William Berrington v. Wal-Mart Stores, Inc. , 696 F.3d 604 ( 2012 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 12a0292p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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WILLIAM BERRINGTON,
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Plaintiff-Appellant,
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No. 11-1988
v.
,
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Defendant-Appellee. -
WAL-MART STORES, INC.,
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Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 1:10-cv-427—Paul Lewis Maloney, Chief District Judge.
Decided and Filed: August 30, 2012
Before: ROGERS and KETHLEDGE, Circuit Judges; MARBLEY, District Judge.*
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COUNSEL
ON BRIEF: William F. Piper, WILLIAM F. PIPER, PLC, Portage, Michigan, for
Appellant. Michael P. Palmer, BARNES & THORNBURG LLP, South Bend, Indiana,
Kelly A. Petrocelli, BARNES & THORNBURG LLP, Grand Rapids, Michigan, for
Appellee.
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OPINION
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ALGENON L. MARBLEY, District Judge. Plaintiff-Appellant William
Berrington alleges that Defendant-Appellee Wal-Mart Stores, Inc. (“Wal-Mart”)
wrongfully refused to rehire him because he filed for unemployment benefits. The
district court dismissed Berrington’s lawsuit pursuant to Federal Rule of Civil Procedure
12(b)(6), finding no basis to hold that Michigan courts would recognize Berrington’s
*
The Honorable Algenon L. Marbley, United States District Judge for the Southern District of
Ohio, sitting by designation.
1
No. 11-1988 Berrington v. Wal-Mart Page 2
cause of action. Berrington appeals, arguing that the district court erred by ruling that
his Complaint fails to state a public policy cause of action under Michigan law for an
employer’s refusal to hire or rehire an individual in retaliation against that person for
filing for unemployment benefits. In the alternative, Berrington claims the district court
should have certified the issue to the Michigan Supreme Court. We affirm the district
court.
I. BACKGROUND
In November 2003, Berrington began working for Wal-Mart in its West Main
Street store located in Kalamazoo County, Michigan. During his employ, Berrington
took a number of approved leaves of absence. On February 22, 2007, Berrington began
a leave of absence that was approved through April 30, 2007. Berrington, however, did
not return to work after April 30. Berrington claims that because of the leave of absence
time he had accumulated, and because of conversations he had with Wal-Mart managers,
he did not believe he needed to update or extend his leave of absence that ended on April
30, 2007.
In mid-May, a personnel manager contacted Berrington and told him to update
his leave of absence paperwork, which Berrington did. Three days after Berrington
updated his leave of absence paperwork, however, Berrington was summoned to the
store and informed that based on store policy, he would be terminated for not returning
to work at the end of his leave of absence. Berrington was told by Wal-Mart that he
could be rehired after ninety days.
Berrington applied for unemployment benefits with the State of Michigan, with
the understanding that he had been involuntarily terminated. Wal-Mart opposed
Berrington’s request for unemployment benefits on the basis that Berrington had quit his
job of his own volition. Wal-Mart’s termination documents indicated that Berrington
voluntarily terminated his employment by failing to return from a leave of absence. The
paperwork also recommended rehiring Berrington. While the dispute over
unemployment benefits was ongoing, ninety days passed and Berrington reapplied for
No. 11-1988 Berrington v. Wal-Mart Page 3
employment with Wal-Mart. Wal-Mart did not offer Berrington a position. After
another ninety days passed, Berrington reapplied a second time for a position at the same
West Main Street Wal-Mart store, again without success. Since August 2007, the Wal-
Mart store on West Main Street has hired a number of employees to positions for which
Berrington is qualified. Berrington contends Wal-Mart refused to hire him because he
filed for unemployment benefits, which he eventually received.
On March 31, 2010, Berrington filed his Complaint against Wal-Mart in the
Ninth Circuit Court in Kalamazoo County, Michigan, alleging the above facts. The
Complaint contains a single cause of action, claiming Wal-Mart violated Michigan
public policy by refusing to rehire him because he filed for unemployment benefits. On
May 3, 2010, Wal-Mart removed the action to federal court based on diversity
jurisdiction under 28 U.S.C. § 1332, and subsequently moved to dismiss Berrington’s
Complaint. On July 28, 2011, the district court rendered an opinion and order granting
Wal-Mart’s motion to dismiss, concluding that since “[n]either the Michigan Supreme
Court nor the Michigan Court of Appeals have indicated any willingness to expand the
wrongful termination public policy exception to the employment-at-will presumption to
the hiring or rehiring context . . . this Court has no basis to find that Michigan state
courts would recognize Berrington’s cause of action.” Berrington v. Wal-Mart Stores,
Inc., 799 F. Supp. 2d 772, 777 (W.D. Mich. July 28, 2011). The district court entered
judgment in favor of Wal-Mart. This appeal followed.
II. LAW AND ANALYSIS
A. Standard of Review
We review de novo a district court’s decision to grant or deny a motion to
dismiss under Rule 12(b)(6) for failure to state a claim, using the same standards
employed by the district court. Fritz v. Charter Twp. of Comstock, 592 F.3d 718, 722
(6th Cir. 2010). When considering a motion to dismiss, we must accept as true any well-
pleaded factual allegations in the plaintiff’s complaint, see JPMorgan Chase Bank, N.A.
v. Winget, 510 F.3d 577, 581 (6th Cir. 2007), but we need not accept any legal
No. 11-1988 Berrington v. Wal-Mart Page 4
conclusions or unwarranted factual inferences. Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). Additionally, the Supreme Court has held that we should review de novo a
district court’s interpretation of state law in diversity cases. See Salve Regina Coll. v.
Russell, 499 U.S. 225, 231 (1991); see also Andrews v. Columbia Gas Transmission
Corp., 544 F.3d 618, 624 (6th Cir. 2008).
B. Berrington’s Wrongful Failure to Rehire Claim
Berrington’s appeal presents us with the question of whether Michigan law
recognizes a public policy cause of action for an employer’s wrongful refusal to rehire
because an individual claimed unemployment benefits. In this action arising under
federal diversity jurisdiction, we apply the substantive law of Michigan, as the forum
state. CenTra, Inc. v. Estrin, 538 F.3d 402, 409 (6th Cir. 2008). Faithful application of
a state’s law requires federal courts to “anticipate how the relevant state’s highest court
would rule in the case,” and in doing so we are “bound by controlling decisions of that
court.” In re Dow Corning Corp., 419 F.3d 543, 549 (6th Cir. 2005). Where the
Michigan Supreme Court has not addressed the issue presented, “we must predict how
the court would rule by looking to all the available data,” Allstate Ins. Co. v. Thrifty
Rent-A-Car Sys. Inc., 249 F.3d 450, 454 (6th Cir. 2001); however, decisions by “the
Michigan Court of Appeals are binding authority where the Michigan Supreme Court
has never addressed the issue decided therein.” Morrison v. B. Braun Med. Inc., 663
F.3d 251, 257 n.1 (6th Cir. 2011). Federal courts should be “extremely cautious about
adopting ‘substantive innovation’ in state law.” Combs v. Int’l Ins. Co., 354 F.3d 568,
578 (6th Cir. 2004) (citation omitted).
Berrington admits that the Michigan Supreme Court has not ruled on whether an
employer’s refusal to hire or re-hire an individual in retaliation against a person because
he filed for unemployment benefits states a private cause of action under Michigan law.
Berrington insists, however, that the Michigan Supreme Court “would not hesitate” to
recognize such a claim in order to vindicate the state legislature’s established public
policy of encouraging dismissed workers to file for unemployment benefits, set forth in
No. 11-1988 Berrington v. Wal-Mart Page 5
the Michigan Employment Security Act (“MESA”), Mich. Comp. Laws § 421.1 et seq.1
Wal-Mart defends the district court’s dismissal of Berrington’s claim on two bases:
Berrington’s failure to rehire claim is not based on a recognized public policy; and, even
if such a public policy exists, Berrington’s request for this Court to create a new tort of
wrongful failure to rehire in violation of public policy lacks any support in authority.
The employment relationship between Berrington and Wal-Mart was
employment at will. Michigan’s general rule regarding termination of an at-will
employee is that either party may terminate the employment contract at any time for any
or no reason. See Suchodolski v. Mich. Consol. Gas Co., 316 N.W.2d 710, 711 (Mich.
1982) (per curium). Michigan courts, however, “recognize an exception to this rule
when the grounds for termination violate public policy.” Morrison, 663 F.3d at 256
(citing Suchodolski, 316 N.W.2d at 711). Public policy proscriptions against terminating
an at-will employee are found most often in one of three situations: “(1) ‘adverse
treatment of employees who act in accordance with a statutory right or duty,’ (2) an
employee’s ‘failure or refusal to violate a law in the course of employment,’ or (3) an
‘employee’s exercise of a right conferred by a well established legislative enactment.’”
Kimmelman v. Heather Downs Mgt. Ltd., 753 N.W.2d 265, 268 (Mich. Ct. App. 2008)
(quoting Suchodolski, 316 N.W.2d at 711–12).
1
The Sixth Circuit previously has summarized an employer’s duties under Michigan’s
unemployment compensation benefits scheme:
Under MESA, Michigan employers are required by state law to remit payments to the
MESC to maintain the fund from which unemployment benefits are paid to workers who
have lost their jobs through no fault of their own. An employer’s rate of contribution
under MESA is obtained through application of a complicated statutory formula. In the
simplest case, a new employer is merely required to provide MESC with a 2.7 percent
contribution. In the most complex case, an employer with an experience rating based
on years of participation must make contributions at a rate computed by a four-factor
formula.
There are four components that comprise the unemployment tax for employers with an
employment history: (1) chargeable benefits component (CBC); (2) nonchargeable
benefits component; (3) account building component (ABC); and (4) solvency tax. Of
the foregoing elements, the CBC and the ABC are directly related to the employer’s
employment history, and directly affect the employer’s “experience rating.”
Mich. Empl. Sec. Comm’n v. Wolverine Radio Co. (In re Wolverine Radio Co.), 930 F.2d 1132, 1137 n.4
(6th Cir. 1991) (internal citations omitted).
No. 11-1988 Berrington v. Wal-Mart Page 6
Berrington argues his claim for wrongful failure to rehire is cognizable as a
violation of Michigan’s public policy under Suchodolski’s third category, to prohibit
retaliation against employees “for exercising a right conferred by a well-established
legislative enactment.” See Suchodolski, 316 N.W.2d at 712. Berrington claims the
Michigan Legislature has expressly declared a strong public policy for providing
unemployment benefits to deserving individuals;2 and, further, the district court of the
Eastern District of Michigan has recognized an anti-retaliation claim in the
unemployment benefits context pursuant to that public policy. See Stencel v. Augat
Wiring Systems, 173 F. Supp. 2d 669, 679 (E.D. Mich. 2001).
In Stencel, the Eastern District of Michigan acknowledged the plaintiff’s
Michigan law public policy claim of retaliatory discharge for filing unemployment
benefits. See id. (stating, “[plaintiff’s] claim would fall under the third [Suchodolski]
type of public policy case,” but ultimately dismissing plaintiff’s claim for failure to show
causation). The Stencel Court analogized the wrongful termination claim asserted there
to claims of wrongful termination in violation of the Legislature’s similar public policy
for claiming worker’s compensation benefits. Id.; see, e.g., Sventko v. Kroger Co.,
245 N.W.2d 151 (Mich. Ct. App. 1976). The court reasoned that “[l]ike the Worker’s
Disability Compensation Act . . . the MESA is a legislative construct intended to provide
relief from hardship caused by involuntary unemployment.” Stencel, 173 F. Supp. 2d
at 679 (citing Paschke v. Retool Indus., 519 N.W.2d 441 (Mich. 1994)).
2
Berrington relies on Section 421.2 of the MESA, which states as follows:
Sec. 2. Declaration of Policy.
The legislature acting in the exercise of the police power of the state declares that the
public policy of the state is as follows: Economic insecurity due to unemployment is a
serious menace to the health, morals, and welfare of the people of this state. Involuntary
unemployment is a subject of general interest and concern which requires action by the
legislature to prevent its spread and to lighten its burden which so often falls with
crushing force upon the unemployed worker and his or her family, to the detriment of
the welfare of the people of this state. Social security requires protection against this
hazard of our economic life. Employers should be encouraged to provide stable
employment. The systematic accumulation of funds during periods of employment to
provide benefits for periods of unemployment by the setting aside of unemployment
reserves to be used for the benefit of persons unemployed through no fault of their own,
thus maintaining purchasing power and limiting the serious social consequences of relief
assistance, is for the public good, and the general welfare of the people of this state.
Mich. Comp. Laws § 421.2.
No. 11-1988 Berrington v. Wal-Mart Page 7
Berrington argues his claim should be recognized as well, because the established
public policy behind the MESA is equally against refusing to rehire an employee on the
basis of claiming unemployment benefits, as it is against terminating an employee on
that basis. The common denominator in all the recognized public policy exceptions to
at-will employment is the existence of an employment relationship. An employee’s right
to be hired or rehired by an employer, on the other hand, has never been recognized as
actionable, under common law on public policy grounds. As the district court stated
below, “Berrington acknowledges that no Michigan state court has considered whether
a failure to rehire may violate public policy.” Berrington, 799 F. Supp 2d at 775
(emphasis added). In fact, neither party has been able to provide a single decision from
any jurisdiction enforcing a retaliatory failure to rehire claim in state common law or
public policy, absent some other statutory basis.3
The district court opined that “Berrington’s legal theory may ultimately be
validated by a Michigan state court,” Berrington, 799 F. Supp. 2d at 776; and, indeed,
Berrington’s proposed equating of failure to rehire with termination is not without its
supporters.4 Without any indications from binding or persuasive authority that Michigan
courts are prepared to recognize a private claim for wrongful failure to rehire, however,
even if we were inclined to accept Berrington’s rationale, our precedent requires us to
refrain from doing so on behalf of the Michigan Supreme Court. See Combs, 354 F.3d
at 577–78 (stating “federal courts sitting in a diversity case are in ‘a particularly poor
3
At least one federal court has found it “likely” that a claim for wrongful failure to rehire would
be recognized as a state public policy action. See Simonson v. Trinity Reg’l Health Sys., 221 F. Supp. 2d
982, 997 (N.D. Iowa 2002) (presuming “a cause of action for wrongful failure to rehire in retaliation for
seeking workers’ compensation benefits [in violation of public policy] is cognizable in Iowa, which the
court believes is likely the case”). That claim, however, was for retaliation for seeking worker’s
compensation benefits, not unemployment benefits.
4
See, e.g., Mark A. Rothenstein, Wrongful Refusal To Hire; Attacking The Other Half of the
Employment-At-Will-Rule, 24 Conn. L. Rev. 97, 123 (1991-1992) (arguing, “[t]he public policy
implications of employer coercion of employees to accept illegal conditions are similar, regardless of
whether they come in the context of a hiring demand or a firing threat”).
No. 11-1988 Berrington v. Wal-Mart Page 8
position . . . to endorse [a] fundamental policy innovation . . . .’”) (quoting Dayton v.
Peck, Stow & Wilcox Co. (Pexto), 739 F.2d 690, 694 (1st Cir. 1984)).5
The district court was correct in declining to carve an unprecedented category of
public policy claims out of Michigan law in this case, and it did not err in granting Wal-
Mart’s motion to dismiss Berrington’s Complaint.
C. Certification to the Michigan Supreme Court
Berrington’s alternative argument that the Court should certify the question to
the Michigan Supreme Court, which he raises as an afterthought and for the first time
here on appeal, is denied. While we have discretion to certify unsettled questions of
state law to a state supreme court, see, e.g., Am. Booksellers Found. for Free Expression
v. Strickland, 601 F.3d 622, 625 (6th Cir. 2010), “the federal courts generally will not
trouble our sister state courts every time an arguably unsettled question of state law
comes across our desks.” Pennington v. State Farm Mut. Auto. Ins. Co., 553 F.3d 447,
450 (6th Cir. 2009) (internal quotation marks omitted). Where, as here, “we see a
reasonably clear and principled course, we will seek to follow it ourselves.” Id.; see also
Geronimo v. Caterpillar, Inc., 440 F. App’x 442, 449 (6th Cir. 2011) (“‘[T]he
appropriate time to seek certification of a state-law issue is before a District Court
resolves the issue, not after receiving an unfavorable ruling.’”) (unpublished opinion)
(quoting Local 219 Plumbing & Pipefitting Indus. Pension Fund v. Buck Consultants,
LLC, 311 F. App’x 827, 831 (6th Cir. 2009)). It is clear that Michigan courts do not
recognize the cause of action appellant urges us to adopt.
The district court’s judgment is affirmed.
5
Our restraint in this regard closely follows our prior decision in Peck v. Elyria Foundry Co.,
347 F. App’x 139 (6th Cir. 2009) (unpublished opinion). The plaintiff in Peck asserted a “failure to hire”
sex discrimination claim under Ohio public policy, but like Berrington “direct[ed] us to no case suggesting
that Ohio would extend the [public policy] tort” to a failure to hire scenario. Id. at 147–48 (thus holding,
“we can quickly dispense with Peck’s argument that the district court erred by refusing to allow her to
amend her complaint to set forth a public policy tort of refusal to hire”).