The opinion of the court was delivered by: William T. Hart, District Judge.
MEMORANDUM OPINION AND ORDER
The plaintiff Joel Gordon ("Gordon"), a citizen of Illinois,
has brought a twelve-count First Amended Complaint ("complaint")
against Matthew Bender & Company, Inc. ("Matthew Bender"), a New
York corporation with its principal place of business in New
York. The Court has subject matter jurisdiction based on
diversity of citizenship and the existence of a federal question.
28 U.S.C. § 1331 and 1332. Now before the Court is Matthew
Bender's motion to dismiss eight of the twelve counts of the
complaint. For the reasons given below, the motion is granted in
part and denied in part.
The Court here will briefly review the facts common to all
counts of the complaint, and will discuss the facts relevant to
each particular contested count below.
Gordon began working for Matthew Bender on November 5, 1973, as
one of its law book sales representatives in a territory which
included parts of Chicago and the surrounding areas. The
employment agreement between Gordon and Matthew Bender stated no
definite period during which the parties remained obligated to
each other. Gordon developed into a commendable employee who
reached or exceeded the goals set for him by his employer.
On July 24, 1980, Gordon was informed by his superior at
Matthew Bender that his territory would be reduced on September
1, 1980. On October 7, 1980, he was told that he would be
terminated if he failed to achieve in his new territory the same
sales goals which had been set for the territory he worked in
prior to the September 1 change. Thus though Gordon's territory
had been diminished, his sales goals remained the same. He did
not meet the goals and was fired on January 8, 1981.
Counts IV and V of the complaint allege violations of the Age
Discrimination in Employment Act, 29 U.S.C. § 621 et seq. Count
VII alleges that Matthew Bender has failed to pay Gordon
commissions due him. Count X alleges an action for an account
stated. Matthew Bender has answered these four counts by denying
the essential allegations, and has moved to dismiss the balance
of the complaint.
Each of the eight counts Matthew Bender challenges here allege
causes of action which arguably arise under state law. The
parties have not expressly addressed the initial issue of which
state's law applies. However, Gordon and Matthew Bender each have
relied heavily on Illinois decisions. Further, Gordon is a
citizen of Illinois who has worked for Matthew Bender in this
state. The Court assumes that Illinois law governs the state law
causes of action asserted here.
The standard applied by a federal court in ruling on a motion
to dismiss a complaint for failure to state a claim upon which
relief may be granted, brought under Fed. R.Civ.P. 12(b)(6), is
stated in Conley v. Gibson, 344 U.S. 41, 45-46, 78 S.Ct. 99,
101-02, 2 L.Ed.2d 80 (1957): "[A] complaint should not be
dismissed for failure to state a claim unless it appears beyond
doubt that the plaintiff can prove no set of facts in support of
his claim which would entitle him to relief." In ruling on
Matthew Bender's motion to dismiss, the Court applies this firm
In addition to the general allegations described above, Gordon
states that "Matthew Bender maliciously manipulated circumstances
to make Mr. Gordon's job impossible [and that t]his bad faith
conduct of Matthew Bender is actionable . . ." (Plaintiff's
Response, at 6). In Count I, Gordon claims to sue under both tort
and contract theories for the breach by Matthew Bender of its
duty and covenant, implied in law, to deal with Gordon in good
faith. He says that in Illinois, "every contract includes a duty
of good faith and fair dealing. `Even though
the express words are absent, performance in good faith will be
implied by the court.' (Dasenbrock v. Interstate Restaurant Corp.
(1972), 7 Ill.App.3d 295, 300, 287 N.E.2d 151, 154, leave to
appeal denied, 55 Ill.2d 601.)." Pierce v. MacNeal Memorial
Hospital Association, 46 Ill.App.3d 42, 51, 4 Ill.Dec. 615, 622,
360 N.E.2d 551, 558 (1st Dist. 1977).
In this case, Gordon and Matthew Bender had an employment
contract terminable at will by either party at any time (see
discussion and rulings on motions to dismiss Counts II and VI,
infra). The essence of Gordon's legal argument is that Matthew
Bender's alleged breach of the obligation (implied in law) to
deal in good faith creates an independent cause of action. No
decision of which this Court is aware has held this to be true.
Instead, the principle of performance in good faith comes into
play in defining and modifying duties which grow out of specific
contract terms and obligations. It is a derivative principle.
The four cases which Gordon cites (none of which deals with the
"good faith" obligation in the context of an at will employment)
point to this conclusion. See Pierce, supra, 4 Ill.Dec. at 622,
360 N.E.2d at 558 (defendants required by settlement agreement to
obtain legal opinion; "good faith and fair dealing" principle is
an aid in interpreting a specific contractual obligation);
Stevenson v. ITT Harper, Inc., 51 Ill.App.3d 568, 9 Ill.Dec. 304,
310, 366 N.E.2d 561, 567 (1st Dist. 1977) (plaintiff fired prior
to vesting date for receiving pension benefits; Pierce principle
"does not aid plaintiff because the record does not suggest that
plaintiff's termination was a bad faith effort by ITT Harper to
avoid its conditional duty [under the contract] to pay pension
benefits."); Ledingham v. Blue Cross Plan for Hospital Care,
Inc., 29 Ill.App.3d 339, 330 N.E.2d 540, 548 (5th Dist. 1975),
rev'd on other grounds, 64 Ill.2d 338, 1 Ill.Dec. 75,
356 N.E.2d 75 (1976) (in a "life and health insurer-insured relationship
there is a duty upon both parties to act in good faith and deal
fairly with the other party to the contract.");*fn1 Hardin v.
Eska Company, 127 N.W.2d 595 (Iowa 1964) (the defendant granted
plaintiff the exclusive right to market items in a specific
territory and then began to compete in that same territory,
thereby destroying the basis of plaintiff's bargain; "good faith"
obligation prevents defendant from interfering with plaintiff's
firm contract right).
Thus none of the cases upon which Gordon relies hold that in
the context of an employment at will, the obligation to deal in
good faith which is implied in law is an independent basis for an
action. A very recent decision of the New York Court of Appeals
squarely holds that no such cause of action will lie.
In Murphy v. American Home Products Corp., No. 35 (N.Y. March
29, 1983), the plaintiff, whose employment was for no definite
duration, was fired. Murphy brought suit alleging several
theories for recovery, including a tort action for wrongful
discharge and a breach of contract action for the employer's
breach of the obligation, implied in law, to deal with an
employee in good faith. The court first found that no action for
wrongful discharge of an employee at will could be stated under
New York law. It then went on to address the plaintiff's
that in all employment contracts the law implies an
obligation on the part of the employer to deal with
his employees fairly and in good faith and that a
discharge in violation of that implied obligation
exposes the employer to liability for breach of
Slip op. at 10. While holding that New York law recognizes that
an obligation of good faith and fair dealing may be implied in a
contract, the court stated:
Slip op. at 11 (emphasis added).
The decision in Murphy strongly suggests that this Court has
correctly interpreted the nature of the obligation to deal in
good faith, implied in all Illinois contracts. Such an obligation
"is in aid and furtherance of other terms of the agreement of the
parties." Id. It does not create an independent cause of action.
See also Martin v. Federal Life Ins. Co., 109 Ill.App.3d 596, 65
Ill.Dec. 143, 150, 440 N.E.2d 998, 1005 (1st Dist. 1982) (the
good faith and fair dealing principle "is essentially used as a
construction aid in determining the parties' intent"; court
dismisses tort action based on alleged bad faith termination of
employment at will).
Illinois, like New York, does not allow for an action based on
a discharge from an employment at will (except in certain
circumstances, discussed infra with regard to Count VI, which are
not applicable here). If the implied obligation to deal in good
faith created such a cause of action, it would eviscerate the at
will doctrine altogether. Murphy v. American Home Products,
supra. The Court believes that Murphy reflects the decision an
Illinois court would reach on these facts.
Since Gordon was an at will employee, the duty to deal in good
faith was appended to nothing which had independent life.
Therefore no cause of action predicated only on the good faith
principle may stand, and Count I is dismissed.
Gordon alleges in Count II that it was "Matthew Bender's policy
and practice . . . to condition its sales representatives'
continued employment on `acceptable sales performance'" (para.
17). He refers to a letter (Ex. D, attached to the complaint)
from Matthew Bender to Gordon placing him on probationary status.
This letter states that if Gordon meets his goals, he will be
"restored to the same status of acceptable sales performance as
other Matthew Bender sales representatives." Gordon alleges that
this letter created a contract for continuous employment
conditioned upon acceptable sales performance, which Matthew
Bender breached by firing him even though he met or exceeded the
requirement of acceptable sales performance.
Matthew Bender has moved to dismiss Count II on a variety of
grounds, including: (1) this was a contract terminable at will,
and therefore Gordon's discharge is not actionable; (2) the
contract lacks mutuality and therefore is not actionable; (3) the
oral contract is unenforceable under the statute of frauds since
it is for an indefinite period. Since the Court finds that this
was a contract terminable at will, the other arguments will not
Gordon claims that though this was a contract for no definite
period, it was not a contract without terms governing its
duration. Gordon's length of employment would depend on his
"satisfactory performance" or "acceptable sales performance."
Therefore, the argument goes, so long as the condition of
acceptable performance was being met — and this is a fact issue
which precludes the granting of a motion to dismiss, since the
Court must accept the plaintiff's allegations as true — the
contract could not be terminated. See Donahue v. Rockford
Showcase & Fixture Co., 87 Ill. App.2d 47, 230 N.E.2d 278 (2nd
Dist. 1967) (contract of employment with no definite period not
an employment at will; existence of specified condition —
by either party if shipments fall below $25,000 — makes it not a
contract terminable at will, but one terminable upon the
existence of a particular condition). Gordon relies heavily on
Scaramuzzo v. Glenmore Distilleries, Co., 501 F. Supp. 727
In Scaramuzzo, the fired plaintiff alleged that the
defendant-employer had promised that Scaramuzzo "would be
discharged only for good cause, and [that] he would retain all
corporate responsibilities assigned to him as long as he
competently executed such responsibilities." Id. at 732.
Defendant moved for summary judgment on grounds that this was an
employment agreement terminable at will. The court denied the
motion, stating that "[a] contract that fails to specify the
length of the term of employment, but that does set conditions
upon which termination may be based, is not terminable at will —
it is terminated upon the existence of those conditions." Id.
Since there existed a fact question as to whether such conditions
existed — whether the plaintiff could be discharged only for good
cause, and whether he would retain his responsibilities as long
as he executed them competently — summary judgment could not be
Gordon argues that there existed a condition to his employment
contract with Matthew Bender — "acceptable sales performance" —
so that, as in Scaramuzzo, a legal claim exists which at the very
least precludes a dismissal of this count of the complaint. But
Gordon cannot distinguish two other cases precisely on point. In
Buian v. J.L. Jacobs and Company, 428 F.2d 531 (7th Cir. 1970),
the court found that the following contract language did not
raise any fact issue, and that a contract terminable at will
existed: "It is scheduled that your assignment in Saudia Arabia
will continue for a period of eighteen (18) months. . . . It is
intended that all staff associates assigned to the Saudi Arabia
projects will remain in Saudia Arabia . . . throughout the
duration of the specified assignments. This of course presumes
satisfactory service by each associate Id. at 532 (emphasis
In Payne v. AHFI/Netherlands, B.V., 522 F. Supp. 18 (N.D.Ill.
1980), the court construed terms similar to those at issue in
Buian and also found that a contract at will existed. The
duration of the Payne contract was to depend on factors such as
"individual performance." Id. at 22.
Buian and Payne clearly stand for the proposition that
satisfactory or acceptable performance language does not
transform a contract with no definite period — one at will — into
a contract which cannot be terminated by either party at any time
for any reason. The Court finds that these cases control.
Further, Scaramuzzo is not contrary authority. It is
distinguishable on its facts — no discharge except "for good
cause" (an objective criterion) has a different ...