Employees Still Losing the Battle Against At-Will Employment

The action in the Superior Court, Donahue v. Federal Express Corp., PICS Case No. 00-0866 (Pa. Super. May 9, 2000) Lally-Green, J. (14 pages), was started by plaintiff Brian Donahue, who worked almost 20 years for Fed Ex.



According to the opinion authored by Superior Court Judge Maureen Lally-Green, Donahue claimed he began noticing invoices that did not comply with repair orders in his department, that Fed Ex was not paying invoices and that his supervisor, Robert Marshall, was directing auto body work to a shop owned by a friend.



When Donahue complained to Marshall about the invoice discrepancy issue, Marshall accused Donahue of gross misconduct. Marshall said Donahue made a racial remark about him in front of another employee and told vendors derogatory things about him.



In the months before Donahue’s discharge, Fed Ex denied his request for clerical assistance, gave him additional duties and ordered him to falsify data to meet administrative requirements.



Fed Ex handles employee grievances via its Guaranteed Fair Treatment Procedure, through which Donahue appealed his termination. He argued that Marshall sought retribution against him for exposing that vendors had not been paid.



Fed Ex management upheld the termination after that appeal and a second, finding Donahue violated the company’s acceptable conduct policy.



In a third appeal, Donahue claimed Fed Ex accused him of making unprofessional remarks, but did not identify the alleged remarks or give him the opportunity to deny them, the opinion said. Management upheld the termination again.



Donahue then brought his complaints into the Allegheny County Common Pleas Court, arguing, among other claims, that his termination violated public policy and the Pennsylvania Human Relations Act. Judge Eugene Strassburger ruled in favor of Fed Ex and Marshall.



Before the Superior Court, Donahue did not raise the PHRA issue but did claim he was fired for whistleblowing.



The court rejected Donahue’s claim because he was under no legal duty to report the alleged wrongdoing.



“[Donahue] contends that employees should not be fired from private companies for reporting unscrupulous practices. [Donahue] has failed to identify any relevant statutes or legal precedents indicating that such retaliation violates public policy,” Lally-Green wrote. “Accordingly, [Donahue's] claim for wrongful discharge under the public policy exception cannot stand.”

Good Faith, Fair Dealing

Donahue also concentrated on Fed Ex’s breach of the good faith and fair dealing exception to at-will employment and the company’s GFTP.



The case Somers v. Somers, 613 A.2d 1211 (Pa. Super. 1992), established that the implied duty of good faith and fair dealing applies to at-will employment cases, Donahue argued.



In Somers, the plaintiff was promised in a contract that if net profits were realized from a particular project, he would receive 50 percent of those profits. The profits could only be received if the corporation resolved a conflict with a third party.



Because he disagreed over how to handle the conflict, Somers was fired. He argued that the company’s eventual settlement with the third party for much less than was owed deprive him of $3 million as his share of the profits.



The Superior Court ruled Somers should be given the opportunity to prove the company acted in bad faith by settling the claim in a way that would deprive him of profits. The opinion said “the duty to perform contractual obligations in good faith does not evaporate merely because the contract is an employment contract, and the employee has been held to be an employee at will.”



However, Lally-Green explained that the duty of good faith and fair dealing in Somers extended beyond the employment relationship into other contractual terms. Somers could recover for breach of duties connected with the profit-sharing provision, but could not recover for his termination.



The Superior Court did rule that the duty applied to one employment case – Baker v. Lafayette College, 504 A.2d 247 (Pa. Super. 1986) – but emphasized that its decision was to apply only to the narrow facts of that case and did not decide the larger issue of whether the duty dictates at-will employment contracts.



Lally-Green said no court has applied the duty in the at-will employment context since Baker and the Superior Court would not do so for Donahue, even considering the GFTP.



“If the GFTP were expressly incorporated into [Donahue's] employment contract, his claim would be analogous to Baker, which held that such a claim is viable. [Donahue's] complaint, however, points to no specific provision of the GFTP indicating that its provisions imposed separate contractual duties on Fed Ex,” Lally-Green said.



“In fact, the GFTP expressly states that ‘the policies and procedures set forth by the company provide guidelines for management and other employees during employment but do not create contractual rights regarding termination or otherwise.’”

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