Robert W. BANAS v. MATTHEWS INTERNATIONAL CORPORATION, Appellant.
Superior Court of Pennsylvania.
Argued Dec. 13, 1984. Filed Dec. 20, 1985.
502 A.2d 637
The judgments of sentence are reversed and the case is remanded for a new trial consistent with this opinion.
Eric P. Reif, Pittsburgh, for appellant.
Robert C. Gallo, Pittsburgh, for appellee.
Before SPAETH, President Judge, and CAVANAUGH, WICKERSHAM, ROWLEY, OLSZEWSKI, MONTEMURO, BECK, TAMILIA and JOHNSON, JJ.
This is an action for defamation and breach of contract. The action arises out of appellee‘s dismissal as an employee of appellant. Appellant is engaged in the business of making, among other things, bronze grave markers. When appellee was dismissed, in July 1979, he was a tooler. In late June 1979, the Resurrection Cemetery, one of appellant‘s customers, notified appellant that contrary to the settled practice between the cemetery and appellant, a grave marker made at appellant‘s plant had been placed on
I
The Defamation Claim
Appellant has argued two issues: whether the trial court erred in charging the jury that appellant‘s conditional privilege could be abused, and therefore lost, by a defamatory communication that was made negligently; and whether the trial court erred in charging the jury on punitive damages.
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Appellant argues that its conditional privilege could be abused, and therefore lost, only by a defamatory communi-
In Rutt v. Bethlehems’ Globe Publishing Co., 335 Pa.Super. 163, 484 A.2d 72 (1984), we stated:
Matus [v. Triangle Publications, Inc., 445 Pa. 384, 286 A.2d 357 (1971) cert. denied, 408 U.S. 930, 92 S.Ct. 2494, 33 L.Ed.2d 343 (1972) ], declare[s] quite unequivocally, that under Pennsylvania law, once the issue of conditional privilege is raised by a defendant who has been sued by a private figure for defamatory communications concerning matters which are not of public concern, the burden of proof of the plaintiff in order to establish abuse of the conditional privilege is ‘want of reasonable care and diligence to ascertain the truth’ or more simply put, negligence. Id. 445 Pa. at 398, 286 A.2d at 365 (quoting Purcell v. Westinghouse Broadcasting Co., supra, 411 Pa. [167] at 179, 191 A.2d [662] at 668 [(1963) ]. 335 Pa.Super. at 185, 484 A.2d at 83.
We made this statement in the course of discussing the effects of the United States Supreme Court‘s decisions in Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974) (“so long as they do not impose liability without fault, the states may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual“), and Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971) (private figure plaintiff must prove ‘actual malice‘) (plurality opinion), on Pennsylvania defamation law. The issue in Rutt was not the burden of proof to establish abuse of a conditional privilege but rather the burden to establish liability in a private figure defamation case, but our conclusion that Gertz and Rosenbloom had not altered the burden to establish liability compels the conclusion here that neither did those decisions alter the burden to establish abuse of a conditional privilege, and the latter burden is settled. The Pennsylvania Supreme Court has long held that “[w]ant of reasonable
Appellant argues that the trial court erred in charging the jury on punitive damages in two respects: the charge represented an incorrect, or at least confusing, statement of the law; and even if correct, the charge should not have been given because as a matter of law the evidence was insufficient to support an award of punitive damages. We do not consider the first argument, for we agree that the evidence was insufficient to support an award of punitive damages. Accordingly, on appellee‘s defamation claim, we vacate the award of $25,000 punitive damages. Appellant has not challenged the award of $15,000 compensatory damages, and it is affirmed.
The test to be applied in determining the sufficiency of evidence to support an award of punitive damages is stated in Hepps v. Philadelphia Newspapers, Inc., supra. There, the trial court withdrew the issue of punitive damages from the jury on the ground that the evidence was “insufficient to establish ‘actual malice.‘” Id., 506 Pa. at 330, 485 A.2d at 388. On the plaintiff‘s appeal, the Supreme Court held that to be entitled to punitive damages, the plaintiff had to establish that the defamatory publication was made either with knowledge that it was false or with reckless disregard of whether it was false. Id., 506 Pa. at 331, 485 A.2d at 389. Applying this test, the Court concluded that “there was no basis for the jury to have concluded that the publication was made with knowledge of the falsity of its content“, and that “[w]hile the plaintiff attempted to show that the dissemination was made with reckless disregard of the truth of its content, it is equally apparent that a jury issue was not created under the clear and convincing test required for such an award of damages.” Id., 506 Pa. at 332, 485 A.2d at 389 (citations omitted). The Court therefore affirmed the trial court‘s decision to withdraw the issue of punitive damages from the jury.2
Two statements served as the basis of appellee‘s defamation claim. The first statement was made at a meeting on July 31, 1979, preceding appellee‘s dismissal for having made a grave marker for his nephew‘s grave. The meeting was attended by Francis Donnelly, Vice President in charge of manufacturing, Charles Krepp, Vice President and Plant Manager, and Alfred Lee, Vice President and Director of Personnel. Appellee was shown a photograph of the grave marker and was asked whether and how he had made it. He admitted having made and removed the marker. N.T. 53. Then, according to appellee, Donnelly stated: “We can‘t have thieves around here, because we have a lot of valuable stuff in here.” Id. The second statement was by Krepp. In response to the “uproar” that followed appellee‘s dismissal, Krepp met with employees in small groups to explain the reasons for the dismissal. At trial Krepp testified that “[p]eople were very concerned, because their security had been shaken.” N.T. 159–60. He told the employees that appellee had been dismissed for the “unauthorized removal of company property.” N.T. 161. He “may have” told “one or two employees” that appellee could have been “indicted because of this action.” Id. He also stated that appellee “not only violated the company rules, but he also violated the rules of the municipality.” Id. (quotation from Krepp‘s deposition as read into trial transcript).
Appellee‘s case hinged upon whether he had received permission to make the grave marker. He claimed that he
Personal Jobs
Employees are not generally permitted to work on personal jobs during company time or on company premises. However, supervisors will often cooperate by giving permission for you to use our equipment and waste material for your personal work.
In support of this claim, appellee testified that he asked for and received permission to make the marker from Jack Campbell, his immediate supervisor. N.T. 42-43, 333. Appellee also testified that William Donatelli, the general foreman of the plant, gave him permission to take the piece of bronze scrap that he used in making the marker, N.T. 37, and that Betty Desport, a nonsupervisory receiver, gave him permission to take a scrap bronze vase used in making the marker, N.T. 76-77, 330. (Campbell, Donatelli and Desport denied having given the permission that appellee claimed they had. N.T. 333-34, 325, 330.) Appellee also testified that some seven to eight years previously he had made a marker for the grave of Donatelli‘s father as a personal job. N.T. 32. (Donatelli testified that he had not. N.T. 324.)
Appellant introduced a written policy statement, entitled “Bronze Division Procedures“, that provided in part: “For the good of all concerned it should be thoroughly understood that we cannot run the risk of offending our customers by permitting employees to buy direct from Matthews. Every employee who desires to purchase a bronze memorial should contact the cemetery office and arrange for said purchase.” N.T. 274-75. Appellee testified, however, that he did not become aware of this policy until after he had been dismissed. N.T. 81.
Also in regard to appellant‘s policy, appellant‘s witnesses testified that making a grave marker did not come within the handbook provision covering personal jobs. For example, Donatelli testified that under company policy, “you weren‘t allowed to make a memorial” for personal purposes.
When Krepp and West learned that a marker had been removed from the plant, they reported to Donnelly as their superior. West had received a telephone call from one of the plant managers “indicating that the cemetery had called and was quite concerned that we had changed our policy and were supplying memorials directly to our customers.” N.T. 281. The matter was then turned over to James Parker, Vice President and General Counsel. N.T. 282. Parker ordered a private firm, Universal Security Consultants, Inc., to conduct an investigation to determine who had removed the marker. N.T. 192. Meanwhile, Krepp held a meeting of the plant foremen, including Campbell and Do-
Of course, in considering the sufficiency of this evidence, we must view it in the light most favorable to appellee:
In reviewing an order denying judgment n.o.v., we must view the evidence, together with all reasonable inferences therefrom, in the light most favorable to appellee as the verdict winner. See, e.g., Lynch v. Metropolitan Life Insurance Co., 427 Pa. 418, 423, 235 A.2d 406, 409 (1967). See also, Atkins v. Urban Redevelopment Authority of Pittsburgh, 489 Pa. 344, 414 A.2d 100 (1980). Judgment n.o.v. should be entered when the facts are such that no two reasonable persons could disagree that the verdict was improper. See, e.g., Cummings v. Borough of Nazareth, 427 Pa. 14, 25-26, 233 A.2d 874, 880-81 (1967); Bottorf v. Waltz, 245 Pa.Super. 139, 142-44, 369 A.2d 332, 334 (1976). Accordingly, when the lower court would be warranted in giving binding instruc-
tions to the jury, see, e.g., Connelly v. Ziegler, 251 Pa.Super. 521, 523-24, 380 A.2d 902, 903 (1977); Albright v. Metropolitan Life Insurance Co., 143 Pa.Super. 158, 164, 17 A.2d 709, 711 (1941), or when the evidence is insufficient to sustain a verdict against the losing party, see, e.g., Fitzgerald v. McCutcheon, 270 Pa.Super. 102, 105-06, 410 A.2d 1270, 1271 (1979); Szumski v. Lehman Homes, Inc., 267 Pa.Super. 478, 480-81, 406 A.2d 1142, 1143 (1979); Trawick v. Nationwide Mutual Insurance Co., 242 Pa.Super. 271, 274-75, 363 A.2d 1265, 1266-67 (1976), the court should enter a judgment n.o.v. McCloskey v. New York Life Insurance Company, 292 Pa.Super. 1, 5, 436 A.2d 690, 691-92 (1981).
By this test, there can be no question that the evidence was sufficient to show that the two statements in question were false and defamatory. The jury was entitled to accept appellee‘s testimony that he had been given permission to make the grave marker, and to reject the testimony of Campbell, Donatelli, and Desport that he had not been, from which it follows that the jury was entitled to find that appellee was not a thief. This conclusion, however, does not dispose of the issue of punitive damages. On that issue, the dispositive questions are: What was Donnelly‘s state of mind, when he charged appellant with being a thief, and what was Krepp‘s, when he told other employees that appellee had taken company property without authority and could be indicted? Did either man make his statement “with knowledge of the falsity of its content” or “with reckless disregard of the truth of its content“? Hepps v. Philadelphia Newspapers, Inc., supra, 506 Pa. at 331, 485 A.2d at 389. And was the evidence of either man‘s state of mind “clear and convincing“? Id.
To answer these questions we must focus our attention on the evidence of how matters stood as of the July 31st
Appellee contends that “management“—presumably referring to Donnelly and Krepp—should have asked Campbell whether he had given appellee permission to make the grave marker. Supplemental Brief for Appellee at 22. This argument, however, is not persuasive.
It cannot be maintained that Donnelly‘s failure to ask Campbell shows that he knew that his statement to appellee was false. Thus what appellee evidently contends is that Donnelly made his statement recklessly. But the evidence refutes, or at least does not support, that contention. An executive who relies on settled company policy, an investigator‘s report, and the plant manager‘s report is not acting recklessly. The fallacy of appellee‘s argument is the assumption—which appellee either does not recognize or does not acknowledge—that if Donnelly had asked Campbell whether he had given appellee permission to make the
Nor can it be maintained that Krepp‘s failure to ask Campbell whether he had given appellee permission to make the grave marker warrants punitive damages. When Krepp met with the plant foremen, including Campbell, it had not been determined that appellee had taken the marker. It is therefore hardly surprising that Krepp only asked the foremen whether they had given anyone permission to take the marker; he had no reason to ask whether appellee had been given permission. Appellee argues that after he was dismissed by Donnelly, at the July 31st meeting, “Charlie Krepp, the plant superintendent, without talking to Campbell, then went onto the plant floor and called [appellee] a thief and stated that he could be indicted in front of most all of his colleagues.” Supplemental Brief for Appellee at 22. This evidence, however, could not show that Krepp knew that what he was saying was false. As for whether he said it with reckless disregard of whether it was false: Again, as is the case with regard to Donnelly‘s statement, appellee assumes that if, after receiving the private investigator‘s report, Krepp had asked Campbell whether he had given appellee permission to take the grave marker, Campbell would have said that yes, he had, and there is no basis in the evidence for that assumption.5
II
The Contract Claim
As was noted at the outset, in describing this appeal, appellee‘s action alleges breach of a section of appellant‘s employee handbook that provided that employees could do personal jobs with their supervisor‘s permission. Appellant argues that appellee‘s “theory of recovery is simply not applicable to the facts in this case under the law of Pennsylvania.” Brief for Appellant at 29. We agree. As will become apparent, what appellee has argued, apparently without recognizing the fact—is that an employee handbook that does not provide job security may be contractually enforced as if it did provide job security. Appellee refers to no authorities in support of this proposition, and we are aware of none. Indeed, the proposition is contrary to the
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The Employment-at-Will Rule
In Pennsylvania the settled rule is that “[a]bsent a statutory or contractual provision to the contrary, the law has taken for granted the power of either party to terminate an employment relationship for any or no reason.” Geary v. United States Steel Corp., 456 Pa. 171, 175, 319 A.2d 174, 176 (1974). This rule, which is often referred to as the employment-at-will rule, originated in the late nineteenth century.6 The rule has been sharply criticized in recent years by commentators arguing that it gives employers too much discretion and allows them to take unfair advantage of employees. See, e.g., Blades, Employment at Will Vs. Individual Freedom: On Limiting the Abusive
We need not decide whether to align ourselves with the critics or defenders of the employment-at-will rule. Appellee concedes—as under the evidence he must—that he had no definite term of employment with appellant. He might have argued that even though he had no definite term of employment, we should not apply the employment-at-will rule but should instead decide to abrogate the rule. We need not decide whether Geary would preclude such a decision, for appellee has not so argued. Accordingly, his claim must be dismissed—unless he has pleaded and proved that he is within one of the exceptions to the rule.
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Exceptions to the Employment-at-Will Rule
In recent years both the Congress and State legislatures have created statutory exceptions to the employment-at-will rule.8 In addition, the Supreme Court and this court have developed as a matter of common law a public policy exception to the rule.
In Geary v. United States Steel Corporation, supra, the Supreme Court stated that “there are areas of an employee‘s life in which his employer has no legitimate interest“, and that “[a]n intrusion into one of these areas might plausibly give rise to a cause of action, particularly where some recognized facet of public policy is threatened.” 456 Pa. at 184, 319 A.2d at 180. Relying on Geary, we have held that a public employer may not deny employment on the basis of a conviction for which the offender has been pardoned, unless the conviction was reasonably related to fitness for the job, Hunter v. Port Authority of Allegheny County, 277 Pa.Super. 4, 419 A.2d 631 (1980), and that an
Appellee neither pleaded nor proved that his case is within any statutory exception to the employment-at-will rule, or that it is within the public policy exception. We must therefore inquire whether he has shown that for some other reason the rule is inapplicable.
When, as in this case, an employment arrangement does not contain a definite term, it will be presumed that the employment-at-will rule applies. The employee may, however, be able to overcome the presumption:
The burden is on the plaintiff ... to overcome the presumption by showing facts and circumstances establishing some tenure of employment. The intention of the parties governs. One relying on the contract as provid-
ing for a reasonable length of time must establish something in the nature and circumstances of the undertaking which would create the inference that a definite or reasonable period of employment was contemplated. Cummings v. Kelling Nut Co., 368 Pa. 448, 451-52, 84 A.2d 323, 325 (1951) (citations omitted).
The question therefore arises whether appellee carried his burden of proof.
Sometimes proof of consideration, when added to proof of services to be rendered, has been sufficient to establish that the employment was not at-will but for a term. Compare Lucacher v. Kerson, 158 Pa.Super. 437, 45 A.2d 245, aff‘d 355 Pa. 79, 48 A.2d 857 (1946), (plaintiff‘s resigning former position in New York to join Philadelphia firm and his plans to move his family to Philadelphia supports promise of “permanent employment“) with Cummings v. Kelling Nut Co., supra (when after nine years’ employment employee claims that he and employer had agreed that his employment would continue for as long as necessary to compensate him for expenditures made in the business during the first years of employment, employment nevertheless held to have been at-will, Court noting that plaintiff‘s claim might have been “more plausible” if he had been required to give up another business activity).
Appellee, however, neither pleaded nor proved any consideration other than his services to appellant. Thus, if he is to escape the employment-at-will rule, he must look elsewhere.
In recent years some courts have held that the employment-at-will rule is inapplicable where the employer has issued an employee handbook containing a provision that commits the employer to dismiss an employee for just cause only, and that an action will lie for breach of such a provision. See, e.g., Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980); Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn. 1983); Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 443 N.E.2d 441, 457 N.Y.S.2d 193 (1982). It would, however, be
The evidence and the theory of appellee‘s case have already been discussed at some length, in examining the issue of punitive damages for defamation. At this point it is enough to recall that the basis of appellee‘s breach of contract action is that the employee handbook issued by appellant contained a provision stating that an employee could “use our [appellant‘s] equipment and waste material for your [the employee‘s] personal work” if given permission by a supervisor. Appellant‘s evidence was that making a grave marker was not “personal work“, but the jury accepted appellee‘s evidence that it was; appellant‘s evidence also was that Campbell, one of appellee‘s supervisors, had not given appellee permission to make the grave marker, but the jury accepted appellee‘s evidence that he had. Appellee‘s argument, accepted by the trial court, is that to dismiss him for doing what he was given permission to do was unjust: “he [was] made a scapegoat because the Resurrection Cemetery threatened to cancel its business with [appellant].” Supplemental Brief for Appellee at 6.
There is no merit to this argument. To be sure, according to appellee, and according to the jury, Campbell gave appellee permission to make the grave marker. But according to appellant, Campbell did not give permission. Given the jury‘s verdict, we may take it as fact that Campbell did give permission. But that fact is irrelevant. Appellant‘s handbook nowhere provided that an employee would be dismissed only if the facts warranted it. If the
The judgment is affirmed so far as the award of $15,000 compensatory damages for defamation is concerned. Otherwise it is reversed.
ROWLEY, J., files a concurring and dissenting Statement.
BECK, J., files a concurring and dissenting opinion in which JOHNSON, J., joins.
ROWLEY, Judge, concurring and dissenting:
I join in Part I of the majority‘s Opinion relative to the defamation claim. However, I join in that portion of Judge Beck‘s Concurring and Dissenting Opinion relative to the contract claim. Therefore, like Judge Beck, I would affirm the judgment.
Factual Background
Banas began his employment with Matthews as a sandblaster (Record at 6a) and advanced to the position of tooler, which he held for 14 or 15 years preceding his discharge (Record at 17a). It was undisputed that Banas was a skilled craftsman and his job performance was good (Record at 120a). In fact, Banas had been selected to work on an important job for Matthews, the making of Elvis Presley‘s grave marker (Record at 19-20a).
After he was hired, Banas received from Matthews a copy of a booklet entitled “Matthews—You and Your Company.” This employee handbook contained the following provision relating to personal jobs:
Employees are not generally permitted to work on personal jobs during company time or on company premises. However, supervisors will often cooperate by giving permission for you [the employee] to use our equipment and waste material for your personal work.
There was testimony at trial that doing personal jobs, euphemistically called “government jobs,” was a commonplace event at the Matthews plant. Banas’ immediate supervisor, Jack Campbell, testified that he had never turned down a request for permission to do a “government job.”
Banas asked for and received permission to do a personal job using a sheet of scrap bronze from the company shop. There is conflicting testimony on whether Banas told his supervisors, when making the request, that the personal job in question was a grave marker. Campbell, the immediate supervisor, who acknowledges that the request was made, maintains that he did not know that Banas intended to make a grave marker. He stated that he believed, when granting permission, that Banas had in mind a small item such as a license plate or house numbers which were the customary items made by employees for their own use, after permission was obtained. Banas maintains that he told Campbell that he wanted to make a grave marker. Banas acknowledges that he also used a bronze vase from company stock
At trial the vice-president of the company, the plant manager, and the general foreman testified that Matthews employees may not make grave markers for personal use. The company policy is to sell grave markers only to cemeteries, not to individuals. Record at 272a, 275a, 294a, 299a, 324a. A document, “Bronze Division Procedures,” offered in evidence by Matthews, stated:
There has been some vagueness and misunderstanding about our policy in connection with the sale of bronze memorials to employees. If we permit employees to purchase bronze memorials directly from Matthews for the installation at any cemetery it presents difficulties and misunderstandings with our customers [cemeteries]. For the good of all concerned it should be thoroughly understood that we cannot run the risk of offending our customers by permitting employees to buy direct from Matthews. Every employee who desires to purchase a bronze memorial should contact the cemetery office and arrange for said purchase. There is no objection if the employee indicates to the cemetery that he or she is an employee of Matthews. The employee should also make certain that the official order is being placed through the cemetery.
Record at 274-75a.
This document was distributed only to those in managerial and supervisory positions at Matthews and not to personnel on Banas’ level. Record at 299a.
Matthews learned from Resurrection Cemetery that a Matthews grave marker had been installed without sale through the cemetery. Matthews then conducted a private investigation and determined that while at work, Banas had made the marker from company materials and had then removed the marker from the company premises. During a meeting between Banas and Matthews supervisory personnel involved with the investigation of the grave marker‘s manufacture and removal, a Matthews supervisor, Francis
Following Banas’ termination, the plant superintendent, Charles Krepp, spoke with Banas’ former co-workers who were concerned because of Banas’ sudden departure. Krepp told them that Banas had been fired for unauthorized taking of company property, that Banas violated the law as well as company rules, and that Banas could have been indicted on criminal charges.
Punitive Damages
I dissent from the majority because I find that a review of the record reveals that more than enough evidence was adduced under the clear and convincing test to create a question for the jury as to whether Banas should have been awarded punitive damages.1
Applying the actual malice standard to the present case, I find sufficient evidence of record which, believed by the jury, would establish Matthews’ actual malice by clear and convincing proof and entitle Banas to punitive damages. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974); Hepps v. Philadelphia Newspapers, Inc., 506 Pa. 304, 485 A.2d 374 (1984), appeal pending, ___ U.S. ___, 105 S.Ct. 3496, 87 L.Ed.2d 628 (1985). Hence, I would affirm the trial court‘s denial of Matthews’ motion for a judgment n.o.v. which alleged that there was inadequate evidence upon which to submit the punitive damages
Preliminarily, I note that the question is not whether as thirteenth jurors, our court would have found actual malice but rather, whether there was evidence in the record from which a rational jury could have found clear and convincing proof of actual malice. See Hepps; Heffernan; Delahanty v. First Pennsylvania Bank N.A., 318 Pa.Super. 90, 464 A.2d 1243 (1983).
Because in addressing this question our court is deciding whether the trial court erred in denying Matthews’ motion for a judgment n.o.v. on punitive damages, the record must be reviewed in the light most favorable to Banas as the verdict-winner below. Dambacher v. Mallis, 336 Pa.Super. 22, 485 A.2d 408 (1984). “[A]ny doubts should be resolved in favor of the verdict.” Tyus v. Resta, 328 Pa.Super. 11, 17, 476 A.2d 427, 430 (1984). Accordingly, our court must accept as fact that which the jury obviously found in holding Matthews liable for defamation, namely, that Banas was given permission to make the grave marker and that Matthews supervisory personnel made false statements about Banas’ being a thief.
With respect to the award of punitive damages, the inquiry must focus on the knowledge and state of mind of the Matthews supervisors (Messrs. Krepp and Donnelly) who uttered the defamatory remarks about Banas. Because at worst the Matthews supervisors received conflicting information on whether Banas had received permission to make a marker, I conclude that the jury could not have found that the Matthews supervisors knowingly made false statements about Banas. See New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964). However, because the contradictory information about Banas’ having permission raised serious doubts concerning Banas’ being a thief, and because despite such conflicting data, Matthews did not question Banas’ immediate supervisor (Jack Campbell) about whether he gave Banas permission to make a grave marker, I also conclude that the jury
The majority reasons that Donnelly could not have been acting with actual malice when he made the “We can‘t have thieves around here” statement because he must have disbelieved Banas’ protestations that he had permission. But I view Donnelly‘s state of mind when he made the statement as a question for the jury. Clearly, Donnelly‘s words are consistent with disbelief of Banas, but the jury would have to determine whether that apparent disbelief was a reckless disregard of evidence indicating that Donnelly‘s statement was false.
Central to my analysis are the following salient background facts established by the record: (1) Banas was a good and reliable employee with a twenty-year, unblemished employment record with Matthews; (2) the performance of personal jobs was commonplace within the Matthews plant; (3) there was evidence that the alleged Matthews’ policy (“Bronze Division Procedures“) prohibiting the construction of a cemetery marker as a personal job was communicated only to supervisory personnel, not to employees like Banas, and finally, (4) when Banas was questioned, he did not deny making the marker with company material.
A discussion of the significance of these facts is required. Since Matthews’ supervisors had been instructed that Matthews’ employees were to obtain grave markers only by purchasing them from cemeteries, any supervisor who gave an employee like Banas permission to make a marker as a personal job would be acting improperly. The jury could infer that a supervisor who gave such permission would be motivated to deny it to protect himself. Since this inference is a matter of common-sense reasoning, the jury could charge Krepp and Donnelly with a like understanding of the circumstances.
With regard to Matthews’ investigation of the specific Banas marker incident, although the record contains conflicting evidence, the jury could have found that Banas’ immediate supervisor (Campbell) was never asked whether he had given Banas permission to make the marker. Moreover, the testimony of the private investigator hired by Matthews to investigate the incident, Nicholas Domek, supports Banas’ side of the story. Domek testified at trial that he was asked to determine who made the marker and in the course of his investigation he spoke with Mr. Logue, Banas’ brother-in-law and father of the deceased. Logue then called Banas on the telephone and allowed Domek to speak to him. Banas, speaking directly to Domek, admitted making the marker, stated he had permission and said he had no objection to the use of his name in Domek‘s report to Matthews.2 See Record at 206a-13a. The jury could have found that Matthews’ supervisory personnel (Krepp and Donnelly) were aware of Domek‘s report and therefore knew that Banas freely admitted making the marker with the knowledge that his employer would receive the report. There was also evidence in the record that Banas did not attempt to conceal the marker in the plant while he was making it, that it was left in plain view on his workbench, and that he carried it out of the plant under his arm covered only with some brown paper to prevent scratching. From these facts the jury could infer first that Banas clearly felt
In holding that Banas has not made a case for punitive damages sufficient to go to the jury, the majority finds that the trial judge erred in not granting Matthews’ motion for judgment n.o.v. The case law is clear that judgment n.o.v. should be entered only when the facts are such that no two reasonable persons could disagree that the verdict was improper. Cummings v. Nazareth Borough, 427 Pa. 14, 233 A.2d 874 (1967). In light of the litany of evidence produced at trial supporting the inference that Matthews’ supervisory personnel (Donnelly and Krepp) acted recklessly in defaming Banas, the majority‘s conclusion that the question of punitive damages should not be presented for jury consideration is in my view untenable.
The majority states that Banas’ claim is predicated upon the assumption that Campbell, Banas’ immediate supervisor, would have admitted giving Banas permission to make a marker as a personal job. I maintain that such an assumption is irrelevant to the question whether Krepp and Donnelly acted with reckless disregard for the truth (Sullivan actual malice) when they labeled Banas a thief. The resolution of the question does not depend on what Campbell would have said but on whether Donnelly and Krepps could be viewed as acting with reckless disregard for the truth because they defamed Banas without first asking Campbell whether Banas had permission to make a marker.
The majority acknowledges that the evidence of record could support a finding that Campbell was never asked if he had given Banas permission to make a marker as a personal job.3 Yet the majority argues that such evidence is insuffi-
cient to raise a jury question as to the reckless publication of the defamatory remarks concerning Banas. The jury could have found that when confronted with conflicting stories about Banas’ having permission for a marker, Krepp and Donnelly acted with reckless disregard for the truth by branding Banas a thief without having first inquired of Campbell whether Banas had received permission to make the marker.
Consequently, I would hold that there existed sufficient evidence in the record to allow the jury to decide whether, by clear and convincing proof, defamatory statements about Banas were uttered with reckless disregard for their truth or falsity.4 Accordingly, I would not disturb the punitive damages award.
Like the majority I would hold that Sullivan actual malice is the appropriate standard for gauging whether a plaintiff in a defamation action is entitled to punitive damages. Geyer v. Steinbronn, (Nos. 02639-02641 Philadelphia 1982, filed December 6, 1985). However, I find the majority‘s punitive damages analysis incomplete because the ma-
Because an award of punitive damages in a defamation action in effect penalizes speech,5 the determination of the appropriate criterion for such an award necessarily mandates an examination of the United States Supreme Court‘s opinions discussing the dynamic tension between the First Amendment guarantee of free expression and the States’ interest in allowing private individuals to protect their reputations.
In Gertz the United States Supreme Court declared that “the States may not permit recovery of presumed or punitive damages ... when liability is not based on a showing of knowledge or falsity or reckless disregard for the truth,” i.e., on a showing of Sullivan actual malice. Id., 418 U.S. at 349, 94 S.Ct. at 3011. But in a later opinion, Dun & Bradstreet, the United States Supreme Court restricted the scope of Gertz by stating that “recovery of presumed and punitive damages in defamation cases absent a showing of ‘actual malice’ does not violate the First Amendment when the defamatory statements do not involve matters of public concern.”6 Dun & Bradstreet, 472 U.S. at ___, 105 S.Ct. at 2948, 86 L.Ed.2d at 605. The majority‘s opinion in the case sub judice neither cites Dun & Bradstreet nor addresses the punitive damages standard delineated in Dun & Bradstreet.
To date, Pennsylvania defamation law on punitive damages in non-public interest cases has been inconsistent. For example, in a case involving a private plaintiff and a private defendant, Laniecki v. Polish Army Veterans Association, 331 Pa.Super. 413, 423, 480 A.2d 1101, 1106 (1984), we “observe[d] that Pennsylvania has embraced Section 908 of the Restatement (Second) of Torts” which allows punitive damages upon proof of “outrageous conduct,” i.e., an act done with an evil motive or with reckless indifference to the rights of others. See Feld v. Merriam, 506 Pa. 383, 485 A.2d 742 (1984) (non-defamation case in which the Pennsylvania Supreme Court resolved the punitive damages issue according to Section 908 of the Restatement (Second) of Torts). Thereafter, in Walder v. Lobel, 339 Pa.Super. 203, 488 A.2d 622 (1985), we departed from the Restatement approach and cited Hepps for the proposition that punitive damages are justified in defamation cases only upon a demonstration of actual malice.
In the present appeal, the majority also quotes Hepps as controlling authority for use of the Sullivan actual malice standard for punitive damages. Although I regard Hepps as instructive on the punitive damages question, I do not believe Hepps is entirely apposite to the case sub judice. The Pennsylvania Supreme Court‘s decision in Hepps predates the United Supreme Court‘s opinion in Dun & Bradstreet. Hepps is explicitly based on the United States Supreme Court‘s Gertz opinion which required proof of actual malice to justify a punitive damages award to a private figure plaintiff in a suit against a media defendant. Hepps, 506 Pa. at 329, 485 A.2d at 388. Neither Gertz nor Hepps distinguishes for purposes of punitive damages be-
Despite inconsistent Pennsylvania precedent and the freedom under Dun & Bradstreet to establish a standard other than actual malice, I nevertheless conclude that punitive damages cannot be obtained without proof of Sullivan actual malice. Geyer.
I endorse the actual malice norm because I am convinced that the goals sought to be achieved through defamation law are better served by the Sullivan actual malice standard than by the common-law malice standard of Section 908 of the Restatement. See Geyer.
Both the Restatement common-law malice (ill-will malice, outrageous conduct) and Sullivan actual malice delineate behavior more egregious than the ordinary negligence needed to establish the underlying tort liability in private plaintiff-private defendant defamation cases. See Delahanty. Common-law malice of the type described by Section 908 of the Restatement refers to the defendant‘s attitude toward the plaintiff whereas actual malice as outlined in Sullivan refers to the defendant‘s attitude toward the truth. See Hepps; Note, Punitive Damages and Libel Law, 98 Harv. L.Rev. 847 (1985).
Therefore, the inquiry becomes which type of conduct to punish and deter through the vehicle of punitive damages, i.e. whether to punish a defendant because he publishes outrageously or with ill will or whether to punish a defend-ant because he lacks respect for the truth and thereby
In the context of actual malice, a defendant makes a defamatory statement with a reckless disregard for the truth or falsity of his statement if the defendant entertains serious doubts about the truth of his statement. St. Amant. Therefore, the defendant‘s knowingly or recklessly publishing a defamatory falsehood, i.e. the defendant‘s exhibiting Sullivan actual malice, requires a high level of scienter and evidences the defendant‘s deliberate decision to publish defamatory remarks for his own advantage regardless of the high risk of harming the plaintiff‘s reputation.
Whereas common-law malice may result from an irrational hatred, actual malice may stem from a choice to proceed despite risks. Courts and laws cannot realistically deter a defendant from disliking a plaintiff, but they can encourage a defendant to exercise sufficient care in making public pronouncements about a plaintiff.
Therefore, I agree with the majority that actual malice is the appropriate standard for awarding punitive damages in a defamation action that does not involve a matter of public concern. Geyer.
The Contract Claim
Unlike the majority, I conclude that Banas placed squarely before the Superior Court the issue of whether the Matthews handbook modified his at-will employment status. Banas argued that it did and that Matthews discharged him in breach of the handbook for making, with permission, a grave marker as a personal job.
On the other hand, the majority‘s opinion examines the effect of the handbook by stating,
“Appellant‘s [Matthews‘] handbook nowhere provided that an employee would be dismissed only if the facts warranted it. If the handbook had contained, if not expressly at least by clear implication, a just cause provision, then appellee‘s [Banas‘] claim might have merit; indeed, it would have merit if this Court were to decide to accept and follow the reasoning of cases such as Toussaint v. Blue Cross & Blue Shield of Michigan, supra. But as we have said, that is a decision that must await a case in which the action is brought for breach of a just cause provision.”
At 484-485 (emphasis in original) (footnotes deleted). I do not understand the majority‘s injection of just cause dismissal language. The majority introduces the just cause issue sua sponte. I can only conclude that the majority‘s just discussion is purely advisory. The parties never raised the issue of a just cause dismissal and the majority has found that the employee handbook is not before the court and therefore refuses to determine if the handbook in any way modified Banas’ at-will status. Since the majority declines to rule on the effect of the handbook in the instant appeal, I assume that in a later case if this court decides the issue whether a handbook can modify conditions of employment, the court would not be bound by the advisory just cause dicta in the majority‘s present opinion.
Contrary to the majority‘s analysis, I hold, as did the trial court, that the Matthews’ employee handbook is clearly an issue in this case. It is only the majority‘s unique interpre-
Although the Matthews’ employee handbook does not establish job security for Banas with respect to a specified tenure (length) of employment, the handbook acts as a framework in which to examine Banas’ at-will-employment status. Just as prior court decisions have carved out public policy exceptions to the at-will-employment doctrine, see, e.g., Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980); Nees v. Hocks, 272 Or. 210, 536 P.2d 512 (1975); Yaindl v. Ingersoll-Rand Co., 281 Pa.Super. 560, 422 A.2d 611 (1981), this court could, if it chose, permit at-will-employment status to be modified on the basis of the contractual effect of an employee handbook. I believe that Banas has today presented this court with the precise question whether provisions in an employee handbook can alter at-will-employment status so that an employer cannot discharge an employee for actions that complied with the provisions of the employee handbook.8
Matthews contends that Banas could be discharged at any time, for any reason irrespective of the provisions of the Matthews’ employee handbook. For this reason, Matthews contests the propriety of the trial court‘s following jury instructions:
If an employer puts out a book and tells a fellow he can do a personal job, even though they say work must be performed on company orders, they do have an exception. If the employee goes and gets permission he‘s permitted to do the particular job and then he turns around and is fired, even though this isn‘t part of any contract signed by anybody the company as a matter of right cannot put
Record at 436a. The court further charged the jury:
Now let‘s assume that you believe there is indeed a breach of contract here. Now, to apply the doctrine of equitable estoppel, ... [w]e have no written contract here, but as a matter of equity a contract is created in the law if these certain conditions exist: That is Matthews made the statement concerning personal jobs, which was a condition of employment, ... and that [Banas] establishes to your satisfaction that Banas could reasonably rely on that.
Record at 440a.
Banas concedes that he was generally an at-will employee in the sense that he had no contractual right to a specified duration of employment. But he argues that this status should not place him at the caprice of his employer. I agree with Banas and would hold that his at-will status was modified by the Matthews’ employee handbook provisions which formed the basis of a unilateral contract limiting the employer‘s power to terminate the employee.
The Employee Handbook as Unilateral Contract
It is hornbook law that when a party makes a promissory offer which invites acceptance by performance rather than by return promise, the rendering of the requested performance creates a completed unilateral contract. See Restatement (Second) of Contracts § 45 and Comment (a) thereunder (1981). In the employment context, the distribution to an employee or employees of a handbook detailing certain rights, policies and procedures constitutes a unilateral offer of an employment contract with those conditions. The employee supplies the necessary acceptance of the offer and consideration by continuing to perform the duties of his job. See, e.g., Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d 261 (1983) (“Her continued employment after formal delivery of the handbook provides sufficient consideration for modifying the employment agreement by inserting the
The same considerations of fairness and equity which have led many of our sister states9 to reject the position that “an employee handbook on personnel policies and procedures is a corporate illusion ‘full of sound ... signifying nothing,‘” Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 462, 443 N.E.2d 441, 443, 457 N.Y.S.2d 193, 195 (1982), likewise compel me to conclude that employers’ statements of policy and procedure contained in handbooks distributed to employees should be accorded contractual significance.
Employers derive substantial benefits in personnel relations from the use of employee handbooks. Comment, supra, at 262. “The employer secures an orderly, cooperative and loyal work force, and the employee the peace of mind associated with job security and the conviction that he will be treated fairly.” Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 613, 292 N.W.2d 880, 892 (1980); see also Weiner, 57 N.Y.2d at 465-66, 443 N.E.2d at 445, 457 N.Y.S.2d at 197 (plaintiff rejected other job offers relying on job security provisions of handbook and was instructed to follow handbook when dealing with employees he supervised); Thompson v. St. Regis Paper
Characterizing an employee handbook as a unilateral offer of employment, takes into account the employer‘s concern to augment, modify and even withdraw the offer contained in the handbook in response to the employer‘s changing needs and circumstances. When an employer distributes a new handbook or portion thereof, the employer makes a new offer of employment. The terms of the new offer are defined by the contents of the new handbook, and the new offer becomes effective on the date the new handbook is distributed. Or, when a handbook is withdrawn, i.e. revoked, the new offer becomes effective on the date that the employer notifies the employee of the revocation of the handbook. Employees accept the new offer and provide consideration by continuing their employment. See Pine River State Bank v. Mettille, Minn., 333 N.W.2d 622 (1983). The Minnesota court viewed this procedure as offering an advantage to employers who can thereby avoid the transaction costs of contracting separately with each employee. Id. Moreover, under this analysis an employer remains free to issue statements which are not contractually binding, so long as such statements are accompanied with an appropriate, conspicuous disclaimer. See Woolley v. Hoffmann-LaRoche, Inc., 99 N.J. 284, 491 A.2d 1257 (1985)
I conclude that the provisions of a handbook distributed to employees can constitute an offer of a unilateral contract which an employee may accept by remaining on the job, and that once accepted, the provisions of the handbook are binding on both parties as conditions of employment until modified by a subsequent offer and acceptance of new conditions. Therefore, I would hold that the trial court did not err in instructing the jury that the Matthews’ employee handbook could be construed as part of an employment contract between Banas and Matthews, and that the conduct of Matthews could be considered a breach of contract. The trial court described the contract arising from the handbook as a “contract by estoppel.” Although it would have been preferable if the trial court had conceptualized the handbook as a unilateral contract, the trial court‘s charge does not constitute reversible error. In determining on appeal whether a trial court‘s instructions are erroneous, the appellate court must examine the charge as a whole, and isolated inaccuracies are not grounds for reversal if the charge as a whole is not misleading or prejudicial. Ackerman v. Delcomico, 336 Pa.Super. 569, 486 A.2d 410 (1984). Since the charges on the significance to be accorded the employee handbook were predicated on a contract theory, and were thus correct as a whole, the jury‘s verdict need not be disturbed on these grounds. Since Matthews raises no other challenges to that portion of the jury‘s verdict which awarded Banas damages for breach of contract, I would affirm that portion of the judgment.
Conclusion
I find no merit in any of Matthews’ allegations of error. Consequently, I would affirm the trial court.
JOHNSON, J., joins in this opinion.
Notes
Appellant cites two decisions by this court, Doman v. Rosner, 246 Pa.Super. 616, 371 A.2d 1002 (1977), and Berg v. Consolidated Freightways, Inc., 280 Pa.Super. 495, 421 A.2d 831 (1980), in support of its suggestion that before Hepps, proof of fault greater than negligence was required to overcome a conditional privilege. Although Doman and Berg do indeed contain statements regarding ‘malice,’ an examination of those cases reveals that they do not hold that malice is required to destroy a conditional privilege. In Doman, we affirmed an order of summary judgment for the defendant principally on the ground that as a matter of law the statements were not defamatory. That being the case, our subsequent statement that there was no evidence that the defendant had “recklessly disregarded the truth,” 246 Pa.Super. at 625, 371 A.2d at 1006, may be regarded as dictum. Even if not so regarded, however, the plaintiff would still have been required to establish malice because we concluded that he was a public figure. See New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964) (public figure must prove malice). Berg was an appeal from an order denying defendants’ motions for a new trial or for judgment n.o.v. We found “satisfactory” the trial court‘s instruction to the effect that the plaintiff was required to prove malice to overcome a conditional privilege. 280 Pa.Super. 495 at 501, 421 A.2d 831 at 834 (1980). Since the jury found malice, defendants-appellants did not complain on appeal that the jury should have been instructed that the plaintiff was required to meet the lesser standard of negligence. Our approval of the trial court‘s instruction should therefore not be understood as requiring a private figure defamation plaintiff to prove malice.
An additional point of divergence is the majority‘s reliance on Rutt v. Bethlehems’ Globe Publishing Co., 335 Pa.Super. 163, 484 A.2d 72 (1984), as support for the proposition that negligence is the proper standard for determining if a conditional privilege to defame has been abused. While I agree that negligence is the appropriate standard, I find that the relevant and natural precedent for that proposition is found in Hepps v. Philadelphia Newspapers, Inc., 506 Pa. 304, 485 A.2d 374 (1984), appeal pending, ___ U.S. ___, 105 S.Ct. 3496, 87 L.Ed.2d 628 (1985). Rutt expressly limits its discussion to the New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), privilege as applied to media defendants while Hepps does not. Hepps contains broad language about the abuse standard applicable to all possible conditional privileges recognized under Pennsylvania law.If the hiring be general, without any particular time limited, the law construes it to be a hiring for a year; upon a principle of natural equity, that the servant shall serve, and the master maintain him, throughout all the revolutions of the respective seasons, as well when there is work to be done as when there is not. 1 Blackstone Commentaries 425.See also Chitty, The Law of Contracts Not Under Seal 588 (1855). See generally Feinman, The Development of the Employment at Will Rule, 20 Am.J.L.Hist. 118 (1976). Justice Powell announced the judgment of the Court in an opinion joined by Justices Rehnquist and O‘Connor. The Chief Justice concurred on the ground that Gertz did not apply because the allegedly defamatory statements did not relate to a matter of public concern. In his separate opinion, Justice White agreed with Justice Powell that inasmuch as the case sub judice did not involve a matter of public concern, Gertz was not controlling. Justice White then reiterated his position that Gertz should be overruled and that common-law defamation principles should govern plaintiffs who are neither public officials nor public figures. Thus, although Dun & Bradstreet is a plurality decision, it represents a majority viewpoint on the standard for awarding punitive damages in defamation cases which do not concern matters of public interest.
It is not correct to read Yaindl so broadly. Rather, it applied the public policy exception to the employment-at-will rule, which the Supreme Court described in Geary v. United States Steel Corp., supra, and which we discuss infra. In Yaindl we concluded that a dismissal based upon an employer‘s specific intent to harm the employee “is an example of when a discharge violates public policy.” 281 Pa.Super. at 573 n. 5, 422 A.2d at 618 n. 5. After reviewing the evidence, we were unable to find any public policy implicated in the dismissal. We also concluded, however, that the employee had stated a claim for improper interference with his prospective employment relationship in a separate division of the company on the basis of actions taken by his superiors in threatening certain actions against the separate division‘s management if it hired the employee. In so concluding we noted that interference with a dismissed employee‘s future employment “constitutes a far greater infringement upon the employee‘s right to earn a living than does the manager‘s discharge of the employee from the manager‘s own company.” 281 Pa.Super. at 585, 422 A.2d at 624.
Since Hepps involved a matter of public concern, the actual malice standard for punitive damages would apply to Hepps under either the reasoning of Gertz or Dun & Bradstreet.