## Facts

- Suzanne J. Marcy worked for Delta as a senior customer service representative at its Bozeman, Montana facility and was generally rated an outstanding employee.
- In May 1993, Marcy submitted payroll-related records with three erroneous entries that would have resulted in about $250 in unearned wages.
- The errors appeared on internal scheduling/attendance documents that were prepared in advance and were not always updated, so they could fail to reflect actual hours worked.
- Marcy admitted the entries were incorrect but asserted they were unintentional and common within Delta’s payroll process.
- Delta investigated and concluded the entries reflected an intentional plan to defraud the company; Delta terminated Marcy for alleged payroll fraud.
- Delta also considered a prior incident in which Marcy had falsified telephone logs to make personal long-distance calls.
- Marcy sued under the Montana Wrongful Discharge from Employment Act (WDEA), alleging the termination lacked “good cause” because it rested on mistaken facts rather than intentional misconduct.
- A jury found Marcy’s payroll errors were unintentional, returned a verdict for Marcy on the WDEA claim (about $66,000), and rejected her defamation claim.
- Delta moved for judgment as a matter of law or, alternatively, a new trial, arguing Marcy failed to prove bad faith or pretext; the district court denied the motions.

## Issues

1. Whether a WDEA wrongful-discharge claim requires the employee to prove the employer acted in bad faith or used a pretextual reason for termination.
2. Whether an employer has “good cause” under the WDEA when it terminates based on an honest, good-faith belief that later proves factually mistaken.
3. Whether the evidence supported the jury’s finding that the termination lacked “good cause,” such that the district court properly denied judgment as a matter of law and a new trial.

## Decision

- The Ninth Circuit affirmed the judgment for Marcy and affirmed the district court’s denial of Delta’s post-trial motions.
- The court held the WDEA does not require proof of employer bad faith or pretext as an independent element of a wrongful-discharge claim.
- The court held a discharge may be wrongful under the WDEA when it is based on mistaken facts and therefore not supported by “good cause,” even if the employer acted honestly and in good faith.
- Because the jury found Marcy did not intend to defraud Delta, Delta’s stated basis for termination lacked factual support sufficient to compel judgment for Delta as a matter of law.

## Legal Principles

- Under the Montana WDEA, the central inquiry is whether the discharge was for “good cause,” not whether the employer acted with subjective bad faith.
- A plaintiff may establish wrongful discharge by showing the employer’s stated reason was factually incorrect and therefore did not constitute “good cause.”
- Proof of pretext or bad faith can support a WDEA claim but is not required where the discharge rests on a mistaken interpretation of the facts.
- An employer’s honest belief in misconduct does not automatically establish “good cause” if the factfinder determines the factual predicate for the discharge was erroneous.

## Conclusion

The Ninth Circuit held that Montana’s WDEA permits recovery for wrongful discharge when termination is based on mistaken facts and thus lacks “good cause,” even if the employer reached its decision in good faith; the court therefore left intact the jury’s verdict for the employee and the denial of Delta’s post-trial motions.


Marcy v. Delta Air Lines, Inc., 166 F.3d 1279 (9th Cir. 1999)