In an interesting recent opinion, a Delaware court continued to expand the exceptions to the employment at-will doctrine. Beware Delaware employers! The retort "but we're at at-will employer" won't save you from going to court in every situation, especially when the facts don't sound good. Live and learn from the facts taken from a recent Delaware case below.
Facts of the case – worst nightmare comes true
Cheryl Bunting had worked as a teller, and then assistant and acting branch manger at a bank in Georgetown, Delaware, for 26 years. She was asked by the "relationship manager" at the bank to notarize loan documents, including a mortgage, for a longtime customer, a local doctor, who was too busy to come to the bank to sign the documents.
The documents were delivered to the doctor and his wife and returned signed to the relationship manager, who didn't witness the signatures. He gave them to Bunting to notarize and process, apparently representing to her that he believed the signatures to be genuine as he had seen them in the past.
Bunting notarized the documents without witnessing the signatures, and then the unimaginable happened. The doctor and his wife became estranged, and the wife contested the validity of her signature, asking that the debt be confirmed as her husband's alone. When the bank learned that Bunting had notarized the signatures without seeing them placed on the mortgage, they terminated her.
Apparently, notarizing documents without actually witnessing the signatures was a widespread and long-standing practice at the Georgetown branch. Unfortunately for Bunting, no one told Dennis Ferretti, the financial group retail manager who made the decision to fire her. After learning that information later, the bank did nothing to remedy the situation.
Bunting filed suit under various causes of action; the successful ones are discussed below. When the facts sound unfair to the employee, the court will often work hard to fit the case into some type of legally pursuable claim. That's clearly what occurred in this case because Bunting's attorney made some creative arguments, and the court bought into them, allowing the case to go before a jury.
Implied covenant claim
The largest hole in the "at-will employment" doctrine in Delaware lies with the implied covenant claim. The supreme court in Delaware has ruled that an employer's right to fire an employee sometimes is limited by a legal doctrine called the covenant of good faith and fair dealing. That covenant applies when the:
1. firing violates public policy;
2. employer misrepresents an important fact and the employee relies on it either to accept a new position or remain in a present one;
3. employer uses its superior bargaining power to deprive an employee of clearly identifiable compensation related to her past service; and
4. employer falsifies or manipulates employment records to create fictitious grounds for termination.
The fourth category is one of the most heavily litigated. Do documents have to be falsified? Is an employer's mistaken belief regarding the grounds for dismissal enough under this category? Delaware courts have been all over the map on these issues.
In this case, the court ruled that Bunting stated a claim under the fourth category based on the following analysis: The manager's failure to describe the actual branch notary practice for the decisionmakers in her firing could be viewed by a jury as an intentional effort to manipulate her employment record to create false grounds for dismissal.
The court is making a real stretch to allow the case to move forward. The facts don't fit neatly into the typical pattern. There's nothing "false" in the records themselves. They reflected that Bunting was fired for not following the notary policy, and in fact she was fired for just that. The fact that her supervisors didn't come forward with what appeared to be the standard practice in contrast to the written notary policy doesn't make the grounds for dismissal false. Nonetheless, the court allowed her to proceed under that theory.
Modification of at-will-employment contract
Bunting also made the argument that she and her employer entered into a contract whereby if she notarized documents in violation of the written notary policy for the benefit of the bank and its customers, she wouldn't be fired for doing so. The court agreed that a jury could find that a contract was entered into which modified her at-will status in this regard.
While it seems clear that the written policy regarding notarizing documents has been modified by the bank, it's less clear that Bunting's at-will status was modified. Nonetheless, the court allowed a jury to decide whether or not such a modification had been made.
Bottom line
The fact that Delaware is an at-will-employment state doesn't save you in every situation. The exceptions are vast, particularly with the implied covenant doctrine. Although the doctrine has been limited to four specific categories, as you can see from this case, virtually any case can be fit into one of the categories if the judge works hard enough.
You can take several lessons from this case:
√ Look carefully at how the facts will appear to a judge or jury before making a decision to fire an employee. Reconsider if the firing appears grossly unfair even if you think there's no legal claim.
√ Be very careful about engaging in routine practice that contradicts your written policies. You may be modifying your handbook or, worse yet, modifying your at-will agreements with any employee who follows your practice! Periodically review your written policies to ensure that they're consistent with actual practice.
√ Beware because the worst-case scenario can and does come true! Employees may think that "nothing will happen" if they skirt the procedures just this once, but it does, as shown by this case. While following procedures like notarizing documents properly may seem like a hassle, these types of policies, particularly with regard to signatures and authorizations, are there for a reason. You as an employer are at great risk if employees don't take these procedures seriously.
