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SHERMAN v. ST. BARNABAS HOSP.

March 29, 1982

Albert H. SHERMAN, Plaintiff,
v.
ST. BARNABAS HOSPITAL, a not-for-profit corporation of the State of New York; Dale D. Embich; District 1199, National Union of Hospital and Health Care Employees, RWDSU, AFL-CIO; Leon Davis; Doris Turner; Ramon Malave; Patrick Battel; Bernice Karolkowski and Tony Selka, Defendants



The opinion of the court was delivered by: GOETTEL

St. Barnabas Hospital ("Hospital") is a voluntary, nonprofit hospital located in the South Bronx. The Hospital employs 1100 workers, approximately 800 of whom are members of the National Union of Hospital and Health Care Employees, RWDSU, AFL-CIO District 1199 ("Union"). In 1968, the Hospital hired the plaintiff, Albert H. Sherman, to head its food services department. There was no written contract between the plaintiff and the Hospital, nor was his employment for a definite term. The plaintiff served as director of food services from 1968 to 1980 and in that capacity was directly responsible for the selection, training, promotion, salary increases, and termination of the 175 employees in his department, all of whom were members of the Union. (The plaintiff was not a member of the Union.)

In the early spring of 1980, the Hospital began to receive complaints about the plaintiff and demands from the Union that he be discharged. (The reason for these complaints is in dispute. For the purposes of deciding the present motions, we must accept as true the plaintiff's allegations, Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 1686, 40 L. Ed. 2d 90 (1974), that the Union's complaints stem from the plaintiff's refusal to agree to the Union's preferential hiring and scheduling demands.) The Hospital attempted to resolve the situation through numerous meetings with the plaintiff and the Union during the spring and summer of 1980, but these meetings were not fruitful. The Union persisted in its demand that the plaintiff be fired and threatened an industry-wide work stoppage if this demand was not met. Fearful of a strike, the Hospital capitulated and placed the plaintiff on involuntary early retirement. (The plaintiff was 60 years old at the time.)

The Hospital concedes that union pressure was the only reason for the plaintiff's discharge, although it challenges plaintiff's allegations as to why the Union wanted him fired. There is no allegation that the plaintiff was incompetent. Indeed, the Hospital provided the plaintiff with excellent references when he was seeking new employment after his discharge from the Hospital. *fn1"

 The plaintiff has filed this action against the Hospital and the Union to recover damages for lost wages and pension benefits and for mental suffering and humiliation. He sets forth a variety of causes of action: abusive discharge (Counts One and Two), breach of contract (Count Three) (Hospital only), prima facie tort (Count Four), tortious interference with contractual relations (Count Five) (Union only), tortious interference with an advantageous economic relationship (Count Six) (Union only), conspiracy to violate the plaintiff's constitutional rights, 42 U.S.C. § 1985(c) (1976) (Count Seven), and a violation of the Age Discrimination Employment Act of 1967, 29 U.S.C. § 630(b) (Supp. III 1979) (Count Eight) (Hospital only).

 The Hospital moves to dismiss Counts One through Four as well as Count Seven pursuant to Fed.R.Civ.P. 12(b)(6) and moves for summary judgment on Count Eight pursuant to Fed.R.Civ.P. 56. The Union moves to dismiss all of the counts against it pursuant to Fed.R.Civ.P. 12(b)(1) and (6) on the grounds that the action is preempted and falls within the exclusive jurisdiction of the National Labor Relations Board and that it is time barred by the six-month statute of limitations in section 10(b) of the National Labor Relations Act, 29 U.S.C. § 160(b) (1976).

 For the reasons stated below, the motions to dismiss the abusive discharge counts (Counts One and Two), the breach of contract count (Count Three), and the tortious interference with contractual relations and an advantageous economic relationship counts (Counts Five and Six) are denied. The motion to dismiss Counts Four, Seven and Eight are granted.

 I. Hospital's Motion to Dismiss

 A. Counts One and Two: Abusive Discharge

 The black letter law of employment at will contracts traditionally has been that an employer may discharge the employee "for good cause, for no cause, or even for cause morally wrong, without thereby being guilty of a legal wrong." Payne v. Western & A. R. R., 81 Tenn. 507, 519-20 (1884), overruled on other grounds, Hutton v. Watters, 132 Tenn. 527, 179 S.W. 134 (1915); see Blades, Employment at Will vs. Individual Freedom: On Limiting the Abusive Exercise of Employer Power, 67 Colum.L.Rev. 1404, 1405 (1967); Note, Implied Contract Rights to Job Security, 26 Stan.L.Rev. 335 (1974). So basic was this rule that one annotator could correctly write only a few years ago that "few legal principles would seem to be better settled than the broad generality that an employment for an indefinite term is regarded as an employment at will which may be terminated at any time by either party for any reason or for no reason at all." Annot., Employee's Arbitrary Dismissal as Breach of Employment Contract Terminable at Will, 62 A.L.R.3d 271, 271 (1975). *fn2"

 Although employers still retain relatively complete freedom to discharge employees at will, they can no longer discharge them for any reason whatsoever. Harsh applications and abuse of the rule have prompted statutory and judicial modifications aimed at preventing discharges that are contrary to public policy.

 The statutory modification of the rule can be found in laws prohibiting discrimination and retaliation. Title VII of the Civil Rights Act of 1964, for example, makes it unlawful for an employer to discharge an employee because of race, color, religion, sex, or national origin, 42 U.S.C. § 2000e-2 (1976), or to discharge any employee in retaliation for filing charges under Title VII. 42 U.S.C. § 2000e-3 (1976). Similarly, the National Labor Relations Act prevents an employer from discharging an employee for forming or joining a union or in retaliation for filing charges against the employer. 29 U.S.C. § 158 (1976). Many states and municipalities have enacted similar statutes. See 8A Lab.Rel.Rep. (BNA) 451: 101-05 (April 1978); Peck, Unjust Discharges From Employment: A Necessary Change in the Law, 40 Ohio St.L.J. 1, 14 (1979).

 The courts have modified the rule through a number of legal theories. By implying a requirement that parties to an employment relationship deal in good faith, some courts have imposed contract liability on employers found to have acted in bad faith. *fn3" See Fortune v. National Cash Register Co., 373 Mass. 96, 104, 364 N.E.2d 1251, 1256 (1977) (employment at will contracts, like all contracts, contain an implied covenant of good faith); Monge v. Beebe Rubber Co., 114 N.H. 130, 316 A.2d 549, 551 (1974) (termination motivated by bad faith is not in the best interest of society and constitutes a breach of contract). See also McKinney v. National Dairy Council, 491 F. Supp. 1108 (D.Mass.1980); McNulty v. Borden, 474 F. Supp. 1111, 1119 (E.D.Pa.1979). Another theory of liability holds employers liable for intentional infliction of emotional distress when the discharge has been extreme and outrageous. See Agis v. Howard Johnson Co., 371 Mass. 140, 355 N.E.2d 315 (1976) (restaurant manager held liable for firing waitresses in alphabetical order to force them to disclose who had been stealing from the restaurant). See also Contreras v. Crown Zellerbach Corp., 88 Wash.2d 735, 565 P.2d 1173 (1977); Alcorn v. Anbro Engineering, Inc., 2 Cal.3d 493, 468 P.2d 216, 86 Cal.Rptr. 88 (1970); but see M. B. M. Co. v. Counce, 268 Ark. 269, 596 S.W.2d 681 (Ark.1980) (no cause of action for intentional infliction of mental distress because plaintiff was an employee at will). *fn4" See generally, Annot., 86 A.L.R.3d 454 (1978 & Supp. 1981). Most courts have modified the rule under a "public policy" exception to the employment at will rule. This exception allows the discharged employee to recover where the discharge violates some important public policy. See, e.g., Petermann v. Teamsters Local 396, 174 Cal.App.2d 184, 344 P.2d 25 (1959) (employee discharged for refusing to commit perjury entitled to recover under breach of contract); Smith v. Atlas Off-Shore Boat Service, Inc., 653 F.2d 1057 (5th Cir. 1981) (seaman discharged for filing Jones Act claim permitted action under maritime law); Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 610 P.2d 1330, 164 Cal.Rptr. 839 (1980) (employee discharged for refusal to participate in illegal price-fixing scheme allowed to recover in tort); Frampton v. Central Indiana Gas Co., 260 Ind. 249, 297 N.E.2d 425 (1973) (at will employee discharged for filing workmen's compensation claim may bring tort action against former employer); Nees v. Hocks, 272 Or. 210, 536 P.2d 512 (1975) (employee dismissed for serving on jury duty entitled to recover in tort). *fn5"

 There are presently no reported New York State appellate court decisions in this emerging area of the law. There are, however, several recent state trial court and federal district court decisions applying New York State law that indicate that New York will adopt the so called public policy exception.

 The leading New York State court decision is Chin v. American Telephone & Telegraph, 96 Misc.2d 1070, 410 N.Y.S.2d 737 (Sup.Ct.1978), aff'd mem., 70 A.D.2d 791, 416 N.Y.S.2d 160 (1st Dep't), leave to appeal denied, 48 N.Y.2d 603, 396 N.E.2d 207, 421 N.Y.S.2d 1028 (1979). Chin involved an employee who claimed to have been discharged for holding certain political beliefs and associations. One of the causes of action asserted against the employer was "abusive discharge." In ruling on the defendant's motion for summary judgment, the court noted that New York had not, as yet, recognized abusive discharge as stating a claim, but went on to suggest that such a claim might be recognized if the discharged employee could establish that "(1) there is a public policy of this state that (2) was violated by the ...


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