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The European-Style Consolatory Cheek Kiss, the UBS Lawsuit, and the Certified Question
December 2, 2021
In the immortal lyrics of "As Time Goes By," a kiss is just a kiss, but, as the 1940s gave way to the 2020s, I'm not quite sure that the sentiment still resonates. You could ask former Governor Andrew Cuomo for his take on the issue. Be that as it may, speaking about how once held beliefs change with time, we got a former UBS employee suing his former employer and co-worker. And there's the question of whether a kiss was just a kiss and what it means to be an at-will employee and if a breach of contract can occur notwithstanding the lack of a written contract and . . . gee, maybe the problems of three little people don't amount to a hill of beans in this crazy world, but, who knows, someday you'll understand that, or maybe not, maybe you'll just be dazed and confused for all eternity
European-Style Consolatory Cheek Kiss
Curt Hall, a former Manager of UBS Financial Services, Inc's Greenville, South Carolina branch, sued his former employer, UBS Financial Services, Inc., and former co-worker, Mary Lucy Reid, in the United States District Court for the District of South Carolina alleging, in part, that the firm had breached the implied covenant of good faith and fair dealing and that Reid had tortiously interfered with contractual relations.
Curt O. Hall, Plaintiff, v. UBS Financial Services Inc. and Mary Lucy Reid, Defendants (Certified Question, South Carolina Supreme Court, Op. No. 28068, December 1, 2021) (the "SCSupCt Opinion")
Curt O. Hall, Plaintiff, v. UBS Financial Services Inc. and Mary Lucy Reid, Defendants (Certified Question, South Carolina Supreme Court, Op. No. 28068, December 1, 2021) (the "SCSupCt Opinion")
https://brokeandbroker.com/PDF/HallSCSupCt2112301.pdf
As to the underlying facts at issue in the federal lawsuit [Ed: footnotes omitted]:
[H]all was the manager of the Greenville branch of UBS. On September 1, 2017, Hall organized an employee happy hour which several UBS employees, including Reid, attended.1 Throughout the event, Reid mentioned she was having issues with her boyfriend and was scared to go home. Hall offered to let Reid stay at his home for the evening. At the end of the happy hour, Hall invited everyone still present to dinner at a nearby restaurant, but only Reid and one of her friends joined him. After dinner, Reid and her friend gave Hall a ride home, with Reid joining Hall in the backseat while her friend drove. When they arrived at his home, Hall again asked Reid if she would be alright and she said she would be. Hall then gave Reid a "European-style consolatory cheek kiss" and exited the vehicle. Later that evening, Hall texted Reid to confirm she was okay. Hall repeated his offer for Reid to stay with him and told her he was outside his home with his dog. Reid responded to Hall's comment about his dog but did not respond to Hall's offer for her to stay with him.Reid reported her version of the events of the evening to UBS's human resources department (HR). HR questioned Hall about the evening, and Hall explained his version of events. According to Hall, Reid fabricated certain events of the evening and also fabricated Hall's general advances towards her and Hall's relationships with other employees in the Greenville office. UBS fired Hall a few weeks after Reid's report. This action followed. Pertinent to the certified questions are Hall's cause of action against UBS for breach of the implied covenant of good faith and fair dealing and Hall's cause of action against Reid for tortious interference with contractual relations. 2= = =Footnote 1: During oral argument, counsel for Reid referred to Reid as Hall's subordinate. This alleged fact is not in the certification order, and it has no bearing upon our answers to the certified questions.Footnote 2: During oral argument, Hall's counsel stated Hall's wife and child were home with Hall. This alleged fact is not in the certification order, and it has no bearing upon our answers to the certified questions.
at Pages 2 - 3 of the SCSupCt Opinion
The Riddle of the South Carolina Sphinx
The United States District Court for the District of South Carolina certified three questions to the South Carolina Supreme Court ("SCSupCt"):
I. Are terminable-at-will employment relationships contractual in nature as a matter of law?II. Does the implied covenant of good faith and fair dealing arise in the context of terminable-at-will employment relationships, and can an employer's termination of an at-will employee constitute a breach of the relationship such that it may give rise to a claim by the former employee against the employer for breach of the implied covenant of good faith and fair dealing?III. Can an employer's termination of an at-will employee, which results from a third-party employee's report to the employer, constitute a breach of the relationship such that it may give rise to a claim by the former employee against the third-party employee for tortious interference with a contractual relationship?
I. Are terminable-at-will employment relationships contractual in nature as a matter of law?
Defendants argued that South Carolina does not allow for "a cause of action to be brought by an employee against an employer on matters that arise out of termination of the at-will employment relationship." at page 4 of the SCSupCt Opinion. The Court conceded that although the Defendants had correctly stated the law, they had, nonetheless, conflated the question of whether an at-will relationship is contractual with whether termination of an at-will employee gives rise to a cause of action for breach of contract. Ummm . . . okay . . . ummm . . . wow, lemme wrap my head around that. I many not be employed pursuant to a contract but my termination could involve a breach of contract. How Zen-like!. While I'm working my way through the sound of one-hand contractual clapping, consider this finding:
[A]ll at-will employment relationships, whether they are memorialized in a written contract stipulating the at-will nature of the employment or orally formed simply out of circumstance, are contractual relationships. When an employer offers to pay an employee to perform a service for a price and the employee performs that service, a contract is formed. Of course, our recognition that at-will relationships are contractual does not alter the established rule allowing an employer to discharge an at-will employee for any reason without incurring liability. That is because under South Carolina law, the right to fire the employee at any time and for any reason is an integral term of the at-will contract. We answer the first certified question "yes."
at Page 7 of the SCSupCt Opinion
So . . . all employment relationships are contractual whether in writing or oral; however, even deeming an at-will employment as contractual in nature does not impose liability upon an employer for termination of an at-will employee. The employer's right to fire continues unabated within the at-will employment context.
II. Does the implied covenant of good faith and fair dealing arise in the context of terminable-at-will employment relationships, and can an employer's termination of an at-will employee constitute a breach of the relationship such that it may give rise to a claim by the former employee against the employer for breach of the implied covenant of good faith and fair dealing?
In working through the second enumerated question, the Court breaks the analysis into two parts, as noted below:
A. Does the covenant arise in at-will employment relationships?
The SCSupCt affirms that the implied covenant of good faith and fair dealing does NOT arise in at-will relationships. That pretty much resolves this point. Except it doesn't. Nope. Citing its prior finding in the first certified question that at-will relationships are, in fact, "contractual," the state court now asserts that:
[I]n light of our answer to the first certified question, this rationale is no longer valid. The implied covenant of good faith and fair dealing exists in at-will employment contracts.
at Page 7 of the SCSupCt Opinion
B. Can an employer's termination of an at-will employee give rise to a claim by the former employee against the employer for breach of the implied covenant of good faith and fair dealing?
Having thrown precedent to the winds in its finding above, SCSupCt now asserts that:
As we explained above, every contract includes the implied covenant of good faith and fair dealing. It is clear then that if a party to a contract believes another party to the contract has breached the implied covenant of good faith and fair dealing, the cause of action is simply one for breach of contract. . . .at Page 8 of the SCSupCt Opinion
What was once, isn't anymore, and with a wave of its judicial wand, SCSupCt invalidates its precedent in favor of imposing an implied covenant of good faith and fair dealing upon at-will employment, which would give rise to a breach of contract. Upon this revised landscape, the state court repaints a more nuanced picture:
It follows then that the implied covenant of good faith and fair dealing, while it exists in the at-will employment contract, does not infringe upon the employer's right to do what the contract allows him to do-terminate the employee for any reason. The employer's motive for firing the employee is immaterial, and the employer may fire the employee-even for a bad reason-without incurring liability for breach of the implied covenant of good faith and fair dealing. We answer Question II in its entirety as follows: The implied covenant of good faith and fair dealing exists in an at-will employment contract; however, the employer's termination of the employee cannot form the basis of a claim that the employer breached the covenant of good faith and fair dealing.4at Pages 8 - 9 of the SCSupCt Opinion= = =Footnote 4: During oral argument, Hall stated his claim for breach of the implied covenant of good faith and fair dealing was not founded upon UBS firing him, but instead upon UBS's submission of a report detailing Hall's actions to the Financial Industry Regulatory Authority (FINRA). Since the record does not include Hall's complaint, we do not know what actions Hall alleged as the basis for his claim for breach of the implied covenant of good faith and fair dealing, and our answers to the district court's questions are based on the limited record before us. The district court can resolve any questions related to FINRA.
The implied covenant of good faith and fair dealing attaches to at-will employment despite the fact that an employer may still terminate such an employee for any reason without being deemed to have breached the covenant. Ummm . . . what? Lemme ponder that for a bit.
III. Can an employer's termination of an at-will employee, which results from a third-party employee's report to the employer, constitute a breach of the relationship such that it may give rise to a claim by the former employee against the third-party employee for tortious interference with a contractual relationship?
And now, with bated breath, we await the SCSupCt,'s deft dissection of the final certified question, which, in keeping with all that went before:
We revise this question to read as follows: Can an employer's termination of an at-will employee, which results from a third-party employee's report to the employer, give rise to a claim by the terminated employee against the third-party employee for tortious interference with a contractual relationship, even when the termination itself was not a breach of the at-will contract? We revise the question because the threshold viability of the terminated at-will employee's tortious interference claim against the third-party employee does not depend upon whether the employer's termination of the employee was a breach of the at-will contract; instead, the threshold viability of the claim depends upon whether the third-party employee, without justification, made a report to the employer which induced the employer to terminate the at-will employee.The district court has presented the narrow question of whether a third-party employee's interference can be actionable. The majority view across the country extends liability not only to third-party employees but also to any third party who intentionally and unjustifiably interferes with the at-will relationship. As we answer the district court's narrow question, we will also answer the broader question.
at Page 9 of the SCSupCt Opinion
Ya gotta love it! The federal court certifies three questions to the state court, which then announces dramatic new precedent by acknowledging the old precedent but then deeming it no longer "good" precedent, and, moving along in that vein, the state court then revises one of the certified questions from the federal court to better reflect "threshold viability." Y'all remember final exams and when you didn't know the answer to the question on the essay portion of the test, you tried to sneak in an answer to something that you did know? Usually, you attempted this legerdemain by starting off your answer with something like: "Although the question posed is excellent and fairly addresses the dramatic issues during the historical period under scrutiny, a better question to ask would be . . ."
The SCSupCt notes that the majority of jurisdictions that have previously addressed the issue of a third party's intentional interference with a terminable-at-will contract as giving rise to a tortious interference with contract have recognized the cause of action "even when the termination of the contract is not a breach of the contract." at page 11 of the SCSupCt Opinion. Further, the state court notes that at-will employees have a reasonable expectation that their continued employment is dependent upon the will of the employer and NOT "the whim of a third party interferer." at page 11 of the SCSupCt Opinion. In recognizing the validity of Hall's cause of action, the Court explains that:
[W]e hold the absence of an underlying breach by the terminating employer does not shield the third party from liability when she intentionally and unjustifiably procures the termination of an at-will employee. Therefore, we answer Question III, as modified, "yes."
at Page 13 of the SCSupCt Opinion
Dissenting in Part
Alas but not unexpectedly, the Court's Opinion is not a nice, neat, clean sweep:
BEATTY, C.J., KITTREDGE and HEARN, JJ., concur. FEW, J., concurring in part and dissenting in part in a separate opinion.
In Justice John Cannon Few's partial concurrence/dissent, he notes in his opening comment:
I appreciate the majority's very fine explanation of our answers to the district court's first and second questions. I completely agree with the majority's answer and explanation as to the first question. As to the second question, I agree with the answers given, but I would explain the answer to the second part of the question in slightly different terms. The manner in which I suggest we explain our answer to the second part of the second question-in my opinion-requires a different answer to the third question than the answer given by the majority.
In plainer terms, Justice Few concurs with the "Yes" answers to the first question, the "Yes" and "No" answers to the second question, but he does not agree with the majority's "Yes" answer to the third question, which he would answer as "No." As Justice Few sees it in part:
[T]herefore, it is not possible for "an employer's termination of an at-will employee . . . [to] give rise to a claim by the terminated employee against the third-party employee for tortious interference with a contractual relationship.". . .There is an additional reason I would answer the third question "no." In this case, if Reid's report is accurate-in other words if Hall made sexual advances to her or otherwise treated her in a professionally inappropriate manner-then she did nothing actionable in reporting Hall's conduct to UBS. In that event, any consequences Hall faces result not from Reid's report but from his own wrongful conduct. Reid's report is actionable, and thus may be the cause of Hall's damages, only to the extent the report is false. In that event, Hall has other theories of recovery against Reid, such as defamation. I would require an employee who is fired from an at-will position as a result of a false report to the employer to rely on defamation, which provides defenses and privileges to the party making the report that the law holds appropriate in a civil action based on a false statement.