March 29, 1993    UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT
                                           

No. 92-2137

                     JAMES CENSULLO, ET AL.,

                      Plaintiffs, Appellees,

                                v.

                       BRENKA VIDEO, INC.,

                      Defendant, Appellant.

                                           

No. 92-2193

                         JAMES CENSULLO,

                      Plaintiff, Appellant,

                                v.

                       BRENKA VIDEO, INC.,

                       Defendant, Appellee.

                                           

          APPEALS FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF NEW HAMPSHIRE

      [Hon. Martin F. Loughlin, Senior U.S. District Judge]
                                                          

                                           

                              Before

                    Torruella, Circuit Judge,
                                            

                  Coffin, Senior Circuit Judge,
                                              

                    and Boudin, Circuit Judge.
                                             

                                           

     Robert E.  Murphy, Jr.,  with whom Wadleigh,  Starr, Peters,
                                                                 
Dunn &amp; Chiesa, was on brief for appellant Brenka Video, Inc.
             
     Vincent  A. Wenners,  Jr.,  with whom  James  W. Craig,  and
                                                           
Craig,  Wenners,  Craig &amp;  Casinghino,  P.A., were  on  brief for
                                            
appellee James Censullo.

                                           

                          March 29, 1993
                                           

          TORRUELLA, Circuit  Judge.  These appeals  arise out of
                                   

plaintiff  James Censullo's  suit  for  wrongful termination  and

other claims.    Censullo won  in a  jury trial  on the  wrongful

termination ground only.  Appellant Brenka Video in appeal number

92-2137 asks this court to reverse  the denial of its motions for

directed  verdict and  judgment notwithstanding the  verdict, and

remand  the case to enter  judgment for Brenka  Video on wrongful

termination.   Appellant James Censullo in  appeal number 92-2193

first asks us to rule that Brenka Video was required to indemnify

David Bowders, Censullo's  immediate supervisor,  for the  amount

awarded against him in  default judgment.  Censullo next  asks us

to reverse the  exclusion of a newspaper article  as hearsay.  We

affirm the judgments in both appeals.

                            THE FACTS
                                     

          On November 14, 1989,  Censullo's wife gave birth to  a

gravely ill child in New Hampshire.  The child was transferred to

Boston  Children's Hospital,  accompanied by  the Censullos.   On

November  20,  the  child  underwent  a  six  and  one-half  hour

operation, following  which his chances of  survival were thought

to  be slim at  best.  The  parents stayed at  the hospital until

after November 24.

          Brenka Video,  a distributor  of home  videos, employed

James Censullo,  pursuant to  an employment contract,  as manager

for the New England region until November 24, 1989.  On that day,

Censullo was contacted by his supervisor, David Bowders.  Bowders

sought to determine when Censullo would return to work.  Censullo

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explained  that his son's condition was very serious, and thus he

did not know when he would return to work.  Bowders told Censullo

that he  needed to straighten  out his priorities,  and determine

whether it would be "better to suffer one loss or two," referring

to the losses of a  son and a job.  Censullo later called Bowders

supervisor, David  Perrier, who  concurred  that Censullo  should

separate    his   personal    problems    from    his    business

responsibilities.

          Bowders  called  Censullo  back, saying  that  Censullo

would  receive  a  telegram shortly  as  a  result  of the  phone

conversations and for "going  over my head."  The  telegram which

arrived  later that day, stated that  Censullo was terminated for

poor  performance.    Brenka  Video contends  that  Censullo  had

already  been  placed on  probation  because  he needed  frequent

redirection, reprimand, and intervention by supervisors.

          On November 30, an article appeared in the Boston Globe

entitled "A Heart of Stone" detailing Censullo's termination from

Brenka  Video.  On the same day, Brenka Video reinstated Censullo

and  placed  him on  "administrative  leave."   Censullo  did not

comply  with  the terms  of  the  administrative leave,  and  was

terminated again on December 14.

          Censullo sued  Brenka Video,  Bowders, and  Perrier for

wrongful termination, breach of contract, and other claims.  When

Bowders  failed to  appear,  the district  court entered  default

judgment against him totaling $250,000.   The district court also

refused to  require Brenka  Video to indemnify  Bowders for  this

                               -4-

judgment.  

          The case proceeded to  trial against Perrier and Brenka

Video.   Censullo  sought  to introduce  the article  entitled "A

Heart  of Stone" to show  Brenka Video's motive  in rehiring him.

The district court excluded the opinion portions  of the article,

but admitted the factual portions into evidence.

          The  jury  found  for  Censullo only  on  the  wrongful

termination claim,  and assessed  $73,000 in damages.   The  jury

found for Brenka  Video on the  breach of contract  claims.   The

district court denied Brenka Video's motions for directed verdict

and  for judgment  notwithstanding  the verdict.   These  appeals

followed, and we address them in turn.

                      APPEAL OF BRENKA VIDEO
                                            

          Brenka  Video contends  that the  district  court, upon

motions  for directed  verdict and  judgment notwithstanding  the

verdict, should have  reversed the jury  verdict for Censullo  on

wrongful termination.   According  to Brenka Video,  only at-will

employees can make a claim for wrongful termination, and Censullo

could not have been an at-will employee.

          We review the district  court's decisions on motions to

direct a verdict and for judgment notwithstanding the  verdict on

the same standard.   We examine  the evidence  in the light  most

favorable to  the  plaintiff, and  determine whether  there is  a

total  lack of evidence in support of  plaintiff's case.  Mayo v.
                                                              

Schooner Capital Corporation, 825 F.2d 566,  568 (1st Cir. 1987).
                            

The  district  court  properly  grants  these  motions  when  the

                               -5-

evidence  allows  a  reasonable  person  to  arrive  at  only one

conclusion.  Conway v. Electro  Switch Corporation, 825 F.2d 593,
                                                  

598 (1st Cir. 1987).

          Under the  governing  law of  New Hampshire,  employees

fall into two classes:  contract employees and at-will employees.

Panto  v. Moore  Business Forms,  Inc., 547  A.2d 260,  267 (N.H.
                                      

1988).    Contract employees  are limited  in their  remedies for

breach by the terms of  the contract.  Id.  In  contrast, at-will
                                          

employees are  limited in their  remedies to claims  for wrongful

termination.1   Cloutier v. Great Atlantic &amp; Pacific Tea Co., 436
                                                            

A.2d 1140, 1143 (N.H. 1981).

          Censullo was a contract employee until November 24.  We

must determine whether  the evidence could support a finding that

Censullo's  status  changed  after  November  24  to  an  at-will

employee, such that the second termination could be wrongful.  As

the  jury found a wrongful  termination, we view  the evidence in

the light  most favorable to  this finding.   In this  light, the

evidence sufficiently supports the jury finding.

          The president of Brenka  Video sent Censullo a telegram

on the same day that the "A Heart of Stone" article appeared.  It

informed Censullo that the initial termination had been reversed,

                    

1  While an employer has great discretion to terminate an at will
employee,  he may not  do so when  he is motivated  by bad faith,
malice  or retaliation.  Cloutier v. Great Atlantic &amp; Pacific Tea
                                                                 
Co.,  436 A.2d  1140, 1143  (N.H. 1981).   To  state a  claim for
   
wrongful termination,  the employee  must also  show that  he was
terminated   for  doing  something   that  public   policy  would
encourage,  or refusing to do something  that public policy would
condemn.   Id.   As  these elements  of the  wrongful termination
              
claim are not in dispute here, we discuss them no further.  

                               -6-

that Censullo  had not been removed from  Brenka Video's payroll,

could continue to  cash his  paychecks, and was  relieved of  his

working responsibilities.  The president assured Censullo that "I

will  personally  get  back to  you."    The  next day,  Censullo

received  a telegram  from  Brenka Video's  controller explaining

that  Censullo had  not  at any  time  been removed  from  active

employee  status,  but  was considered  to  be  on an  indefinite

administrative leave.   When Censullo's "personal  situation" was

resolved,  Censullo was to meet with Brenka Video to "discuss the

conditions  and  standards"   of  continued   employment.     The

controller  asked   Censullo  to  check  in   with  Brenka  Video

regularly. 

          In the ensuing period,  Censullo did not contact Brenka

Video.   He cashed two paychecks  and kept two others.   He later

explained that  he considered himself  at all times  a terminated

employee,  and cashed two checks  as severance pay.   On December

14, Censullo received  another communication terminating him  for

failure to comply with the administrative leave.

          Censullo's own views  notwithstanding, we believe  that

the jury could find that Censullo became an at-will employee as a

result of  the telegrams from  Brenka Video's principals.   Those

telegrams relieved Censullo of  the job he had contracted  to do,

and  placed him in a  nebulous administrative leave  status.  The

parties  would later fix the  terms of continued  employment.  As

the telegrams contained no terms limiting Brenka Video's power to

terminate  Censullo,  the jury  reasonably  could  find that  the

                               -7-

telegrams created an at-will relationship.

          Brenka  Video asserts  that while  the telegrams  could

constitute an offer of at-will employment status, such status was

not  effective until Censullo accepted  the offer, which he never

did.   While we agree  that Censullo  bore the burden  of showing

acceptance of the offer, see Panto, 547 A.2d at  264, we disagree
                                  

as to  whether Censullo actually met  his burden.   In Panto, the
                                                            

New Hampshire  Supreme Court  found that an  employee accepted  a

change in employment status by merely performing as called for by

the  change.  Id. at 265.  In this case, the jury could find that
                 

Censullo had accepted the  change in status by doing  nothing and

cashing  his paychecks, which is  what the telegram  asked him to

do.   Censullo  did  not comply  with  the telegram  from  Brenka

Video's controller urging Censullo to  check in with the  company

periodically.  The letter from Brenka Video's president, however,

indicated that the company would be  in touch with Censullo.  The

jury could  have determined  that the letter  from the  president

more accurately stated the requirements of the change in status.

          The jury  could have found from  the evidence presented

at trial that Censullo became  an at-will employee after November

24.   Therefore, a finding  of wrongful  termination was  proper.

The district court did not err in failing to grant Brenka Video's

motions for directed verdict and for judgment notwithstanding the

verdict.  

                     APPEAL OF JAMES CENSULLO
                                             

          Censullo's  first argument  on  appeal is  that  Brenka

                               -8-

Video  is   vicariously  liable  for  the   tort  of  intentional

infliction of emotional distress  committed by its employee David

Bowders.    Censullo's  current  claim   of  vicarious  liability

deviates from his  original claim of indemnification.  We address

it  in an abundance  of caution, however,  noting that Censullo's

complaint  at  least   contained  an  allegation   of  respondeat

superior.  For reasons that parallel those of the district court,

we find the current claim meritless.

          Censullo presented this issue  to the district court in

a "Motion to Assess Damages and for Indemnification," seeking  to

recover  for the default  against Bowders through indemnification

of  Bowders from  Brenka Video.   The  district court  denied the

motion because  Censullo cited  no authority for  the proposition

that  an employer must indemnify an employee.  The district court

noted that normally, when  the negligence of an agent  is imputed

to  the principal, the principal  may recover from  the agent the

amount paid as indemnification.   Furthermore, the district court

already ruled that the state workmen's compensation scheme barred

Censullo from  recovering from  Brenka Video for  the intentional

infliction  of emotional  distress.   The court  thus found  that

granting the  motion would  allow Censullo to  recover indirectly

from Brenka Video when he could not do so directly.

          The district  court correctly found that  the workmen's

compensation statute bars  employees from  suing their  employers

for personal injuries arising out of the employment relationship.

O'Keefe  v. Associated Grocers of  N.E., Inc., 424  A.2d 199, 201
                                             

                               -9-

(N.H.  1980).   Emotional  distress  is  a personal  injury,  not

subject  to recovery in a common law action under state workmen's

compensation statute.  See Bourque  v. Town of Bow, 736 F.  Supp.
                                                  

398, 404 (D.N.H. 1990).

          The district court also correctly held, in granting the

default judgment, that Censullo  could sue his co-employee acting

as a supervisor for intentional infliction of emotional distress.

Thompson  v.  Forest, 614  A.2d  1064,  1067  (N.H. 1992)  (under
                    

workmen's  compensation scheme,  co-employee  not immunized  from

suit for intentional torts).   While Thompson authorizes Censullo
                                             

to raise a claim of  intentional infliction of emotional distress

against his  co-employee Bowders, it  does not authorize  such an

action against Brenka  Video, his employer.  Indeed, according to

a leading commentator, "when  the intentional injury is committed

by a  co-employee the better  rule is that  an action in  damages

will not lie against the employer . . . ."  2A Arthur Larson, The
                                                                 

Law  of Workmen's Compensation    68.00 (1992).   Because we find
                              

that  Censullo  has  not  stated   a  valid  claim  on  vicarious

liability, we affirm the district court's order.

          Censullo's second argument,  the only one  remaining in

this appeal,  relates to the  admission of the  newspaper article

entitled  "A  Heart   of  Stone."    As  Censullo  conceded  that

resolution  of this issue is unnecessary unless we were to remand

the case for a new  trial, and we have found no reason  to do so,

we do not reach this issue.

                            CONCLUSION
                                      

                               -10-

            Cases 92-2137 and 92-2193 are dismissed.

                               -11-
