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Sabetay v. Sterling Drug

Court of Appeals of New York

February 11, 1987, Argued ; March 26, 1987, Decided

No Number in Original


 [*331]  [**919]  [***210]  [****6]     OPINION OF THE COURT

Plaintiff asserts he was wrongfully discharged from employment because he refused  [**920]  to participate in certain improper, unethical and illegal activities, and because he "blew the whistle" on these alleged activities. He was employed by a division of the defendant corporation without a written contract, and alleges that his dismissal was in violation of two contractual obligations: the first arising from the "Corporate Employee Relations Policy" manual and the second arising from Sterling's Code of Corporate Conduct and Internal Control Guide (together referred to as the "Accounting Code").

The issue is whether plaintiff stated a cause of action by alleging that a statement in a corporate personnel policy manual created an enforceable contractual promise not to terminate him on any ground not mentioned in the manual, or by alleging that various corporate accounting policies constituted an employment agreement precluding plaintiff's termination  [*332]  for refusing to participate in allegedly improper activities.

From June 1972 to December 1984 plaintiff, a director of financial projects, was employed by Sterling International Group, a division [****7]  of Sterling Drug. He had been administering the dissolution of Sterling's Greek manufacturing facility. The liquidation was completed in June 1983. In February 1984, plaintiff was recalled to New York and was notified of his discharge in July, when no job within Sterling or any of its subsidiaries could be found for him.

Plaintiff alleges that he was discharged because he refused to participate in certain illegal activities (i.e., tax avoidance schemes and maintenance of slush funds) arising out of the liquidation of Sterling's Greek manufacturing facility, and because he disclosed these activities to his supervisor in compliance with what plaintiff believed to be corporate policy. His complaint alleges four contract and three tort causes of action, all based on wrongful discharge from employment.

Defendant Sterling moved, pursuant to CPLR 3211 (a) (7), to dismiss the complaint on the ground that none of the seven causes of action stated a cognizable claim. Supreme Court dismissed the tort actions but denied the motion as to the four contract causes of action. The Appellate Division affirmed the dismissal of the causes of action sounding in tort and also dismissed the four [****8]  claims based on a breach of an implied contract of employment. Although the complaint was dismissed in its entirety, plaintiff, on appeal to this court, challenges only the dismissal of the four contract causes of action. We agree with the Appellate Division that plaintiff has failed to state a cognizable cause of action for breach of any implied contract rights.

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69 N.Y.2d 329 *; 506 N.E.2d 919 **; 514 N.Y.S.2d 209 ***; 1987 N.Y. LEXIS 15806 ****; 2 I.E.R. Cas. (BNA) 150

Alexander Sabetay, Appellant, v. Sterling Drug, Inc., Respondent

Prior History:  [****1]  Appeal, by permission of the Court of Appeals, from an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered January 23, 1986, which modified, on the law, and, as so modified, affirmed an order of the Supreme Court at Special Term (Richard W. Wallach, J.), entered in New York County, (1) granting a motion by defendant to dismiss the complaint to the extent of dismissing the third, fifth and seventh tort causes of action, and (2) denying the motion to dismiss as to the four remaining implied contract causes of action. The modification consisted of dismissing the complaint in its entirety.

 Sabetay v Sterling Drug, 114 AD2d 6.

Disposition: Order affirmed, with costs.


termination, employees, cause of action, at-will, handbook, policies, manual, wrongful discharge, contractual, Accounting, assurance, employment application, employment contract, express agreement, good faith, discharged, personnel, covenant, alleges

Labor & Employment Law, Employment Relationships, At Will Employment, Duration of Employment, General Overview, Business & Corporate Compliance, Contracts Law, Types of Contracts, Covenants, Wrongful Termination, Breach of Contract, Employer Handbooks, Contracts Law, Contract Interpretation, Good Faith & Fair Dealing, Employment Contracts, Implied Contracts