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North Dakota Supreme Court - 407 N.W.2d 206
Tags: Good Faith
tl;dr:
There is no general duty to engage in good faith when determining whether to fire an at-will employee.Video Summary
Case Summary
In the 1987 case Hillesland v. Federal Land Bank Association of Grand Forks, Elmer Hillesland, a former executive of the Association, sued them and Federal Land Bank of St. Paul (the Bank) for wrongful discharge. Hillesland had helped his sons purchase a farm from financially struggling Association customers. Although the Association's board approved the transaction, the Bank's review committee expressed conflict of interest concerns. After the sale, the Bank fired Hillesland, accusing him of violating written ethics codes, tarnishing the banks' reputations, and demonstrating poor business judgment. Hillesland claimed the Bank and Association had violated the Farm Credit Act, breached contracts, discriminated based on his age, and wrongfully interfered with his contract.
The district court dismissed Hillesland's claims, and the Supreme Court agreed, finding none of his claims could withstand summary judgment. The court ruled there was no implied right to sue for wrongful discharge and no breached contracts as Hillesland was an at-will employee. Additionally, they found no age discrimination or tortious interference with contracts by the Bank, as Hillesland could not prove malicious or unjustifiable actions.
This case is important because it highlights the legal concept of wrongful discharge, where an employee accuses their employer of unlawfully or unfairly ending their employment. This claim can stem from statutory, common, contractual, or implied laws, balancing employees' rights to job stability with employers' rights to manage their businesses and staff.
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The former CEO of the Federal Land Bank Association of Grand Forks sued the bank and the Federal Land Bank of St. Paul for violating the Farm Credit Act, breaching his employment contract, age discrimination, and tortious interference with his employment contract. The district court dismissed the case, and the plaintiff appealed on five issues, including whether there is an implied private right of action for wrongful discharge under the Farm Credit Act. The court found that there is no implied private right of action under the Cort test for wrongful discharge under the Farm Credit Act. The court also ruled in favor of the employer in an employment contract dispute where the employee claimed permanent employment and discharge only for good cause, but failed to provide evidence to support this claim. The court held that statements made by an employer during recruitment do not create a contractual agreement for permanent employment or discharge only for good cause. The court declined to follow California's interpretation of an implied covenant of good faith and fair dealing in employment contracts, which prohibits an employer from engaging in bad faith action extraneous to the contract, combined with the obligor's intent to frustrate the employee's enjoyment of contract rights. The at-will rule in North Dakota allows either party to terminate an employment without cause or notice.
Surrogate Justice Pederson's dissenting opinion in the case agrees with the majority opinion except for the dicta disposition of issue number 3, which concerns the Implied Covenant of Good Faith and Fair Dealing. Pederson believes that even though the termination was not "without cause," there is still an obligation to not act in bad faith in all relationships between civilized persons. In cases of aggravated breach or unconscionable conduct, the court should provide a remedy. Justice Meschke concurs with this opinion. It is noted that the lower court may have erred in its decision.
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