William L. Thompson v. Memphis Light, Gas and Water and Joseph Lee, III , 2011 Tenn. App. LEXIS 206 ( 2011 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
November 16, 2010 Session
WILLIAM L. THOMPSON
v.
MEMPHIS LIGHT, GAS AND WATER AND JOSEPH LEE, III
Appeal from the Circuit Court of Shelby County
CT- 001598-07 Lori K. Ridder, Judge
No. W2009-02447-COA-R3-CV - Filed April 29, 2011
This is a wrongful termination case. The plaintiff senior management employee of a public
utility was passed over for the position of president of the utility. In the meantime, federal law
enforcement authorities were investigating matters involving the utility, and federal officers
interviewed the plaintiff employee. Subsequently, the new president of the utility eliminated
the plaintiff’s job position and his employment was terminated. The plaintiff employee filed
suit against the utility, alleging violation of Tennessee’s Public Protection Act, and against
the new president of the utility, in his individual capacity, alleging tortious interference with
his employment and conspiracy. The defendants filed a motion to dismiss for failure to state
a claim. The trial court granted the motion, and the plaintiff employee appeals. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed.
H OLLY M. K IRBY, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and J. S TEVEN S TAFFORD, J., joined.
Ronald D. Krelstein, Germantown, Tennessee, for Plaintiff/Appellant, William L. Thompson.
Allan J. Wade, Brandy S. Parrish, and J. Gordon Howard, Allan J. Wade, PLLC, Memphis,
Tennessee, for Defendants/Appellees, Memphis Light Gas & Water and Joseph Lee, III in his
official capacity.
Robert L. J. Spence, Jr. and Bryan M. Meredith, SpenceWalk PLLC, Memphis, Tennessee,
for Defendant/Appellee Joseph Lee, III in his individual capacity.
OPINION
F ACTS AND P ROCEEDINGS B ELOW
This is an appeal1 from the trial court’s grant of a motion to dismiss for failure to state a claim
upon which relief can be granted under Rule 12.02(6) of the Tennessee Rules of Civil
Procedure.2 In reviewing a dismissal for failure to state a claim, the appellate court is to take
the relevant and material allegations in the complaint as true. Stein v. Davidson Hotel Co.,
945 S.W.2d 714, 716 (Tenn. 1997). In this case, the motion to dismiss was granted as to the
Third Amended Complaint, so our recitation of the facts is taken from this pleading.3
Plaintiff/Appellant William L. Thompson (“Thompson”) began working for
Defendant/Appellee Memphis Light, Gas and Water (“MLGW”) in 1965. From 1984 until
1998, Thompson served as MLGW’s Vice-President of Construction and Maintenance.4 In
1998, Thompson was appointed to the position of Senior Vice-President and Chief Operating
Officer at MLGW. He served under the former President of MLGW, Herman Morris.
At some point while Mr. Morris was President of MLGW, the Mayor of Memphis at that time,
Mayor Willie Herenton, allegedly told MLGW President Morris to hire certain attorneys for
legal work involving the issuance of bonds, and also directed that the bonds be issued by
certain banks, including the bank that employed Mayor Herenton’s son. Also during that
time, a proposed sale of MLGW was under consideration. Such a proposed sale would
1
This is the second appeal in this matter. The first appeal in this cause was Thompson v. Memphis Light,
Gas and Water Division, 244 S.W.3d 815 (Tenn. Ct. App. 2007). In the first appeal, this Court granted
summary judgment to MLGW on whether Thompson was entitled to severance benefits under an MLGW
personnel policy. See Thompson, 244 S.W.3d at 815.
2
Rule 12.02(6) provides:
Every defense, in law or fact, to a claim for relief in any pleading, whether a claim,
counterclaim, cross-claim or third-party claim, shall be asserted in the responsive pleading
thereto if one is required, except that the following defenses may at the option of the pleader
be made by motion in writing: . . . (6) failure to state a claim upon which relief can be
granted.
TENN . R. CIV . P. 12.02(6).
3
The initial complaint was filed in March 2007, and was amended in September 2007 and December 2008.
The Third Amended Complaint does not refer to these prior complaints or incorporate them by reference.
4
Thompson’s job titles prior to 1984 are not mentioned in the Third Amended Complaint.
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allegedly generate substantial fees for the same lawyers and banks. Thompson was of the
opinion that MLGW could not be sold, and believed that Mayor Herenton’s plan to transfer
money from any sale of MLGW to the city for budget purposes would violate state law, bond
covenants, and MLGW contracts with TVA. Thompson expressed these opinions in internal
discussions at MLGW.
In 2004, the Federal Bureau of Investigation (“FBI”) investigated MLGW, including an
investigation of the above activities. Federal officers interviewed Thompson.
Mr. Morris left the position of MLGW President. Thompson applied for the position, and
believed that he was well qualified, based on his experience. Thompson was interviewed for
the position of President and recommended by a search committee. Nevertheless, Mayor
Herenton nominated Defendant/Appellee Joseph Lee, III (“Lee”) to serve as President of
MLGW, and Lee assumed the position in July 2004. Thompson believed that he was more
qualified than Lee, based on Thompson’s extensive experience.
For a two-month period after he began serving as President of MLGW, Lee had virtually no
contact with Thompson or other executive staff at MLGW. During this same time period, Lee
met with union officials and other employee groups and discussed eliminating MLGW
managers and executive staff. Thompson was told that several former executives of MLGW
advised Lee that Thompson “was an employee whose continued employment with MLGW
would be of great importance to the successful operation of MLGW.”
Thereafter, Lee met with Thompson and suggested to Thompson that he retire, allegedly
strongly implying that Thompson’s employment would be terminated if he chose not to retire.
Thompson told Lee had no intention of retiring.
On September 13, 2004, Lee notified Thompson in writing that his position as Senior Vice-
President and COO of MLGW was eliminated. Thompson was informed that there were no
other positions available to him. Thompson was the only executive level employee at MLGW
whose job was eliminated. After his job was eliminated, Thompson’s job duties were
performed by others in a functionally similar capacity “without regard to the title given the
successor.”
Thompson requested a review of his job elimination before the MLGW Board of
Commissioners. He never received such a review.
On March 23, 2007, Thompson filed the instant lawsuit against MLGW and against Lee, in
his official and individual capacities, seeking damages for lost future income and retirement
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benefits.5 After several amended complaints and responses,6 Thompson filed the Third
Amended Complaint that is the subject of this appeal.
Thompson asserted that the termination of his employment constituted a violation of
Tennessee’s Public Protection Act, Tenn. Code Ann. § 50-1-304. Thompson claimed that he
had a property right in his job. He contended that he was wrongfully denied a pre-termination
hearing, contrary to MLGW’s “established custom and practice” and “in violation of his rights
as guaranteed by Article I § 8 of the Tennessee Constitution and the Fourteenth Amendment
of the United States Constitution.” Thompson further claimed that the termination of his
employment should have conformed to the MLGW “displaced employee” policy, under which
Thompson would have had the right to be placed in the position he held before becoming
MLGW’s Senior Vice-President and Chief Operating Officer, or to be placed in a comparable
position under MLGW policy, practice and procedure. He asserted that only the MLGW
Board had the authority to discharge him, and that Lee’s elimination of Thompson’s position
circumvented the Board.
As to Lee, Thompson asserted that he was guilty of tortuously interfering with Thompson’s
employment. He claimed that Lee eliminated Thompson’s job for an improper personal
purpose in that Lee “was fearful that [Thompson’s] continued presence at MLGW would
demonstrate that Lee was dependent upon the existing staff to successfully operate MLGW,”
and because Lee feared that Thompson’s experience would make more evident Lee’s lack of
relevant experience. Thompson maintained that the elimination of his job position was not
in the best interest of MLGW, and that Lee acted with malice, spite, improper motive, and to
serve his own personal interests.
Thompson further alleged a conspiracy between Lee and Mayor Herenton “to take punitive
job action against him by tortiously interfering with his job for cooperating with the federal
investigation and opposing the sale of MLGW.” Thompson claimed several overt acts in
furtherance of the conspiracy, including Lee’s action “at the behest of [Mayor] Herenton” in
persuading the Board of Commissioners to rescind MLGW’s severance benefits policy to
prevent Thompson from availing himself of any severance benefits, Lee’s unilateral
elimination of Thompson’s position, Lee’s decision not to apply the displaced employment
5
A prior lawsuit was nonsuited, and this action was brought under Tennessee’s Savings Statute, Tenn. Code
Ann. § 28-1-105.
6
The responses to the first complaint included a motion to dismiss, answers by both defendants, and a motion
for summary judgment. An amended complaint was followed by answers and another motion to dismiss.
The second amended complaint was followed by yet another motion to dismiss.
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policy to Thompson, and Lee’s refusal to place Thompson in another position, or recall
Thompson, even though there were open positions available.
In response, MLGW and Lee filed yet another motion to dismiss. The motion, filed pursuant
to Rule 12.02(6) of the Tennessee Rules of Civil Procedure, asserted that Thompson’s Third
Amended Complaint failed to state a claim upon which relief can be granted. MLGW and Lee
argued in the motion that Thompson had no right to a pre-termination hearing, did not have
a property right in his employment, did not allege any facts establishing a retaliatory motive,
and did not allege facts showing a refusal to participate in or remain silent about illegal
activities.
On November 18, 2009 the trial court issued two orders, the first as to the claims against Lee
individually, and the second as to MLGW and the claims against Lee in his official capacity.
As to the claims against Lee individually, the trial court noted that a complaint must “do more
than simply parrot the legal elements of the cause[s] of action,” citing Lee v. State Volunteer
Mut. Ins. Co., No. E2002-03127-COA-R3-CV, 2005 WL 123492, at *10 (Tenn. Ct. App. Jan.
21, 2005). It found that the Third Amended Complaint alleged tortious interference with
Thompson’s employment only in conclusory terms. Specifically, the trial court found that
Thompson, “alleges that Lee acted for an improper personal purpose and contrary to the best
interests of MLGW without alleging any facts to support these conclusions. Malice, spite or
improper motive is alleged, yet no facts are alleged to support these conclusions.” For the
same reason, it also dismissed the conspiracy claim against Lee.
As to MLGW, the trial court found that Thompson failed to state a claim under the Public
Protection Act because Thompson alleged that Lee acted outside the scope of his employment
and eliminated Thompson’s job for his own personal reasons. In order for Thompson’s Public
Protection Act claim to prevail, the trial court held, Thompson had to show that his employer,
MLGW, terminated his employment for reasons that violated the statute. Additionally, the
trial court determined that none of the allegedly illegal acts asserted were in fact illegal.
Ultimately, the trial court held that the Third Amended Complaint contained no facts showing
a relationship between any alleged refusal to participate or remain silent about illegal
activities and the termination of Thompson’s employment.
As to Thompson’s Loudermill 7 claim, the trial court noted that Thompson was an at-will
employee, and as such no cause was required to terminate his employment and neither prior
7
The Loudermill hearing is the first hearing in the grievance process, in which the employee is given the
opportunity to present reasons why he should not receive the proposed discipline. See Cleveland Bd. of
Education v. Loudermill, 470 U.S.532, 105 S. Ct. 1487 (1985).
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notice nor a post-termination hearing were required. The trial court found that Thompson did
not have a property right in his job, and had no other rights granted by statute. For all of these
reasons, the trial court granted both defendants’ motion to dismiss the Third Amended
Complaint. Thompson now appeals.
ISSUES ON A PPEAL AND S TANDARD OF R EVIEW
On appeal, Thompson asserts that the trial court erred in dismissing the Third Amended
Complaint for failure to state a claim upon which relief can be granted as to both MLGW and
Lee, individually. Specifically, Thompson asserts that he sufficiently plead the elements of
a claim against MLGW under Tennessee’s Public Protection Act, and that he alleged
sufficient facts to establish a constitutionally protected property right in his continued
employment at MLGW and entitlement to a pre-termination or Loudermill hearing.
Thompson also maintains that he alleged sufficient facts to establish the elements of a claim
for relief against Lee in his individual capacity for tortious interference with Thompson’s
employment at MLGW and conspiracy.
Our Supreme Court has recently described the standard of review for the grant of a motion
to dismiss for failure to state a claim upon which relief can be granted under Tennessee Rules
of Civil Procedure Rule 12.02(6):
A Rule 12.02(6) motion to dismiss under the Tennessee Rules of Civil
Procedure seeks “to determine whether the pleadings state a claim upon which
relief can be granted.” Edwards v. Allen, 216 S.W.3d 278, 284 (Tenn.2007).
Such a motion tests only the legal sufficiency of the complaint, not the strength
of the proof. The resolution of the motion is determined by an examination of
the pleadings alone. Cook ex rel. Uithoven v. Spinnaker's of Rivergate, Inc.,
878 S.W.2d 934, 938 (Tenn.1994) (citing Wolcotts Fin. Servs., Inc. v.
McReynolds, 807 S.W.2d 708, 710 (Tenn. Ct. App.1990)). In considering a
motion to dismiss, courts must construe the assertions in the complaint liberally;
the motion cannot be sustained unless it appears that there are no facts
warranting relief. Id. (citing Fuerst v. Methodist Hosp. S., 566 S.W.2d 847,
848–49 (Tenn.1978)). On appeal, all allegations of fact by the Plaintiffs must
be taken as true. Stein v. Davidson Hotel Co., 945 S.W.2d 714, 716 (Tenn.
1997). Our scope of review is de novo with no presumption of correctness.
Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 836 (Tenn.2008); Owens
v. Truckstops of Am., 915 S.W.2d 420, 424 (Tenn.1996).
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Leggett v. Duke Energy Corp., 308 S.W.3d 843, 851 (Tenn. 2010); see also Doe v. Cath.
Bishop for the Diocese of Memphis, 306 S.W.3d 712, 717 (Tenn. Ct. App. 2008).
A NALYSIS
Public Protection Act
Thompson asserts that he alleged sufficient facts in his Third Amended Complaint to support
a claim against MLGW under Tennessee’s Public Protection Act. Thompson argues that
Lee’s decision, acting on behalf of MLGW, to eliminate his job position was made in
violation of the Act.
Thompson claims that his employment was terminated because he was interviewed by the
F.B.I. as part of its investigation of MLGW activities.8 He asserts that, “it matters not that
the F.B.I. investigation concluded without anyone being formally charged. What does matter
is that employees have a right to assist in such investigations without fear of being discharged
for doing so.” Thompson claims that the trial court “overlooked the probability that the F.B.I.
was investigating ‘pay to play’ conduct by [Mayor] Herenton regarding his requests that
certain lawyers and banks be involved in the MLGW bond issue” and “if the steering of the
‘business’ was a payoff for political support, campaign contributions, etc., then it would be
illegal.” Thompson also points to the following allegation in his complaint: “Before the
plaintiff’s job was eliminated, the plaintiff advised Lee that certain acts of Lee were in
violation of regulations governing the operation of MLGW.” Thompson notes that the Third
Amended Complaint states that he objected to the sale of MLGW, saying that it could not be
sold, and that he said that Mayor Herenton’s plan to have monies transferred from MLGW
to the city for budgetary purposes “was prohibited by state law, bond covenants, and
contractual obligations with T.V.A.” These allegations, Thompson insists, are sufficient to
state a claim under the Public Protection Act. He emphasizes that, “a plaintiff is not required
to plead every shred of evidence that exists or might be discovered prior to trial in order to
state a claim.”
The employment-at-will doctrine is a bedrock of the Tennessee common law. Van Cleave
v. Reelfoot Bank, No. W2008-01559-COA-R3-CV, 2009 WL 3518211, at *3 (Tenn. Ct. App.
Oct. 30, 2009). (citing Franklin v. Swift Transp. Co., Inc., 210 S.W.3d 521, 527 (Tenn. Ct.
App. 2006)). Under this doctrine, an employer may terminate the employment of a person
8
Thompson argues in his appellate brief that his discharge violated a federal statute that purportedly prohibits
retaliation against an employee who is interviewed by a federal official. As no such allegation under a
federal statute was included in the Third Amended Complaint, we do not consider it here.
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employed for an indefinite term “at any time, for good cause, bad cause, or no cause at all.”
Id. (citing Franklin, 210 S.W.3d at 527).
This traditional rule, however, is not absolute; restrictions have been placed on the right of
an employer to discharge an employee. Specifically, retaliatory discharge is “an important,
but narrow, exception to the at-will doctrine,” applicable only in limited circumstances. Van
Cleave, 2009 WL 3518211, at *3 (quoting Franklin, 210 S.W.3d at 530). Here, Thompson
alleges retaliatory discharge under the Tennessee Public Protection Act, Tennessee Code
Annotated § 50-1-304. Subsection (b) of this Act provides that “[n]o employee shall be
discharged or terminated solely for refusing to participate in, or for refusing to remain silent
about, illegal activities.” T.C.A. § 50-1-304(b) (2009 Supp.). The elements required to
establish a claim under the Public Protection Act were summarized in Franklin:
To prevail under the Public Protection Act, a plaintiff must establish: (1) his
status as an employee of the defendant employer; (2) his refusal to participate
in, or remain silent about, “illegal activities” as defined under the Act; (3) his
termination; and (4) an exclusive causal relationship between his refusal to
participate in or remain silent about illegal activities and his termination.
Franklin, 210 S.W.3d at 528. Here, the parties agree that Thompson was an employee of
MLGW and that his employment was terminated. The remaining elements of the Public
Protection Act claim are disputed. We consider each in turn.
A. Illegal Activities
In the Public Protection Act, the term “illegal activities” is defined as “activities that are in
violation of the criminal or civil code of this state or the United States or any regulation
intended to protect the public health, safety or welfare.” T.C.A. § 50-1-304(a)(3) (2009
Supp.). The trial court found that the Third Amended Complaint did not allege any illegal
activities, observing: “The sale of MLGW, retaining certain lawyers, and the steering of bond
business to certain banking interests are not illegal activities.” We consider the allegations
in the Third Amended Complaint highlighted by Thompson on appeal.
First, Thompson ominously argues that there was a “probability” that the F.B.I. was
investigating “pay to play” conduct by public officials, namely, “steering business to certain
lawyers or banks as a payoff for political support, campaign contributions, etc.”
Unfortunately, much of this was not included in the Third Amended Complaint. The
Complaint states only that the F.B.I. was “investigating the affairs of MLGW” and that the
investigation involved the Mayor’s actions in steering business to certain lawyers and banks.
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“Pay to play” conduct by public officials was not mentioned and cannot be inferred from the
allegations in the Third Amended Complainant. We agree with the trial court that these
allegations in and of themselves do not sufficiently state illegal activities.
More importantly, as to Thompson, the Third Amended Complaint states only this: “The
plaintiff was interviewed by federal officers.” Nothing more. We do not know from the
Complaint what the “federal officers”9 asked Thompson, or what he said. Thus, the
Complaint simply does not allege that Thompson discussed “illegal activities” with the
unspecified “federal officers.”
As to the proposed sale of MLGW, the Third Amended Complaint states only that Thompson
opined “that MLGW could not be sold.” This likewise states no “illegal activity” within the
definition in the Public Protection Act.
The Third Amended Complaint avers that Thompson said to unspecified persons in “internal
discussions at MLGW” that the Mayor’s plan to transfer monies from MLGW to the city “was
prohibited by state law,” and that Thompson told Lee that certain of his actions “were in
violation of regulations governing the operation of MLGW.” Though largely conclusory
under the principles of notice pleading, we find that these allegations are barely sufficient as
to the element of “illegal activities.” 10
B. Refusal to Participate
In Van Cleave, the court discussed the two types of retaliatory discharge claims under the
Public Protection Act:
[T]he term “retaliatory discharge” includes both (1) discharge in retaliation for
refusing to remain silent about illegal activities, usually referred to as
“whistleblowing,” and (2) discharge in retaliation for refusing to participate in
illegal activities. The claims are similar but distinct.
***
In a whistleblowing claim, the plaintiff must show that he refused to
remain silent about his employer’s illegal activities, and the requisite causal
9
We presume arguendo that the “federal officers” were F.B.I. officials.
10
We note that the allegation as to the proposed transfer of monies from MLGW to the city was an allegation
of purportedly illegal activities not by MLGW, but by Mayor Herenton. We have held that under T.C.A. §
50-1-304(c), the “illegal activities” need not be by the employer. See Guy v. Mutual of Omaha, 2001 WL
204485, at *10.
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relationship between his refusal to remain silent and his discharge. In a refusal-
to-participate claim, the plaintiff must show that he refused to participate in
illegal activities and the requisite causal relationship between his refusal to
participate and his discharge.
Van Cleave, 2009 WL 3518211, at *7-8 (emphasis in original) (footnotes and citations
omitted).
In this case, Thompson’s Third Amended Complaint alleges no facts indicating that he was
asked or expected to participate in illegal activities, or that he refused to do so.
C. Refusal to Remain Silent
As noted above, concerning the F.B.I. investigation of MLGW activities, the Third Amended
Complaint alleges only that Thompson “was interviewed by federal officers.” In considering
a motion to dismiss under Rule 12.02(6), we are constrained to “construe the assertions in the
complaint liberally; the motion cannot be sustained unless it appears there are no facts
warranting relief.” Leggett, 308 S.W.3d at 851. We are not constrained, however, to insert
facts that are not alleged. The Third Amended Complaint simply does not say what, if
anything, Thompson said to the unspecified “federal officers.”
As to the remaining allegations, the Third Amended Complaint recounts only internal
discussions within MLGW. Thompson asserts that he told Lee that certain of Lee’s actions
violated unspecified regulations, and that Thompson said in “internal discussions at MLGW”
that MLGW could not be sold and that the Mayor’s plan to transfer MLGW monies to the city
would violate state law. Nowhere does the Third Amended Complaint allege that Thompson
made any attempt to report these alleged “illegal activities” to officials or regulators outside
MLGW. This is required in order to establish a claim of retaliatory discharge for refusal to
remain silent. See Collins v. AmSouth Bank, 241 S.W.3d 879, 885 (Tenn. Ct. App. 2007)
(abrogated in other respects in Gossett v. Tractor Supply Co., 320 S.W.3d 777, 788-89 (Tenn.
2010)).
Thus, we must agree with the trial court that Thompson’s Third Amended Complaint fails to
state a claim against MLGW under the Tennessee Public Protection Act.
Loudermill Claim
Thompson also asserts on appeal that he alleged sufficient facts to establish a constitutionally
protected property interest in his continued employment at MLGW, and that accordingly he
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was entitled to a pre-termination or Loudermill hearing. In his brief, Thompson admits that
he was an at-will employee, but asserts that it was the policy, practice, and custom of MLGW
to provide employees with a hearing. Thompson further asserts that it was the personnel
policy of MLGW to provide a hearing for employees when such employees were terminated,
and that this policy was arbitrarily not applied to him. Based on personnel policy, practice,
and past custom of MLGW, Thompson asserts that he had a property right in his job.
This Court has previously described the circumstances under which an employee may be
entitled to a Loudermill hearing:
The term Loudermill hearing stems from the United States Supreme Court
decision in Cleveland Board of Education v. Loudermill, 470 U.S. 532, 105
S. Ct. 1487, 84 L. Ed. 2d 494 (1985). The Loudermill Court held that a public
employee who can be discharged only for cause must be given notice and an
opportunity to respond to the charges against him prior to termination.
Case v. Shelby Cty. Civil Service Merit Bd. 98 S.W.3d 167, 170 (Tenn. Ct. App. 2002) (citing
Loudermill, 470 U.S. at 546, 105 S. Ct. 1487)).
As noted by the trial court, Thompson acknowledges in his complaint that he was an at-will
employee, not an employee who could be discharged only for cause. Therefore, we agree with
the trial court’s holding that Thompson had no due process right to a Loudermill hearing.
The Third Amended Complaint refers to MLGW policies affording a hearing to discharged
employees. However, Thompson was not discharged; rather, his job position was eliminated.
We agree with the trial court’s holding on this claim.
Tortious Interference
Thompson asserts that the trial court erred in dismissing his claim against Lee, in his
individual capacity, for tortious interference with Thompson’s employment with MLGW. The
trial court found that Thompson, “alleges that Lee acted for an improper personal purpose and
contrary to the best interests of MLGW without alleging any facts to support these
conclusions. Malice, spite or improper motive is alleged, yet no facts are alleged to support
these conclusions.” Thompson asserts that the Third Amended complaint alleges that Lee’s
actions were not in the best interest of MLGW, that Lee acted for purely selfish reasons and
with malice, and that Lee acted in retaliation for Thompson’s F.B.I. interview. Thompson
maintains that this is sufficient to state a claim.
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This Court has previously set forth the requirements for a claim of intentional interference
with employment:
The essential elements of a claim for intentional interference with employment
are “that the defendant intentionally and without justification procured the
discharge of the employee in question.” Ladd v. Roane Hoisery, Inc., 556
S.W.2d 758, 760 (Tenn. 1977). A claim for intentional interference with
employment “contemplate[s] a three-party relationship – the plaintiff as
employee, the corporation as employer, and the defendants as procurers or
inducers.” Nelson v. Martin, 958 S.W.2d 643, 647 (Tenn. 1997).
An at-will employee . . . can be terminated at any time for good cause,
bad cause or no cause. See Clanton v. Cain-Sloan Co., 677 S.W.2d 441, 443
(Tenn. 1984). However, even an at-will employee has a property interest in
continued employment without unjustified interference by those who stand
outside the employment relationship. Ladd, 556 S.W.2d at 760. Where a third
party intentionally and unjustifiably interferes with that employment interest by
procuring the plaintiff’s termination, a cause of action will lie against the third
party. Baldwin v. Pirellie Armstrong Tire Corp., 3 S.W.3d 1, 6 (Tenn. Ct.
App. 1999).
A corporation may only act through its agents and employees;
consequently, a corporate director, officer or employee is not individually liable
for tortious interference with a corporate contract, such as an at-will
employment agreement, so long as he is acting in furtherance of the corporate
interest. Forrester v. Stockstill, 869 S.W.2d 328, 334-335 (Tenn. 1994). A
corporate director, officer or employee may be held liable for interference with
such a contract if “he is acting outside the scope of his authority, acting with
malice, or acting to serve his own interests.” Id. at 333 (quoting Thomas G.
Fisher, Annotation, Liability of Corporate Direct, Officer or Employee for
Tortious Interference with Corporation’s Contract with Another, 72 A.L.R. 4th
492 (1989)).
However, where there is intentional interference with an employment
contract, there is frequently “some element of ill will”; consequently, where the
director, officer or employee is generally acting in furtherance of the corporate
interest, “the addition of a spite motive usually is not regarded as sufficient to
result in liability.” Id. at 333 (quoting W. Page Keeton, Prosser & Keeton on
the Law of Torts § 130, pp. 1009-10 (5th ed. 1984)). He may be held liable if
“the reason underlying his interference is purely a malevolent one, and a desire
to do harm to the plaintiff for its own sake.” Id. In Forrester, the Court
emphasized that the public interest is served by corporations having candid
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advice from their officers and employees, and noted that fear of individual
liability would limit such advice. Id. at 334. Consequently, the actions of an
officer, director or employee of a corporation are considered to be the actions
of the corporation so long as he is acting “within the general range of this
authority, and his actions are substantially motivated by an intent to further the
interest of the corporation.” Id. at 334-35. Under these circumstances, the
director, officer, or employee is immune from individual liability. Id.
Lyne v. Price, No. W2000-00870-COA-R3-CV, 2002 WL 1417177, at *2-3 (Tenn. Ct. App.
June 27, 2002).
Cases applying and interpreting Forrester v. Stockstill have emphasized the requirement that
a plaintiff who asserts a claim for intentional interference with employment must assert facts
showing that the defendant stood as a third party to the relationship between the plaintiff
employee and the employer. In Waste Conversion Systems, Inc. v. Greenstone Industries,
Inc., 33 S.W.3d 779 (Tenn. 2000), the court applied Forrester as follows:
Forrester indicates that Tennessee has recognized a privilege against an
interference of contract claim when there is unity of interest between the
interfering party and the breaching party. Forrester also shows that the claim
can be alleged successfully only when the interfering party is a third party not
closely tied to the operation of the reaching corporation.
Id. at 782 (certified question on whether parent corporation can be liable for inducing breach
by subsidiary). In Nelson v. Martin, the court addressed a claim against two defendants, the
president and CEO of a corporation, and a director of the corporation, for inducing the
wrongful termination of an employee of the corporation. The court stated: “In order for there
to be a three-party relationship, there must be a showing that the defendants were acting
outside the scope of their duties as officers of the corporation rather than on behalf of the
corporation.” Nelson, 958 S.W.2d at 647. The court held that the plaintiff’s allegation
essentially that the defendant “acted wrongfully in terminating his employment” was
insufficient. Id.
In this case, Thompson emphasizes that the Third Amended Complaint asserts that Lee was
jealous of Thompson because of Thompson’s experience and stature within MLGW, and that
Lee acted with malice and spite. The court has noted, however, that an allegation of ill will
or spite in and of itself “is not sufficient to result in liability.” Lyne v. Price, 2002 WL
1417177, at *3 (citing Forrester, 869 S.W.2d at 333). In a later case, the court clarified that
“the malice element . . . is one of the elements of the [intentional interference] claim, and is
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separate from the three-party relationship which the plaintiff must also prove.” Rennell v.
Through the Green, Inc., No. M2006-01429-COA-R3-CV, 2008 WL 695874, at *7 n.4
(Tenn. Ct. App. Mar. 14, 2008). To show that the defendant stood as a third party to the
plaintiff’s employment relationship, the Court looks for facts showing “that the defendant[]
would benefit personally from plaintiff’s discharge.” Fitzgerald v. Abbott, Nol. M2008-
00920-COA-R3-CV, 2009 WL 304421, at *2 (Tenn. Ct. App. Feb. 5, 2009).
In Lyne v. Price, the Court found that the plaintiff’s complaint alleged sufficient facts to show
that the defendant Coach Price stood as a third party to the plaintiff’s employment with a
university. As the plaintiff’s immediate supervisor, Coach Price had the authority to procure
the termination of the plaintiff’s employment with the university. Lyne, 2002 WL 1417177,
at *4. However, in addition to his work as the university’s basketball coach, Coach Price
operated basketball camps that were independent from the university. Id. at *1. The plaintiff
performed administrative tasks related to both the university’s basketball team and Coach
Price’s separate basketball camps. Id. In her complaint, the plaintiff asserted that “Coach
Price’s procurement of her termination was motivated by her actions or refusal to act related
to the basketball camp, separate from Coach Price’s job duties as head basketball coach, and
in furtherance of his individual economic interests.” Id. at *4. The Court found these
allegations sufficient to state a claim against Coach Price individually for intentional
interference with the plaintiff’s employment with the university. Id.
In the case at bar, we find no facts alleged in the Third Amended Complaint showing that Lee
“would benefit personally from [Thompson’s] discharge.” Fitzgerald, 2000 WL 304421, at
*2. Assuming the truth of Thompson’s allegation that his continued employment would have
benefitted MLGW and the termination of his employment was not in the best interest of
MLGW, this shows only that Lee’s actions were misguided or, at worst, spiteful and jealous.
It does not show that Lee stood as a third party to the employment relationship or that Lee
stood to benefit personally from the termination of Thompson’s employment.
Thus, we must agree with the trial court’s finding that the Third Amended Complaint does not
state a claim against Lee for intentional interference with Thompson’s employment.
Conspiracy
The final issue raised by Thompson on appeal is whether the trial court erred in dismissing
his claim against Lee in his individual capacity for conspiracy. As the Tennessee Supreme
Court has previously noted, in a cause that includes both a claim for intentional interference
with employment and a claim for conspiracy, “the determinative legal theory is the intentional
interference with at-will employment. If that claim fails, then the claim for conspiracy must
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also fail for ‘[i]t cannot be that a conspiracy to do a thing is actionable where the thing itself
would not be.’ ” Forrester v. Stockstill, 869 S.W.2d 328, 330 (Tenn. 1994). Accordingly, we
must also affirm the dismissal of Thompson’s claim against Lee for conspiracy.
C ONCLUSION
The decision of the trial court is affirmed. Costs on appeal shall be taxed to the Appellant,
William L. Thompson, and his surety, for which execution may issue, if necessary.
________________________________________
HOLLY M. KIRBY, JUDGE
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