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Thursday, April 1, 2010

NC Court of Appeals Addresses Public Policy Exception To "At-Will" Employment Doctrine

by Gary L. Beaver

Normally, a fired at-will employee in North Carolina has almost no chance of a successful wrongful discharge claim against his or her former employer. An employer can usually terminate an at-will employee for any reason whatsoever or even for no reason at all. However, there is a very narrow public policy exception to the at-will employment doctrine that allows such claim if the termination was done for an unlawful reason or purpose that contravenes public policy. The court applied the exception here. The discharged employee (Combs) claimed he was fired for reporting to the management of his employer, City Electric Supply Company, that the company had engaged in illegal and fraudulent activity by stealing from its customers' accounts. Apparently, there were times when customers overpaid and their accounts would then reflect a negative balance. Combs noted, and City Service admitted at trial, that City Service did not apply the negative account balances against later bills incurred by the customers. After Combs reported to a head supervisor (Smith) that the Combs's immediate supervisor was ordering him to take such actions, Smith denigrated Combs in an employment review and reduced Combs's salary. Then Combs was fired and Smith told him it was for job performance issues. Combs sued, among others, City Electric and Smith, and the trial court granted a directed verdict on the wrongful discharge claim against both City Service and Smith and on a tortious interference with contract claim against Smith.

City Service boldly contended that there was nothing wrong with its handling of the negative balances so the plaintiff had no basis for asserting the public policy exception. On March 16, 2010, the Court of Appeals agreed with Combs that taking the evidence as true and in the light most favorable to Combs, City Electric's withholding of negative balance statements, transfers of the overpayments to a separate account, and sending later statements that did not reflect the negative balances so that the customers paid the new balances without getting any credit for the prior overpayments were evidence of obtaining property by false pretenses. The Court of Appeals reversed the directed verdict as to the wrongful discharge claim. The case opinion is useful to give one a sense of what the courts will look for in applying the public policy exception. The Court also reversed the directed verdict as to Smith's alleged tortious interference with Combs's employment contract because the forecasted evidence of Smith's conduct was enough to defeat a non-outsider's qualified privilege to interfere with a contract.

On a personal note, one of the customers that had been allegedly ripped-off was Wilbur's BBQ & Restaurant. That alone gets my dander up as Wilbur's, located on US 70 in Goldsboro, has the best commercial BBQ and hushpuppies in North Carolina (note that I said commercial as my father makes the best BBQ in NC) and, in my humble opinion, does not deserve to be mistreated by anyone. I would have to drop the hammer on anyone who cheats Wilbur's. Go get 'em Mr. Combs.

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