MDNC Judge James Beaty reversed a Magistrate Judge’s recommended dismissal of the North Carolina state law wrongful discharge claim brought by Carl Edwards’ former car chief against Roush Fenway Racing.  (Opinion here.)  The plaintiff in that case was terminated within days of requesting a medical leave for treatment of major depression. The Magistrate Judge recommended that the plaintiff’s North Carolina state law wrongful discharge claim be dismissed because the plaintiff signed an employment contract and thus was not an “at will” employee capable of bringing a state law wrongful discharge claim. Rather, the Magistrate Judge reasoned that the plaintiff’s legal remedy was a breach of contract claim. Roush had not sought dismissal of plaintiff’s breach of contract, FMLA and Americans with Disabilities Act claims.

In a rare reversal of a magistrate’s recommended ruling, the District Court Judge agreed with plaintiff’s argument that dismissal of the wrongful discharge claim was inappropriate because the employment agreement might ultimately be unenforceable due to indefiniteness. Specifically, the agreement permitted Roush to unilaterally demote the plaintiff and reduce his pay, which plaintiff argued potentially rendered the agreement too indefinite to be enforceable. In the event the employment agreement was unenforceable, the District Court Judge reasoned that the plaintiff should be able to plead the wrongful discharge claim in the alternative to his breach of contract claim.

The victory is significant from a damages standpoint. While there are damages caps applicable to the Americans with Disabilities Act, there are no such damages caps on compensatory damages under the state law wrongful discharge claim that was restored by the Court’s latest ruling.

Roush has since filed its answer and the parties are poised to begin the discovery process.  Josh Van Kampen is representing the plaintiff in this case.

Categories: Judicial Decisions, Results Tags: Americans with Disabilities Act, At-Will Employment, Breach of Contract, Damages, FMLA, Joshua Van Kampen, Judge Beaty, Labor and Employment, MDNC, North Carolina Federal Courts, Results, Wrongful Discharge

In Combs v. City Electric Supply Company, the Court of Appeals reversed the trial court in large part, concluding that the plaintiff had presented sufficient evidence to support a claim of wrongful discharge in violation of public policy and tortious interference with contract.  The Court, however, upheld the dismissal of the plaintiff’s Unfair and Deceptive Trade Practices Act (UDTP) claim.

The plaintiff’s case was based on the allegation that his former employer, City Electric Supply Company, terminated him in retaliation for reporting that the company was stealing from its customers’ accounts. The plaintiff brought three claims: wrongful discharge in violation of public policy, tortious interference of contract, and the UDTP claim. At the close of plaintiff’s evidence the trial judge granted the Defendants’ Motion for a Directed Verdict and entered a judgment in favor of defendants.

The Court of Appeals reversed the trial court’s decision to grant a directed verdict on the wrongful discharge and tortious interference claims because the plaintiff presented “more than a scintilla of evidence” in support of each element of these claims.  Crucially, the Court found that there was sufficient evidence that the company had committed criminal conduct, and that the plaintiff was terminated for reporting this conduct.

The Court, however, affirmed the directed verdict on the UDTP claim because the employment dispute between the parties did not include any conduct that would constitute activity “affecting commerce.’” According to the Court, a retaliation claim is simply an employment dispute and does not fall within the purview of the UDTP statute.

Categories: Judicial Decisions Tags: Case Commentary, Labor and Employment, NC Court of Appeals, Retaliation, UDTP, Wrongful Discharge