Kelsay v. Motorola, Inc. , 74 Ill. 2d 172 ( 1978 )

MR. JUSTICE RYAN

delivered the opinion of the court:

Plaintiff, Marilyn Jo Kelsay, filed a complaint in the circuit court of Livingston County, seeking compensatory and punitive damages against her ex-employer, Motorola, Inc. The plaintiff alleged that her employment with defendant had been terminated as retaliation for her filing a workmen’s compensation claim. The trial court directed a verdict in plaintiff’s favor and the jury assessed damages in the amount of $1,000 compensatory damages and $25,000 punitive damages. The court remitted the compensatory damages to $749, which represents the wages plaintiff lost between the time she was discharged and the time she found a new job. On appeal, the Fourth District Appellate Court reversed the judgment of the trial court, holding that an employee has no cause of action against an employer for retaliatory discharge. (51 Ill. App. 3d 1016.) Because a different panel of the same court reached a contrary result in an opinion filed on the same day (Leach v. Lauhoff Grain Co. (1977), 51 Ill. App. 3d 1022), the appellate court issued a certificate of importance to this court (see 58 Ill. 2d R. 316) so that we may resolve the conflict.

Plaintiff suffered a cut to her thumb while working at the Motorola factory in Pontiac. She received immediate medical attention at a local hospital, where her thumb was stitched. She returned to work later that same afternoon. Shortly thereafter, plaintiff sought advice of counsel regarding a workmen’s compensation claim for her thumb injury. Counsel sent notice of the impending claim to the employer, Motorola, Inc.

Plaintiff spoke with the personnel manager at the Motorola plant, Donald Aherns, after he received notice of the workmen’s compensation suit. Aherns told plaintiff that the corporation was aware of the situation, that she would be “more than adequately compensat[ed] ” by the corporation for her thumb injury, and that there was no need for her to follow through with her claim. He also informed the plaintiff that it was the corporation’s policy to terminate the employment of employees who pursued workmen’s compensation claims against it, and advised the plaintiff to “think about it” a little longer. Plaintiff, however, decided to proceed with her claim and, after informing Aherns of her final decision, was discharged. Her compensation claim against Motorola was eventually settled. Subsequently, as noted above, plaintiff sought relief in the Livingston County circuit court against defendant, Motorola, for her retaliatory discharge by the corporation.

This appeal raises several issues. First, should this State recognize a cause of action for retaliatory discharge? If so, is such an action one which may give rise to a claim for punitive damages, and, if so, was the jury’s award of $25,000 punitive damages proper in the instant case?

The employer argues that no cause of action should exist in this State for the retaliatory discharge of an employee. He contends that, as of the time of plaintiff’s discharge, there was nothing in the Workmen’s Compensation Act (Ill. Rev. Stat. 1973, ch. 48, par. 138.1 et seq.) that impinged on the employer’s unfettered right to terminate without cause an employee whose employment contract was at will. Further, the employer argues that recognition of a cause of action for retaliatory discharge is totally inconsistent with the exclusivity provision of the

Act itself, which specifically provides:

“The compensation herein provided, together with the provisions of this Act, shall be the measure of the responsibility of any employer engaged in any of the enterprises or businesses enumerated in Section 3 of this Act ***.” (Ill. Rev. Stat. 1973, ch. 48, par. 138.11.)

Finally, the employer argues that the legislature’s decision to provide solely for criminal punishment of employers who, after 1975, “discharge or *** threaten to discharge *** an employee because of the exercise of his rights or remedies granted to him by [the] Act” (Ill. Rev. Stat. 1975, ch. 48, par. 138.4(h)), without providing for a civil remedy for employees who are so discharged, precludes the plaintiff’s action in the instant case.

The Workmen’s Compensation Act (Ill. Rev. Stat. 1973, ch. 48, par. 138.1 et seq.) substitutes an entirely new system of rights, remedies, and procedure for all previously existing common law rights and liabilities between employers and employees subject to the Act for accidental injuries or death of employees arising out of and in the course of the employment. (37 Ill. L. & Prac. Workmen’s Compensation sec. 2 (1958).) Pursuant to the statutory scheme implemented by the Act, the employee gave up his common law rights to sue his employer in tort, but recovery for injuries arising out of and in the course of his employment became automatic without regard to any fault on his part. The employer, who gave up the right to plead the numerous common law defenses, was compelled to pay, but his liability became fixed under a strict and comprehensive statutory scheme, and was not subjected to the sympathies of jurors whose compassion for fellow employees often led to high recovery. (See 81 Am. Jur. 2d Workmen’s Compensation sec. 1 et seq. (1976).) This tradeoff between employer and employee promoted the fundamental purpose of the Act, which was to afford protection to employees by providing them with prompt and equitable compensation for their injuries. See O’Brien v. Rautenbush (1956), 10 Ill. 2d 167.

The Workmen’s Compensation Act, in light of its beneficent purpose, is a humane law of a remedial nature. (Shell Oil Co. v. Industrial Com. (1954), 2 Ill. 2d 590.) It provides for efficient remedies for and protection of employees and, as such, promotes the general welfare of this State. Consequently, its enactment by the legislature was in furtherance of sound public policy. (Deibeikis v. Link-Belt Co. (1914), 261 Ill. 454.) We are convinced that to uphold and implement this public policy a cause of action should exist for retaliatory discharge.

While noting that in 1975, subsequent to plaintiff’s discharge, the Workmen’s Compensation Act was amended making it unlawful for an employer to interfere with or to coerce the employee in the exercise of his rights under the Act (111. Rev. Stat. 1975, ch. 48, par. 138.4(h)), the employer argues that as of the time of plaintiff’s discharge, the legislature had neither prohibited nor provided for any remedy for a discharge resulting from the filing of a workmen’s compensation claim. As such, its authority to terminate the employee, whose contract was at will, was absolute. In this regard he cites various statutes in which the legislature has seen fit to limit the employer’s right to discharge (the wage assignment act (111. Rev. Stat. 1975, ch. 48, par. 39.11), the Service Men’s Employment Tenure Act (111. Rev. Stat. 1973, ch. 126y2, par. 33), and the Fair Employment Practices Act (111. Rev. Stat. 1973, ch. 48, par. 851 et seq.)), and correctly notes that none of these limitations are applicable to the instant case.

We are not convinced that an employer’s otherwise absolute power to terminate an employee at will should prevail when that power is exercised to prevent the employee from asserting his statutory rights under the Workmen’s Compensation Act. As we have noted, the legislature enacted the workmen’s compensation law as a comprehensive scheme to provide for efficient and expeditious remedies for injured employees. This scheme would be seriously undermined if employers were permitted to abuse their power to terminate by threatening to discharge employees for seeking compensation under the Act. We cannot ignore the fact that when faced with such a dilemma many employees, whose common law rights have been supplanted by the Act, would choose to retain their jobs, and thus, in effect, would be left without a remedy either common law or statutory. This result, which effectively relieves the employer of the responsibility expressly placed upon him by the legislature, is untenable and is contrary to the public policy as expressed in the Workmen’s Compensation Act. We cannot believe that the legislature, even in the absence of an explicit proscription against retaliatory discharge, intended such a result.

We recognize that the Court of Appeals for the Seventh Circuit has reached a contrary conclusion in construing the Illinois Workmen’s Compensation Act. In Loucks v. Star City Glass Co. (7th Cir. 1977), 551 F.2d 745, the court considered the question without the benefit of any prior decision of this court on the question involved and held that inasmuch as the legislature had not provided for a prohibition against retaliatory discharge, the employer was free to exercise its traditional right to discharge at will. Decisions of the Federal courts in construing statutes of this State are not binding on this court. For the reasons above stated, we believe that the construction adopted in Loucks contravenes the public policy of this State.

Two recent cases in other States have held that an employee has a cause of action against an employer for retaliatory discharge. Frampton v. Central Indiana Gas Co. (1973), 260 Ind. 249, 297 N.E.2d 425, and Sventko v. Kroger Co. (1976), 69 Mich. App. 644, 245 N.W.2d 151.

In Frampton, the plaintiff had been injured on the job, and received workmen’s compensation. Later, she made a claim for increased disability and received a settlement. Soon thereafter she was fired without cause, and brought an action for retaliatory discharge against the employer. In sustaining the causé of action, the Indiana Supreme Court noted that to prohibit a cause of action under such circumstances would be to sanction the ability of employers to coerce employees into forgoing their rights and by so doing unilaterally defy and destroy the function of the State’s workmen’s compensation act. See 2A A. Larson, Workmen’s Compensation sec. 68.36 (Supp. 1978).

Similarly, in Sventko, the plaintiff was discharged for filing a workmen’s compensation claim against her employer. The Michigan Appellate Court, in holding that the employee should have an action for retaliatory discharge, stated that an “employer at will is not free to discharge an employee when the reason for the discharge is an intention on the part of the employer to contravene the public policy of [the] state.” 69 Mich. App. 644, 647, 245 N.W.2d 151, 153.

There are decisions of other State courts that have held to the contrary (see Annot., 63 A.L.R.3d 979, 983 (1975)). We believe, however, that the reasoning in Frampton and Sventko is persuasive and conforms with the public policy expressed by the legislature in our workmen’s compensation act. Concerning the decision of Frampton v. Central Indiana Gas Co., we agree with the comment of Professor A. Larson that “[i]t is odd that such a decision was so long in coming.” (2A A. Larson, Workmen’s Compensation sec. 68.36 (Supp. 1978).) We do not agree with the employer’s argument that Frampton is distinguishable from the instant case because the Indiana Supreme Court “placed express reliance on Indiana’s statutory language prohibiting any ‘device’ to circumvent employers’ liabilities under the Act,” (Loucks v. Star City Glass Co. (7th Cir. 1977), 551 F.2d 745, 748), and because no analogous language can be found in the Illinois statute. While the Indiana Supreme Court may have used the statutory language to buttress its decision, the overriding principle enunciated by the court is that the workmen’s compensation statute embraced the important public policy that compensation should be available to injured workers. Certainly it cannot be argued that the absence of any language from the Act prohibiting devices whereby employers may circumvent their duties under the Act can be interpreted to mean that retaliatory discharge is less repugnant to the public policy of this State than it is to that of Indiana.

The employer argues that the exclusivity provision of section 11 of the Act, which provides that the provisions of the Act “shall be the measure of the responsibility of any employer” (Ill. Rev. Stat. 1973, ch. 48, par. 138.11) precludes an action for retaliatory discharge. Motorola argues that this conclusion is compelled because the section clearly shows that the legislature intended that the Act should be exclusive in providing for employees ’ rights and remedies. We do not agree. First, that section was meant to limit recovery by employees to the extent provided by the Act in regard to work-related injuries, and was not intended to insulate the employer from independent tort actions. Second, we cannot accept a construction of section 11 which would allow employers to put employees in a position of choosing between their jobs and seeking their remedies under the Act. As we have already discussed, to prevent such anomalous results it is necessary to allow an action for retaliatory discharge. It would be illogical to bar the action on the basis of language of the Act itself, the fundamental purpose of which is to ensure rights and remedies to employees who have compensable claims. Accordingly, we feel it is improper to interpret section 11 in the manner suggested by the employer.

The employer argues that the absence of any provisions for civil remedies for retaliatory discharge in the 1975 amendments, which make it a criminal offense for an employer to threaten or effect such a discharge (Ill. Rev. Stat. 1975, ch. 48, par. 138.4(h)), is a conscious decision by the legislature that no such civil remedy shall exist. We do not agree. As we have noted, retaliatory discharge is offensive to the public policy of this State as stated in the Workmen’s Compensation Act. This policy can only be effectively implemented and enforced by allowing a civil remedy for damages, distinct from any criminal sanctions which may be imposed on employers for violating the Act after 1975. The imposition of a small fine, enuring to the benefit of the State, does nothing to alleviate the plight of those employees who are threatened with retaliation and forgo their rights, or those who lose their jobs when they proceed to file claims under the Act. It is conceivable, moreover, that some employers would risk the threat of criminal sanction in order to escape their responsibility under the Act. Further, the fact that an act is penal in nature does not bar a civil remedy, and where a statute is enacted for the benefit of a particular class of individuals a violation of its terms may result in civil as well as criminal liability, even though the former remedy is not specifically mentioned. Heimgaertner v. Benjamin Electric Manufacturing Co. (1955), 6 Ill. 2d 152.

In Teale v. Sears, Roebuck & Co. (1976), 66 Ill. 2d 1, this court held that a discharged employee had no cause of action for compensatory and punitive damages for discharge from employment in violation of what was referred to as the “Age Discrimination Act” (Ill. Rev. Stat. 1975, ch. 48, pars. 881 to 887). In that case the Act did not specifically authorize a civil action for damages, but it did provide for a criminal penalty for a violation of the Act. However, this court found within the language of the Act an “internal restriction [which] strongly militates against, if indeed it does not preclude, expansion of the statutory sanction by implication.” (66 Ill. 2d 1, 5.) The court found the restrictive inference that flows from the language of the statute conclusive when compared to civil remedies which the General Assembly had expressly provided for other types of employment discrimination.

We now consider the award of $25,000 punitive damages. In this connection, two points merit consideration, first, whether punitive damages may generally be awarded in cases for retaliatory discharge, and second, whether the jury’s award for such damages was proper in the instant case.

It has long been established in this State that punitive or exemplary damages may be awarded when torts are committed with fraud, actual malice, deliberate violence or oppression, or when the defendant acts willfully, or with such gross negligence as to indicate a wanton disregard of the rights of others (Consolidated Coal Co. v. Haenni (1893), 146 Ill. 614). Where punitive damages may be assessed, they are allowed in the nature of punishment and as a warning and example to deter the defendant and others from committing like offenses in the future. (Eshelman v. Rawalt (1921), 298 Ill. 192, 197.) And, while the measurement of punitive damages is a jury question, the preliminary question of whether the facts of a particular case justify the imposition of punitive damages is properly one of law. Knierim v. Izzo (1961), 22 Ill. 2d 73, 87.

In the absence of the deterrent effect of punitive damages there would be little to dissuade an employer from engaging in the practice of discharging an employee for filing a workmen’s compensation claim. For example in this case, the plaintiff was entitled to only $749 compensatory damages. We noted above the very real possibility that some employers would risk the threat of criminal sanction in order to escape their responsibilities under the Act. The statute makes such conduct, as is involved in this case, a petty offense (Ill. Rev. Stat. 1975, ch. 48, par. 138.26), which is punishable by a fine not to exceed $500 (Ill. Rev. Stat. 1975, ch. 38, par. 1005—9—1(4)). The imposition on the employer of the small additional obligation to pay a wrongfuHy discharged employee compensation would do little to discourage the practice of retaliatory discharge, which mocks the public policy of this State as announced in the Workmen’s Compensation Act. In the absence of other effective means of deterrence, punitive damages must be permitted to prevent the discharging of employees for filing workmen’s compensation claims.

Contrary to the arguments presented by the defendant, there is no persuasive reason to totally rule out an award of punitive damages in an action for retaliatory discharge. The cases and authorities cited by defendant in support of his arguments are inapposite. Those cases and authorities recognize the generally accepted proposition that exemplary damages are not recoverable for wrongful discharge. (See, e.g., 56 C.J.S. Master and Servant sec. 58 (1948).) However, the validity of this proposition rests on the fact that such a cause of action sounds in contract (53 Am. Jur. 2d Master and Servant sec. 63 (1970)), and traditionally actions for breach of contract have not given rise to claims for punitive damages (see 11 Williston, Contracts sec. 1340 (3d ed. 1968)). However, the general rule has no application where, as here, the cause of action is premised upon a separate and independent tort. (Ledingham v. Blue Cross Plan for Hospital Care of Hospital Service Corp. (1975), 29 Ill. App. 3d 339, rev’d on other grounds (1976), 64 Ill. 2d 338.) Under such circumstances, when the facts permit, punitive damages may be properly awarded.

However, under the facts of the present case, we are compelled to conclude that the award for $25,000 as punitive damages was improper. As we have noted, the function of punitive damages is similar to that of a criminal penalty, i.e., as a punishment to the wrongdoer and as a means to deter such a wrongdoer and others from committing like offenses in the future. (See Mattyasovszky v. West Towns Bus Co. (1975), 61 Ill. 2d 31.) Because of their penal nature, punitive damages are not favored in the law, and the courts must take caution to see that punitive damages are not improperly or unwisely awarded. (See Eshelman v. Rawalt (1921), 298 Ill. 192, 197.) Adherence to this rule compels us to conclude that punitive damages should not be awarded where, as here, the cause of action forming the basis for their award is a novel one.

In this regard, we find the reasoning of Nees v. Hocks (1975), 272 Ore. 210, 536 P.2d 512, persuasive. In that case, an employee who was dismissed because she went on jury duty brought an action against her employer for retaliatory discharge. The Supreme Court of Oregon sustained the cause of action and allowed the recovery of compensatory damages, but in denying recovery for punitive damages, held:

“If we held that punitive damages could be awarded in the present case we would be permitting the jury to punish defendants for conduct which they could not have determined beforehand was even actionable. The assessment of punitive damages has some of the same functions as the sanctions of criminal law [citation]. The sanctions of the criminal law cannot constitutionally be imposed when the criminality of the conduct is not capable of being known beforehand.” (272 Ore. 210, 220-21, 536 P.2d 512, 517.)

Similar considerations apply in the instant case. At the time of plaintiff’s discharge there was no provision in the Act making it unlawful to discharge an employee for seeking relief under its provisions. Also, at that time there was no decision of this court holding that a retaliatory discharge in such cases was actionable. The opinion of the Indiana Supreme Court in Frampton was filed on May 1, 1973, only one month before the plaintiff in this case was discharged. Sventko was not decided by the Michigan Appellate Court until 1976. As against this absence of authority which would alert the defendant to the existence of a cause of action for discharging the plaintiff for pursuing her compensation claim, there was authority which would have reasonably caused the defendant to conclude that its conduct was not actionable. Plaintiff was an employee not for a specific term but at will, and generally, an employer may discharge such an employee whenever and for whatever cause he chooses without incurring liability. (53 Am. Jur. 2d Master and Servant sec. 43 (1970).) Also, at the time of plaintiff’s discharge, there had been decisions in other States that had held that retaliatory discharge for seeking such relief was not actionable. (Christy v. Petrus (1956), 365 Mo. 1187, 295 S.W.2d 122; Raley v. Darling Shop of Greenville, Inc. (1950), 216 S.C. 536, 59 S.E.2d 148.) In summary, the cause of action asserted here was novel and there was no statutory or judicial pronouncement which would have caused the defendant to believe that its conduct was actionable while there was authority which would reasonably cause one to believe that it was not. Under these circumstances, although we hold that the plaintiff is entitled to compensatory damages, we conclude that it would be extremely unfair to sustain an award against the defendant for punitive damages. (See People v. Patton (1974), 57 Ill. 2d 43; Bassi v. Langloss (1961), 22 Ill. 2d 190; In re Luster (1957), 12 Ill. 2d 25.) We hold that punitive damages may properly be awarded in cases such as the one under consideration for retaliatory discharge subsequent to the date this opinion is filed. However, we hold that it was improper for the trial court to award punitive damages in this case.

In summary, the judgment of the appellate court denying plaintiff a cause of action for retaliatory discharge is reversed. Plaintiff’s award in the amount of $749 compensatory damages by the trial court is affirmed, but the trial court’s order for $25,000 punitive damages is reversed.

Appellate court reversed; circuit court affirmed in part and reversed in part.

MR. JUSTICE KLUCZYNSKI took no part in the consideration or decision of this case.