Keehan v. Korenowski , 95 N.E.3d 781 ( 2017 )


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  • [Cite as Keehan v. Korenowski, 
    2017-Ohio-7050
    .]
    STATE OF OHIO                   )                      IN THE COURT OF APPEALS
    )ss:                   NINTH JUDICIAL DISTRICT
    COUNTY OF SUMMIT                )
    DANIEL J. KEEHAN                                       C.A. No.   28221
    Appellant
    v.                                             APPEAL FROM JUDGMENT
    ENTERED IN THE
    NICHOLAS KORENOWSKI, et al.                            COURT OF COMMON PLEAS
    COUNTY OF SUMMIT, OHIO
    Appellees                                      CASE No.   CV-2015-05-2811
    DECISION AND JOURNAL ENTRY
    Dated: August 2, 2017
    HENSAL, Judge.
    {¶1}    Plaintiff-Appellant, Daniel Keehan, appeals the judgment of the Summit County
    Court of Common Pleas, dismissing his complaint for failure to state a claim. This Court affirms
    in part and reverses in part.
    I.
    {¶2}    This appeal stems from the dismissal of Mr. Keehan’s complaint wherein he
    asserted claims against Certech, Inc., Morgan Advanced Ceramics, Inc., Morgan Advanced
    Materials, PLC (collectively, the “Morgan Defendants”), Nicholas Korenowski, Lynsey Poulton,
    and John Stang for violations of Ohio’s whistleblower statute and wrongful discharge in
    violation of public policy. Mr. Keehan’s complaint asserted that Mr. Korenowski, Ms. Poulton,
    and Mr. Stang were employees of the Morgan Defendants who had the authority to discipline
    him, or otherwise affect the terms and conditions of his employment.
    2
    {¶3}    The complaint indicates that Mr. Keehan worked as a general manager for the
    Morgan Defendants at their facility located in Twinsburg, Ohio. In order to meet their labor
    needs, the Morgan Defendants had a contractual relationship with Flexible Staffing, a company
    that provided temporary employees.         At the time Mr. Keehan started with the Morgan
    Defendants in 2012, the Morgan Defendants were utilizing over 125 temporary employees from
    Flexible Staffing. The complaint notes that the majority of Flexible Staffing personnel came
    from Puerto Rico, and that Flexible Staffing sponsored their stay in the United States.
    {¶4}    According to Mr. Keehan, he noticed numerous illegal, unethical, and
    unprofessional incidents involving Flexible Staffing’s employees and its owner.             With the
    Morgan Defendants’ approval, Mr. Keehan began using a different staffing agency and reduced
    the number of Flexible Staffing employees to less than 12 by 2014. Regarding the illegal,
    unethical, and unprofessional incidents, Mr. Keehan alleged that: (1) several physical altercations
    occurred between Flexible Staffing personnel; (2) Flexible Staffing’s owner tried to bribe him in
    order to increase Flexible Staffing’s business with the Morgan Defendants; (3) a Flexible
    Staffing employee tried to bribe an employee from Rapid Response (another staffing agency that
    the Morgan Defendants used) in an effort to obtain green cards and licenses on behalf of Flexible
    Staffing; (4) Rapid Response employees complained of harassment from Flexible Staffing
    employees; (5) Flexible Staffing employees tried to recruit Rapid Response employees to work
    for Flexible Staffing; (6) Flexible Staffing’s invoices failed to include any sales tax; (7) under the
    guise of offering a new person to act as a liaison between Flexible Staffing and the Morgan
    Defendants, Flexible Staffing’s owner arranged for a woman to proposition Mr. Keehan; (8)
    Flexible Staffing employees had undisclosed felony convictions; (9) Flexible Staffing employees
    were being paid under the table and their W-2s were being altered in order to obtain government
    3
    subsidies; and (10) a Flexible Staffing employee was wanted for murder in Puerto Rico. Mr.
    Keehan also alleged that he was informed that his predecessor was under investigation for
    receiving kickbacks from Flexible Staffing.
    {¶5}   Mr. Keehan asserted that he informed Kristine Waggoner, the Morgan
    Defendants’ Vice President of Human Resources, that he had concerns regarding employee
    safety, and indicated that he wanted to terminate the use of Flexible Staffing. He also asserted
    that he reported all “unethical conduct” by phone to the Morgan Defendants. Additionally, he
    asserted that he notified the Morgan Defendants about certain nonconforming airline parts that
    were being shipped to a client in Mexico, and that the nonconformity was likely to cause an
    imminent risk of harm to persons and a hazard to public health and safety. According to Mr.
    Keehan, the Morgan Defendants did not investigate any of the issues he brought to their
    attention.
    {¶6}   Following his conversation with Ms. Waggoner, Mr. Keehan sent a letter to Mr.
    Stang (President of Morgan Advanced Materials, North America), outlining some of these
    issues.    Mr. Keehan later met with Ms. Poulton (Responsible Business Program and Risk
    Manager for the Morgan Defendants) to report the issues regarding Flexible Staffing and his
    concerns regarding “various illegal and unethical matters he had uncovered.” Ms. Poulton
    allegedly indicated that she was unaware of these issues and requested a copy of the letter Mr.
    Keehan sent to Mr. Stang. A few days after their meeting, Mr. Keehan was terminated.
    {¶7}   Following his termination, Mr. Keehan sued the Morgan Defendants and Mr.
    Korenowski, Ms. Poulton, and Mr. Stang (collectively, “Defendants”), alleging violations of
    Ohio’s whistleblower statute and wrongful discharge in violation of public policy. Defendants
    removed the case to the United States District Court for Northern District of Ohio on the basis of
    4
    diversity jurisdiction, but that court ultimately remanded the matter to the Summit County Court
    of Common Pleas.      See Keehan v. Certech, Inc., N.D.Ohio No. 5:15-CV-1236, 
    2015 WL 8483179
    , *9 (Dec. 10, 2015).
    {¶8}    Upon remand, Defendants moved to dismiss Mr. Keehan’s complaint for failure
    to state a claim under Civil Rule 12(B)(6). Mr. Keehan opposed the motion, but the trial court
    entered judgment in favor of Defendants and dismissed Mr. Keehan’s complaint with prejudice.
    Mr. Keehan now appeals, raising two assignments of error for our review.
    II.
    ASSIGNMENT OF ERROR I
    THE TRIAL COURT ERRED WHEN IT FOUND THAT APPELLANT DID
    NOT STATE A CLAIM PURSUANT TO R.C. [] 4113.52
    {¶9}    In his first assignment of error, Mr. Keehan argues that the trial court erred by
    dismissing his whistleblower claims against Defendants. This Court reviews a trial court’s
    granting of a motion to dismiss for failure to state a claim under Civil Rule 12(B)(6) de novo.
    State ex rel. Dellagnese v. Bath–Akron–Fairlawn Joint Economic Dev. Dist., 9th Dist. Summit
    No. 23196, 
    2006-Ohio-6904
    , ¶ 8. “Dismissal is appropriately granted once all the factual
    allegations of the complaint are presumed true and all reasonable inferences are made in favor of
    the nonmoving party, and it appears beyond doubt that the nonmoving party cannot prove any set
    of facts entitling him to the requested relief.” 
    Id.,
     citing State ex rel. Hanson v. Guernsey Cty.
    Bd. of Commrs., 
    65 Ohio St.3d 545
    , 548 (1992).
    {¶10} We begin our analysis with a review of Ohio’s whistleblower statute, codified at
    Revised Code Section 4113.52. The statute “addresses the situation where an employee in the
    course of his or her employment becomes aware of a violation of any state or federal statute or
    any ordinance or regulation of a political subdivision that the employer has the authority to
    5
    correct, and the employee reasonably believes that the violation either is a criminal offense that
    is likely to cause an imminent risk of physical harm or a hazard to public health or safety or is a
    felony.” (Emphasis sic.) Contreras v. Ferro Corp., 
    73 Ohio St.3d 244
    , 246-247 (1995); R.C.
    4113.52(A)(1)(a). “Under such circumstances, [the statute] requires that the employee orally
    notify his or her supervisor or other responsible officer of the employer of the violation and
    subsequently file with that person a written report that provides sufficient detail to identify and
    describe the violation.” (Emphasis sic.) Id. at 247; R.C. 4113.52(A). “If an employer takes any
    disciplinary or retaliatory action against an employee as a result of the employee’s having filed
    [such] a report * * * the employee may bring a civil action” against the employer for injunctive
    relief, or for the remedies set forth in the statute, including reinstatement of the employee’s
    position and payment of back wages. R.C. 4113.52(D) and (E). Importantly, “[i]n order for an
    employee to be afforded protection as a ‘whistleblower,’ such employee must strictly comply
    with the dictates of R.C. 4113.52. Failure to do so prevents the employee from claiming the
    protections embodied in the statute.” Contreras v. Ferro Corp., 
    73 Ohio St.3d 244
     (1995),
    syllabus.
    {¶11} We will first address Mr. Keehan’s argument regarding the trial court’s dismissal
    of his claim against the individual defendants (i.e., Mr. Korenowski, Ms. Poulton, and Mr.
    Stang). In their motion to dismiss, Defendants argued that the individual defendants did not
    qualify as “[e]mployer[s]” under the whistleblower statute and, therefore, could not be subject to
    liability thereunder. The trial court agreed, as do we.
    {¶12} The whistleblower statute defines “[e]mployer” as “any person who has one or
    more employees. ‘Employer’ includes an agent of an employer, the state or any agency or
    instrumentality of the state, and any municipal corporation, county, township, school district, or
    6
    other political subdivision or any agency or instrumentality thereof.” R.C. 4113.51(B). Mr.
    Keehan argues that the “agent of an employer” language clearly indicates that the statute
    provides for individual liability.    In support of his argument, he cites Ohio’s unlawful
    discrimination statute, which defines “[e]mployer” to include “any person acting directly or
    indirectly in the interest of an employer.” R.C. 4112.01. He argues that because the Ohio
    Supreme Court has held that a supervisor can be held liable under the unlawful discrimination
    statute, and because that statute provides similar remedies to those available under the
    whistleblower statute, the whistleblower statute should be interpreted to allow for individual
    liability against his supervisors. See Genaro v. Cent. Transport, Inc., 
    84 Ohio St.3d 293
    , 300
    (1999) (holding that “for purposes of R.C. Chapter 4112, a supervisor/manager may be held
    jointly and/or severally liable with her/his employer for discriminatory conduct of the
    supervisor/manager in violation of R.C. Chapter 4112.”). The trial court disagreed, holding that
    the individual defendants could not be subject to liability under the whistleblower statute because
    they were not “[e]mployer[s]” as defined therein.
    {¶13} The only appellate court to address this issue is the Fifth District’s decision in
    Armstrong v. Trans-Service Logistics, Inc., which the trial court relied upon in reaching its
    conclusion. 5th Dist. Coshocton No. 04CA015, 
    2005-Ohio-2723
    . There, the court rejected a
    similar argument with respect to the Ohio Supreme Court’s holding in Genaro (i.e., because the
    Ohio Supreme Court held that a supervisor could be held individually liable under the unlawful
    discrimination statute, the whistleblower statute should be similarly interpreted to create
    individual liability). In this regard, the Fifth District noted that the definition of “employer”
    under the unlawful discrimination statute was far broader than its definition under the
    whistleblower statute. Id. at ¶ 40. It further noted that the definition of “employer” under the
    7
    whistleblower statute aligned more closely with its definition under Title VII given its use of
    “agency terminology[,]” which the Genaro decision acknowledged was far less reaching than the
    definition of “employer” under the unlawful discrimination statute. Id. at ¶ 38, 40; Genaro at
    299. Thus, the court was unpersuaded by the appellant’s argument in that regard.
    {¶14} Additionally, the Fifth District reasoned that the whistleblower statute speaks
    directly to employer liability, and that the remedies afforded thereunder are “clearly designed to
    be levied against the corporate entity as opposed to an individual supervisor.” Armstrong at ¶ 41.
    It concluded that the statute’s reference to agents of the employer was included for the purpose
    of respondeat superior liability of the employer, and held that the whistleblower statute does not
    create individual liability for supervisors. Id. at ¶ 42, 43.
    {¶15} We are persuaded by the Fifth District’s analysis of Genaro and the comparison
    the Fifth District drew between the definition of “[e]mployer” under the whistleblower statute,
    and its definition under Title VII, which defines “employer” to include “any agent” of the
    employer. 42 U.S.C. 2000e. In light of analogous case law indicating that the inclusion of
    agency terminology in the definition of “employer” does not extend liability to individual
    supervisors and/or employees, we agree with the Fifth District’s – and the trial court’s –
    resolution of this issue. See, e.g., Yesudian ex rel. U.S. v. Howard Univ., 
    270 F.3d 969
    , 972
    (D.C.Cir.2001) (“Even in cases arising under Title VII, which explicitly defines ‘employer’ as
    including ‘any agent [of the employer]’ * * * we and all other circuits have held that the word
    ‘employer’ does not cover a supervisor in his personal capacity.”). We, therefore, hold that the
    trial court did not err by dismissing Mr. Keehan’s whistleblower claim against the individual
    defendants.
    8
    {¶16} We now turn our attention to Mr. Keehan’s argument with respect to his
    whistleblower claim against the Morgan Defendants. In their motion to dismiss, Defendants
    argued that Mr. Keehan’s whistleblower claim against the corporate defendants failed because:
    (1) the alleged violations contained in the complaint reflected the activities of Flexible Staffing
    and its owner, and the Morgan Defendants had no authority to correct those alleged violations;
    (2) Mr. Keehan failed to allege that he provided oral and written notice to the same supervisor;
    and (3) Mr. Keehan failed to allege that he reported the alleged violations to the appropriate
    external authority. We will address each argument in turn.
    {¶17} Regarding whether the Morgan Defendants had the authority to correct the
    alleged violations, the trial court noted that Mr. Keehan’s complaint was unclear as to which
    activities he attributed to Flexible Staffing, and which he attributed to the Morgan Defendants.
    The trial court, therefore, found that “numerous questions and issues exist as to whether the
    actions alleged were within the control of the Morgan Defendants, and Defendants [did] not
    establish[] that [Mr. Keehan] can prove no set of facts upon which would allow recovery on this
    particular issue.”
    {¶18} Next, the trial court addressed Defendants’ argument that Mr. Keehan failed to
    allege that he provided oral and written notice to the same supervisor as required under Section
    4113.52(A)(1)(a). The trial court agreed with Defendants. It noted, however, that Mr. Keehan
    made general allegations throughout his complaint with respect to providing both oral and
    written notice, but determined that these general allegations lacked sufficient factual support, and
    that Mr. Keehan failed to clarify how the various reports and notifications applied to the claim at
    issue. We disagree.
    9
    {¶19} As previously noted, before an employee can avail himself of the protections
    under the whistleblower statute, he must orally notify his supervisor “of a violation of any state
    or federal statute or any ordinance or regulation of a political subdivision that the employee’s
    employer has authority to correct, and the employee reasonably believes that the violation is a
    criminal offense that is likely to cause an imminent risk of physical harm to persons or a hazard
    to public health or safety [or] a felony * * *.” R.C. 4113.52(A)(1)(a). Subsequent to orally
    notifying a supervisor, the employee is required to file a written report with that supervisor. 
    Id.
    {¶20} Mr. Keehan alleged that he informed Ms. Waggoner “of his concerns regarding
    the safety of the employees, the safety of his own family and his own safety and that he wanted
    to terminate the services of Flexible Staffing[.]” He then alleged that “[a]fter he met with [Ms.]
    Waggoner * * * and because he felt he needed to set the record straight as to what was
    happening at the Twinsburg plant, [he] sent written notice to [Mr.] Stang through [his] attorney,
    outlining these issues * * *.”
    {¶21} Next, Mr. Keehan alleged that he then met with Ms. Poulton and reported the
    issues with Flexible Staffing, as well as his concerns regarding the various illegal and unethical
    matters that he uncovered. His complaint states that:
    [he] discussed with [Ms.] Poulton his concerns with the Morgan Defendants’
    business relationship with Flexible Staffing, the physical altercations engaged in
    by Flexible Staffing’s temporary employees, the threats made by Flexible
    Staffing’s management directed at [him], the attempts to seduce [him] by
    representatives of Flexible Staffing, and Flexible Staffing’s practice of failing to
    include sales tax in its invoices submitted to the Morgan Defendants and/or
    certain John Doe Defendants. [He] also disclosed the suspected kickback scheme
    between Flexible Staffing and his predecessor, the attempted bribes, paying
    employees under the table and fraudulent W-2s. [He] further disclosed that
    nonconforming airline parts were being shipped which posed an imminent risk of
    physical harm and threatened public health and safety. [He] also disclosed to
    [Ms.] Poulton that he memorialized many of these incidents in a letter to John
    Stang as well as had previously provided notice to other management personnel.
    10
    {¶22} Mr. Keehan then alleged that Ms. Poulton requested a copy of the letter he sent to
    Mr. Stang. Despite alleging that she requested a copy, there is no specific allegation that he
    provided it to her. Later in the complaint, however, he alleged that he “provided written reports
    directly to: * * * [Ms. Poulton].” While Mr. Keehan’s complaint is not the picture of clarity, we
    conclude that Mr. Keehan adequately alleged that he gave both oral and written notice to at least
    one person: Ms. Poulton.
    {¶23} Lastly, the trial court found that Mr. Keehan failed to report the alleged violations
    to the appropriate external authority.      On appeal, however, Defendants concede that the
    whistleblower statute does not require an employee to report to an external authority, and assert
    that the trial court’s reference to Mr. Keehan’s failure to do so was merely dicta that did not
    affect its analysis. See R.C. 4113.52(A)(1)(a) (providing that an employee “may file a written
    report” after the other statutory requirements are met).
    {¶24} In light of the forgoing, we hold that the trial court erred by dismissing Mr.
    Keehan’s whistleblower claim against the Morgan Defendants on the basis that Mr. Keehan
    failed to allege strict compliance with the statute’s requirements.
    ASSIGNMENT OF ERROR II
    THE TRIAL COURT ERRED WHEN IT FOUND THAT APPELLANT DID
    NOT STATE A CLAIM FOR WRONGFUL DISCHARGE IN VIOLATION OF
    PUBLIC POLICY.
    {¶25} In his second assignment of error, Mr. Keehan argues that the trial court erred by
    dismissing his claim for wrongful discharge in violation of public policy. We agree.
    {¶26} Ohio law recognizes an exception to at-will employment when the employee’s
    termination violates a statute and “thereby contravenes public policy.” Greeley v. Miami Valley
    Maintenance Contractors, Inc., 
    49 Ohio St.3d 228
     (1990), paragraph two of the syllabus. To
    11
    establish a claim for wrongful discharge in violation of public policy, an employee must
    establish that: (1) a “clear public policy existed and was manifested in a state or federal
    constitution, statute or administrative regulation, or in the common law (the clarity element)”[;]
    (2) “dismissing employees under circumstances like those involved in the plaintiff’s dismissal
    would jeopardize the public policy (the jeopardy element)”[;] (3) “[t]he plaintiff’s dismissal was
    motivated by conduct related to the public policy (the causation element)”[;] and (4) “[t]he
    employer lacked overriding legitimate business justification for the dismissal (the overriding
    justification element).” (Emphasis omitted.) Dohme v. Eurand Am., Inc., 
    130 Ohio St.3d 168
    ,
    
    2011-Ohio-4609
    , ¶ 12-16, quoting Painter v. Graley, 
    70 Ohio St.3d 377
    , 384 fn. 8 (1994).
    While an employee may maintain a wrongful-discharge claim on the basis of a violation of the
    public policy embodied in the whistleblower statue, the employee must first comply with that
    statute’s requirements. Kulch v. Structural Fibers, Inc., 
    78 Ohio St.3d 134
     (1997), paragraph
    three of the syllabus.
    {¶27} In his complaint, Mr. Keehan argued that clear public policies exist relating to the
    following statutes: Revised Code Chapter 5739 (“Sales Tax”); Title 57 of the Ohio Revised Code
    (“Taxation”), Title 26 of the United States Code (“Internal Revenue Code”); 8 U.S.C. 1324a
    (“Unlawful Employment of Aliens); and Revised Code Chapter 2307 (“Civil Actions”). He also
    argued that clear public policies exist regarding the prohibition against obtaining government
    subsidies based upon fraudulent information, as well as providing nonconforming goods that
    pose a threat to public safety and can result in the imminent risk of physical harm.
    {¶28} In their motion to dismiss, Defendants argued that Mr. Keehan failed to allege
    facts sufficient to support a claim for wrongful discharge because the statutes cited in his
    complaint were not independent sources of public policy and, even if they were, he failed to
    12
    establish that Defendants, rather than Flexible Staffing, violated those public policies. They also
    argued that, to the extent that any violations related to their conduct, those claims were derivative
    of his whistleblower claim. Relatedly, they argued that Mr. Keehan’s wrongful-discharge claim
    was simply derivative of his whistleblower claim, and that it could not survive a motion to
    dismiss because Mr. Keehan failed to allege compliance with the whistleblower statute. Thus,
    because he failed to allege compliance with the whistleblower statute, he could not establish a
    claim for wrongful discharge based upon the public policy protecting whistleblowers.
    {¶29} The trial court agreed with Defendants that Mr. Keehan failed to allege any
    sources of public policy independent of the public policy protecting whistleblowers. In this
    regard, the trial court found that Mr. Keehan made “little or no distinction between the existence
    of the law or statute, and the public policy upon which his claim is based” and that he appeared
    to be “confusing the source of law itself as a public policy that prohibits, or would be jeopardized
    by, his termination.” Given its determination that Mr. Keehan failed to allege strict compliance
    with the whistleblower statute, the trial court held that his derivative wrongful-discharge claim
    likewise failed.
    {¶30} Assuming without deciding that the trial court properly determined that Mr.
    Keehan’s wrongful-discharge claim was derivative of his whistleblower claim, given our
    resolution of the previous assignment of error, we hold that the trial court erred by dismissing
    Mr. Keehan’s derivative wrongful-discharge claim on the basis that he failed to allege strict
    compliance with the whistleblower statute.        Mr. Keehan’s second assignment of error is
    sustained on that basis.
    13
    III.
    {¶31} Mr. Keehan’s first assignment of error is overruled to the extent that he argues
    that the trial court erred by dismissing his whistleblower claim against the individual defendants.
    Mr. Keehan’s first assignment of error is sustained as it relates to the trial court’s dismissal of his
    whistleblower claim against the Morgan Defendants. Mr. Keehan’s second assignment of error
    is sustained. The judgment of the Summit County Court of Common Pleas is affirmed in part
    and reversed in part.
    Judgment affirmed in part
    and reversed in part.
    There were reasonable grounds for this appeal.
    We order that a special mandate issue out of this Court, directing the Court of Common
    Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
    of this journal entry shall constitute the mandate, pursuant to App.R. 27.
    Immediately upon the filing hereof, this document shall constitute the journal entry of
    judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
    period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
    instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
    mailing in the docket, pursuant to App.R. 30.
    Costs taxed equally to both parties.
    JENNIFER HENSAL
    FOR THE COURT
    14
    CARR, P. J.
    SCHAFER, J.
    CONCUR.
    APPEARANCES:
    MICHAEL G. POLITO, JOSEPH T. BURKE, NATHANIEL G. SZEP, and ASHLEY E.
    LOYKE, Attorneys at Law, for Appellant.
    REBECCA J. BENNETT and JACLYN C. STAPLE, Attorneys at Law, for Appellees.
    

Document Info

Docket Number: 28221

Citation Numbers: 2017 Ohio 7050, 95 N.E.3d 781

Judges: Hensal

Filed Date: 8/2/2017

Precedential Status: Precedential

Modified Date: 10/19/2024