Wieder v. Skala
80 N.Y.2d 628 (1992)
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Rule of Law:
In an employment relationship between a lawyer and a law firm, there is an implied-in-law contractual obligation that both parties will conduct the practice of law in accordance with the profession's ethical standards, and a firm cannot terminate an associate for insisting on compliance with a mandatory disciplinary rule.
Facts:
- Howard L. Wieder, an associate at the law firm Skala, hired his own firm to represent him in a condominium purchase.
- The firm assigned another associate, L.L., to handle the matter.
- L.L. neglected the transaction for several months and made false and fraudulent misrepresentations to Wieder to conceal his neglect.
- When Wieder discovered the malpractice, he reported it to senior partners, who acknowledged they knew L.L. was a 'pathological liar' and had deceived others before.
- Wieder insisted the firm report L.L.'s misconduct to the Appellate Division Disciplinary Committee as required by Disciplinary Rule 1-103 (A).
- The firm initially refused and attempted to dissuade Wieder, offering to reimburse his personal losses.
- Following Wieder's persistent demands, the firm eventually reported L.L.'s misconduct.
- Subsequently, partners continuously berated Wieder for causing them to make the report and terminated his employment a few months later.
Procedural Posture:
- Howard L. Wieder sued his former law firm and its partners in the New York Supreme Court (trial court).
- Defendants moved to dismiss the fourth (breach of contract) and fifth (tortious discharge) causes of action for failure to state a claim upon which relief can be granted.
- The Supreme Court granted the defendants' motion to dismiss.
- Wieder, as appellant, appealed to the Appellate Division of the Supreme Court (intermediate appellate court).
- The Appellate Division affirmed the trial court's dismissal of the claims.
- The Court of Appeals (New York's highest court) granted Wieder, as appellant, leave to appeal.
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Issue:
Does firing a law firm associate for insisting that the firm report another lawyer's professional misconduct, as required by the Code of Professional Responsibility, constitute a breach of an implied term in the at-will employment contract?
Opinions:
Majority - Hancock, Jr., J.
Yes, firing a law firm associate for insisting that the firm report another lawyer's professional misconduct constitutes a breach of an implied-in-law term in the at-will employment contract. The court reasoned that the professional relationship between a lawyer and a law firm is unique and intrinsically different from typical corporate employment. There is an implied understanding in this relationship that both the associate and the firm will conduct their practice in compliance with the ethical standards of the profession. The mandatory reporting requirement of DR 1-103 (A) is a core tenet of the legal profession's self-regulation. By insisting Wieder violate this rule, the firm was frustrating the central purpose of the employment relationship—the ethical practice of law—and placing him in the untenable position of choosing between his job and potential disbarment. Unlike in Murphy v. American Home Prods. Corp., enforcing this implied obligation is 'in aid and furtherance of' the contract's purpose, rather than being 'inconsistent' with it. The court, however, declined to recognize a tort for abusive discharge, maintaining that such a significant change to employment law is best left to the Legislature.
Analysis:
This case establishes a significant but narrow exception to New York's firmly entrenched employment-at-will doctrine. It creates a cause of action for breach of contract specifically for lawyer-associates terminated for upholding core, mandatory ethical obligations. The decision's impact is largely confined to the legal profession due to its reliance on the unique self-regulatory scheme and the inseparable nature of an attorney's ethical duties and employment responsibilities. While it provides protection for associates in such situations, the court's explicit refusal to create a broader public policy tort reaffirms its deference to the legislature on wrongful discharge claims for the general workforce.
