Zick v. Verson Allsteel Press Co.

• Decision Date: 03 December 1985
• Docket Number: No. 85 C 6598.,85 C 6598.
• Citation: 623 F. Supp. 927
• Court: U.S. District Court — Northern District of Illinois
• Parties: Robert ZICK, Plaintiff, v. VERSON ALLSTEEL PRESS CO., Defendant.

623 F. Supp. 927

Robert ZICK, Plaintiff, v. VERSON ALLSTEEL PRESS CO., Defendant.

No. 85 C 6598.

United States District Court, N.D. Illinois, E.D.

December 3, 1985.

Richard J. Puchalski, Doss, Puchalski, Keenan & Bargiel, Chicago, Ill., for plaintiff.

Robert Zielinski, Mayer, Brown & Platt, Chicago, Ill., for defendant.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Robert Zick ("Zick") sues Verson Allsteel Press Co. ("Verson"), alleging Verson terminated his employment in violation of the Age Discrimination in Employment Act, 29 U.S.C. §§ 621-34 (Count I) and — as a pendent claim — in breach of an implied contractual covenant of good faith and fair dealing under Illinois law (Count II). Verson now moves under Fed.R.Civ.P. ("Rule") 12(b)(6) to dismiss Count II and under Rule 11 for sanctions. For the reasons stated in this memorandum opinion and order, Verson's motion is granted in both respects.

Facts¹

For purposes of this opinion, the relevant facts are few. Zick was hired by Verson in 1956.² After twenty-eight years as a Verson employee, Zick (then fifty-six years old) was fired July 27, 1984. Zick makes no allegation he had an express employment contract, nor does he allege Verson ever specifically undertook not to fire him except for cause.

"Good Faith and Fair Dealing"

Verson principally contends Zick was an "at will" employee whom it could fire at any time "for any reason, or none at all." Martin v. Federal Life Insurance Co., 109 Ill.App.3d 596, 600, 65 Ill.Dec. 143, 147, 440 N.E.2d 998, 1002 (1st Dist.1982). Zick does not dispute his at-will status, but he argues an at-will employment contract, like all contracts in Illinois, incorporates an implied covenant of good faith and fair dealing (the "Implied Covenant"). That Implied Covenant, in Zick's view, imposes "a substantive limitation on the employer's right to discharge" (Zick Mem. 4).

Before this opinion addresses the argument as Zick presents it, the Rule 11 issue makes it worthwhile to note arguments he expressly does not present:

1. Zick's claim is purely contractual. He does not assert the tort of retaliatory discharge.

2. He does not allege any express promise of job security or permanent employment, nor does he allege he and Verson bargained over such promises. See Martin, 109 Ill.App.3d at 600-03, 65 Ill. Dec. at 147-49, 440 N.E.2d at 1002-04 (discussing requirement of specific bargaining to rebut presumption employment contract is at will).

3. He does not claim the Implied Covenant is to be implied-in-fact from his course of dealing with Verson.

4. He makes no quasi contractual or quantum meruit claim.

In short, Zick argues the Implied Covenant is a part of his at-will employment contract "as a matter of law" (Zick Mem. 5), essentially as a compulsory term. See Restatement (Second) of Contracts 2d ("Restatement") § 205 (1979):

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

As a general principle of contract construction, the Restatement position is of course unexceptionable. See Martindell v. Lake Shore National Bank, 15 Ill.2d 272, 286, 154 N.E.2d 683, 690 (1958); Bonner v. Westbound Records, Inc., 76 Ill.App.3d 736, 744-45, 31 Ill.Dec. 926, 932-33, 394 N.E.2d 1303, 1309-10 (1st Dist.1979). But Zick's interpretation of the scope of the good-faith-and-fair-dealing doctrine is totally awry. That requirement is not an enforceable legal duty to be nice or to behave decently in a general way. Instead the phrase "good faith" is more a term of art, having a number of meanings as used in contract law (Restatement § 205 comment a):

1. Good faith is an obligation to refrain from acts or omissions tending to defeat the justified and reasonable expectations of the parties to a contract. Id.; Corbin on Contracts § 654 D, at 804 (Kaufman supp. 1984 pt. 1).

2. Good faith is a tool for interpreting contractual provisions. It "comes into play in defining and modifying duties which grow out of specific contract terms and obligations. It is a derivative principle." Gordon v. Matthew Bender & Co., 562 F.Supp. 1286, 1289 (N.D.Ill.1983). As Martindell, 15 Ill.2d at 286, 154 N.E.2d at 690 observed:

Where an instrument is susceptible of two conflicting constructions, one which imputes bad faith to one of the parties and the other does not, the latter construction should be adopted.

3. Finally, good faith has been construed as an obligation to refrain from certain types of conduct "because they violate community standards of decency, fairness or reasonableness." Restatement § 205 comment a. But this is a limited and discretely-bounded public-policy exception, prohibiting acts not expressly breaches of the terms of a contract yet offensive to the community. See, e.g., Palmateer v. International Harvester Co., 85 Ill.2d 124, 132-33, 52 Ill.Dec. 13, 16-17, 421 N.E.2d 876, 879-80 (1981) (against public policy to discharge at-will employee for reporting potentially criminal activity of fellow-employee to law-enforcement authorities); Kelsay v. Motorola, Inc., 74 Ill.2d 172, 181-82, 23 Ill.Dec. 559, 563-64, 384 N.E.2d 353, 357-58 (1978) (same where at-will employee is fired for applying for statutory workers' compensation).³

None of those concepts of "good faith" applies to the Implied Covenant as Zick asserts it. As to the last-described meaning of the term, Zick does not articulate a public-policy rationale comparable to that expressed in Palmateer and Kelsay.⁴ As to the second, there are no express contractual terms in need of interpretation or clarification. And as to the first (and perhaps most important) of the meanings of "good faith," discharge whenever and for whatever reason an employer chooses is a basic component of an at-will contract. Thus that sort of discharge cannot logically be said to contradict or frustrate the reasonable and justifiable expectations of the employee.⁵ As Judge Hart of this District Court observed in a case much like Zick's (Gordon, 562 F.Supp. at 1290):

Since Gordon was an at will employee, the duty to deal in good faith was appended to nothing which had independent life. Therefore no cause of action predicated only on the good faith principle may stand....

True enough, courts in some other jurisdictions have adopted a broader role for the concept of good faith in at-will employment contracts. See, e.g., the landmark case of Monge v. Beebe Rubber Co., 114 N.H. 130, 316 A.2d 549, 551 (1974) (employer may not terminate an at-will employee if motivated by bad faith or malice). What those courts have really done is essentially to abolish the at-will contract as it has been known at common law.

Zick in essence asks this Court to follow the path cleared by Monge, a move this Court has already declined to take because it cannot do so. See Scott v. Sears, Roebuck & Co., 605 F.Supp. 1047, 1052-53 (N.D.Ill.1985):

Despite her admitted at-will employee status, Scott claims Illinois law implies a covenant of good faith and fair dealing that limits the circumstances under which Sears could discharge her. But that is not the law in Illinois.

That last sentence is really the crucial stumbling block Zick cannot overcome. According to well-established principles of federal jurisprudence, this Court must apply state law to a pendent state-law claim. Just as in diversity cases, federal courts do not participate in the evolution of state law.⁶ In diversity and pendent jurisdiction cases, federal jurisprudence is rubberstamp jurisprudence.⁷

Zick's case is not even a close call. As the cases already cited demonstrate, Illinois courts have shown no inclination whatever to back away from the traditional at-will rule. Nothing could be clearer than the statement made in Criscione, 66 Ill.App.3d at 669-70, 23 Ill.Dec. at 459, 384 N.E.2d at 95 (quoting Loucks v. Star City Glass Co., 551 F.2d 745, 747 (7th Cir.1977)):

Furthermore, requiring an employer in an at will relationship to terminate an employee only for a legitimate business reason absent any other restrictions by contract or statute would place the courts in the untenable position of having to assess an employer's business judgment. There has been no attempt by the legislature to so alter the State's employment policy and such a step is not one for the courts to make. The rule in this state is that an employment at will relationship can be terminated for "a good reason, a bad reason, or no reason at all."

Only last May the Illinois Supreme Court forcefully reaffirmed that Illinois rule in Barr v. Kelso-Burnett Co., 106 Ill.2d 520, 525, 88 Ill.Dec. 628, 633, 478 N.E.2d 1354, 1356 (1985):

Contrary to plaintiffs' assertion, however, this court has not, by its Palmateer and Kelsay decisions, "rejected a narrow interpretation of the retaliatory discharge tort" and does not "strongly support" the expansion of the tort. The common law doctrine that an employer may discharge an employee-at-will for any reason or for no reason is still the law in Illinois, except for when the discharge violates a clearly mandated public policy.

Zick tries to invoke a dictum in Dayan v. McDonald's Corp., 125 Ill.App.3d 972, 991, 81 Ill.Dec. 156, 170, 466 N.E.2d 958, 972 (1st Dist.1984) (citations omitted):

In describing the nature of that limitation imposed by the doctrine of good faith performance the courts of this state have held that a party vested with contractual discretion must exercise that discretion reasonably and with proper motive, and may not do so arbitrarily, capriciously, or in a manner inconsistent with the reasonable expectations of the parties.... Where a party acts with improper motive, be it a desire to extricate himself from a contractual obligation by refusing to bring about a condition precedent or a desire to deprive an employee of reasonably anticipated benefits through termination, that party is exercising contractual discretion in a manner inconsistent with the reasonable expectations of the parties

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