Wrongful Discharge Law: Three Key 2010 Missouri Supreme Court Decisions

In 2010, the Missouri Supreme Court decided three important cases on the doctrine of wrongful termination in violation of public policy.

Two cases clearly favored employees, easing their burden of proof in one and extending the right to sue to a broader range of employees in the other. The third provided some limits on this right to sue that will be helpful to some employers defending against these claims.

“Contributing Factor” Wrongful Termination Standard: Fleshner v. Pepose Vision Institute, P.C.

Facts

In Fleshner v. Pepose Vision Institute, P.C., 304 SW 3d 81 (2010), an employee received a phone call from a Department of Labor investigator seeking information about her employer. She disclosed facts about hours worked by employees. She then reported this conversation to her supervisor. The company terminated her the next day.

Proceedings

A jury found the employer liable and awarded $30,000 in actual damages and $95,000 in punitive damages.

On appeal, the employer claimed the trial court erred in not using a jury instruction requiring “exclusive causation, but instead using one that required the terminated employee to show only that she was discharged “because of” her conversation with the investigator.

Holding: Public Policy Exception Burden of Proof

The Supreme Court of Missouri applied the following public-policy exception to the at-will employment doctrine:

An at-will employee may not be terminated:

  1. for refusing to violate the law or any well-established and clear mandate of public policy as expressed in the constitution, statutes, regulations promulgated pursuant to statute, or rules created by a governmental body, or
  2. for reporting wrongdoing or violations of law to superiors or public authorities.

If the employer terminates an employee for either of these reasons, the employee has a cause of action in tort for wrongful discharge based on the public-policy exception.

This amounted to an adoption by the state’s highest court of a standard that had been developed and applied by the lower Missouri state courts over the last 25 years, but had never been directly endorsed or rejected by the Supreme Court of Missouri.

Contributing factor, not exclusive causation

The court held that the proper jury instruction on the causal standard for a public-policy exception is “contributing factor.” That is, the terminated employee’s protected activity of refusing to violate law or complaining about unlawful conduct need not be the only reason for termination, just a reason contributing to the employer’s termination decision.

The court reasoned:

[P]ublic policy requires rejection of “exclusive causation” as the proper causal standard for the public-policy exception. Employees would be discouraged from reporting their employers’ violations of the law or for refusing to violate the law if “exclusive causation” were the standard. An employee who reported violations of the law or who refused to violate the law could be terminated, without consequence, by the employer.

Upon a lawsuit alleging wrongful termination in violation of public policy, the employer could assert that, while the employee’s reporting or refusal played a part in the decision to terminate, the employee was also fired for another reason, such as reporting for work late or failing to follow the dress code. “Exclusive causation” would result in an exception that fails to accomplish its task of protecting employees who refuse to violate the law or public policy.

The court stated that trial courts should use a modified MAI § 31.24 instruction, applying the “contributing factor” analysis, until a specific instruction for the public-policy instruction is adopted.

Wrongful Discharge Claim Available to Contract Employees, Not Just At-Will Employees: Keveney v. Missouri Military Academy

Facts

In Keveney v. Missouri Military Academy (2010), a teacher employed under a written employment contract providing the employer could terminate employment for cause alleged he was terminated because he insisted his superiors report to family services authorities evidence that a student was being physically abused. He alleged his superiors refused to report this, told him his job would be jeopardized if he reported it, and terminated his employment the same day.

Proceedings

The terminated employee alleged wrongful discharge and breach of contract. The circuit court dismissed the wrongful discharge claim and claims for punitive damages and emotional distress, but the jury awarded $13,300 in damages for breach of contract, which the employer appealed.

In a cross-appeal, the employee asserted that wrongful discharge claims should be available to contract employees and, alternatively, that contract employees should be able to obtain punitive damages and damages for emotional distress under a whistleblower breach of contract claim.

Holding: Contract Employees May Sue for Wrongful Discharge In Violation of Public Policy

Missouri courts had previously not applied the wrongful discharge cause of action to contract employees. But in Keveney, the Supreme Court of Missouri found three compelling reasons to allow contract employees to pursue such an action:

  1. Limiting the wrongful discharge cause of action to at-will employees fails to recognize the distinct underlying purpose of the wrongful discharge cause of action. “A discharge is ‘wrongful’ because it is based on the employer’s attempt to condition employment on the violation of public policy expressed in applicable constitutional, statutory or regulatory provisions.” This is entirely independent of the terms of the employment contract.
  2. Given the distinct interests at issue in a wrongful discharge action as opposed to a contract action, it follows that the remedies are distinct. An employee discharged in violation of an employment contract can recover the amount of income he or she would have earned absent the breach, less interim earnings. But if an employee is discharged for refusing to violate a public policy requirement, a breach of contract action fails to vindicate the violated public interest or to provide a deterrent against future violations.
  3. It is inconsistent to allow an at-will employee to pursue an action for wrongful discharge while denying a contract employee the same right, because this illogically grants at-will employees greater protection from these tortious terminations, due to an erroneous presumption that the contractual employee does not need such protection.

Applying these principles, the court held in Keveney that contract employees can pursue a claim for wrongful discharge. The Court also found that the terminated employee had satisfied the requirement that he allege his discharge was caused by his refusal to perform an illegal act or engage in conduct that violates public policy.

Public Policy Wrongful Termination Claim Must Be Based Based on Specific Law: Margiotta v. Christian Hospital Northeast Northwest

Facts

In Margiotta v. Christian Hospital Northeast Northwest d/b/a Christian Hospital and BJC Health System, (2010), a terminated at-will employee brought a wrongful termination action against his former employer, alleging he was terminated for reporting violations of federal and state regulations.

He alleged he was terminated because he continuously reported incidents of safety violations pertaining to patient care to his supervisors. Although these reports predated his termination by almost two years, he argued the termination was in retaliation for them.

Proceedings

The trial court granted summary judgment in favor of the employer, and the Supreme Court affirmed.

Holding: Terminated Employee’s Complaints Did Not Allege Violations of Specific Legal Provisions

The Court stated that to prevail on a whistle-blowing claim, a terminated employee must show they “reported to superiors or to public authorities serious misconduct that constitutes a violation of the law and of well-established and clearly mandated public policy” as expressed in “a constitutional provision, a statute, a regulation based on a statute or a rule promulgated by a governmental body.”

However, “not every statute or regulation gives rise to an at-will wrongful termination action. . . . A vague or general statute, regulation, or rule cannot be successfully pled under the at-will wrongful termination theory, because it would force the court to decide on its own what public policy requires.” “The pertinent inquiry . . . is whether the authority clearly prohibits the conduct at issue in the action.”

The Court found that the health care regulations cited as the basis for the terminated employee’s complaints “did not constitute a clear mandate of public policy.” A federal regulation providing that a “patient has the right to receive care in a safe setting” did not specifically address the incidents forming the basis of the complaints. A state regulation cited was inapplicable because it dealt with building safety, not patient treatment, and the terminated employee had complained about the latter.

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