Gordon v. Matthew Bender & Co., Inc.
115 L.R.R.M. (BNA) 4100, 1983 U.S. Dist. LEXIS 17287, 562 F. Supp. 1286 (1983)
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Rule of Law:
In an at-will employment contract, the implied covenant of good faith and fair dealing does not create an independent cause of action for wrongful termination. The covenant is a derivative principle that aids in interpreting existing contractual obligations but cannot be used to imply a term that is inconsistent with the explicit right of either party to terminate the relationship at any time.
Facts:
- On November 5, 1973, Joel Gordon began working for Matthew Bender & Company as a law book sales representative.
- The employment agreement between Gordon and Matthew Bender did not specify a definite period of employment, making it an at-will relationship.
- Gordon performed commendably, consistently meeting or exceeding the sales goals set by his employer.
- On July 24, 1980, Matthew Bender informed Gordon that his sales territory would be significantly reduced effective September 1, 1980.
- On October 7, 1980, Gordon was told he must achieve the same sales goals in his new, smaller territory as were set for his original, larger territory, or he would be terminated.
- Gordon failed to meet the unchanged sales goals in his diminished territory.
- Matthew Bender terminated Gordon's employment on January 8, 1981, which was ten months before his pension benefits were scheduled to become fully vested.
Procedural Posture:
- Joel Gordon filed a twelve-count First Amended Complaint against Matthew Bender & Company, Inc. in the U.S. District Court for the Northern District of Illinois.
- Matthew Bender answered four counts of the complaint.
- Matthew Bender then filed a motion under Fed. R. Civ. P. 12(b)(6) to dismiss the remaining eight counts for failure to state a claim upon which relief can be granted.
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Issue:
Does the implied covenant of good faith and fair dealing create an independent cause of action allowing an at-will employee to sue for wrongful termination in Illinois?
Opinions:
Majority - Hart, J.
No, the implied covenant of good faith and fair dealing does not create an independent cause of action for wrongful termination of an at-will employee. The court reasoned that the principle of good faith performance is a derivative concept used to define and modify duties that arise from specific contract terms, not to create new, independent duties. Citing New York's Murphy v. American Home Products Corp., the court found it would be 'incongruous' to imply an obligation that would be 'destructive of [the] right of termination' explicitly granted in an at-will relationship. To allow such a claim would effectively 'eviscerate the at will doctrine altogether.' Because Gordon was an at-will employee, there was no contractual term regarding duration to which the duty of good faith could attach, and therefore, no cause of action based solely on the good faith principle can stand.
Analysis:
This decision reinforces the traditional strength of the employment-at-will doctrine in Illinois, narrowly construing the application of the implied covenant of good faith and fair dealing. It establishes that the covenant cannot be used as a standalone cause of action to challenge a termination itself, thereby preventing a major erosion of the at-will rule. The ruling directs future plaintiffs to ground wrongful discharge claims in either a violation of a specific contract term (such as deprivation of earned commissions) or a recognized public policy exception, rather than a general claim of unfairness. This maintains a clear distinction between contract interpretation and the creation of new employee rights, affirming that fundamental changes to the at-will doctrine are the province of the legislature or higher courts addressing public policy.
