Donahue v. Federal Express Corp.
753 A.2d 238 (2000)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
In Pennsylvania, the implied covenant of good faith and fair dealing does not apply to the termination of an at-will employment relationship. An at-will employee may only sue for wrongful discharge if the termination violates a clear mandate of public policy, which does not include internal whistleblowing when the employee is under no legal duty to report.
Facts:
- Brion O. Donahue was an employee of Federal Express Corporation ('FedEx') from November 1979 until his termination in January 1997, with Robert W. Marshall as his immediate supervisor.
- Donahue questioned numerous invoices that did not match repair orders and reported other improprieties, including Marshall directing company business to an auto body shop owned by a personal friend.
- After Donahue complained to Marshall about the invoice discrepancies, Marshall accused Donahue of gross misconduct, including making a racial remark and derogatory comments about Marshall to vendors.
- In the months prior to his termination, Donahue alleges that FedEx management denied him clerical assistance, gave him additional duties, and ordered him to falsify data.
- FedEx had a 'Guaranteed Fair Treatment Procedure' (GFTP) for employee grievances.
- FedEx terminated Donahue's employment, and Donahue unsuccessfully appealed the termination through all three steps of the company's internal GFTP.
Procedural Posture:
- Brion O. Donahue filed a multi-count complaint against Federal Express Corporation and Robert W. Marshall in the Pennsylvania Court of Common Pleas (trial court).
- FedEx and Marshall filed preliminary objections in the nature of a demurrer, arguing that Donahue's complaint failed to state a claim upon which relief could be granted.
- The trial court granted the preliminary objections and entered judgment in favor of FedEx and Marshall, dismissing Donahue's lawsuit.
- Donahue (Appellant) appealed the trial court's order to the Superior Court of Pennsylvania.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the implied covenant of good faith and fair dealing apply to the termination of an at-will employment relationship, thereby creating a cause of action for wrongful discharge?
Opinions:
Majority - Lally-Green, J.
No. The implied duty of good faith and fair dealing does not create a cause of action for the termination of a pure at-will employment relationship. The court reasoned that Pennsylvania's strong presumption of at-will employment allows an employer to terminate an employee for any reason, except where the termination threatens clear mandates of public policy. The duty of good faith and fair dealing only applies to the performance and enforcement of existing contractual terms that exist beyond the at-will employment relationship itself, such as a profit-sharing agreement. In this case, FedEx’s employee handbook and its 'Guaranteed Fair Treatment Procedure' (GFTP) did not create separate contractual duties, as the handbook explicitly stated that its policies were guidelines and did not create contractual rights. The court also rejected Donahue's other claims, holding that firing a private-sector employee for internal whistleblowing does not violate public policy when the employee is under no legal duty to report the conduct. Furthermore, superior job performance does not constitute 'additional consideration' sufficient to overcome the at-will presumption, and a claim for wrongful discharge based on a 'specific intent to harm' is no longer viable in Pennsylvania.
Analysis:
This decision reinforces the strength and breadth of the employment-at-will doctrine in Pennsylvania, making it exceedingly difficult for employees to challenge their terminations in court. The court clarifies that the implied covenant of good faith and fair dealing cannot be used as a tool to attack the termination decision itself, limiting its application to specific, ancillary contractual promises. By narrowly construing the public policy exception to exclude internal whistleblowing not mandated by law, the decision limits protections for private-sector employees who report internal misconduct. This case solidifies the principle that unless an employee has a specific contract or the termination violates a clear statutory prohibition, the employer's right to terminate is nearly absolute.
Unlock the full brief for Donahue v. Federal Express Corp.