Discrimination Is Against Public Policy, Court Says

A North Carolina worker who says her employer fired her because she was female and of foreign descent may sue for wrongful discharge, a Middle District judge ruled May 23.

This is so, the court held, because North Carolina public policy prohibits discrimination based on sex or national origin. And the court said the worker may also sue the employer for discharging her in bad faith, which opens the door to punitive damages.

One lawyer in the case says the ruling advances Coman v. Thomas Mfg. Co., the landmark 1989 Supreme Court case that created a public policy exception to North Carolina’s at-will employment rule.

‘I think it extends Coman a little,’ says Durham lawyer Stewart Fisher, who represented the plaintiff. ‘The question on everybody’s mind after Coman was how wide is that public policy exception?’

The case is Iturbe v. Wandel & Gol-termann. (North Carolina Lawyers Weekly No. MD-0766 – 16 pp.). The ruling was written by U.S. District Judge Eugene Gordon.

In upholding the wrongful discharge action, Judge Gor-don said recent North Carolina case law has established a two-prong test for evaluating Coman claims:

Did the employer’s actions violate a well-established public policy?

Does North Carolina provide a statutory remedy for the policy violation?

The court concluded both conditions were met in this case. The court said the first condition was met by G.S. § 143-422.2, which prohibits employers from engaging in discriminatory conduct. The second condition was met because no civil remedy exists under that statute, according to the opinion.

Judge Gordon also gave the green light to the bad faith claim, saying dicta in Coman endorsed that cause of action.

‘The language in Coman supporting the bad faith argument of wrongful discharge was dictum. But it was powerful dictum,’ the court held. ‘It is concluded that discharge from employment in bad faith can state a claim in North Carolina.

Facts

A Chilean woman worked for a New Jersey manufacturing company. In 1984, the company opened a new plant in Research Triangle Park. The woman was asked to relocate with the company. She was told she would have ‘a continuing job’ if she made the move and that she would have an opportunity to grow with the company.

The woman and her family relocated to North Carolina. Her husband, also Chilean, got a job at the same plant as a machinist.

In 1989, the husband met with a plant manager and was told that either he or his wife were going to be laid off. Four days later, the wife was fired. The woman contended she was the victim of sex and ethnic discrimination.

She also said the company had not followed its own written policy when it fired her. According to the company policy, decisions about employee layoffs were to be based on job performance and seniority. But when the woman was fired, an American, male co-worker in the same department kept his job even though he had less seniority and a comparable job performance.

The wife brought suit in the U.S. Middle District alleging wrongful discharge, breach of contract and violations of the federal Civil Rights Act. The employer moved to dismiss all claims.

Ruling

In a memorandum opinion and order, Judge Gordon addressed a number of the plaintiff’s claims:

Wrongful Discharge Based On Public Policy. This claim was based on the 1989 North Carolina Supreme Court ruling in Coman. (Lawyers Weekly No. NS1262 – 22 pages).

While Coman established a public policy exception to the traditional rule of at-will employment, it did not specify how far the exception extends or which public policies will support a claim of wrongful discharge.

Judge Gordon cited a May 7 decision by the state Court of Appeals that he said ‘clarifies the reach’ of the exception. In that case, Amos v. Oakdale Knitting Co. (Lawyers Weekly No. NA0667 – 7 pages; see page 1 story and case digest in May 13 issue), the Appeals Court ruled that three textile workers fired after refusing to work for less than the minimum wage could not sue for wrongful discharge because they had an alternative statutory remedy under the state’s Wage and Hour Act.

Judge Gordon said Amos created a two-part test for wrongful discharge claims. The first prong of the Amos test was satisfied, according to the opinion, by G.S. § 143-422.2 which says in part: ‘It is the public policy of this state to protect and safeguard the right and opportunity of all persons to seek, obtain and hold employment without discrimination, or abridgement on account of race, religion, color, national origin, age, sex or handicap by employers which regularly employ 15 or more employees.’

And because the statute provides no remedy for violations, the second part of the Amos test was also met, Judge Gordon said.

Wrongful Discharge Based On Employer’s Bad Faith. This claim, which also has its roots in Coman, was based on the employer’s alleged bad faith in not adhering to its written layoff policy when it fired the plaintiff.

Judge Gordon said Coman ‘was not extremely specific about what it meant’ by the bad faith exception. But it said the landmark 1989 ruling cited with approval two cases from other jurisdictions with facts similar to Iturbe.

In both of these cases, employers disregarded their own written policies when firing a employee. And in both cases, the discharged employees were allowed to press bad faith claims against their former employers. Those decisions were Kerr v. Gibson’s Products Inc., 733 P.2d 1292 (1987), and Cleary v. American Airlines, Inc., 168 Cal. Rptr. 722 (1980).

Breach of Contract. The plaintiff alleged her employer promised her a ‘continuous job’ if she relocated to North Carolina. She said her subsequent firing amounted to breach of contract.

Judge Gordon said under the traditional rule of at-will employment an employer can fire an employee for any reason, despite prior assurances that the job would be regular or permanent. Some cases in North Carolina, however, have recognized an exception to this rule when an employee gives up a job and moves to a new city to start work with a new employer.

Controlling Case

But Judge Gordon said Iturbe is controlled by the 1988 case, Buffaloe v. United Carolina Bank, 366 S.E.2d 918 (1988), where an employee moved from Charlotte to Lumberton to receive a promotion with the same employer. This was held to be insufficient additional consideration to give the plaintiff a breach of contract claim.

‘Buffaloe controls the case today…. Iturbe did not give up any other employment opportunities; she moved from New Jersey to North Carolina in order to retain the same job with the same company. Thus, any promise Wandel & Goltermann made to Iturbe was nudum pactum: the consideration she provided in return for it was insufficient to form a binding contract for permanent employment. Since no contract for permanent employment existed, Wandel & Goltermann had nothing to breach.’