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Hennessey v. Coastal Eagle Point Oil Co.

Decided: July 20, 1992.

JAMES HENNESSEY, PLAINTIFF-APPELLANT,
v.
COASTAL EAGLE POINT OIL COMPANY, DEFENDANT-RESPONDENT.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 247 N.J. Super. 297 (1991).

Clifford, Wilentz, Handler, O'Hern, Garibaldi, Stein, Pollock

Clifford

The opinion of the court was delivered by

CLIFFORD, J.

This appeal questions whether a private employer's discharge of an employee who had failed a mandatory random drug test violated a clear mandate of public policy, and thus was compensable as a wrongful discharge. See Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58 (1980). The trial court found a clear mandate of public policy against private random drug testing in the search-and-seizure provision of New Jersey's Constitution, and therefore granted plaintiff's motion for summary judgment. The Appellate Division reversed, 247 N.J. Super. 297 (1991). We granted certification, 126 N.J. 340 (1991), and now affirm.

I

Plaintiff, James Hennessey, was an at-will employee of defendant, Coastal Eagle Point Oil Company (Coastal Eagle), in Westville, New Jersey, working in an oil refinery as a lead pumper. He supervised the "gaugers," whose duties include blending gasoline with additives and managing the flow of gasoline products through the refinery. A gauger functions only under the direction of the lead pumper, who must translate orders and instructions into gauge levels for the gaugers. The lead pumper's job requires an ability to make precise calculations, to interpret orders and convey them to the gaugers, and to keep accurate records for the next shift's lead pumper.

The refinery functions twenty-four hours a day, seven days a week, on three shifts: 7:00 a.m. to 3:00 p.m., 3:00 p.m. to 11:00 p.m., and 11:00 p.m. to 7:00 a.m. As is true of many of the refinery's employees, Hennessey worked all three shifts on a rotating schedule. Michael J. Hoey, Coastal Eagle's manager of employee relations, described the position as a "very responsible" one. Irving Turner, Hennessey's immediate supervisor, evaluated plaintiff's work as "above average," noting that his job "always got done well."

Coastal Eagle acquired the refinery from Texaco (which had no written employee-drug-testing policy) in 1985. After the takeover, Coastal Eagle conducted physical examinations, including drug tests, on all its employees. (It regarded those examinations as pre-employment physicals.) Over nineteen percent of the employees tested positive for drug use. (Hennessey tested negative for the presence of drugs in that examination.) On June 21, 1985, Coastal Eagle issued a written policy and accompanying memorandum in which the company prohibited the on-premises use of alcohol, drugs, or controlled substances; required employees to notify their supervisors of their use of any drug or medication that was "known or advertised as possibly affecting or impairing" judgment or job performance; and warned employees that they might "at any time be required to give a urine or blood sample in order to determine compliance with the policy," and that noncompliance with the policy might result in termination. Coastal Eagle also announced a policy under which it would encourage and help employees who voluntarily disclosed drug problems to seek rehabilitation.

In January 1986, after discovering evidence of on-site marijuana use, the company decided to conduct random urine testing that spring (without notifying the employees that the tests would be conducted or describing the methodology that would be used in testing). Coastal Eagle included several features in the testing program to ensure minimum intrusion and maximum accuracy: the company chose urinalysis rather than blood-testing after concluding that the former method was less intrusive; an observer monitored the employee while giving the sample to avoid submission of counterfeit samples; steps were taken to ensure that the testing was truly random; the urine samples were tested only for drugs and not for any other physiological characteristics; and the most accurate testing methodology was used, with positive results being confirmed by a different test. At the same time the company also rescinded its informal policy of allowing employees who had tested positive to avoid termination by entering a rehabilitation program. The company notified supervisors of the change through a directive that was not distributed to non-management employees. The refinery's management expected that employees would receive notice of the change through the chain of command.

Hennessey, a non-management employee, was randomly chosen on June 9, 1986, for testing, and his urine yielded a positive result for marijuana and diazepam, which is the active ingredient in the tranquilizer Valium. Plaintiff neither challenges the accuracy of the test result nor contends that he was taking the diazepam for medical reasons. Coastal Eagle dismissed Hennessey, who thereafter brought this suit. His complaint included six counts: (1) wrongful discharge in violation of public policy, as provided by Pierce, supra, 84 N.J. 58; (2) common-law invasion of privacy; (3) violation of New Jersey's constitutional right of privacy as provided by article I, paragraphs 1 ("natural and unalienable rights") and 7 (search and seizure); (4) violation of New Jersey's Law Against Discrimination, N.J.S.A. 10:5-1 to -42; (5) breach of contract; and (6) negligent or intentional infliction of emotional distress. The parties stipulated to dismissal of Count Four.

On cross-motions for summary judgment the Law Division granted plaintiff's motion, based on his wrongful-discharge claim. The trial court found a public policy applicable to private employers in Fraternal Order of Police v. City of Newark, 216 N.J. Super. 461, 474 (App. Div. 1987), in which the court had held that the City of Newark may conduct drug testing of police officers only with reasonable individualized suspicion of drug use. As had the Appellate Division in Fraternal Order of Police, the trial court here based its opinion entirely on article I, paragraph 7 of the New Jersey Constitution -- the Search and Seizure Clause. The court found that Fraternal Order of Police and Allen v. Passaic County, 219 N.J. Super. 352 (Law Div. 1986) (requiring reasonable suspicion for drug-testing of sheriff's-office personnel), provided "clear expressions of New Jersey public policy regarding drug screening." The court dismissed the remaining counts.

In reversing, the Appellate Division held that because "private action does not violate constitutional prohibitions against unreasonable searches," 247 N.J. Super. at 305, random drug testing by private employers does not violate a clear mandate of public policy and therefore cannot form the basis of a wrongful-discharge claim. Explaining that privacy is "too amorphous" a standard to form the basis for a clear mandate of public policy, id. at 308, the court remanded to the trial court for determination of the remaining counts of Hennessey's complaint.

We affirm the Appellate Division's judgment and hold that Coastal Eagle's firing of Hennessey, an at-will employee in a safety-sensitive position, as a result of his failing a random urine test did not violate a clear mandate of public policy.

II

The traditional common-law rule was that an employer could fire an at-will employee "for good cause, for no cause, or even for cause morally wrong * * *." Payne v. Western & Atl. R.R. Co., 81 Tenn. 507, 519-20 (1884), overruled on other grounds, Hutton v. Watters, 179 S.W. 134 (Tenn. 1915), quoted in Lawrence E. Blades, Employment at Will vs. Individual Freedom: On Limiting the Abusive Exercise of Employer Power, 67 Colum. L. Rev. 1404, 1405 & n.10 (1967). However, starting in 1959, courts across the country began to hold that firing an employee for "bad cause" might be actionable. See Petermann v. International Bhd. of Teamsters, Local 396, 344 P.2d 25, 27 (Cal. Dist. Ct. App. 1959) (finding public-policy exception to at-will-employment rule when employee had been fired for refusing to commit perjury).

This Court first recognized a cause of action for wrongful discharge in 1980. See Pierce, supra, 84 N.J. 58. The defendant in Pierce, Ortho Pharmaceutical Corp., had employed the plaintiff, Dr. Grace Pierce, as an at-will employee in a high-level research position. She was the only medical doctor working on a project to develop loperamide, an anti-diarrhea drug. As part of the testing and research procedure, Ortho decided to file an investigational-new-drug application (IND) with the Federal Food and Drug Administration (FDA). Dr. Pierce, who disapproved of the research because in Ortho's proposed formulation loperamide would contain saccharin, wrote a memorandum in which she declared her opposition to continuing with the research; she believed that even seeking FDA permission to proceed was unjustified. She expressed that opposition to her immediate supervisor, who removed her from the loperamide project and asked her to choose other projects.

Viewing the transfer as a demotion, Dr. Pierce resigned and sued Ortho, claiming that she had been terminated for refusing to support an action that violated her interpretation of the Hippocratic oath. (She did not allege that continued testing would violate State or federal law.) The trial court granted summary Judgement for Ortho, reasoning that an employer may fire an at-will employee for any reason. The Appellate Division reversed. 166 N.J. Super. 335 (1979).

This Court reversed, but in so doing narrowed the scope of an employer's authority to fire an at-will employee: we held that "an employee has a cause of action for wrongful discharge when the discharge is contrary to a clear mandate of public policy." Pierce, supra, 84 N.J. at 72 (emphasis added). The Court continued:

An employer's right to discharge an employee at will carries a correlative duty not to discharge an employee who declines to perform an act that would require a violation of a clear mandate of public policy. However, unless an employee at will identifies a specific expression of public policy, he may be discharged with or without cause.

[Ibid.]

In applying its new rule, the Court found no violation of a clear mandate of public policy. Id. at 73-76. The only source of public policy on which Dr. Pierce had relied was the Hippocratic oath. Clinical testing of the loperamide was not imminent; indeed, it was contingent on the FDA's approval of Ortho's IND. Nor did Dr. Pierce allege that Ortho would have proceeded without FDA approval. In sum, one doctor acting according to the dictates of her conscience was not sufficient to constitute a "clear mandate of public policy." Id. at 75. "As a matter of law, there is no public policy against conducting research on drugs that may be controversial, but potentially beneficial to mankind, particularly where continuation of the research is subject to approval by the FDA." Id. at 76.

III

A

The sources of public policy are varied. In Pierce, supra, we stated:

The sources of public policy include legislation; administrative rules, regulations or decisions; and judicial decisions. In certain instances, a professional code of ethics may contain an expression of public policy. However, not all such sources express a clear mandate of public policy. * * * Absent legislation, the judiciary must define the cause of action in case-by-case determinations.

[84 N.J. at 72.]

This state's courts have found a wrongful-discharge cause of action to exist when based on a clearly-articulated public policy. See, e.g., Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192-93 & n.1 (1988) (plaintiff had requested access to employment records to establish gender discrimination claim; Court found clear mandate of public policy in federal case law); Lally v. Copygraphics, 85 N.J. 668, 670 (1981) (plaintiff had filed Worker's Compensation claim; Court found clear mandate of public policy derived from statute); Potter v. Village Bank, 225 N.J. Super. 547, 560 (App. Div.) (plaintiff bank-president had reported to Banking Commission suspected money-laundering by bank directors; court derived clear mandate of public policy from statute), certif. denied, 113 N.J. 352 (1988); Cerracchio v. Alden Leeds, Inc., 223 N.J. Super. 435, 445 (App. Div. 1988) (plaintiff had filed complaint with OSHA; court found clear mandate of public policy in "legislation"); Kalman v. Grand Union Co., 183 N.J. Super. 153, 157-59 (App. Div. 1982) (plaintiff-pharmacist had refused to close pharmacy on July 4; court derived clear mandate of public policy from case law, administrative regulations, and code of ethics); cf. Lepore v. National Tool and Mfg. Co., 224 N.J. Super. 463, 473-74 (App. Div. 1988) (extending protection of at-will employees to employees covered by collective-bargaining agreements; employee had been fired for reporting safety violations to OSHA), aff'd, 115 N.J. 226, cert. denied, 493 U.S. 954, 110 S. Ct. 366, 107 L. Ed. 2d 353 (1989).

When the plaintiff does not show a violation of a clearly-established right, however, there is no wrongful-discharge cause of action. Our courts have denied recovery to an employee who claimed that his firing for following his conscience violated a clear mandate of public policy. See House v. Carter-Wallace, Inc., 232 N.J. Super. 42, 51 (App. Div.) (plaintiff had voiced internal opposition to distribution of contaminated tooth polish; court suggested that outcome might have been different had plaintiff complained to governmental, or other outside, authority), certif. denied, 117 N.J. 154 (1989); see also Citizens State Bank v. Libertelli, 215 N.J. Super. 190, 196 (App. Div. 1987) ("Termination of a bank officer for protesting directors' improprieties is not barred by public policy arising from a regulatory scheme which specifically permits the termination and contains effective other means of dealing with those improprieties.").

Nor was the firing of an employee in retaliation for suing the employer to resolve a salary dispute deemed to violate a clear mandate of public policy. Alexander v. Kay Finlay Jewelers, Inc., 208 N.J. Super. 503, certif. denied, 104 N.J. 466 (1986). There the Appellate Division noted the absence of any statute or regulation prohibiting such a firing. The employer-employee dispute was found to be entirely private. Id. at 508.

In Schwartz v. Leasametric, Inc., 224 N.J. Super. 21, 30 (1988), the Appellate Division held that firing an employee to avoid paying commissions does not violate a clear mandate of public policy. The court characterized Pierce as requiring "retaliation for an employee's refusal to commit an act which would violate a statute or for assertion of a right protected by legislation, or for firings which were 'invidiously discriminatory.'" Ibid. (quoting Citizens State Bank v. Libertelli, supra, 215 N.J. Super. at 195).

B

Coastal Eagle and amici claim that an action will lie only when an employee is fired in retaliation for exercising rights set forth by statute, regulation, or judicial decision. They support their claim by quoting Pierce, supra, 84 N.J. at 72: "The sources of public policy include legislation; administrative rules, regulations or decisions; and judicial decisions." Therefore, they contend, no clear mandate of public policy can derive from a constitution. We disagree. The wrongful-discharge cause of action that we developed in Pierce is broader than defendant contends. No reported opinion from this state's courts has specifically rejected either the state or federal constitution as a source of public policy. Coastal Eagle and amici seek too constricted an interpretation of Pierce. In that case we did not restrict the cause of action to retaliatory actions or to violations of statutory rights; all we require is that the employee "point to a clear expression of public policy." Id. at 73. Both logic and ample precedent support a finding of public policy in the language and jurisprudence of the New Jersey Constitution.

New Jersey has found the Constitution to be such a source. See, e.g., Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 404 (1960) ("Public policy at a given time finds expression in the Constitution, the statutory law and in judicial decisions."). Courts in other jurisdictions have agreed when addressing wrongful-discharge claims. See, e.g., Radwan v. Beecham Labs., 850 F.2d 147, 151-52 (3d Cir. 1988) (finding a clear mandate of public policy in New Jersey's constitutional right to collective bargaining, N.J. Const. art. 1, P 19); Zamboni v. Stamler, 847 F.2d 73, 83 (3d Cir.) (finding public policy in free-speech and - assembly clauses of United States and New Jersey Constitutions) cert. denied, 488 U.S. 899, 109 S. Ct. 245, 102 L. Ed. 2d 233 (1988); Wagenseller v. Scottsdale Memorial Hosp., 710 P.2d 1025, 1033 (Ariz. 1985) (general statement including constitution as source of public policy); Gantt v. Sentry Ins., 824 P.2d 680, 687 (Cal. 1992) (same); Parnar v. Americana Hotels, Inc., 652 P.2d 625, 631 (Haw. 1982) (same); Palmateer v. International Harvester Co., 421 N.E.2d 876, 878 (Ill. 1988) (same) Boyle v. Vista Eyewear, Inc., 700 S.W.2d 859, 871 (Mo. Ct. App. 1985) (same); Burk v. K-Mart Corp., 770 P.2d 24, 28 (Okla. 1989) (same). Having declared the Pierce doctrine, this Court is not likely to perceive the state's highest source of public policy, namely, its constitution, as irrelevant.

IV

A

The Appellate Division stated that "private action does not violate constitutional prohibitions against unreasonable searches," 247 N.J. Super. at 305, and noted the consistent judicial rejection of attempts to apply constitutional protections to wrongful-discharge claims based on private-sector drug testing. Id. at 305-06 (citing Johnson v. Carpenter Technology Corp., 723 F. Supp. 180, 185 (D. Conn. 1989); Greco v. Halliburton Co., 674 F. Supp. 1447, 1451 (D. Wyo. 1987); Monroe v. Consolidated ...


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