NO. 84-437
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
F. CLIFFORD HOBBS,
Plaintiff and Appellant,
-vs-
PACIFIC HIDE AND FUR DEPOT, a Montana
corporation,
Defendant and Respondent.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Joel G. Roth, Judge presiding.
COUNSEL OF RECORD:
For -
:
Charles R. Johnson; Marra, Wenz, Johnson & Hopkins,
Great Falls, Montana
J. Marquis Eastwood, Stephen D. Bell; Dorsey & Whitney,
Minneapolis, Minnesota
For Hesponnent: %fa l u
Tom L. Lewis; Regnier, Lewis & Roland, Great Falls,
Montana
Kenneth R. Olson; Rai-z & Olson, Great Falls, Montana
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Submitted.: May 12, 1988
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{- ! LC- Decided: March 31, 1989
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Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
F. Clifford Hohbs sued Pacific Hide and Fur Depot for
his claimed wrongful discharge from employment in the
District Court, Eighth Judicial District, Cascade County.
His theories of recovery, which were submitted to the jury,
included actual fraud, constructive fraud, hreach of the
implied covenant of good faith and fair dealing, and
negligent misrepresentation. The jury verdict found against
Hobbs on all of the theories of recovery, and, judgment
having been rendered thereon in favor of the defendant, Hobhs
appealed from the judgment to this Court. We reverse and
remand for new trial as to the claim for breach of an implied
covenant of good faith and fair dealing, and affirm as to all
other claims for relief. The reasons follow.
Pacific Hide and Fur Depot is a Montana corporation that
recycles scrap iron, copper, brass and aluminum, buys and
sells cattle and game hides, fur, and sells steel, farm
products and hardware. It has corporate offices in Great
Falls, Montana, and 32 operating branches in the states of
Montana, Wyoming, Idaho, Washington and Oregon. Its
president at the time of the discharge of Hobbs was Joe
Thiebes, Jr., who died on May 1, 1982, two years before
trial. Pacific had 450 employees in 1981. In 1983, Pacific
reduced its work force to 350 employees.
Clifford Hobbs began his employment with Pacific in
December, 1978. At that time, he had been employed in the
retail steel industry for approximately 15 years. He had met
Roqer Palmer, Pacific's Billings branch manager and
apparently came in the fall of 1978 to Great Falls for an
employment interview. Hobbs claims that Palmer represented
to him that he would have a bright future and job securitv
with Pacific as long as he competently performed his job. He
claims he was promised substantial salary, stock in the
company, annual bonuses, and opportunity for advancement. He
claims that these promises induced him to leave his
employment with Wisconsin Steel, to move his family from
Denver to Great Falls and to accept the position of director
of corporate purchasing for Pacific.
Hobbs maintains that Palmer made other promises which
need not be enumerated here except to say that Hobbs claims
he was painted a glowing future.
After Hobbs went to work for Pacific, substantial
friction developed between Palmer and Hobbs. Nonetheless, on
August 14, 1980, he was promoted and given additional
responsibility as manager of Branch 1 Steel in Great Falls.
Although he was now holding two management jobs, as director
of corporate purchasing, and as manager of Branch 1 Steel,
Hobbs contended that his compensation was substantially below
other branch managers. He also contends he never received a
promised substantial increase in his bonus.
Under his employment, Hobbs was required to report to
Palmer, although other employees at the same management level
reported directly to the president or vice president of
Pacific. Palmer continued to be disruptive, and on one
occasion, increased the price of a contract by two percent
over a firm price that Hohbs had negotiated. This action
resulted in the discipline of Palmer, and his removal as
superior of Hobbs, after which Roger Palmer told Cliff Hobbs
that Palmer was "going to get him."
A few months later, however, the executive vice
president placed Roger Palmer back over the purchasing
department and required Hobbs to report directly to Palmer.
By April 15, 1981, the executive vice president and Palmer
determined that Hobbs would handle only purchasing, and he
would again report to Roger Palmer. Other managers reported
having trouble with Palmer.
Hobbs was terminated from his employment on September
15, 1981, without prior notice. The decision to terminate
Hobbs was made after a meeting between Thiebes, Vosburg, the
executive vice president, and Palmer on September 15, 1981.
At the same time, Thiebes circulated a letter to the other
managers stating that Hobbs had not worked out as manager of
Branch 1, although he had done an excellent job in
purchasing. The letter stated it was a "subject lesson" to
all managers, and went on to state that the conflicts between
Palmer and Hobbs "should now be resolved."
Hobbs maintains that during the trial it was
demonstrated that the problems at Branch 1, a drop in sales,
low margin on sales, and a write-off of bad debts were not
Hobbs ' fault. No other management level official was
terminated. Hobbs also claims that other managers, before
and after his termination, had worse records, but were not
fired.
Roger Pal-mer was terminated from the company in May,
1982, apparently because of unresolved intra-company
conflicts with other managers.
Other pertinent facts will appear under the issues to
which they pertain.
I
Hobbs' first attack is upon instructions given to the
jury relating to the theory of breach of the implied covenant
of good faith and fair dealing. Hobbs contends that the
given instructions were inadequate, placed an improper burden
of proof upon the plaintiff, and amounted to a directed
verdict in favor of the defendant upon the issue. From our
examination, we find the instructions inadequate, confusing
and misleading, and therefore requiring reversal.
First, a resume of pertinent cases from this Court is in
order. In Gates v. Life of Montana Insurance Company (1982),
196 Mont. 178, 638 P.2d 1063 (Gates - I), we had an employee
who was hired under an oral contract of indefinite duration.
After she was employed, the employer issued a handbook, which
assured employees that they would be given a hearing before
termination. Gates was fired without a hearing. The
employer claimed the right to discharge Gates without a
hearing because she was an at-will employee. This Court
reversed a summary judgment in favor of the employer, say;-ng:
.
. . The circumstances of this case are that the
employee entered into an employment contract
terminable at the will of either party at any time.
The employer later promulgated a handbook of
personnel policies establishing certain procedures
with regard to terminations. The employer need not
have done so, hut presumably sought to secure an
orderly, cooperative and loyal work force by
establishing uniform policies. The employee,
having faith that she would be treated fairly, then
developed the peace of mind associated with job
security. If the employer has failed to follow its
own policies, the peace of mind of its employees is
shattered and an injustice is done.
We hold that a covenant of good faith and fair
dealing was implied in the employment contract of
the appellant .. .
Gates, 638 P.2d at 1067.
On remand to the District Court, Gates' case was tried
before a jury, which resulted in a verdict in her favor for
both compensatory and punitive damages. In Gates v. Life of
Montana Insurance Company (1983), 205 Mont. 304, 668 P.2d 213
(Gates -11), we sustained the punitive damage award on the
grounds that a breach of an implied covenant for good faith
and fair dealing in employment constituted a tort.
Dare v. Montana Petroleum Marketing Company was decided
by this Court in 1984. 212 Mont. 274, 687 P.2d 1-015. The
District Court had granted summary judgment against Dare
because no handbook existed, such as in Gates. This Court
stated:
.
. . We conclude that the District Court construed
Gates too narrowly.
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Whether a covenant of good faith and fair dealing
is implied in the particular case depend.s upon
objective manifestations - employer giving
the
rise to the employees' reasonable belief that he or
she has job security and will be treated fairly.
Gates, 638 at 1067, 39 St.Rep. at 20. The presence
of such facts indicates that the term of employment
has gone beyond the indefinite period contemplated
in the at will employment statute, section
39-2-503, MCA, and is founded upon some more secure
and objective basis. In such cases, the implied
covenant protects the investment of the employee
who in good faith accepts and maintains employment
reasonably believing their job is secure so long as
they perform their duties satisfactorily. Such an
employee is protected from bad faith or unfair
treatment by the employer to which the employee may
be subject due to the inherent inequality of
bargaining power present in many employment
relationships. The implied covenant seeks to
strike a balance between the interests of the
employer in controlling the work force and the
interests of the employee in job security. Gates,
638 P.2d at 1066-67, 39 St.Rep. at 20.
We hold that an employment handbook as promulgated
by the employer in Gates is not essential t o a
cause of action for breach of the implied covenant
of good faith and fair dealing. Implication of the
covenant depends upon existence of objective
manifestations w the employer giving-rise to the
employees reasonable belief that he or she has job
security and will be treated fairly. (Emphasis
supplied.)
Dare, 687 P.2d at 1020.
In Crenshaw v. Rozeman Deaconess Hospital (19841, 213
Mont. 488, 693 P.2d 487, this Court held that a probationary
employee was owed the duty of good faith under Gates - and
I,
that the duty coexisted with the right to terminate an
at-will employee. This Court said:
.. . This requirement of good faith and fair
dealing does not conflict with section 39-2-503,
MCA, [the at-will employment statute1 but merely
supplements it. Employers can still terminate
untenured employees at-will and without notice.
They simply may not do so in bad faith or unfairly
without becoming liable for damages.
Crenshaw, 693 P.2d at 492. See also, v. Montana
Nye
Livestock Department (1982), 196 Mont. 222, 639 P.2d 498.
The nature of an implied covenant of good faith and fair
dealing in a contract was described by this Court in
Nicholson v. United Pacific Insurance Company (Mont. 1985) ,
710 P.2d 1342, 42 St.Rep. 1822. There we said part:
. .. but whether performing or breaching, each
party has a justifiable expectation that the other
will act as a reasonable person. (Citing a case.)
The nature and extent of an implied covenant of
good faith and fair dealing is measured - - in a
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particular contract by the justifiable expectations
of the parties. Where one party acts arbitrarily,
caprici~usly,or unreasonably, that conduct exceeds
the justifiable expectations of the second party.
The second party then should be compensated for
damages resulting from the other's culpable
conduct. (Emphasis supplied.)
The District Court in this case before us gave two
instructions that related to the issue of the implied
covenant and good faith and fair dealing:
NO. 17
COURT'S INSTRUCTION - -
Mr. Hobbs has made claims concerning his dismissal
from employment with Pacific Hide and Fur. You
should understand that generally an employment
contract for an indefinite term or period may be
terminated at any time by either party, provided
that party gives notice to the other. However, no
prior notice is required, so that an employer or
emplovee may tell the other that the employment
contract is terminated on the same day notice is
given. If you find that Mr. Hobbs and Pacific had
an employment contract with no specified term, then
Pacific had the right to terminate Mr. Hobbs's
employment at any time and for any reason. That is
the general rule. I will now instruct you on the
causes of action for breach of the implied covenant
of good faith and fair dealing. If you find that
Mr. Hobbs has proven by a preponderance of the
evidence that the defendant breached the implied
covenant of good faith and fair dealing, then you
may find for Mr. Hobbs. But if not, then you must
apply the general rule that an employment contract
can be terminated for any reason or no reason at
all. Good cause need not be shown for the
termination.
An employer is entitled to be motivated by and to
serve its own legitimate business interests; an
employer must have wide latitude in deciding whom
it will employ in the face of the uncertainties of
the business world; and an employer needs
flexibility in the face of changing circumstances.
NO. 19
COURT'S INSTRUCTION - -
You are instructed that the defendant Pacific Hide
and Fur Depot owed plaintiff Clifford Hobbs an
implied-in-law duty of good faith and fair dealing
arising out of the emplover/employee relationship
that existed between the parties. In considering
whether the defendant acted in bad faith in the
manner in which plaintiff Clifford Hobbs was
treated during the employment relationship and at
the time the plaintiff was discharged, you should
consider all the evidence which tends to establish
either good faith or bad faith. If you find that
the defendant has violated this obligation imposed
by law, the plaintiff is entitled to be compensated
for all detriment or injury proximately caused
thereby whether that detriment or injury could have
been anticipated or not.
Taken together, the court's instructions failed to tell
the jury the nature and extent of the implied covenant of
good faith and fair dealing. The instructions informed the
jury that as a matter of law Pacific owed Hobbs an implied in
law duty of good faith and fair dealing, but did not tell the
jury that the implied covenant is measured in a particular
contract by the justifiable expectations of the parties.
Nicholson, supra. We therefore hold that the cause must be
reversed for the failure to give proper instructions on this
issue. A party has a right to have instructions given which
are adaptable to his theory of the case. Northwestern Union
Trust Company v. Worm (1983), 204 Mont. 184, 663 P.2d 325.
Without binding either counsel or the District Court on
retrial, we suggest that instructions to the jury might
properly include the following:
Montana statutory law provides that an employment
relationship having no specific duration may be
terminated at the will of either party on notice to
the other. This is referred to as the at-will
employment doctrine.
However, if there are objective manifestations by
the employer giving rise to a reasonable belief on
the part of the employee that he has job security
and will be treated fairly, the right of the
employer to terminate the employee at will is
limited by a covenant of good faith and fair
dealing which the law implies into the employment
relationship. An employer may still terminate an
employee at will and without prior notice; however,
the implied covenant of good faith and fair dealing
requires the employer to have a fair and honest
reason for termination, and not to act arbitrarily,
capriciously or unreasonably.
In this case the covenant of good faith and fair
dealing is implied into the employment
relationship, and you are instructed that a breach
of this covenant would render the employer liable
to the employee for damages.
In determining whether the defendant violated
the duty of good faith and fair dealing, you must
balance the interests of the defendant in
controlling its work force with the interest of the
plaintiff in job security. An employer such as
Pacific is entitled to be motivated by and to serve
its own legitimate business interest, and must be
given discretion in determining who it will employ
and retain in employment.
Thus, if the employer is motivated to
discharge the employee for reasons unfair or not
honest, the employee is entitled to recover damages
proximately caused by the breach. On the other
hand, if the employer was motivated by honest
business reasons in discharging the employee, the
employer had the right to terminate the employment
on the same day as notice is given for the
discharge.
Hobbs maintains that the District Court committed
reversible error hy the manner in which it controlled the
discovery and pretrial proceedings in this case.
There are two items of pretrial discovery that ought to
Se made available to Hobbs before any subsequent retrial..
Prior to the trial in the District Court, Hobbs
requested of the defendant corporation that it produce two
copies of all federal and state income tax records of the
defendant corporation for the years 1979 through 1982.
Inasmuch as Thiebes' letter terminating Hobbs represented
that one of the reasons for the termination was difficult
economic times adversely affecting his financial standing in
the corporation, the income tax records of the corporation
were relevant to the reasons stated. Rule 26 (b)(1),
M.R.Civ.P. It appears that Hobbs was entitled to production
of these documents for his pretrial preparation, and for use
at the trial as evidence.
Also prior to the trial in the District Court, Hobhs
requested of the defendant corporation information as to the
salary and annual bonuses paid to all of the branch managers
of the corporation during 1979, 1980 and 1981. The court
granted, after objection, the motion as to the salary and
annual bonuses paid to the branch managers of Branches 1, 2
and 40, and as to the other five branch managers of branches
that sold steel in 1979, 1980 and 1981, those who received
the highest salary and annual bonuses in said years.
During the trial, counsel for Pacific, in
cross-examining Mr. Carestia, Hobbs' financial expert, used
information relating to the salaries and bonuses of branch
managers for the additional years of 1982 and 1983. An
argument ensued between counsel before the court in chambers
as to whether the information relating to the years 1982 and
1983 had improperly been withheld from Hobbs' counsel so that
it was impossible to advise Carestia, prior to the trial, of
such information in the preparation of his testimony. The
record is not clear to us as to which counsel was correct
with respect to whether the information had been requested or
supplied in time. In any future retrial of this cause, we
direct that upon a proper request for discovery, information
that may be used by either party in direct or
cross-examination of witnesses must be supplied in accordance
with the request for production.
In this case, the District Court permitted the
corporation's counsel to cross-examine Carestia on
information which had not been supplied to the expert. The
court felt that the jury was aware of the fact that the
witness did not have the information that he was being
questioned about and that on redirect examination by Hobbs'
counsel, the jury would be made well aware of it. On that
basis, the District Court permitted the cross-examination
over objection. It is probable that the District Court was
unable, as we are unable, to determine which of the parties
was right as to the extent of the request for the production
of documents. In any event, this issue can be obviated on
retrial if, on proper request for production, information is
exchanged as to documents that will be used either for direct
or cross-examination of either parties' witnesses on retrial.
The objective of the District Court in controlling and
regulating discovery is to insure a fair trial to a11
concerned, neither according one party an unfair advantage
nor placing the other at a disadvantage. Massaro v. Dunham
(1979), 184 Mont. 400, 603 P.2d 249; Lindberg v. Leatham
Rros., Inc. (1985), 215 Mont. 11, 693 P.2d 1234.
We find no merit in other issues raised hy Hobbs as to
discovery as regulated by the District Court, and it is
unnecessary to set them forth here.
111
At the time of the trial in this cause in the District
Court, the corporation president involved in terminating
Hobbs had died. In the course of the trial, through several
witnesses, statements made by the deceased Thiebes to those
witnesses were permitted into evidence. Hobbs raises a
general objection to this kind of evidence, claiming hearsay.
At issue in this case, as indicated in the proposed
instructions foregoing, is whether the employer was motivated
to discharge the employee for reasons unfair or not honest,
as a breach of the implied covenant of good faith and fair
dealing. Therefore, the facts relating to the method used by
the deceased Thiehes in deciding to terminate Hobbs were
relevant to those issues. Thus, it may be that statements
made by Thiebes to others relating to the discharge of Hobbs
would he indicative of the facts considered by him in making
the discharge, as to whether he was acting fairly and
honestly.
V7hether a witness is available or not, under Rule
803(3), M.R.Evid., statements are not excluded by the hearsay
rule if those statements indicate the then existing mental,
emotional or physical condition of the declarant. When a
declarant is unavaj-lable as a witness, as for reason of
death, Rule 804(a) (4), his statements are not excluded by the
hearsay rule if there are comparable circumstantial
guarantees of trustworthiness. Rule 804 (a)(b)(5), M.R.Evid.
Whether there are circumstantial guarantees of
trustworthiness is a matter for determination by the District
Court in the first instance which will be upheld in this
Court absent an abuse of discretion.
In any retrial of this case, those rules should guide
the District Court in considering whether to admit such
statements.
IV
Hobbs objects to an instruction given by the District
Court on the subject of constructive fraud on the ground that
it was repetitious and misleading. The District Court
submitted the issue of constructive fraud to the jury in a
special interrogatory and the jury responded that the
defendant had not committed constructive fraud which was the
proximate cause of the damages to Hobbs.
We do not comment on the instruction given by the
District Court in this case for the reason that we find
plaintiff's theory or basis for constructive fraud is not
proper1.y conceived in this case. Statements were made by
Palmer to Hobhs before his employment that Pacific was a
"gold mine," that Palmer was offering to Hobbs the
"opportunity of a lifetime," and that Hobbs would be
reporting directly to the president or executive vice
president of the company and not to Palmer. Such statements
are not the source of plaintiff's problems in this case nor
are they demonstrahl-y false. The statements may arguably
have given rise to justifiable expectations in Hobbs about
his employment, but they do not constitute a basis for
constructive fraud. It is true that defendant's fraudulent
intent is not a necessary element in an action against it for
constructive fraud, 5 28-2-406 (I), MCA, nor must there exist
a fiduciary or confidential relationship between the
pl-aintiff and the defendant, Mends v. Dykstra (1981), 195
Mont. 440, 449-50, 637 P.2d 502, 507-08. Here, however,
given the statements made, their nature, and the
circumstances existing between the parties at the time the
statements were made, Hobbs can show no duty imposed on
Pal-mer or any other officer of Pacific "to speak out on the
circumstances," indicating that the statements were false or
misleading and should not be relied on. Palmer seems only to
have expressed his opinion, belief or judgment on the matters
stated and not necessarily statements of positive fact. See
Restatement (Second) of Torts 5 53821 Comments a-g (1977).
These statements do not have in them the elements of
concealment or falsity that characterize the statements or
representations which led to the contract in McGregor I T .
Momrner (Mont. 1986), 714 P.2d 536, 43 St.Rep. 206, upon which
case Hobbs relies on appeal.
v
Accordingly, the judgment of the District Court in this
case is reversed, and the cause remanded for retrial in
accordance with this Opinion. Cosfs to plaintiff. ,..
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/ Justice (
We Concur:
A
Chief Justice
Justices
Mr. J u s t i c e F r e d J . Weber d i s s e n t s :
The m a j o r i t y c o n c l u d e s t h a t r e v e r s a l i s r e q u i r e d i n t h i s
c a s e because t h e i n s t r u c t i o n s d i d n o t t e l l t h e jury t h a t t h e
i m p l i e d c o v e n a n t i s measured by t h e j u s t i f i a b l e e x p e c t a t i o n s
of the parties. T h i s c o n c l u s i o n i s b a s e d upon N i c h o l s o n v .
U n i t e d P a c i f i c I n s u r a n c e Company (Mont. 1 9 8 5 ) , 710 P.2d 1342,
42 St.Rep. 1822. It seems i n a p p r o p r i a t e t o a p p l y a legal
t h e o r y which had n o t y e t been s t a t e d by t h i s C o u r t . In the
present case, the jury instructions were given on May 1,
1984, n e a r l y one y e a r p r i o r t o t h e 1985 N i c h o l s o n d e c i s i o n .
I c o n c l u d e t h e r e i s no r e v e r s i b l e e r r o r , a n d I would a f f i r m
t h e j u r y v e r d i c t and judgment f o r t h e d e f e n d a n t .
The f a c t s s t a t e d i n t h e m a j o r i t y o p i n i o n p r e s e n t a v e r y
favorable picture of the plaintiff's claim. No facts are
p r e s e n t e d which s u g g e s t a b a s i s f o r t h e j u r v v e r d i c t f o r t h e
defendant. However, the record demonstrates there were
approximately 30 w i t n e s s e s who testified i n behalf of the
d e f e n d a n t d u r i n g a month l o n g t r i a l . I b e l i e v e it a p p r o p r i -
a t e t o s e t f o r t h some o f t h e f a c t s which s u p p o r t t h e i u r y ' s
verdict.
When p l a i n t i f f f i r s t went t o work f o r P a c i f i c Hide and
F u r Depot (Pacific), Mr. Palmer t e s t i f i e d t h a t M r . Thiebes
a u t h o r i z e d him t o o f f e r p l a i n t i f f a 532,000 p e r y e a r s a l a r y
p l u s a n unknown bonus. T h e r e i s no t e s t i m o n y from P a c i f i c
that anyone r e p r e s e n t e d t o plaintiff t h a t h e would r e c e i v e
any h i g h e r s a l a r y . Furthermore, p l a i n t i f f himself t e s t i f i e d
t h a t he r e a l i z e d a n y bonus h e m i g h t r e c e i v e would b e d i s c r e -
tionary with M r . T h i e b e s and would h a v e t o b e a p p r o v e d by M r .
Thiebes p r i o r to receipt. Mr. Palmer also testified that
plaintiff s a i d h e was a n x i o u s t o l e a v e C o l o r a d o and move t o
Yontana. This testimony is relevant in considering the
argument t h a t t h e p l a i n t i f f was e n t i c e d t o move h i s family
from Denver to Great Falls based upon Pacific's representa-
tions of a "glowing future."
Several Pacific employees testified as to the dissension
between plaintiff and Mr. Palmer and the disruptive effect it
had on the purchasing department under plaintiff's supervi-
sion. The Vice-president of Pacific testified that plaintiff
had an obsession with Mr. Palmer's interference with the
purchasing department. An agent within the department testi-
fied to the effect that plaintiff was very candid about his
dislike of Mr. Palmer and his disapproval of Mr. Palmer's
ideas and the way he did things. Another purchasing agent
testified that employees within the department found plain-
tiff to be harsh and abusive, and that under his supervision,
the department had experienced a considerable loss of morale.
The agent testified that he had considered resigning due to
the pressure of having to work for plaintiff and had ex-
pressed that inclination to Mr. Thiebes. Plaintiff agreed
that the problems he had with Mr. Palmer created confusion
within the corporation and that the confusion spilled over
into other corporate branches.
Witnesses testified that the plaintiff frequently com-
plained about his immediate supervisor to individuals outside
the company. These complaints were expressed to one individ-
ual who testified that because of plaintiff's statements, he
formed a negative opinion of Mr. Palmer, and he believed that
plaintiff's statements were destructive to the interests of
Pacific. Another individual unrelated to the company testi-
fied that plaintiff's preoccupation with Mr. Palmer and his
constant talk about the inner workings of Pacific demonstrat-
ed a lack of professionalism. At one point, plaintiff told
this individual about an "ultimatum" which he had given Mr.
Thiebes a few months prior to his termination, indicating
that "the situation was unworkable" and that "it will either
he Roger or him, and that was the way he wanted to resolve
it."
The record contains substantial evidence that the plain-
tiff had been advised of the need to cooperate with Mr.
Palmer, his superior, and that if his performance did not
improve, the plaintiff could be terminated. The evidence
further demonstrated that shortly thereafter, the plaintiff
contacted another steel company concerning alternative em-
ployment, and this contact was made prior to his termination
by Pacific.
Mr. Thiebes ultimately made the decision to terminate
the plaintiff. Because Mr. Thiebes died prior to trial, we
are not able to ascertain all of his reasons for the termina-
tion. The record does establish that Mr. Thiebes was well
aware of the prohl-ems between the plaintiff and Mr. Palmer.
He had also been told that the purchasing department was
experiencing morale problems and that an employee was consid-
ering resignation. Supervisory employees of Pacific had
indicated to Mr. Thiebes that if Pacific had to choose be-
tween the plaintiff and Mr. Palmer, it would be wise to
terminate the plaintiff and retain Mr. Palmer. Mr. Palmer
was described by several other Pacific empl.oyees as being
more knowledgeable of the steel business and more dedicated
to that business than was the plaintiff.
Other key employees testified that the plaintiff experi-
enced a lack of effort when he was managing branch I of the
steel business as well corporate purchasing. Mr. Thiebes'
letter of termination stated that the economic times and the
plaintiff's inability to manage branch I along with his
purchasing duties were the primarv causes for his
termination.
Such evidence supports the contention of the defendant
that its decision to terminate the plaintiff was a sound
business decision. The jury accepted that idea, as d-emon-
strated by the following question presented to it:
Do you find that defendant Pacific Hide and Fur
breached an implied covenant of qood faith and fair
dealing to thi plaintiff, which was a proximate
cause of damages to plaintiff Clifford Hobbs?
To that question the jury answered, "No." There is clearly
substantial evidence to support the conclusion of the jury.
I do not find a factual basis for trial reversal. In order-
ing a retrial, I note that almost 8 years have passed since
the date of termination and 5 years since the trial. We are
posing a difficult trial problem for all parties by the
present reversal.
The basic reason for reversal stated in part I of the
majority opinion is that the instructions were inadequate.
The problem instructions were 17 and 19. Instruction 19
stated:
You are instructed that the defendant Pacific Hide
and Fur Depot owed plaintiff Clifford Hobbs an
implied-in-law duty of good faith and fair dealing
arising out of the employer/employee relationship
that existed between the parties. In considering
whether the defendant acted in bad faith in the
manner in which plaintiff Clifford Hobbs was treat-
ed during the employment relationship and at the
time the plaintiff was discharged, you should
consider all the evidence which tends to establish
either good faith or bad faith. If you find that
the defendant has violated this obligation imposed
by law, the plaintiff is entitl-ed to be compensated
For all detriment or injury proximately caused
thereby whether that detriment or injury could have
been anticipated or not.
The instruction stated that the District Court concluded that
the duty of good faith and fair dealing did arise in the
present contract. As a result there was no need to require
the iury to weigh any circumstances to determine if such a
covenant was appropriate. The majority refers to Gates I,
pointing to the circumstances under which a covenant of good
faith and fair dealing may be implied. That does not appear
relevant where the District Court already concluded that the
covenant did arise in the present contract. In a similar
manner, the majority refers to Dare with emphasis upon the
objective manifestations by an employer from which the cove-
nant may be implied. Again, that does not appear relevant
where the trial court had already reached that conclusion.
As previously mentioned, that "measurement" of the
justifiable expectations of the parties had not been enunci-
ated by this Court at the time of trial. While the Nicholson
wording was not used in the present case, it seems to me that
instruction 19 contains a good explanation of the duty. That
instruction stated that in considering whether the defendant
acted in bad faith, the jury may consider the manner in which
the plaintiff was treated during the employment relationship
and - - - - the plaintiff was discharged.
at the time The instruc-
tion further emphasizes that the iurv should consider - -
all the
evidence which tends to establish either good or bad faith.
It ends with the statement that if the jury finds the defen-
dant has violated this obligation, the plaintiff is entitled
to compensation for all injury proximately caused by that
violation. I conclude this is a fair statement of the law as
it existed and was available to the trial judge and attorneys
during the 1984 trial.
The jury was also instructed on the nature of the
at-will employment contract and how the cause of action for
breach of the implied covenant interplays with that relation-
ship in instruction 17 which states in part that:
If you find that Mr. Hobbs has proven by a prepon-
derance of the evidence that the defendant breached
the implied covenant of good faith and fair
dealing, then you must find for Mr. Hobbs. But if
not, then you must apply the general rule that an
employment contract can be terminated for any
reason or no reason at all.
I conclude there is no basis for reversal because of the
wording of jury instructions 17 and 19.
I would affirm the verdict of the jury and the judgment
of the District Court.
Mr. Justice L. C. Gulbra the foregoing
dissent.