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Pierce v. Ortho Pharmaceutical Corp.

Decided: July 28, 1980.

GRACE PIERCE, PLAINTIFF-RESPONDENT,
v.
ORTHO PHARMACEUTICAL CORPORATION, DEFENDANT-APPELLANT



On certification to the Superior Court, Appellate Division, whose opinion is reported at 166 N.J. Super.. 335 (1979).

For reversal and remandment -- Chief Justice Wilentz, and Justices Sullivan, Clifford, Schreiber, Handler and Pollock. For affirmance -- Justice Pashman. The opinion of the Court was delivered by Pollock, J. Pashman, J., dissenting.

Pollock

This case presents the question whether an employee at will has a cause of action against her employer to recover damages for the termination of her employment following her refusal to continue a project she viewed as medically unethical. Resolution of this question involves an examination of the common law doctrine of at will employment to determine whether we should adopt an exception to the rule allowing an employer to discharge an at will employee without cause.

Plaintiff, Dr. Grace Pierce, sued for damages after termination of her employment with defendant, Ortho Pharmaceutical Corporation. The trial judge granted defendant's motion for summary judgment. The Appellate Division reversed and remanded for a full trial. 166 N.J. Super. 335 (1979). We granted defendant's petition for certification. 81 N.J. 266 (1979). We now reverse the Appellate Division and reinstate the summary judgment granted by the Law Division.

I

Since the matter involves a motion for summary judgment, we glean the facts from the pleadings, affidavits, and depositions before the court on the motion, giving plaintiff the benefit of all reasonable inferences that may be drawn in her favor. R. 4:46-2.

Ortho specializes in the development and manufacture of therapeutic and reproductive drugs. Dr. Pierce is a medical doctor who was first employed by Ortho in 1971 as an Associate Director of Medical Research. She signed no contract except a secrecy agreement, and her employment was not for a fixed term. She was an employee at will. In 1973, she became the Director of Medical Research/Therapeutics, one of three major sections of the Medical Research Department. Her primary responsibilities were to oversee development of therapeutic drugs and to establish procedures for testing those drugs for safety, effectiveness, and marketability. Her immediate supervisor was Dr. Samuel Pasquale, Executive Medical Director.

In the spring of 1975, Dr. Pierce was the only medical doctor on a project team developing loperamide, a liquid drug for treatment of diarrhea in infants, children, and elderly persons. The proposed formulation contained saccharin. Although the concentration was consistent with the formula for loperamide marketed in Europe, the project team agreed that the formula was unsuitable for use in the United States. An alternative formulation containing less saccharin might have been developed within approximately three months.

By March 28, however, the project team, except for Dr. Pierce, decided to continue with the development of loperamide. That decision was made apparently in response to a directive from the Marketing Division of Ortho. This decision meant that Ortho would file an investigational new drug application (IND) with the Federal Food and Drug Administration (FDA), continuing laboratory studies on loperamide, and begin work on a formulation. FDA approval is required before any new drug is tested clinically on humans. 21 U.S.C. § 355; 21 C.F.R. §§ 310.3 et seq. Therefore, loperamide would be tested on patients only if the FDA approved the saccharin formulation.

Dr. Pierce knew that the IND would have to be filed with and approved by the FDA before clinical testing could begin. Nonetheless, she continued to oppose the work being done on loperamide at Ortho. On April 21, 1975, she sent a memorandum to the project team expressing her disagreement with its decision

to proceed with the development of the drug. In her opinion, there was no justification for seeking FDA permission to use the drug in light of medical controversy over the safety of saccharin.

Dr. Pierce met with Dr. Pasquale on May 9 and informed him that she disagreed with the decision to file an IND with the FDA. She felt that by continuing to work on loperamide she would violate her interpretation of the Hippocratic oath. She concluded that the risk that saccharin might be harmful should preclude testing the formula on children or elderly persons, especially when an alternative formulation might soon be available.

Dr. Pierce recognized that she was joined in a difference of "viewpoints" or "opinion" with Dr. Pasquale and others at Ortho concerning the use of a formula containing saccharin. In her opinion, the safety of saccharin in loperamide pediatric drops was medically debatable. She acknowledged that Dr. Pasquale was entitled to his opinion to proceed with the IND. On depositions, she testified concerning the reason for her difference of opinion about the safety of using saccharin in loperamide pediatric drops:

Q That was because in your medical opinion that was an unsafe thing to do. Is that so?

A No. I didn't know. The question of saccharin was one of potential harm. It was controversial. Even though the rulings presently look even less favorable for saccharin it is still a controversial issue.

After their meeting on May 9, Dr. Pasquale informed Dr. Pierce that she would no longer be assigned to the loperamide project. On May 14, Dr. Pasquale asked Dr. Pierce to choose other projects. After Dr. Pierce returned from vacation in Finland, she met on June 16 with Dr. Pasquale to discuss other projects, but she did not choose a project at that meeting. She felt she was being demoted, even though her salary would not be decreased. Dr. Pierce summarized her impression of that meeting in her letter of resignation submitted to Dr. Pasquale the following day. In that letter, she stated:

Upon learning in our meeting June 16, 1975, that you believe I have not 'acted as a Director', have displayed inadequacies as to my competence, responsibility, productivity, inability to relate to the Marketing Personnel, that you, and

reportedly Dr. George Braun and Mr. Verne Willaman consider me to be non-promotable and that I am now or soon will be demoted, I find it impossible to continue my employment at Ortho.

The letter made no specific mention of her difference of opinion with Dr. Pasquale over continuing the work on loperamide. Nonetheless, viewing the matter most favorably to Dr. Pierce, we assume the sole reason for the termination of her employment was the dispute over the loperamide project. Dr. Pasquale accepted her resignation.

In her complaint, which was based on principles of tort and contract law, Dr. Pierce claimed damages for the termination of her employment. Her complaint alleged:

The Defendant, its agents, servants and employees requested and demanded Plaintiff follow a course of action and behavior which was impossible for Plaintiff to follow because of the Hippocratic oath she had taken, because of the ethical standards by which she was governed as a physician, and because of the regulatory schemes, both federal and state, statutory and case law, for the protection of the public in the field of health and human well-being, which schemes Plaintiff believed she should honor.

However, she did not specify that testing would violate any state or federal statutory regulation. Similarly, she did not state that continuing the research would violate the principles of ethics of the American Medical Association. She never contended her participation in the research would expose her to a claim for malpractice.

Ortho moved for summary judgment on two theories. The first was that Dr. Pierce's action for wrongful discharge was barred because she resigned. The trial judge denied the motion on that ground because he found that there was a fact question whether Ortho induced Dr. Pierce's resignation. However, the trial court granted Ortho's motion on the alternative ground that because Dr. Pierce was an employee at will, Ortho could end her employment for any reason. In reversing the trial court, the Appellate Division ruled that a plenary hearing was necessary before deciding whether to adopt an exception to the common law rule permitting an employer to fire an employee at will for any reason. 166 N.J. Super. at 342, 399 A.2d 1023.

II

A motion for summary judgment is a means for the efficient disposition of a cause of action where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. R. 4:46-2. Of course, courts should exercise appropriate caution in deciding issues involving policy considerations. Jackson v. Muhlenberg Hospital, 53 N.J. 138, 142 (1969). However, excessive caution would undercut the purposes of a motion for summary judgment, which provides a means for piercing the allegations of the pleadings to determine whether there are issues requiring disposition at trial. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 73-75 (1954). If, after drawing all inferences of doubt against the movant, a court finds that there is no genuine issue of material fact, it should enter summary judgment. Id. at 75. Applying those principles, we hold that even if she were discharged by Ortho, Dr. Pierce has not alleged facts that would support an action for damages for the termination of her employment.

As previously noted, there was a fact question whether Ortho induced Dr. Pierce to resign. Consequently, the trial judge properly denied summary judgment on the alternative ground that her resignation barred this action. That determination is not challenged on this appeal. Therefore, we do not reach the question whether resignation bars an action for wrongful discharge. See, e.g., Donnelly v. United Fruit Co., 75 N.J. Super. 383 (App. Div. 1962), aff'd 40 N.J. 61 (1963).

As discussed below, our careful examination of Dr. Pierce's allegations and the record reveals no genuine issue of material fact requiring disposition at trial. Although this case raises important policy considerations, all the relevant facts are before us, and there is no reason to defer a decision. Accordingly, we reverse the Appellate Division and reinstate the summary judgment in favor of defendant.

III

Under the common law, in the absence of an employment contract, employers or employees have been free to terminate

the employment relationship with or without cause. Schlenk v. Lehigh Valley R.R. Co., 1 N.J. 131, 135 (1948) (railroad employee discharged for fighting). See also English v. College of Medicine and Dentistry of New Jersey, 73 N.J. 20, 23 (1977) (morgue supervisor discharged for failure to keep accurate records); Jorgensen v. Pennsylvania R.R. Co., 25 N.J. 541, 554 (1958) (railroad employee discharged for theft).

The rule temporarily attained constitutional magnitude in Adair v. United States, 208 U.S. 161, 175, 28 S. Ct. 277, 280, 52 L. Ed. 436, 442 (1907), where the United States Supreme Court held unconstitutional a federal statute making it illegal for an employer to prohibit an employee from joining a union. See also Coppage v. Kansas, 236 U.S. 1, 13-14, 35 S. Ct. 240, 243, 59 L. Ed. 441, 446 (1914) (applying Adair to similar state statutes). As a corollary of the development of legislation, administrative regulation, and judicial decisions, the rule has since lost its constitutional protection. See NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S. Ct. 615, 81 L. Ed. 893 (1937).

In the last century, the common law developed in a laissez-faire climate that encouraged industrial growth and approved the right of an employer to control his own business, including the right to fire without cause an employee at will. See Comment, 26 Hastings L.J. 1434, 1441 (1975). The twentieth century has witnessed significant changes in socioeconomic values that have led to reassessment of the common law rule. Businesses have evolved from small and medium size firms to gigantic corporations in which ownership is separate from management. Formerly there was a clear delineation between employers, who frequently were owners of their own businesses, and employees. The employer in the old sense has been replaced by a superior in the corporate hierarchy who is himself an employee. We are a nation of employees. Growth in the number of employees has been accompanied by increasing recognition of the need for stability in labor relations.

Commentators have questioned the compatibility of the traditional at will doctrine with the realities of modern economics and employment practices. See, e.g., Blades, Employment at

Will vs. Individual Freedom: On Limiting the Abusive Exercise of Employer Power, 67 Colum. L. Rev. 1404 (1967) [hereinafter cited as Blades]. The common law rule has been modified by the enactment of labor relations legislation. See, e.g., NLRB v. Jones & Laughlin Steel Corp., supra. The National Labor Relations Act and other labor legislation illustrate the governmental policy of preventing employers from using the right of discharge as a means of oppression. Blades, supra at 1418. Consistent with this policy, many states have recognized the need to protect employees who are not parties to a collective bargaining agreement or other contract from abusive practices by the employer.

Recently those states have recognized a common law cause of action for employees at will who were discharged for reasons that were in some way "wrongful". The courts in those jurisdictions have taken varied approaches, some recognizing the action in tort, some in contract. See Comment, 93 Harv. L. Rev. 1816, 1818-1824 (1980). Nearly all jurisdictions link the success of the wrongful discharged employee's action to proof that the discharge violated public policy.

In Geary v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974), a salesman employed at will was discharged after he expressed to the management his opinion that a new product was defective and dangerous. The court sustained the dismissal of the complaint because it revealed only that "there was a dispute over the merits of the new product," and because no public policy is violated when a company discharges an employee who is not qualified to make technical judgments for making "a nuisance of himself." 319 A.2d at 178-179. However, the court suggested that an action in tort might exist if a "clear mandate of public policy is violated." Id. at 180. See Reuther v. Fowler & Williams, Inc., 255 Pa.Super. 28, 386 A.2d 119 (Super. Ct. 1978) (employee who was fired for taking time off for jury duty has cause of action for wrongful discharge); see also Perks v. Firestone Tire & Rubber Co., 611 F.2d 1363 (3d Cir. 1979) (employee fired for refusal to take polygraph test has cause of action); Lekich v. International Business Machines Corp., 469 F. Supp. 485

(E.D. Pa. 1979) (employee who made unauthorized long distance telephone calls had no cause of action); Wehr v. Burroughs Corp., 438 F. Supp. 1052 (E.D. Pa. 1977) (cause of action recognized, but employee had alternative remedy for age discrimination).

In Monge v. Beebe Rubber Co., 114 N.H. 130, 316 A.2d 549 (1974), the court allowed an at will employee to sue for breach of contract when she was dismissed after she refused to date the foreman. Balancing the employee's interest in maintaining employment, the employer's interest in running a business, and the public interest, the court held that termination motivated by bad faith or malice is not in the public interest and constitutes a breach of the employment contract. 316 A.2d at 551. See Fortune v. National Cash Register Co., 364 N.E. 2d 1251 (Mass. 1977) (employment contract, even at will, includes an implied covenant of good faith; employee has a cause of action when employer dismissed him to avoid paying a bonus); Nees v. Hocks, 272 Or. 210, 536 P. 2d 512 (1975) (discharge of an employee for a "socially undesirable motive" held to be compensable; employee fired for serving on a jury).

Employees have recovered damages for wrongful discharge in a variety of contexts. It is well established that an employee has a cause of action where he is discharged in retaliation for filing a worker's compensation claim, even if the worker's compensation statute does not provide such a remedy. See, e.g., Lally v. Copygraphics, 173 N.J. Super. 162 (App. Div. 1980) appeal pending; Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 23 Ill.Dec. 559, 384 N.E. 2d 353 (1979); Brown v. Transcom Lines, 284 Or. 597, 588 P. 2d 1087 (1978); Sventko v. Kroger Co., 69 Mich.App. 644, 245 N.W. 2d 151 (Ct. App. 1976); Frampton v. Central Indiana Gas Co., 260 Ind. 249, 297 N.E. 2d 425 (1973).

In a recent case the Supreme Court of California reversed a judgment sustaining a demurrer to the complaint of an employee who alleged he had been discharged because of his refusal to participate in an illegal scheme to fix retail prices. The court declared, "when an employer's discharge of an employee ...


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