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Borse v. Piece Goods Shop

filed: May 13, 1992; As Amended May 29, 1992.

SARAH BORSE, APPELLANT
v.
PIECE GOODS SHOP, INC.



On Appeal From the United States District Court for the Eastern District of Pennsylvania. (D.C. Civil No. 90-05780)

Before: Becker, Scirica, and Roth, Circuit Judges

Author: Becker

Opinion OF THE COURT

BECKER, Circuit Judge.

Plaintiff Sarah Borse brought suit against her former employer, Piece Goods Shop, Inc. ("the Shop"), in the district court for the Eastern District of Pennsylvania. She claimed that, by dismissing her when she refused to submit to urinalysis screening and personal property searches (conducted by her employer at the workplace pursuant to its drug and alcohol policy), the Shop violated a public policy that precludes employers from engaging in activities that violate their employees' rights to privacy and to freedom from unreasonable searches. Pursuant to Federal Rule of Civil Procedure 12(b)(6), the district court dismissed her complaint for failure to state a claim on which relief could be granted. This appeal requires us to decide whether an at-will employee who is discharged for refusing to consent to urinalysis screening for drug use and to searches of her personal property states a claim for wrongful discharge under Pennsylvania law.

Because we predict that, under certain circumstances, discharging a private-sector, at-will employee for refusal to consent to drug testing and to personal property searches may violate the public policy embodied in the Pennsylvania cases recognizing a cause of action for tortious invasion of privacy, and because the allegations of Borse's complaint are not sufficient for us to determine whether the facts of this case support such a claim, we will vacate the district court's order and remand with directions to grant leave to amend.

I. THE ALLEGATIONS OF THE COMPLAINT

Because of the procedural posture of this case, we begin with a summary of the allegations of the complaint. Borse was employed as a sales clerk by the Piece Goods Shop for almost fifteen years. In January 1990, the Shop adopted a drug and alcohol policy which required its employees to sign a form giving their consent to urinalysis screening for drug use and to searches of their personal property located on the Shop's premises.

Borse refused to sign the consent form. On more than one occasion, she asserted that the drug and alcohol policy violated her right to privacy and her right to be free from unreasonable searches and seizures as guaranteed by the United States Constitution. The Shop continued to insist that she sign the form and threatened to discharge her unless she did. On February 9, 1990, the Shop terminated Borse's employment.

The complaint alleges that Borse was discharged in retaliation for her refusal to sign the consent form and for protesting the Shop's drug and alcohol policy. It asserts that her discharge violated a public policy, embodied in the First and Fourth Amendments to the United States Constitution, which precludes employers from engaging in activities that violate their employees' rights to privacy and to freedom from unreasonable searches of their persons and property. Plaintiff seeks compensatory damages for emotional distress, injury to reputation, loss of earnings, and diminished earning capacity. She also alleges that the discharge was willful and malicious and, accordingly, seeks punitive damages.

II. OVERVIEW OF THE PUBLIC POLICY EXCEPTION TO THE EMPLOYMENT-AT-WILL DOCTRINE IN PENNSYLVANIA

A.

Choice of Law and Scope of Review

The district court's subject-matter jurisdiction was based on diversity of citizenship pursuant to 28 USC § 1332. The jurisdiction of this court is founded upon 28 USC § 1291.

Federal courts sitting in diversity must apply the substantive law of the state whose laws govern the action. Erie Railroad Co. v Tompkins, 304 U.S. 64, 78, 58 S Ct 817, 822, 82 L. Ed. 1188 (1938). Our review of the district court's prediction and application of Pennsylvania law is plenary. Smith v Calgon Carbon Corp., 917 F.2d 1338, 1345 (3d Cir 1990), cert denied, 111 S Ct 1597 (1991). Because the Pennsylvania Supreme Court has not addressed the question whether discharging an at-will employee who refuses to consent to urinalysis and to searches of his or her personal property located on the employer's premises violates public policy, we must predict how that court would resolve the issue should it be called upon to do so. Smith, 917 F.2d at 1341; Robertson v Allied Signal, Inc., 914 F.2d 360, 364 (3d Cir 1990). Although decisions by Pennsylvania's intermediate appellate courts are not conclusive in predicting how the state's highest court would decide an issue, they suggest how that court might decide and may constitute presumptive evidence of state law in appropriate circumstances. McGowan v University of Scranton, 759 F.2d 287, 291 (3d Cir 1985).

B.

Recognition of the Exception by the Pennsylvania Supreme Court

Ordinarily, Pennsylvania law does not provide a common-law cause of action for the wrongful discharge of an at-will employee. Rather, an employer "may discharge an employee with or without cause, at pleasure, unless restrained by some contract." Henry v Pittsburgh & Lake Erie Railroad Co., 139 Pa 289, 21 A 157, 157 (1891) (quoted in Smith, 917 F.2d at 1341).

In Geary v United States Steel Corp., 456 Pa 171, 319 A2d 174 (1974), however, the Pennsylvania Supreme Court recognized the possibility that an action for wrongful discharge might lie when the firing of an at-will employee violates public policy. Geary, a salesperson, complained to his immediate superiors about the safety of his employer's product. After being told to "follow directions," Geary took his complaints to the vice-president in charge of the product. As a result, the company withdrew the product from the market, but discharged Geary.

Geary argued that an exception to the at-will doctrine was warranted in his case because his dismissal was contrary to public policy. The Pennsylvania Supreme Court disagreed, relying upon two factors to decide that Geary's case did not merit an exception. First, the court observed that Geary was not responsible for monitoring product safety and that he did not possess expertise in that area. 319 A2d at 178-79. Second, the court noted that Geary had violated the internal chain of command by pressing his concerns before the vice-president. Id at 179-80.

Summarizing its decision, the court stated:

It may be granted that there are areas of an employee's life in which his employer has no legitimate interest. An intrusion into one of these areas by virtue of the employer's power of discharge might plausibly give rise to a cause of action, particularly where some recognized facet of public policy is threatened. . . . However, we hold only that where the complaint itself discloses a plausible and legitimate reason for terminating an at-will employment relationship and no clear mandate of public policy is violated thereby, an employee at will has no right of action against his employer for wrongful discharge.

Id at 180. Courts construing Pennsylvania law have interpreted this language as implicitly recognizing that a cause of action for wrongful discharge exists in appropriate circumstances, even though the court refused to uphold such an action on the facts in Geary. See, for example, Woodson v AMF Leisureland Centers, Inc., 842 F.2d 699 (3d Cir 1988) (upholding cause of action). See also Field v Philadelphia Electric Co., 388 Pa Super 400, 565 A2d 1170 (1989) (same); Hunter v Port Authority of Allegheny County, 277 Pa Super 4, 419 A2d 631 (1980) (same); Reuther v Fowler & Williams, Inc., 255 Pa Super 28, 386 A2d 119 (1978) (same).

The Pennsylvania Supreme Court did not revisit the validity of the public policy exception to the employment-at-will doctrine until fifteen years after Geary. In Clay v Advanced Computer Applications, Inc., 522 Pa 86, 559 A2d 917 (1989), a married couple employed by the same company alleged that they were fired because the wife rejected the sexual advances of a company manager. The court held that their claims were barred because they had failed to seek recourse under the Pennsylvania Human Relations Act, which provides a statutory remedy for wrongful discharges based upon sexual harassment. The court did not deny that it had recognized a public policy exception to the employment-at-will doctrine in Geary, but it did stress the narrowness of that exception. The court stated:

As a general rule, there is no common law cause of action against an employer for termination of an at-will employment relationship. . . . Exceptions to this rule have been recognized only in the most limited of circumstances, where discharges of at-will employees would threaten clear mandates of public policy. . . . Nevertheless, inasmuch as appellees failed to pursue their exclusive statutory remedy for sexual harassment and discrimination in the workplace, they are precluded from relief.

Id at 918-19 (citations omitted).*fn1

One year later, the Pennsylvania Supreme Court returned to the issue again. In Paul v Lankenau Hospital, 524 Pa 90, 569 A2d 346 (1990), a doctor alleged that a hospital had forced him to resign because he removed five refrigerators, which he claimed that he was authorized to take. He argued that because he had permission to remove the refrigerators, the hospital was estopped from discharging him for taking them. The court held that the doctrine of equitable estoppel is not an exception to the employment-at-will doctrine. Id at 348. The court also appeared to question the validity of the public policy exception, but it did not expressly inter it. Regarding Geary, the court stated:

The majority in a 4-3 decision held that while some exceptions to the at-will employment doctrine might exist, especially in public policy areas, "this case does not require us to define in comprehensive fashion the perimeters of this privilege, and we decline to do so." . . . The Court specifically answered in the negative to the central question of "whether the time has come to impose judicial restraints on an employer's power of discharge."

Id at 348 (citations and footnote omitted). The Pennsylvania Supreme Court has not addressed the public policy exception since Paul.

C.

Application of the Exception by the Pennsylvania Superior Court

The Pennsylvania Superior Court first upheld a wrongful discharge cause of action based on the public policy exception in Reuther v Fowler & Williams, Inc., 255 Pa Super 28, 386 A2d 119 (1978). Reuther alleged that he was discharged for missing work for a week in order to serve jury duty. The court first observed that "the jury system and jury service are of the highest importance to our legal process." 386 A2d at 120. As evidence of the strong public policy encouraging jury service, the court then cited the Pennsylvania Constitution's guarantee of the right to trial by jury, a Pennsylvania statute providing that summonses for jury service shall be deemed summonses of the court, another Pennsylvania statute providing that persons who fail to appear for jury duty when summoned may be fined, and the United States Supreme Court's identification of trial by jury as "fundamental to the American scheme of Justice." Duncan v Louisiana, 391 U.S. 145, 149, 88 S Ct 1444, 1447, 20 L. Ed. 2d 491 (1968). The court thus concluded that "the necessity of having citizens freely available for jury service is just the sort of 'recognized facet of public policy' alluded to by our Supreme Court in Geary." 386 A2d at 121. Accordingly, the court held that Reuther had stated a cause of action.

The Superior Court also upheld a cause of action for wrongful discharge in Hunter v Port Authority of Allegheny County, 277 Pa Super 4, 419 A2d 631 (1980). Hunter alleged that the Port Authority had denied his application for employment as a bus driver because of a thirteen-year old assault conviction for which he had since been pardoned. The court noted that the federal courts had held that banning a person convicted of past misconduct from public employment violates federal law unless the ban is rationally related to a legitimate governmental objective. The court also observed that the Pennsylvania legislature had recently enacted a statute limiting an employer's reliance upon criminal records when making employment decisions. The court then turned to Pennsylvania Supreme Court decisions interpreting Article I, section 1 of the Pennsylvania constitution*fn2 as prohibiting the government from interfering with the "right to engage in any of the common occupations of life" without a reasonable relationship to a legitimate governmental objective. 419 A2d at 635. In reliance upon those decisions and "'the deeply ingrained public policy of this State . . . to avoid ...


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