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House v. Carter-Wallace Inc.

Decided As Amended July 12 1989.: April 4, 1989.


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

Brody, Ashbey and Skillman. The opinion of the court was delivered by Skillman, J.A.D.


This is a wrongful discharge case. On January 24, 1983, defendant Carter-Wallace, Inc. (Carter-Wallace) terminated plaintiff D. Larry House, the Vice President of Production and Distribution in its manufacturing division.

On August 29, 1985, House filed a four count complaint seeking reinstatement and back pay as well as compensatory and punitive damages. Count one alleged that Carter-Wallace terminated House in violation of public policy in retaliation for his opposition to the distribution of certain allegedly contaminated batches of Pearl Drops, a brand of tooth polish manufactured by Carter-Wallace. Count two alleged that Carter-Wallace breached a covenant of good faith and fair dealing implicit in its employment of House. Count three alleged that Carter-Wallace's termination of House violated procedural and substantive protections guaranteed to employees through internal company memoranda. Count four alleged that Carter-Wallace's termination of House constituted an intentional infliction of emotional distress.

On February 13, 1987, the trial court delivered an oral opinion and signed an order granting Carter-Wallace summary judgment with respect to the second, third and fourth counts of House's complaint. After the parties submitted substantial additional materials, the trial court delivered a second oral opinion on March 13, 1987 granting summary judgment on count one.*fn1 An order embodying this ruling was signed on March 16, 1987.

On appeal, House argues in a four point brief that the trial court erred in dismissing each of the four counts of his complaint. We conclude that summary judgment was properly granted and therefore affirm.


On January 17, 1983, Michael J. Kopec, President of the Manufacturing Division and House's immediate superior, sent a memorandum to Daniel J. Black, the President and Chief Operating Officer of Carter-Wallace, entitled "Manufacturing Division Organizational Assessment." One section of this memorandum recommended House's termination as follows:

For the last four years I have been generally positive regarding Mr. House's performance. This view was reflected in the merit increases he's been granted from 1978 through 1981. Clearly, Mr. House is a hard working and very dedicated and loyal manager who has consistently given his best effort on behalf of the Company.

It's clear that during the course of the last one to two years very negative perceptions concerning Mr. House's performance have developed. In my view they have developed as a result of his style, as well as the performance of elements within our organization for which he is responsible.

House is very detail oriented, almost to a fault. He insists on being as intimately involved as he possibly can in almost every element within his areas of responsibility. Over the past two years, however, it's clear that his focus has been primarily on Carter Operations and insufficient attention has been given to the Plant operations, primarily those in Cranbury. On a confidential basis I was informed by a recruiter who is presently working in our behalf that during an interview for a position outside Carter-Wallace, Mr. House characterized his efforts as being broken down as 80% in Carter Operations, with the balance spread over his other areas of responsibility. Observations tend to bear this out in that he appears to spend more time with individual planners within the Carter Operations Group than he does with Mr. Osowick attending to major operating problems, concerns, and opportunities within the Cranbury Plant.

As a result of Mr. House's orientation to detail and insistence upon intimate involvement, I don't believe he has effectively delegated where delegation of authority and responsibility should have been made, and as a result, some of the key managers who report to him have neither developed nor performed up

to their capabilities. This is a definite concern regarding Mr. Osowick, the Director of Manufacturing at Cranbury.

In many ways Mr. House has been overprotective of those who report to him and, again, this has stifled their development, as well as having contributed to negative impressions concerning the way in which he runs his operations. He is often too quick to jump to the defensive and as a result of a sometimes parochial view of things, fails to recognize the totality of a situation. As a result, his judgment is often questioned. During the initial production campaign for Sea & Ski at Fluid Packaging Company he became so immersed in who was at fault, as well as taking all possible steps to insure that product could be made available when needed, that he failed to recognize, project, and then report the consequences of his actions as they impacted costs.

Mr. House's dedication to getting the job done on time at all costs is in many ways applaudable and even considering the Sea & Ski problems at Fluid, the course of action taken was undoubtedly the correct one. However, as I have discussed with him on a number of occasions, the real failure was in recognizing the cost implications and making them known. The same type of situation developed during the first Golden Dome promotion for aerosols. Because of equipment failures and in the final analysis inadequate equipment, an extraordinary amount of hand labor was required in order to provide the finished goods as required by Marketing. Mr. House focused solely on getting the product out on time and in the end result we found that an unfavorable variance of $250,000 had accumulated. Again, all things considered, I don't know that we would have proceeded any differently. The failure, again, was in recognizing the magnitude of potential variances and then projecting and communicating them to Management.

While the services provided the Carter Division by Mr. House and the Carter Operations group have been good, as have those provided by Distribution and Lambert Kay Operations, we have been plagued by a number of operating problems in the Cranbury Plant which have not in my opinion been addressed on either a timely or adequate basis. While recognizing that the Cranbury operations is a difficult and complex one to manage, as I look back retrospectively I can only conclude that when Mr. House and that element of his organization react to problems, there has not been an adequate amount of proaction. In other words, there has been a lack of initiative relative to taking positive steps to preclude the reoccurrence of past problems and mistakes. Numerous processing errors, primarily in weighing and ingredient addition, have resulted in considerable rework, spoiled and unusable, and a product recall. It seems that only as a result of the urging of the GMP Audit Committee and finally my demanding that an analysis be performed, have we assessed possibilities associated with a central dispensing approach geared to improving weighing out ingredients. While we are continuing to assess central dispensing pharmacy, an alternate short term solution is being recommended for implementation in 1983/84.

In addition, the long standing problems and concerns regarding metal contamination were not pursued aggressively by Mr. House's organization. Months of meetings and deliberations concerning the best approach went on before I

finally had to call it to the attention of Mr. House and request that it be focused on, a plan developed, and then steps taken to implement. Similarly, we've had ongoing concerns about human hair contamination in tablets. Beyond implementing a costly Lakso inspection of finished tablets, which is of course an after the fact effort, there has been insufficient effort directed at the basic causes.

Without further recitation of past problems, it is clear that serious deficiencies have continued to exist. This, coupled with the fact that for whatever the reasons may be, Mr. House has alienated and lost credibility with a number of key executives he must interface with, raises a very serious question regarding his continued role within our organization.

It is with regret that I recommend that Mr. House's employment be terminated. In view of the foregoing I see no other option without sacrificing the future effectiveness of key elements within the Manufacturing Division. While it is conceivable that he could be effective in a diminished role, perhaps responsible for Carter and Lambert Kay Operations and Distribution, I don't believe this would be an acceptable or workable alternative. I will consult with Mr. Conant and at an appropriate time provide you with a recommended termination package.

Kopec's recommendation was accepted by Black, and on January 24, 1983, Kopec notified House that he was being terminated. According to House, Kopec told him that he was being terminated because he was "politically unacceptable." According to Kopec, "[r]ather than embarrass or humiliate [House] by going through a litany of his failures, I simply told him that I didn't feel he was doing the job properly and that he had lost the confidence and respect of too many of his peers and elsewhere in the organization at the same or higher level."

After the termination, Carter-Wallace provided House with an office, secretary and employment counselling to assist him in finding a new job. House also received severance pay and psychiatric counselling at Carter-Wallace's expense. Carter-Wallace continued to provide these benefits until October 1983 when House obtained new employment.

House alleges that the reasons set forth in Kopec's memorandum for his termination were pretextual and that the actual reason for his termination was his opposition to Carter-Wallace's distribution of certain batches of allegedly contaminated

Pearl Drops tooth polish. This product was manufactured under House's supervision at a plant in Puerto Rico. In September 1982, Carter-Wallace became aware through its own quality control procedures that certain batches of Pearl Drops might be contaminated. Consequently, Carter-Wallace temporarily quarantined those batches and had its Quality Control Division conduct extensive tests. As a result, the Quality Control Division concluded that one batch was contaminated and made arrangements for it to be disposed. However, ...

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