Prout v. Sears, Roebuck and Co.

772 P.2d 288, 236 Mont. 152

• Court: Montana Supreme Court
• Decided: May 2, 1989
• Docket: 88-117
• Status: Published

Opinions

MR. CHIEF JUSTICE HASWELL, Retired,

sitting for MR. JUSTICE HUNT, delivered the Opinion of the Court.

In this action for wrongful termination of employment, the underlying issue is whether there is a genuine issue of material fact precluding summary judgment. The District Court held there was none. We disagree.

Plaintiff Tammy Prout, an employee of the Sears catalogue store in Helena, Montana, was fired by Terry McGinnis, the store manager, on December 2, 1986. The reason for termination given by Sears to Tammy was falsification of her time sheets showing the hours she worked on two occasions. She sued Sears and McGinnis for wrongful termination of her employment, alleging breach of the implied covenant of good faith and fair dealing, negligent firing, estoppel and negligent infliction of emotional distress. The defendants answered claiming that Tammy was an employee at-will subject to termination for any reason deemed sufficient by Sears, without any reasonable expectation of job security; accordingly, the implied covenant of good faith and fair dealing did not exist in the employment relationship between Sears and Tammy and cannot be used as a basis for her claim of wrongful discharge.

Following pretrial discovery and entry of a pretrial order pursuant to Rule 16, M.R.Civ.P., the District Court of Lewis and Clark County granted the defendants’ motion for summary judgment holding there was no genuine issue of material fact presented and that defendants were entitled to judgment as a matter of law.

The undisputed facts disclose that plaintiff went to work at the Sears catalogue store in Helena on a part-time basis when she was a sixteen-year-old high school student. At that time she signed an employment application reading in pertinent part:

“ ‘In consideration of my employment, I agree to conform to the rules and regulations of Sears, Roebuck & Co. and my employment and compensation can be terminated with or without notice, at any time, at the option of either the company or myself. I understand that no unit manager or representative of Sears, Roebuck & Co. other than the president or vice president of the company, has any authority to enter into any agreement for employment for any specified period of time, or to make any agreement contrary to the foregoing.

“ ‘May 30, 1979. /s/ Tammy Sharpe [Prout]’ ”

When plaintiff was hired four days later she signed a personal record card containing the following language:

“ ‘In consideration of my employment, I agree to conform to the rules of Sears, Roebuck & Co. and my employment and compensation can be terminated, with or without cause and with or without notice, at any time, at the option of either the company or myself.

“ ‘June 4, 1979. /s/ Tammy Sharpe [Prout]’ ”

The agreed facts in the pretrial order further indicate that Tammy was initially hired as a sales person but a little over two years later, on August 10, 1981, she was promoted to the position of machine operator and given a twenty cent per hour increase in pay due to the higher technical skills required of the machine operator’s position. On January 2, 1983, Tammy was promoted to the position of Division Head A (supervisor) and received a pay increase of $1.50 per hour. The agreed facts further state that “Tammy Prout was given these promotions because her supervisors were generally satisfied with her job performance.” On December 2, 1986, Terry McGinnis advised Tammy that her employment with Sears was terminated effective that date.

During Tammy’s employment at the Helena Sears store Sears changed managers five times. At least three of these managers gave performance evaluations on Tammy reporting that she had difficulties with absenteeism and tardiness which needed attention and correction. These reports and other warnings given to Tammy were both written and verbal. The reason given by Sears to Tammy for her termination was falsification of two time sheets although Mc-Ginnis, the manager, also claimed he asserted absenteeism and tardiness.

At the heart of this dispute is Sears’s time-keeping and payment system. Sears paid its employees in the Helena store every Friday for the preceding week on the basis of time sheets due at the central payroll office each Thursday for the entire work week. Thus, if an employee was scheduled to work on Friday or Saturday, the employee would enter the scheduled hours for those days on the Thursday time sheet and be paid accordingly on Friday of the following week. If, in fact, the recorded Friday and Saturday hours were not worked as scheduled, the employee was supposed to teletype the correction of hours to the central payroll office the following Monday.

The weekly time sheets signed by Tammy contained this language:

“I have recorded my actual starting and quitting time each day. Any falsification will subject me to immediate dismissal.”

This was signed by Tammy each week as she sent in her weekly time sheet.

Tammy believed that it was an acceptable practice to make up the necessary hours during the next work week rather than to teletype the corrections into the central payroll office on the Monday following a missed day. Tammy and two former employees of the Helena Sears store testified by deposition this was an accepted store practice under two prior store managers. The existence of this practice was disputed by defendant McGinnis and several current employees.

During two pay periods in November, 1986, Tammy missed time at work which she had recorded on her time sheets as having worked. She did not teletype in the Monday corrections adjusting her pay. Tammy was paid for these hours which were missed. She was attempting to make up the hours missed on a compensatory time basis. Both of the two incorrect time sheets were observed by manager McGinnis, and he promptly fired Tammy for this reason when she returned to work after receiving the pay check under the second inaccurate time sheet.

The pretrial order lists the following issues of fact, among others, that remain to be litigated upon the trial:

1. Whether defendants acted unfairly and in bad faith toward plaintiff;

2. Whether defendants acted in a negligent manner;

3. Whether defendants negligently inflicted emotional distress upon plaintiff;

4. Whether defendants are equitably estopped from relying upon the language in the employment application and personal record card regarding termination without cause or notice;

5. Whether defendants led plaintiff to believe that her time-keeping procedures were acceptable to them, and, if so, whether defendants are equitably estopped from terminating plaintiff for allegedly falsifying her time sheets;

6. Whether plaintiff acted negligently concerning her termination.

One of the issues of law listed in the pretrial order is whether the provisions of plaintiff’s employment application and personal record card bar the claims asserted in this lawsuit. The pretrial order notes that this legal issue is the subject of a pending motion for summary judgment by defendants.

The gist of the District Court’s ruling on the motion for summary judgment is contained in the following language:

“The sole issue decided by the Court is that plaintiff’s claims are precluded as a matter of law by the language of plaintiff’s employment application and her personal record card. That language in clear and unequivocal terms notified plaintiff that her employment could be terminated at any time and for any reason, and defeats the claims plaintiff is attempting to assert in this case.”

At the outset, we note that this case is governed by the law that existed at the time of firing, December 1986, and is no way affected by legislation enacted by the 1987 legislature.

Montana’s at-will employment statute provides in pertinent part:

“TERMINATION AT WILL. An employment having no specified term may be terminated at the will of either party on notice to the other, except where otherwise provided by [statute].” Section 39-2-503, MCA

Notice prior to termination is not required. Gates v. Life of Montana Insurance Company (1982), 196 Mont. 178, 638 P.2d 1063 (Gates I). None of the statutory exceptions are applicable to this appeal.

Because of the harshness of this statute when applied literally and mechanically to all at-will employment terminations (Nye v. Dept. of Livestock (1982), 196 Mont. 222, 639 P.2d 498), and because of abuses inherent in employment relationships between parties of unequal bargaining power (Dare v. Montana Petroleum Marketing Co. (1984), 212 Mont. 274, 687 P.2d 1015; Stark v. The Circle K Corporation (Mont. 1988), [230 Mont. 468,] 751 P.2d 162, 45 St.Rep. 377), courts in Montana and elsewhere, to achieve justice in a wide variety of employment situations, have established exceptions to the unlimited discretion of the at-will employer to discharge his employees. We need not concern ourselves here with a survey and exposition of the law in this area nationally or in other jurisdictions, as Montana has proven to be a fertile field for such litigation and has developed its own law and precedent accordingly.

Aside from statutory enactments, Montana courts have recognized four exceptions to the right of the at-will employer to discharge its employees:

1. When the discharge violates public policy: Keneally v. Orgain (1980), 186 Mont. 1, 606 P.2d 127; Staudohar v. Anaconda Co. (D. Mont. 1981), 527 F.Supp. 876; Nye v. Dept. of Livestock, supra.

2. When the discharge breaches an express or implied promise of job security: Gates I, supra; Dare v. Montana Petroleum Marketing Co., supra; Stark v. The Circle K Corporation, supra.

3. When the discharge breaches the implied covenant of good faith and fair dealing: Gates I, supra; Gates v. Life of Montana Insurance Co. (1983), 205 Mont. 304, 668 P.2d 213 (Gates II); Dare, supra; Crenshaw v. Bozeman Deaconess Hospital (1984), 213 Mont. 488, 693 P.2d 487; Malloy v. Judges Foster Home Program (Mont. 1987), 746 P.2d 1073, 44 St.Rep. 1996; Stark, supra.

4. Negligent discharge: Crenshaw, supra.

These four exceptions frequently overlap. For a good exposition of the Montana law in this area, see Hopkins and Robinson, Employment At-Will, Wrongful Discharge, and the Covenant of Good Faith and Fair Dealing in Montana, Past, Present, and Future, 46 Mont. L. Rev. 1 (1985).

In this case we have an express, written, at-will employment relationship between Sears and Tammy, giving Sears the right to terminate her employment, without notice, without cause and providing that any falsifications of time sheets would subject Tammy to immediate dismissal. We have a pretrial order approved both as to form and content by the attorneys for the respective parties, signed and entered by the district judge, and listing what the parties considered eight issues of fact remaining to be litigated at the trial. Fact issues listed include whether the defendants acted unfairly and in bad faith toward the plaintiff; whether defendants acted negligently concerning plaintiff’s termination; whether defendants led plaintiff to believe that her time-keeping procedures were acceptable to them, and, if so, whether defendants are equitably estopped from terminating plaintiff for allegedly falsifying her time sheets; and whether defendants are equitably estopped from relying upon the language in the employment application and personal record card regarding termination without cause or notice. At first blush it would appear that at least some of these fact issues are really issues of law and that some of them are mixed questions of fact and law. However, the parties treated them as issues of fact and, underlying all these listed issues, are numerous factual disputes concerning Tammy’s job performance, the reason for and manner in which she was discharged, the employer’s practice concerning time-keeping procedures, and related matters.

The District Court held as a matter of law that the language of Tammy’s employment application and personal record card barred her claims in this action, thus rendering the fact issues listed in the pretrial order irrelevant.

In deciding this appeal we need not further detail the evidence developed in pretrial discovery. The parties concede the existence of numerous fact issues for litigation at trial by approving the content of the pretrial order. These must be resolved to determine whether plaintiff’s claims fall into any of the four exceptions to the right of the at-will employer to discharge its employees. This precludes summary judgment.

Our decision in this appeal turns on the facts peculiar to this case. It is not to be read as a carte blanche to the jury in every wrongful discharge case. The distinguishing characteristics in this case are the agreement by the attorneys that the listed fact issues in the pretrial order “remain to be litigated upon the trial”; the alleged conduct of the employer in discharging its employee for dishonesty consisting of a time-keeping practice that allegedly had been condoned on prior occasions and which allegedly made it difficult, if not impossible, for the discharged employee to secure further employment; and the alleged negligence of the employer. In this case we neither expand the exceptions to the at-will rule nor create jury issues out of thin air, but simply apply Montana precedent to this case.

At the same time we give effect to the employment application and record card. These give the employer the right to fire without cause. They do not give the employer the right to fire for a false cause. If the at-will employer who can fire without cause under the employment contract chooses instead to fire an employee for dishonesty, the discharged employee must be given the opportunity to prove the charge of dishonesty false.

The foregoing limitation on an employer’s right to fire without cause was recently stated by Justice Harrison:

“Employers can still terminate untenured employees at will and without notice. They simply may not do so in bad faith or unfairly without becoming liable for damages.” Crenshaw v. Bozeman Deaconess Hospital, 693 P.2d at 492.

We vacate the summary judgment, dismiss the claim for negligent infliction of emotional distress as having insufficient basis, and remand the balance of the case to the District Court for further proceedings.

MR. JUSTICES HARRISON, SHEEHY AND McDONOUGH concur.