the court instructed the jury that it should decide whether Cotran in fact committed the sexual harassment. In a special verdict, the jury answered "no" to the question whether Cotran "engaged in any of the behavior on which [the employer] based its decision to terminate [Cotran's] employment."

[¶ 13.] On appeal, the employer argued that it should not be "required to prove the acts of sexual harassment occurred." It asserted that it should only be required to prove that it had a good-faith belief that the...