Hatfield v. Rochelle Coal Co. , 1991 Wyo. LEXIS 116 ( 1991 )

LEHMAN, District Judge.

The United States District Court for the District of Wyoming certified to this court the following questions which arose during a suit concerning wrongful termination of employment. The stated questions are as follows:

I.

Does Wyoming recognize a claim for breach of the covenant of good faith and fair dealing in the context of a wrongful termination action in which there is an employment contract?

II.

Does Wyoming recognize a claim under Art. I, § 6 of the Wyoming Constitution when no state action is alleged?

We answer “no” to the first question and “no” to the second question.

DISPOSITION OF CERTIFIED QUESTIONS

1. Duty of Good Faith and Fair Dealing in Employment Contract.

The Restatement (Second) of Contracts § 205 (1981) states as follows:

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

The question is whether Wyoming law imposes this implied covenant of good faith and fair dealing upon an employer by virtue of his being a party to an employment contract. We hold that it does not.

Appellant, James N. Hatfield, correctly points out that we have adopted the covenant of good faith and fair dealing in situations where duties implied by law arise independently of the express terms of a contract. See McCullough v. Golden Rule Ins. Co., 789 P.2d 855, 858 (Wyo.1990). However, this does not justify a presumption that the covenant applies to employment disputes. In fact, we have never applied it to a case in which there is alleged the wrongful termination of an employment contract.

We have held that the covenant does not apply to employment which is not “at-will.” In Leithead v. American Colloid Co., 721 P.2d 1059 (Wyo.1986), an employee sued his employer for wrongful termination, alleging that the terms of his employee handbooks had modified his at-will employment. We held that the specific terms and general tenor of the handbooks gave the employee an enforceable right to be discharged only for cause. Id. at 1063. With regard to his claim for breach of the implied covenant of good faith and fair dealing, however, we stated that “[t]he covenant has no application here * * * because the parties’ contract was not at will.” Id. at 1064 (emphasis added).

Neither, have we recognized such a covenant when the employment is strictly “at-will.” See Ware v. Converse County School Dist. No. 2, 789 P.2d 872, 875 (Wyo.1990);¹ McDonald v. Mobil Coal Producing, Inc., 789 P.2d 866, 869 (Wyo.1990); Nelson v. Crimson Enterprises, Inc., 777 P.2d 73, 76 n. 3 (Wyo.1989) (specifically reserving the question); Reese v. Dow Chemical Co., 728 P.2d 1118, 1121 (Wyo.1986) (not addressing the question but noting its academic interest and future potential); Mobil Coal Producing, Inc. v. Parks, 704 P.2d 702, 704 (Wyo.1985); and Rompf v. John Q. Hammons Hotels, Inc., 685 P.2d 25, 28 (Wyo.1984) (reserving the question and not applying the covenant to the facts in that ease).

The language in the Nelson and Rompf cases suggests that we might apply this covenant in the context of wrongful termination under an employment contract, given the right case. Other states have either recognized or refused to recognize an implied duty of good faith imposed upon employment contracts in the interest of public policy. See generally Annotation, Modem Status of Rule That Employer May Discharge At-Will Employee For Any Reason, 12 A.L.R.4th 544 (1982). However, appellant has failed to convince us that the circumstances of his case make it “the right case” for adoption of the rule in this state. Thus, under the current status of Wyoming law, Wyoming does not recognize an implied covenant of good faith and fair dealing imposed upon an employer by virtue of his being a party to an employment contract.

2. Violation of Due Process in Absence of State Action.

The second certified question involves the construction of the Wyo. Const, art. 1, § 6:

No person shall be deprived of life, liberty or property without due process of law.

We must determine whether this language in the Wyoming Constitution requires due process where private action is taken that deprives a citizen of an interest in property.

We have implicitly recognized the requirement that state action be shown to activate Wyoming’s due process clause. In Hanesworth v. Johnke, 783 P.2d 173, 176 (Wyo.1989), we held that a district court’s involvement in the process of extinguishing claims of creditors, who did not file timely claims against an estate, constituted state action sufficient to invoke the due process clauses of the United States and Wyoming Constitutions. However, we did not explicitly analyze the parameters of Wyoming’s due process clause in Hanesworth. We did adopt the state action requirement and found it satisfied by the district court’s involvement in that case. Appellant’s arguments do not persuade us to deviate from or expand our holding in Hanes-worth.

Appellant argues that, because we recognize some guarantees of the Wyoming Constitution as greater in scope than those of the federal constitution, we ought to extend the scope of the Wyoming Constitution’s due process clause beyond that of the federal constitution to include some forms of private action. Our cases, recognizing a more extensive scope of rights under provisions of our constitution identical or very similar to those of the federal constitution, have involved rights of the individual vis-a-vis the state — not contentions between private parties. See Simonds v. State, 799 P.2d 1210 (Wyo.1990), Urbigkit, C.J., specially concurring (state double jeopardy provision may exceed scope of federal provision) and Washakie County School Dist. No. One v. Herschler, 606 P.2d 310, 332 (Wyo.), cert. denied 449 U.S. 824, 101 S.Ct. 86, 66 L.Ed.2d 28 (1980) (equal protection analysis under Wyoming Constitution includes wealth as a suspect classification).

Appellant further argues that because the language of Wyo. Const, art. 1, § 6 is written in the passive voice (“[n]o person shall be deprived”) and, therefore, the “depriving entity” is not specified, the framers intended to include private persons as well as the state. First, we note that private persons are not explicitly mentioned in Wyo. Const, art. 1, § 6. Second, appellant has not provided any legislative history or other pertinent authority which persuades us that the framers of our constitution intended to include them by implication.

Other state courts which have considered this question have nearly unanimously held that private employers are not subject to due process claims under their state constitutions for wrongful termination of employees, because of the lack of state action. See Dimond v. Samaritan Health Service, 27 Ariz.App. 682, 558 P.2d 710, 711-12 (1976); Schreiner v. McKenzie Tank Lines, Inc., 482 So.2d 567, 569 (Fla.1983); Barr v. Kelso-Burnett Co., 106 Ill.2d 520, 88 Ill.Dec. 628, 478 N.E.2d 1354, 1356 (1985); and Vavasori v. Commission on Human Relations, 65 Md.App. 237, 500 A.2d 307, 310 (1985), cert. denied 305 Md. 419, 504 A.2d 1152 (1986).

The Alaska case, Nichols v. Eckert, 504 P.2d 1359 (Alaska 1973), is particularly on point. That case involved a challenge by nontenured teachers against a school board and superintendent for alleged breach of their employment contracts. The Alaska Supreme Court stated that its due process provision, nearly identical to Wyoming’s, applies only when there is state action. Id. at 1362. We note that Alaska, like Wyoming, recognizes a broader scope for the equal protection clause of its constitution than that of the federal constitution, see Breese v. Smith, 501 P.2d 159, 167 n. 30 (Alaska 1972); but even that recognition does not extend to requiring due process of a private employer.

Appellant has cited no authority which convinces us that Wyoming’s Constitution differs from every other state constitution and the federal constitution in requiring state action before the due process clause is implicated. Nor has appellant persuaded us to abandon or modify our holding in Hanesworth. We hold that our constitution does not require due process in the absence of state action.

Consequently, we answer the questions presented:

I.

Does Wyoming recognize a claim for breach of the covenant of good faith and fair dealing in the context of a wrongful termination action in which there is an employment contract?

NO

II.

2. Does Wyoming recognize a claim under Art. I, § 6 of the Wyoming Constitution when no state action is alleged?

NO

URBIGKIT, C.J., filed an opinion specially concurring in part and dissenting in part.

1 . In Ware, 789 P.2d at 875, a case in which a school district failed to properly post notice of a job vacancy in accord with its intra-district transfer policy, we did apply a reliance theory under the Restatement (Second) of Contracts § 90(1) (1981). Section 90(1) provides as follows:

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the «promise. The remedy granted for breach may be limited as justice requires.

It should be clear that this theory of reliance is not the same as the implied covenant of good faith and fair dealing, but may have served as a substitute for it in wrongful-termination cases where we found injustice in the employer’s practices.