Dismissal, Insurance, and food-poisoning lawsuits: Specific cases, broader lessons. (Legal Briefs).

Introduction

The environmental health director in Casper, Wyoming, and the health director in Harrisburg, Pennsylvania, were dismissed in 1998 and 1994, respectively. Both sued their employers, though on different grounds, and expected to receive damages or reinstatement. Both lost their appeals in 2001. Cases 1 and 2 of this month's column explain why. Many of the employment principles apply to other environmental health personnel.

Case 3 is an insurance case involving an environmental consulting company. The issue was the requirement of timely notice for a claim to the insurance company, which is applicable to all liability insurance contracts.

The last case involves a private lawsuit between a customer and a restaurant. It clarifies the legal elements that must be proven in a private food-poisoning lawsuit. Although the local health department was not a party to the lawsuit, the knowledge derived from the case may assist health departments in educating food service operators on the importance of food safety.

Case #1: Dismissal of the Casper, Wyoming, Environmental Health Director(1)

The plaintiff was hired as environmental health director for the City of Casper-- Natrona County Health Department in 1985. A five-person board governed the department, which also had a public-health director. The department had no personnel manual until the county's manual was adopted in 1988. The next year the plaintiff was appointed interim public health director.

In 1991, the board adopted its own personnel manual. Shortly thereafter, the plaintiff signed an acknowledgement that the manual was not an employment contract.

Significant budget cuts were made in the health department in 1996 and 1997. In 1997, the board met with concerned citizens and government officials about the conduct of the environmental health programs, but the environmental health personnel were not invited. After the board performed a self-audit to evaluate the conflicts, it adopted new personnel rules and regulations. Existing employees, such as the plaintiff, were given $500 as consideration for accepting the new policies. The plaintiff accepted the money.

At the end of 1997, the board did not renew the contract of the health department director and instead hired a replacement. The new director recommended terminating the environmental health director, which the board did, "not for disciplinary reasons but as part of the Board's desire to take the department in a new direction."

The former environmental health director claimed in the lawsuit that the dismissal breached his employment contract, breached the implied contract covenants of good faith and fair dealing, and violated public policy. The trial court granted the department summary judgment without a trial. Therefore, the plaintiff appealed.

The plaintiff admitted he was an at-will employee until the 1991 personnel manual came into being, but claimed that the manual created an implied contract permitting discharge only for cause. The document he had signed, however, clearly acknowledged that the personnel manual was not a contract and was only general personnel guidance. That left him as an at-will employee.

The general rule is that an at-will employee may be hired or fired for any reason or no reason at all, except for certain specific prohibitions. At-will employees have no contract and cannot sue for a breach of contract. In Wyoming, however, a discharged employee can still sue for breach of the implied covenant of good faith and fair dealings, the intentional infliction of emotional distress, or a retaliatory termination that violates a public policy. Unfortunately for the plaintiff, those grounds are considered tort claims. Tort claims applicable to municipal and county governments are barred by the Wyoming Governmental Claims Act.

Case #2: Dismissal of the Health Director in Harrisburg, Pennsylvania(2)

The Harrisburg, Pennsylvania, health director was discharged in 1994. He had arrived at his position through vertical job transfers, moving from housing inspector in 1979 to assistant health officer in 1987 and finally to city health director in 1991. In 1993, the health director was reprimanded for off-duty conduct. A month later, he was suspended for five days without pay for insubordination, profanity, and providing false information. The 1994 termination was the result of a charge, six months after his suspension, of simple assault and disorderly conduct during an argument at home.

In the lawsuit, the former health director claimed that the discharge without a pre-termination hearing and without just cause was unlawful because it violated the city's civil service provisions and his constitutional right to due process. The trial court granted the city summary judgment.

Under civil service, a properly selected employee has permanency of tenure. The civil service law does, however, mandate that an employee properly obtain a position in strict observation of civil service provisions. In this case, the plaintiff was appointed to his position and never took a civil service examination required by statute, Therefore, he never acquired civil service status and lost its procedural protections.

The due process provision of the Fourteenth Amendment applies whenever the government deprives a person of life, liberty, or property Nonprobationary government employment is generally considered a form of property unless it is employment at will. Pennsylvania public employees are employees at will and have no property rights in their jobs. So, without any reasonable expectation of continued employment, the plaintiff was not entitled to due process.

The plaintiff also claimed his discharge violated public policy and was, therefore, a wrongful termination entitling him to damages. The public policy the plaintiff relied upon was a statute requiring that there be a city health officer. Upon his discharge, the city lacked a health officer, The court, however, said, "It is not sufficient that the employer's action toward the employee is unfair." Ultimately, the court held that there was no prohibition against a city firing an at-will employee, and that the city had not violated public policy.

Case #3: Insurance Contract Requirement (3)

Environmental consultants often have both professional malpractice insurance and business insurance. All liability insurance contracts (automobile, home, renter's, premises, professional, malpractice, etc.) have a clause requiring the insured to give the insurance carrier prompt notice of a claim, Failure to give prompt notice is a breach of the contract. Such a breach may allow an insurance company to decline representation or coverage of a claim.

In this case, an environmental and safety consulting company was under a services contract with Reynolds Metals Company in Illinois. Several Reynolds employees were excavating a pit in 1995. Unfortunately, a compressed air pump line was mistakenly connected to an unlabeled compressed argon line. The argon sank into the pit, killing three employees and seriously injuring three others. The consulting company did not notify the insurance carrier of the accident.

Initially, the workers and survivors sued Reynolds. In November 1997, they added the consulting company to the lawsuit. So the company notified its general liability insurer that it was being sued. The insurer declined coverage and defense of the claim, and sued the consulting company for a declaratory judgment affirming its actions.

The appellate court said:

Aires had a contractual duty to give notice to CUIC "as soon as practicable of any occurrence or an offense that may result in a claim." Notice provisions such as the one at issue in this case are intended to ensure that the insurer will not be prejudiced in its ability to investigate and defend claims against its insureds.... Therefore, Illinois law provides that the failure to fulfill a condition precedent that requires timely notice of potential claims relieves the insurer of any duty to defend or indemnify the insured.

What, however, is the criterion for when the duty to inform arises? The duty arises at the time when a reasonably prudent person would realize a potentially covered claim may be brought. There are many factors in determining when that moment arrives.

After reviewing all the facts and circumstances of the accident, the court decided that the consulting company would not reasonably have known it would be sued or that a claim would be filed against it until the lawsuit was actually amended. Particularly important was the fact that the consulting company had no involvement in the excavation project or in the connection of the air lines at the accident site, and that it had only performed air testing in other areas and recommended labeling of air lines there.

The significance of this case is, nevertheless, a serious reminder to be familiar with your insurance policy--and to notify your insurance carrier reasonably soon after any accident in which you are involved. Since you do not know when an accident may occur after consulting work is finished, it is also a good idea to keep a copy of business and malpractice insurance policies for at least five years and preferably longer (10 to 15 years). If you are sued, you have to give prompt notice to the insurance company that was insuring you at the time of the accident, and you must know the terms of the policy and the insurance limits. Only a copy of the insurance policy will have that information.

Case #4: A Restaurant's Liability (4)

In 1986, a woman who was six months pregnant had an early breakfast at a restaurant buffet. She ate scrambled eggs and noticed nothing unusual about them. A short time later, however, she experienced abdominal pain, vomiting, and diarrhea, Two weeks later, she was admitted to a hospital, where it was discovered that her fetal membrane had ruptured. Her child Was delivered by caesarian section but had cerebral palsy, seizures, and brain damage. The mother, on behalf of her son, sued the restaurant in 1997 for negligence.

Negligence requires proof of these elements: duty, breach of duty causation, proximate cause, and damages. According to the appellate court,

Illness alone cannot establish proximate cause; a mere showing that a person became sick subsequent to eating food is insufficient. In the absence of direct evidence of the unwholesomeness or adulteration of the food, recovery could be supported by circumstantial evidence if every other reasonable hypothesis as to the cause of the plaintiff's illness could be excluded.

No direct evidence of unwholesomeness or adulteration of the food was provided. Both sides relied upon expert witnesses. The trial court granted the restaurant summary judgment without trial.

For the plaintiff, one expert had submitted an affidavit that the timing and etiology of her symptoms in 1986 showed the mother had contracted Staphylococcus aureus food poisoning from the eggs at the restaurant. A second expert had stated that the only reasonable cause for the rupture of her fetal membrane was illness from the S. aureua bacteria. The third expert had said that the birth defects had been caused by the consumption of the contaminated eggs.

The defendant had experts who stated that in order to have sufficient S. aureus toxin, the eggs would have had to have been at room temperature for eight to 10 hours. The restaurant manager testified that the eggs could not have been left out more than two hours.

Because of the conflicts in testimony among the expert witnesses, the Georgia Court of Appeals reversed the lower court and remanded the case for trial. The potential damages against the restaurant are enormous.

Editor's note: Readers who have questions about cases discussed in Legal Briefs may contact Mr. Sikora by e-mail at <[e-mail]>.

Cases Cited

(1.) Hoff v. Casper-Natrona County Health Depart., 33 P.3d 99 (Wyo. 2001).

(2.) Davenport v. Reed, No. 2756 C.D. 2000 (Pa. Commw. 2001).

(3.) Commercial Underwriters Ins. Co. v. Aires Envtl. Serv., LTD., 259 F.3d 792 (7th Cir. 2001).

(4.) Worthy v. The Beautiful Restaurant, Inc., A01A1492 (Ga. App. 2001).