P was employed as a salesman for D for 25 years on an at-will contract.
P was paid salary and commission based on what he sold and who he sold it to.
D introduced a new cash register and wanted to sell it to P's customer First National. P helped with the transaction and was awarded commission on the eventual sale.
The day after the order from First National was placed, a termination notice was written to P. He did not receive the notice until a month later.
P's boss told him that P was indeed fired but asked P to stay on to help smooth out the operation of the sale with First National.
P received 75% commission while he stayed on. When P inquired about receiving 100%, he was told to forget about it.
P was asked to retire; P refused and was fired. P did not receive any bonus payments on machines delivered to First National after that date.
Procedural History:
Lower court found for P, jury awarded $45k (the extra 25% as well as 100% of machines sold after his termination)
Appeals Court reversed, found for D.
MA Supreme Court reversed, found for P, D acted in bad faith.
Issues:
Does a "bad faith" termination constitute a breach of an employment at will contract?
Holding/Rule:
A "bad faith" termination does constitute a breach of an employment at will contract.
Reasoning:
D's written contract contains an implied covenant of good faith and fair dealing, and a termination not made in good faith constitutes a breach of the contract.
When commissions are to be paid for work performed by the employee, the employer's decision to terminate its at will employee should be made in good faith.
The fact that the discharge was after a portion of the bonus was paid still creates a question for the jury on the D's motive for terminating the employment.
Where the company seeks to deprive the agent of all compensation by terminating the contractual relationship when the agent is on the brink of successfully completing the sale, the company has acted in bad faith and the ensuing transaction between the company and the buyer is to be regarded as having been accomplished by the agent.
Reasonable inferences can be drawn from the evidence that the P's termination after 25 years the day after D obtained a $5M order was motivated by the desire to pay P as little of the bonus credit as it could.
