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Giudice v. Drew Chemical Corp.

Decided: April 24, 1986.


On appeal from Superior Court of New Jersey, Law Division, Morris County.

J. H. Coleman and Long. The opinion of the court was delivered by Coleman, J.h., J.A.D.


[210 NJSuper Page 34] Plaintiffs are former employees of defendant Drew Chemical Corp. and its parent companies. They were discharged from their employment in September -- October 1981. At the time of discharge, plaintiffs held the following positions: Giudice, executive vice president of Drew, president of Drew Ameroid International and a member of the board of directors of Drew; Parcel, vice president of finance; Sellitto, comptroller; Doremus, office manager; and Bugge, European manager of Drew and managing director of two Drew subsidiaries. Plaintiffs instituted the present action on May 13, 1983, alleging wrongful discharge from their employment because they refused to "conceal and cover-up" culpable conduct on the part of J. J. Sweeney, the former president of Drew Chemical, and other corporate officers who had permitted Sweeney's misconduct to remain uncorrected. Plaintiffs also asserted that their discharges violated certain, unidentified "employment agreements" between Drew Chemical and plaintiffs. Plaintiffs further alleged that defendants engaged in various forms of tortious conduct against plaintiffs, including negligent or intentional infliction of emotional distress, defamation, and intentional infliction of injury to the prospective economic advantage of Giudice. Defendants denied the allegations made in the complaint. On October 12, 1985 an order was entered granting summary judgment to defendants, dismissing the complaint. Plaintiffs have appealed. We now reverse in part and affirm in part.

It is clear from our careful study of the record that the parties were in serious disagreement over what caused plaintiffs to be fired. Plaintiffs contend, among other reasons, that they were fired in retaliation for not covering up Sweeney's dereliction of duty. They assert that a variety of express and implied agreements, including policy statements, manuals, memoranda and past practices, constituted contracts of employment which precluded defendants from firing them absent good cause. Defendants contend that plaintiffs were at-will employees and that, among other reasons, plaintiffs were fired because they fomented discord after Sweeney was chosen to be Drew Chemical's president in Giudice's stead, and Giudice was suspected of leaking confidential information to a competitor. They assert that the firing was privileged on grounds that no employment agreement existed which prohibited the firings, including confidentiality agreements that were signed by Giudice, Parcel, Sellitto and Bugge. In granting the motion for summary judgment, Judge D'Ambrosio reviewed documents submitted, heard oral argument and concluded that no written or implied contract of employment existed requiring cause for discharge.

After Judge D'Ambrosio's decision was rendered on March 4, 1985 and before final judgment was entered on October 12, 1985, our Supreme Court decided Woolley v. Hoffmann-La Roche, Inc., 99 N.J. 284 (1985). Woolley for the first time allows a contract of employment to be carved out of a company's personnel policy manual. Contrary to defendants' assertion, plaintiffs vaguely alleged in the pretrial memorandum that Drew Chemical's Corporate Policy & Procedures Manual and the operations manuals of Ashland Oil, Inc. and U.S. Filter Corporation created an implied contract of employment requiring good cause for termination. Even if the issue was not raised below, we are nonetheless required to apply Woolley. See Riggs v. Township of Long Branch, 101 N.J. 515, 521 (1986); Application of Ronson Corp., 164 N.J. Super. 68, 71 (App.Div.1978).

The summary judgment dismissing the complaint must be reversed in part. On the remand, the trial must be allowed to proceed because it is obvious that factual questions will persist concerning the meaning and intent of certain documents relevant to a decision under Woolley. If the fact finder determines that a contract of employment under Woolley does exist, on an issue as vital as job security, the trial judge must construe that contract "in accordance with the reasonable expectations of the employees." 99 N.J. at 297-298.

Plaintiffs also contend that summary judgment was inappropriate under Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58 (1980). We disagree. Based upon our careful study of the record, plaintiffs failed to identify "a specific expression of public policy" protecting them from at-will termination. Id. at 72. Private investigation of possible criminal activities of fellow employees does not implicate the same public policy consideration as if plaintiffs had been fired as the result of cooperating with law enforcement officials investigating possible criminal activities of fellow employees. Thomas v. Duralite Co., Inc., 524 F.2d 577 (3d Cir.1975), Popkin v. Bishop, 464 F.2d 714 (2nd Cir.1972), Tully v. Mott Supermarkets, Inc., 337 F. Supp. 834 (D.N.J.1972) and Merrit v. Libby, McNeill & Libby, 510 F. Supp. 366 (S.D.N.Y.1981) which were cited by plaintiffs do not support the proposition for which they were cited and do not require a different result.

In Thomas a former shareholder brought an action against a corporation and two of its officers to recover for alleged misrepresentations made in connection with the corporation's repurchase of his stock. The officers had allegedly misrepresented a turnaround in the corporation's financial position and had failed to disclose merger negotiations. The court did not address the issue of public policy; the suit merely involved a private shareholder's securities act fraud suit. Popkin involved a shareholder's derivative action which sought to enjoin a proposed corporate merger. Tully, a case which plaintiffs

fail to note was reversed and remanded at 540 F.2d 187 (3rd Cir.1976), involved a case in which one class of shareholders sued another class, alleging violations of securities fraud statutes. Merrit involved five consolidated shareholder actions in which plaintiff alleged that defendant corporations conspired to defraud plaintiff in connection with a tender offer. In none of these cases are termination of employment or public policy issues discussed.

Plaintiffs allege that cases in other jurisdictions which have adopted the public policy exception to the employment at-will rule support their position. In Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 427 A.2d 385, 387 (1980), the Connecticut Supreme Court cited cases of wrongful termination where employees exercised their right to (1) refuse to commit perjury, (2) file a workmen's compensation claim, and (3) engage in union activity. These results were supported by state statutes and constitutions which established the principle that public policy imposes limits on unbridled discretion to terminate the employment of an at-will employee. 427 A.2d at 387. Those are not the issues raised in the present case.

The central allegation in Sheets was that plaintiff was discharged because he called to his employer's attention repeated violations of a Connecticut law which prohibited, as a public health measure, the sale of mislabeled food and which imposed criminal penalties upon anyone who violated the law. Plaintiff's position as quality control director and manager exposed him to the possibility of criminal prosecution under the statute. Id., 427 A.2d at 388. The court held "that an employee should not be put to an election whether to risk criminal sanction or to jeopardize his continued employment." Id., 427 A.2d at 389. Because the present plaintiffs were not discharged for refusing to commit criminal acts, Sheets is not relevant. In the same connection, see Alexander v. Kay Finlay ...

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