House v. Iacovelli , 94 N.E.3d 599 ( 2018 )

[Cite as House v. Iacovelli, 2018-Ohio-443.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF MEDINA )
CHRISTINE HOUSE C.A. No. 16CA0087-M
Appellant
v. APPEAL FROM JUDGMENT
ENTERED IN THE
BRUCE IACOVELLI, et al. COURT OF COMMON PLEAS
COUNTY OF MEDINA, OHIO
Appellees CASE No. 15CIV0781
DECISION AND JOURNAL ENTRY
Dated: February 5, 2018
CARR, Presiding Judge.
{¶1} Appellant, Christine House, appeals the judgment of the Medina County Court of
Common Pleas. This Court affirms in part, reverses in part, and remands.
I.
{¶2} On August 7, 2015, House filed a complaint against Iacovelli and Windward
Enterprises alleging claims of wrongful termination, conversion, and violations of the Fair Labor
Standards Act. Iacovelli promptly filed an answer generally denying the claims in the complaint.
{¶3} With leave of court, House filed an amended complaint alleging a sole count of
wrongful termination in violation of public policy. House alleged that Iacovelli had refused to
comply with multiple provisions in R.C. Chapter 4141 by failing to accurately report House’s
income and make the requisite contributions to Ohio’s unemployment compensation insurance
program. The allegations centered on House’s tenure as a server at the Riverstone Tavern, a
restaurant that is operated by Iacovelli and his business, Windward Enterprises. House worked
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35 to 50 hours per week and was paid at a variable hourly rate that accounted for her ability to
collect tips depending on the time of the shift. House alleged that she approached Iacovelli to
address concerns about the payroll not accurately reflecting the amount of pay and tips that she
had earned. Iacovelli admitted that he had failed to pay for all of House’s unemployment
compensation insurance under Ohio law. The amended complaint specified that Iacovelli
admitted to underreporting her income by $11,000. House further alleged that instead of
addressing the issue, Iacovelli accused House of creating “too much drama” and terminated her
employment. After she was fired, Iacovelli urged House to mislead the Ohio Department of Jobs
and Family Services (“ODJFS”) by stating that she was terminated for “lack of work” in order to
qualify for unemployment benefits. In exchange for her cooperation in this ploy, Iacovelli
offered to pay House $150 every two weeks to offset her refused unemployment compensation
due to Iacovelli’s failure to make adequate payments under the unemployment compensation
insurance program. House stressed in her amended complaint that she did not agree to
participate in Iacovelli’s “joint schemes to defraud the government and cheat her out of
employment benefits.”
{¶4} Iacovelli initially filed a motion to dismiss the amended complaint pursuant to
Civ.R. 12(B)(6). House filed a brief in opposition to the motion. The trial court issued a journal
entry denying the motion to dismiss on August 18, 2016.
{¶5} When Iacovelli did not file an answer to the amended complaint within fourteen
days of the denial of the motion to dismiss, House filed a motion for default judgment. Iacovelli
promptly filed a motion for leave to file an answer instanter and objection to the motion for
default judgment. The trial court issued a journal entry granting Iacovelli’s motion and
recognizing the filing of the answer to the amended complaint.
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{¶6} Thereafter, Iacovelli filed a second “motion to dismiss” wherein he argued that he
should be dismissed from the lawsuit because the nature of House’s claim implicated only
Windward Enterprises as a corporate entity and not Iacovelli in his individual capacity. The trial
court denied the motion on the basis that it was untimely and Iacovelli had failed to obtain leave
of court. In so doing, the trial court noted that the matter was set for trial on October 17, 2016,
and that Iacovelli had not filed his motion until September 23, 2016.
{¶7} On October 3, 2016, Iacovelli filed a motion for a pretrial determination regarding
the first two elements of House’s wrongful termination claim. Iacovelli stressed that the trial
court should hold a pretrial hearing because the clarity and jeopardy elements of House’s claim
involved questions of law. In the alternative, Iacovelli requested that the trial court reopen
summary judgment proceedings. House filed multiple briefs in opposition to Iacovelli’s motion
for a pretrial determination. The trial court subsequently issued a journal entry wherein it
scheduled the matter for a non-oral hearing and set a deadline for the filing of briefs and
memoranda. Thereafter, House filed a “position statement on public policy at issue[.]” Iacovelli
filed a responsive brief in support of his motion for a pretrial determination. On November 21,
2016, the trial court issued a journal entry concluding that while House satisfied the clarity
element in support of her public policy wrongful termination claim, she had failed to satisfy the
jeopardy as a matter of law. The trial court dismissed the sole claim in the amended complaint.
{¶8} On appeal, House raises three assignments of error.
II.
ASSIGNMENT OF ERROR I
THE TRIAL COURT ERRED TO THE PREJUDICE OF THE APPELLANT BY
DISMISSING THE PUBLIC TORT CLAIM UNDER THE THEORY THE
APPELLANT COULD NOT PROVE THE JEOPARDY ELEMENT OF THE
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CLAIM WAS SATISFIED BECAUSE OF THE ADEQUACY OF THE
STATUTORY REMEDIES.
{¶9} In her first assignment of error, House contends that the trial court erred by
dismissing this matter on the grounds that she could not satisfy the jeopardy element of her
wrongful termination claim. House argues that the statutory remedies set forth in R.C. 4141.27
fail to adequately protect society’s public policy interest in establishing and maintaining an
unemployment compensation program. This Court agrees.
{¶10} In Greeley v. Miami Valley Maint. Constrs., Inc., 49 Ohio St.3d 228 (1990), the
Supreme Court of Ohio set forth a public policy exception to the employment at will doctrine
and held that an employee could maintain a private cause of action against an employer when the
employee is discharged or disciplined for a reason which is proscribed by statute. Greeley at
paragraph one of the syllabus. Though Greeley dealt with a statutory based claim, the court
specified that a private cause of action for wrongful discharge need not be predicated on a
violation of a specific statute. Greeley at 235. While the high court grappled with the scope of
the public policy exception in a number of decisions that followed Greeley, the court ultimately
reaffirmed its prior precedent and held that “an exception to the employment-at-will doctrine is
justified where an employer has discharged his employee in contravention of a ‘sufficiently clear
public policy.’” Painter v. Graley, 70 Ohio St.3d 377, 384 (1994).
{¶11} In determining whether a plaintiff could maintain a public policy claim, the
Supreme Court has relied on the standard established in Collins v. Rizkana, 73 Ohio St.3d 65(1995). See Wiles v. Medina Auto Parts, 96 Ohio St.3d 240. The high court has stated that the
following four elements must be present in order to establish a public policy wrongful
termination claim:
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1. That [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. That dismissing employees under circumstances like those involved in the
plaintiff’s dismissal would jeopardize the public policy (the jeopardy
element).
3. The plaintiff’s dismissal was motivated by conduct related to the public
policy (the causation element).
4. The employer lacked overriding legitimate business justification for the
dismissal (the overriding justification element).”
(Emphasis sic.) (Internal citations and quotations omitted). Urda v. Buckingham, Doolittle, &
Burroughs, 9th Dist. Summit No. 23226, 2006-Ohio-6915, ¶ 15, quoting Collins at 69-70.
{¶12} The clarity and jeopardy elements “involve relatively pure law and policy
questions.” Collins at 70. It is well settled that the clarity and jeopardy elements of the test are
issues for the trial court’s determination; while the causation and overriding justification
elements are questions for determination by the fact finder. Dohme v. Eurand Am., Inc., 130
Ohio St.3d 168, 2011-Ohio-4609, ¶ 17, citing Collins at 70.
Background
{¶13} In its November 21, 2016 order dismissing House’s amended complaint, the trial
court determined that House satisfied the clarity element because there is a clear public policy
manifested in a state statute that employers should accurately report employees’ pay and tips to
the Ohio Bureau of Unemployment Compensation. With respect to the jeopardy element,
however, the trial court determined that House failed to satisfy that element of her claim for
wrongful termination as a matter of law. In reaching this conclusion, the trial court reasoned that
“there already exists a statutory remedy that adequately protects society’s interests[] [as] R.C.
4141.27 provides that the Attorney General may bring such actions for violations of R.C.
4141.01 to R.C. 4141.46.”
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Discussion
{¶14} At the outset, we note that Iacovelli’s “motion for a pretrial determination” was
not a valid motion under the Ohio Rules of Civil Procedure. A defendant may challenge the
plaintiff’s ability to satisfy the clarity and jeopardy elements in a wrongful termination/retaliation
action in multiple ways, including a Civ.R. 12 motion or a motion for summary judgment filed
pursuant to Civ.R. 56(C). See generally Coon v. Tech. Constr. Specialties, Inc., 9th Dist.
Summit No. 22317, 2005-Ohio-4080, ¶ 4-5, 26 (addressing the jeopardy element in a motion for
judgment on the pleadings); Giannini-Baur v. Schwab Ret. Plan Servs., 9th Dist. Summit No.
25172, 2010-Ohio-6424, ¶ 28 (addressing the clarity element at the summary judgment stage).
In this case, however, Iacovelli waited until after the deadline for the filing of dispositive
motions and then filed a motion seeking the dismissal of the amended complaint on the basis that
House could not satisfy the clarity and jeopardy elements of her claim. Nevertheless, despite
having denied a prior motion to dismiss on the basis that it was untimely, the trial court
entertained the “pretrial determination” motion and ultimately dismissed the action on the
grounds that House could not satisfy the jeopardy element of her claim as a matter of law.
{¶15} As Iacovelli’s motion raised purely legal issues, this Court applies a de novo
standard of review. See Eagle v. Fred Martin Motor Co., 157 Ohio App.3d 150, 2004-Ohio-829,
¶ 11. When reviewing a matter de novo, this court does not give deference to the trial court’s
decision. Id.{¶16} The Supreme Court of Ohio has explained that analyzing the jeopardy element of
a public policy wrongful termination action requires assessing whether prohibiting the action
from going forward would compromise the objectives of the public policy in question. Wiles v.
Medina Auto Parts, 96 Ohio St.3d 240, 244. Thus,“[a]n analysis of the jeopardy element
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necessarily involves inquiring into the existence of any alternative means of promoting the
particular public policy to be vindicated by the common-law wrongful discharge claim.” Wiles
at 244. The public policy expressed in a statute is not jeopardized by the absence of a wrongful
termination action when the aggrieved employee “has an alternate means of vindicating his or
her statutory rights[,] [] thereby discouraging an employer from engaging in the unlawful
conduct.” Id. “Wiles made clear that the method to determine whether a plaintiff can file
statutory and public policy causes of action involves reviewing the adequacy of the remedy, not
ensuring the aggrieved party receives the greatest recovery.” Coon, 2005-Ohio-4080, at ¶ 23,
citing Wiles at 248. “[A] remedy is not inadequate merely because it does not allow for all
avenues of recovery.” Coon at ¶ 22.
{¶17} In Wiles, the Supreme Court concluded that recognizing a common law tort action
was unnecessary because the statute in question, the Family and Medical Leave Act, included a
comprehensive remedial scheme that provided the employee with “a meaningful opportunity to
place himself or herself in the same position the employee would have been absent the
employer’s violation of the FMLA.” Wiles at 245. Specifically, the statute allowed the
employee to recover “(1) compensatory damages for the salary he lost following his demotion,
(2) liquidated damages * * *, (3) prejudgment interest, (4) reasonable attorney fees, and (5)
appropriate equitable relief, including front pay and/or reinstatement to the managerial position
he held prior to taking his FMLA leave.” Id. Relying on Wiles, this Court similarly held that a
separate public policy cause of action was unnecessary for a violation of the worker’s
compensation retaliation statute set forth in R.C. 4123.90 because the statutory remedies
provided the employee with “a ‘meaningful opportunity’ to return to the same position he was in
prior to the adverse action by the employer.” Coon at ¶ 26, quoting Wiles at 245.
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{¶18} In this case, the trial court erred by concluding that House could not satisfy the
jeopardy element of her claim. The trial court dismissed the amended complaint solely on the
grounds that society’s interests are adequately protected by R.C. 4141.27. Though R.C. 4141.27
does set forth the procedure by which the Attorney General may file suit against noncomplying
employers, the statute makes no mention of remedies available to the aggrieved employee when
the employer refuses to comply. While Iacovelli cites to this Court’s decision in Coon in defense
of the trial court’s judgment, we emphasized in Coon that “the purpose of a remedy in a
wrongful termination case is * * * to deter the employer from violating the law and to place the
employee in the position they would have been had the employer not violated the law.” Coon at
¶ 26. R.C. 4141.27 does not contain any provision that would provide House with a “meaningful
opportunity” to return to the position she occupied prior to the adverse employment action. See
Coon at ¶ 26, citing Wiles at 245. Iacovelli suggests that the statute sets forth a private remedy in
R.C. 4141.281(A), which allows an employee to file an administrative appeal of the
determination of unemployment compensation “benefit rights” by the director of the ODJFS. It
stands to reason that the first step an employee would take upon noticing a payroll discrepancy is
to raise that issue with their employer. While the administrative appeal process provides a viable
mechanism to challenge a determination of benefits, it fails to set forth a remedial scheme for a
situation such as this where an employee is terminated merely for inquiring about why her pay
did not reflect the amount she had earned. Under these circumstances, we cannot accept
Iacovelli’s contention that the administrative appeal process provides House with a meaningful
opportunity to return to the position she was in prior to the time she approached Iacovelli with
her concerns.
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{¶19} Moreover, the particular circumstances of this case illustrate why disallowing
House to proceed with her claim could have a chilling effect on the willingness of employees to
report violations. House alleged in the amended complaint that when she approached Iacovelli
to address discrepancies with her pay, Iacovelli admitted to underreporting her income and
failing to make payments to the unemployment compensation insurance fund. Instead of
rectifying the issue, Iacovelli not only terminated House on account of the fact that she was
creating “too much drama,” but also attempted to leverage House into participating in a scheme
where she would be compensated for intentionally misleading the ODJFS. Absent adequate
statutory remedies, House must be allowed to pursue a public policy wrongful termination claim
in order to avoid fostering an environment where employees face the prospect of losing their jobs
when they seek to obtain the benefits they have earned under the law.
{¶20} House’s first assignment of error is sustained.
ASSIGNMENT OF ERROR III
THE TRIAL COURT ERRED TO THE PREJUDICE OF THE APPELLANT BY
NOT GRANTING A MOTION FOR DEFAULT JUDGMENT GIVEN [THAT]
THE APPELLEE FAILED TO FILE AN ANSWER ON TIME AFTER ITS
MOTION TO DISMISS WAS OVERRULED.
{¶21} In her third assignment of error, House contends that the trial court erred when it
denied her motion for default judgment. This Court disagrees.
{¶22} A trial court’s ruling on a motion for default judgment is reviewed for an abuse of
discretion. Deutsche Bank Nat’l Trust Co. v. Patrino, 9th Dist. Summit No. 24183, 2008-Ohio-
5235, ¶ 6. An abuse of discretion is more than an error of judgment; it means that the trial court
was unreasonable, arbitrary, or unconscionable in its ruling. Blakemore v. Blakemore, 5 Ohio
St.3d 217, 219 (1983). When applying the abuse of discretion standard, this Court may not
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substitute its judgment for that of the trial court. Pons v. Ohio State Med. Bd., 66 Ohio St.3d
619, 621 (1993).
{¶23} As noted above, Iacovelli initially filed a motion to dismiss the amended
complaint pursuant to Civ.R. 12(B)(6). The trial court issued an order denying the motion on
August 18, 2016. Shortly thereafter, on September 8, 2016, House filed a motion for default
judgment wherein she argued that judgment should be rendered in her favor because Iacovelli
failed to file an answer to the amended complaint with 14 days of the denial of the motion to
dismiss as required by Civ.R. 12(A)(2). The next day, Iacovelli filed a motion for leave to file an
answer instanter as well as a brief in opposition to the motion for default judgment. The trial
court granted Iacovelli’s motion and deemed the answer admitted.
{¶24} On appeal, House contends that the trial court should have granted the motion for
default judgment given the “lop sided unfairness allowed to [Iacovelli]” during the course of the
trial court proceedings. House’s argument is not well taken. This case does not involve a
scenario where the defendant “failed to plead or otherwise defend” as contemplated by Civ.R.
55(A). Prior to the filing of House’s motion for default judgment, Iacovelli had keenly litigated
the dispute by filing an answer to the original complaint, as well as a motion to dismiss the
amended complaint. Moreover, though Iacovelli did not immediately file an answer to the
amended complaint subsequent to the trial court’s denial of his motion to dismiss, Iacovelli
promptly responded to the motion for default judgment by filing his answer the following day.
Under these circumstances, where Iacovelli showed a commitment to vigorously defending the
lawsuit, the trial court did not abuse its discretion by permitting Iacovelli to file an answer to the
amended complaint and rejecting the motion for default judgment.
{¶25} The third assignment of error is overruled.
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ASSIGNMENT OF ERROR II
THE TRIAL COURT ERRED TO THE PREJUDICE OF THE APPELLANT BY
GRANTING A MOTION TO QUASH A SUBPOENA SEEKING UNEMPLOYMENT
COMPENSATION RECORDS RELATING TO THE APPELLEE’S EMPLOYMENT
OF THE APPELLANT AND BY FINDING IN EFFECT OHIO R.C. 4141.21 IS
UNCONSTITUTIONAL.
{¶26} House withdrew her second assignment of error at oral argument.
III.
{¶27} House’s first assignment of error is sustained. The second assignment of error is
withdrawn. The third assignment of error is overruled. The judgment of the Medina County
Court of Common Pleas is affirmed in part, reversed in part, and the cause remanded for further
proceedings consistent with this decision.
Judgment affirmed in part
reversed in part,
and cause remanded.
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 Medina, 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.
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Costs taxed equally to both parties.
DONNA J. CARR
FOR THE COURT
TEODOSIO, J.
CALLAHAN, J.
CONCUR.
APPEARANCES:
MICHAEL T. CONWAY, Attorney at Law, for Appellant.
MICHAEL DEWINE, Attorney General, and SUSAN M. SHEFFIELD, Assistant Attorney
General, for Appellee.
WILLIAM STEIGER II and STEVE C. BAILEY, Attorneys at Law, for Appellees.