Just Cause Case Analysis

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The court concluded that there is no generally accepted meaning of “just cause” in private employment contracts, and the term is ambiguous.

However, there is a long-standing definition of “good cause” for discharge in private employment contracts, and, according to Black’s Law Dictionary, “just cause” and “good cause” are synonymous.

In Schumaker v. Heinemann, 99 Wis. 251, 74 N.W. 785, 786 (1898), the Wisconsin Supreme Court held, “It is not for every breach of duty that an employer is warranted in putting an end to a contract of employment before the appointed time. In a controversy over such a matter, especially where the employment is of a business nature, requiring the exercise of judgment and discretion, the breach of duty is not per se a legal justification for a discharge of the employe, unless such breach evidences moral turpitude, or the conduct is manifestly injurious to the employer’s business. So, where the breach itself is undisputed, but the evidence leaves it in doubt as to whether there was any wrong intended, or any real injury inflicted, upon the employer’s business, whether it constituted reasonable ground to discharge the employe is always a fact to be found by the jury.”

In Thomas v. Beaver Dam Mfg. Co., 157 Wis. 427, 147 N.W. 364, 365 (1914), the court held, “any inexcusable substantial violation by an employe of instructions, or neglect of duty of a substantial character, or any misconduct inconsistent with the relations of master and servant and which might injuriously affect the former’s business, regardless of any express agreement on the subject, constitutes good ground for discharging the employe.”

This may be old law, but until reversed, these decisions still provide the law for when an employer can lawfully terminate an employment contract, and should be followed, notwithstanding the subjective intents of the parties.

In the case at bar, there is apparently no dispute that Kernz committed the infractions alleged: entering a secured area without following the proper “lock-out” procedures; and going on foot in an area where pedestrian traffic was prohibited.

	Links Wisconsin Court of Appeals Related Article Subjective intent controls contract

Obviously, neither involves moral turpitude. The question submitted to the jury thus should have been whether there was any wrong intended, any real injury inflicted upon the employer’s business, or whether these actions constituted an inexcusable substantial violation of instructions.

The case is silent as to what the jury was actually instructed, but this is the question that should have been asked of the jury, and the evidence of the parties’ subjective intent should not have been admitted.

Thus, one holding in the case — when a contract term is ambiguous, but the parties subjectively agreed on its meaning, that mutual definition provides the term’s meaning — is solid precedent, and should be followed in the event this case be published.

However, the holding that “just cause” is an ambiguous term plainly conflicts with prior precedent, and the Supreme Court’s definition of that term trumps the court of appeals’ holding in this case.

— David Ziemer

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David Ziemer can be reached by email.