Chandler v. Dowell Schlumberger, Inc , 214 Mich. App. 111 ( 1995 )

Markman, J.

Plaintiff appeals from an opinion and order of the Midland Circuit Court granting summary disposition in favor of defendant. We affirm.

Plaintiff was employed by defendant beginning in June 1989. In January 1992, a new regulation went into effect requiring that defendant obtain certification for vehicles transporting hazardous materials on public roads. Plaintiff complained to defendant’s agents regarding defendant’s inconsistent compliance with the regulation. However, plaintiff did not report the violation to any public authority. On April 6, 1992, defendant was cited by the Michigan Department of Transportation for violating the regulation as a result of an anonymous tip. Shortly thereafter, defendant terminated plaintiffs employment.

On July 8, 1992, plaintiff filed a complaint alleging that defendant was liable under the Whistle-blowers’ Protection Act (wpa), MCL 15.361 et seq.; MSA 17.428(1) et seq. Defendant moved for summary disposition pursuant to MCR 2.116(C)(8) and (10), alleging that plaintiff had been dismissed because of economic necessity and that plaintiff could not recover under the wpa because he had not engaged in the protected activity of reporting or being about to report illegal conduct to a public authority. The trial court granted defendant’s motion pursuant to. MCR 2.116(C)(10), reasoning that because plaintiff had never reported a violation to a public authority, he had not engaged in protected activity and thus had failed to state a prima facie case under the wpa.

Plaintiff argues that the wpa protects an employee who has been discharged because of an erroneous perception that the employee has reported a violation of law, regulations, or rules to a public body. We disagree.

The starting point in every case involving construction of a statute is the language itself. House Speaker v State Administrative Bd, 441 Mich 547, 567; 495 NW2d 539 (1993). The wpa, at MCL 15.362; MSA 17.428(2), provides the following:

An employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee’s compensation, terms, conditions, location, or privileges of employment because the employee, or a person acting on behalf of the employee, reports or is about to report, verbally or in writing, a violation or a suspected violation of a law or regulation or rule promulgated pursuant to law of this state, a political subdivision of this state, or the United States to a public body, unless the employee knows that the report is false, or because an employee is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body, or a court action.

This Court has stated that under the wpa a prima facie case of retaliatory discharge requires proof (1) that the plaintiff was engaged in protected activities as defined by the act, (2) that the plaintiff was subsequently discharged, and (3) that a causal connection existed between the protected activity and the discharge. Tyrna v Adamo, Inc, 159 Mich App 592, 601; 407 NW2d 47 (1987). The issue in this case involves the first and third requirements. The plaintiff did not report, nor does he argue that he was about to report, his employer’s violations to a public body. Thus, he was not "engaged in protected activities as defined by the act.” Because he was not so engaged, there also exists a lack of a causal connection between the discharge and "the protected activity.”

Plaintiff claims, however, that he is entitled to protection under the wpa as a "perceived whistle-blower.” In support of his claim, plaintiff points to Sanchez v Lagoudakis, 440 Mich 496; 486 NW2d 657 (1992), in which the Michigan Supreme Court held that the Michigan Handicappers’ Civil Rights Act (mhcra) prohibited employer discrimination based on erroneous perception of membership in a protected category. The mhcra specifically provided a cause of action to employees who were subject to discrimination "because of a handicap.” MCL 37.1202(1); MSA 3.550(202X1); Sanchez, supra at 502. The Court held that the mhcra covered those érroneously perceived of as having a handicap, reasoning:

The focus of the act was the basis of the employer’s conduct — the employer’s belief or intent — and not the employee’s condition. If the employer acts on a belief that the employee has a handicap, and subsequently discharges or otherwise discriminates against the employee on the basis of that belief, it is inconsequential whether the employee actually has the handicap because, in either hypothesis, the employer has undertaken the kind of discriminatory action that the act prohibits.¹⁶

Although not applicable to the case before it, the Supreme Court noted that in 1990, the Legislature amended the definition of "handicap” to include "[b]eing regarded as having” a handicap. Id. at 506.

Plaintiff urges this Court to follow the rule established in Sanchez to afford protection to perceived whistleblowers. Plaintiff further points to Polk v Yellow Freight System, Inc, 801 F2d 190 (CA 6, 1986), in support of his claim. In Polk, the court concluded that a visit to the Michigan Civil Rights Commission was a protected activity under the Civil Rights Act, MCL 37.2101 et seq.; MSA 3.548(101) et seq. As. the court noted, the act "prohibits discrimination or retaliation against a' person 'because the person has opposed a violation of this act, or because the person has made a charge, filed a complaint, testified, assisted, or participated in an investigation, proceeding, or hearing under this act.’ [MCL 37.2701(a); MSA 3.548(701)(a)].” Id. at 197. The court, citing Gifford v Atchinson, T & S F R Co, 685 F2d 1149, 1156, n 3 (CA 9, 1982), found no legal distinction between filing a charge and threatening to file a charge. Id. at 200. The court then reasoned:

We see no reason to distinguish between a visit to a government agency to inquire about filing a charge and a threat to file a charge. In both instances, the focus is not on whether the employee intends to follow through with, filing the charge, but rather on whether the employer’s decision to discharge was motivated by an improper desire to retaliate against an employee for pursuing rights granted by the Act. [Polk, supra at 200.]

The issue whether the wpa affords protection to a perceived whistleblower has not been examined in Michigan.¹ However, the issue of an employer’s knowledge or belief under the wpa was addressed in Kaufman & Payton, PC v Nikkila, 200 Mich App 250; 503 NW2d 728 (1993). In Kaufman & Payton, the counterplaintiff was employed by the law firm of Kaufman & Payton, P.C. Id. at 252. After becoming concerned with the legality of billing procedures that she had executed, she consulted outside counsel who subsequently sent letters to the firm questioning its billing practices and addressing the counterplaintiff’s future duties. Id. at 252-253. The counterplaintiff subsequently resigned. Id. at 253. Thereafter, she sent a request for investigation to the Attorney Grievance Commission and followed up with a formal complaint. Id. The counterplaintiff later alleged in her countercomplaint against the employer that she had been constructively discharged in violation of the wpa. Id. at 253-254.

This Court found that the counterplaintiff’s failure to produce evidence that the firm believed, before she resigned, that the counterplaintiff would report her complaints to responsible agencies was fatal to her cause of action under the wpa. Id. at 254-258. A majority of the panel explained:

An employer’s subjective fear of retaliation will not substitute for some form of notice of threatened action. Instead, an employer is entitled to objective notice of a report or a threat to report by the whistleblower. Neither Kaufman’s nor the firm’s knowledge that Nikkila [the counterpl’aintiff] had retained counsel, together with other unspecified evidence, yields an inference that the firm believed before she resigned that she would report her complaints to responsible agencies. [Id. at 257-258. Emphasis in original.]

One could conceivably argue, under Kaufman & Payton, that plaintiff’s dismissal, which may have been based on a "fear” or "perception” of whistle-blowing, is not covered under the wpa. However, the problem with the counterplaintiff’s case in Kaufman & Payton was the lack of a causal connection between the alleged constructive discharge and protected activity under the wpa due to the employer’s apparent lack of belief or knowledge of any protected activity. In other words, if the employer did not believe or know of the employee’s protected activity, it would be difficult to imagine how that could have been the basis for discharge.²

In contrast, in the instant case, assuming plaintiff was discharged because of defendant’s erroneous perception of whistleblowing by plaintiff, defendant had the belief or knowledge of whistle-blowing. In fact, defendant in this case admitted that whistleblowing had taken place, the erroneous perception only being that the individual who engaged in the activity was the plaintiff. We recognize, of course, that a causal connection is nevertheless still lacking between the discharge and actual protected activity by the plaintiff. However, defendant’s motivation for the discharge here would be the same as an employer who discharges an employee actually engaged in protected activity. The question thus becomes whether that motivation is enough to provide protection under the wpa to the terminated employee who was not engaged in protected activity.

In construing the wpa, plaintiff, citing Sanchez and Polk, would have us focus, not on the action of the employee, but instead on the motive or intent of the employer. In Sanchez and Polk, the Michigan Supreme Court and the Sixth Circuit Court of Appeals, respectively, both expressed the necessity of focusing on the motive or intent of the employer in the context of legislative acts seeking to prevent discrimination.³ However, we find Polk to be clearly distinguishable from the instant case.

In Polk, the Sixth Circuit Court of Appeals noted its focus on employer motive in the context of a case in which the employee had in fact taken some action in an effort to resist discrimination. The court concluded that the employee was pursuing rights protected by the Civil Rights Act and was discharged as a result. In the instant case, however, we do not address whether plaintiff’s actions constitute protected activity under the wpa. It is undisputed that plaintiff neither reported nor was about to report defendant’s violations to a public body. We instead address whether, despite plaintiffs inaction, he is nevertheless entitled to protection under the wpa.

In Sanchez, the employee was discharged because of an erroneous perception that she was handicapped. Thus, assuming that plaintiff was discharged because of an erroneous perception that he was a whistleblower, Sanchez provides considerable guidance. In deciding whether the employee was entitled to protection under the mhcra, the Supreme Court examined the language and purpose of the act. The Court concluded that the act focused on the employer’s belief or intent— the process of discrimination — and that denying protection to those erroneously perceived as having a handicap would be inconsistent with the mhcra’s intent of preventing discrimination based on handicap. Sanchez, supra at 502, 502-503, n 16.

In deciding whether plaintiff is entitled to protection under the wpa, we similarly examine the language and purpose of the act. The wpa provides that an employer shall not discharge an employee

because the employee, or a person acting on behalf of the employee, reports or is about to report, verbally or in writing, a violation or a suspected violation of a law or regulation or rule promulgated pursuant to law of this state, a political subdivision of this state, or the United States to a public body .... [MCL 15.362; MSA 17.428(2). Emphasis added.]

In contrast with this section of the wpa is § 202(1) (b) of the mhcra, MCL 37.1202(l)(b); MSA 3.550(202)(l)(b), applied in Sanchez that protects against discharge "because of a handicap that is unrelated to the individual’s ability to perform the duties of a particular job or position.” Sanchez, supra at 502. Unlike the mhcra, which protects against discharge or other discrimination on the basis of inherent status, the wpa protects against discharge or other discrimination on the basis of certain concrete actions taken by the employee. However, this difference alone, while not irrelevant, does not appear to require disparate application of the two acts. The importance and effect of this distinction becomes more apparent when viewed in light of the respective purposes of the two acts.

The purpose of the mhcra is to prevent discrimination — a process of thinking and conduct by the employer — based on handicap. As the Supreme Court reasoned, it would be inconsistent with that purpose to deny protection to those who are the victims of this process even though the perception is erroneous that they are handicapped. The harm on which the Legislature focused is the same whether the object of the discrimination was handicapped or not.

We therefore consider whether a similar inconsistency would result if protection were denied to those discriminated against because of the erroneous perception that they are whistleblowers:

The [legislative] analysis [of the wpa] recognizes the problem the wpa was designed to alleviate as the inability to combat corruption or criminally irresponsible behavior in the conduct of government or large businesses. House Legislative Analysis, HB 5088, 5089 (February 5, 1989). The analysis goes on to say that "[t]he people best placed to observe and report violations are the employees of government and business, but employees are naturally reluctant to inform on an employer or a colleague.” [Dudewicz v Norris Schmid, Inc, 443 Mich 68, 75; 503 NW2d 645 (1993). Emphasis omitted.]

The wpa "seeks to protect the integrity of the law by removing barriers to employee efforts to report violations of the law” and also "to protect the public by protecting employees who report violations of laws and regulations.” Tyrna, supra at 599-600, citing Hopkins v City of Midland, 158 Mich App 361, 374; 404 NW2d 744 (1987).

Violations of laws, rules, and regulations by employers do not just harm their employees but, by definition, also harm the interest of the public at large. However, the public is obviously not as likely to discover these violations as are employees. Statutory protection of the employee who reports a violation serves to encourage reporting by an employee who might otherwise be fearful of the consequences. As a result, the public is better served. In contrast, we do not believe that protection of employees who either are unable or unwilling to report violations of laws, rules, or regulations significantly encourages reporting. In fact, it is arguable that such protection under the wpa could discourage actual reporting where employees are cognizant that they will be protected absent any invocation of their civic duty as long as the employer erroneously believes the employee has engaged in such activity.

Plaintiff claims that a primary purpose of the wpa is to discourage employers from retaliation against employees who have reported or are about to report legal violations to a public body. He thus argues that denying him protection would be inconsistent with that goal. We acknowledge that penalizing and discouraging employers are inevitable effects, and presumably inherent in the purpose, of the wpa. Certainly if we look at this as the wpa’s exclusive — or even principal — purpose, we could conclude, as the Supreme Court did in Sanchez, that protection to a perceived whistleblower is provided under the act.

However, in doing so, and focusing principally upon the employer’s motive or intent under the wpa, we render it "inconsequential,” Sanchez, supra, whether the employee actually reports or is about to report a legal violation to a public body. Accordingly, we lose sight of the fact that plaintiff has not served or attempted to serve any public interest by reporting the very harm against which the wpa ultimately seeks to protect. The wpa specifically seeks to protect the public from violation of laws, regulations, and rules. How then can we conclude that the employee’s actions, which are so indispensable in facilitating this goal, are "inconsequential”? Unlike an inherent status such as a handicap, over which an employee has no control, an employee has full control over his actions. The wpa seeks to encourage those actions that assist in the protection of the public by in turn protecting the employee. Indeed, this is the only rationale for the wpa. Unlike the mhcra, whose purpose is to prevent discrimination per se, the wpa is designed to prevent discrimination but only as a means to a particular public policy end — an end to which plaintiff has not contributed in any way.

In the instant case, plaintiff has not comported himself any differently than any other employee who did not engage in whistleblowing, the only difference being that he was discharged. Plaintiff may have been discharged for what he believes, and perhaps rightfully so, are unfair reasons. Generally, however, employment relationships in the State of Michigan are terminable at will, with or without cause, "at any time for any, or no, reason.” Vagts v Perry Drug Stores, Inc, 204 Mich App 481, 484; 516 NW2d 102 (1994), quoting Suchodolski v Michigan Consolidated Gas Co, 412 Mich 692, 694-695; 316 NW2d 710 (1982).⁴ Plaintiff is like any other employee unfairly discharged. To the extent that plaintiff falls within an exception to the general employment rule, he is entitled, as is any other discharged employee, to avail himself of such exception. He stands in no superior position to any other employee, however, because he has done nothing to warrant such superior position.

While the protection afforded under the wpa sets forth one exception to the rule of termination at will, we believe that this particular exception limits protection to those employees who actually report or are about to report violations of laws, rules, and regulations to a public body and who thereby serve the public interest, which is the object of the wpa.⁵

The wpa seeks to protect the public from violations of laws, rules, and regulations and to protect those employees who exercise their civic duty in reporting such violations. In determining whether a perceived whistleblower is afforded protection under the wpa, we follow the Supreme Court’s analysis in Sanchez and examine the language and purpose of the act. In doing so, we conclude that, consistent with both the purpose and the plain language of the wpa, the Legislature has not provided protection under the act to employees discharged because of an erroneous belief that they have reported legal violations to a public body. Such, employees instead are entitled only to those legal protections to which all other discharged employees in Michigan are entitled. Therefore, plaintiff cannot establish a prima facie case under the wpa.

Plaintiff further argues that he is not disqualified from protection under the wpa because of his failure to report a prior violation to a public body. Contrary to the assertions in both parties’ appellate briefs, we do not believe the circuit court held in this matter that failure to report previous violations disqualified plaintiff from bringing an action under the wpa. The court held, rather, that plaintiff’s failure to report any violation, including the immediate one, placed him outside the scope of the wpa. In any event, having found that plaintiff cannot present a prima facie case of retaliatory discharge under the wpa, we find it unnecessary to decide this issue.

Affirmed.

Gribbs, P.J., concurred.

16 The purpose of the act is to prohibit employers from discriminating on the basis of handicap. It would not be consistent with that purpose to relieve employers who so discriminate of liability if, although they acted in a prohibited discriminatory manner, it later turns out that their belief was in fact erroneous. The key as far as the act is concerned is that the employer acted on the belief of a handicap.

1 In Vagts v Perry Drug Stores, Inc, 204 Mich App 481, 486; 516 NW2d 102 (1994), however, this Court held that an employee could not avail herself of the protection of the wpa because: "(1) she did not refuse to perform an illegal act, (2) she did not report or threaten to report the illegal activity, and (3) she did not file suit within the statutory period.” The plaintiff in Vagts apparently did not raise the issue of the wpa or contend that her discharge was premised in any way upon a perception that she was engaged in "whistleblowing.”

2 Kaufman & Payton principally addresses whether, under the facts of that case, the employer believed that the counterplaintiff would report her complaints; in other words, whether there was a causal connection between discharge and protected activity.

3 As previously discussed, the Michigan Supreme Court noted the purpose of the mhcra in Sanchez, supra at 502-503, n 16. The purpose of the Civil Rights Act, which was applied in Polk, similarly has been noted as being the prevention of discrimination. See Radtke v Everett, 442 Mich 368, 379; 501 NW2d 155 (1993).

4 See Vagts, supra, for a discussion regarding exceptions to this general proposition.

5 In seeking to understand the meaning of the wpa, we offer one additional observation. When the Legislature amended the mhcra to include specifically protection for those that are "regarded as” being handicapped, it did not similarly amend the wpa.