Mitchell L. Darnall v. A+ Homecare, Inc. and James D. Smith ( 1999 )

MITCHELL L. DARNALL, )
)
Plaintiff/Appellant, ) Appeal No.
) 01-A-01-9807-CV-00347
v. )
) Williamson Circuit
A% HOMECARE, INC. and
JAMES D. SMITH,
)
)
No. I-95381
FILED
)
Defendants/Appellees. ) June 2, 1999
)
Cecil Crowson, Jr.
Appellate Court Clerk
COURT OF APPEALS OF TENNESSEE
APPEAL FROM THE CIRCUIT COURT FOR
WILLIAMSON COUNTY
AT FRANKLIN, TENNESSEE
THE HONORABLE CORNELIA A. CLARK, JUDGE
STANLEY M. CHERNAU
Suntrust Center, Suite 1750
424 Church Street
Nashville, Tennessee 37219
ATTORNEY FOR PLAINTIFF/APPELLANT
ROBERT E. BOSTON
511 Union Street, Suite 2100
Nashville, Tennessee 37219
ATTORNEY FOR DEFENDANTS/APPELLEES
AFFIRMED AND REMANDED
WILLIAM B. CAIN, JUDGE
OPINION
This is an appeal by the plaintiff from summary judgment granted to the
Defendants in a complaint asserting retaliatory discharge with the action based
solely upon Tennessee Code Annotated section 50-1-304.
I. THE FACTS OF THE CASE
Plaintiff was employed by A+ Homecare, Inc. on September 6, 1994
to be its Director of Finance. He was hired as an "at will" employee. A+
Homecare, Inc., through its agencies, provides home health services to
individuals throughout the Middle Tennessee area. A+ Homecare, Inc. had a
written policy prohibiting sexual harassment in the work place which policy was
known to Mitchell Darnall. In late October 1994, one of Darnall's female co-
workers complained to A+ supervisory personnel that Darnall had made
inappropriate, unwelcome, sexually graphic comments to her of a personal nature
that made her very uncomfortable. This employee, Diana Rollinson, made her
complaints to Cindi Smith, Vice President of Human Resources at A+. After
reporting the problem to Rhea Garrett, General Counsel for A+, Cindi Smith
informed Darnall of the complaint asserted by Ms. Rollinson.
Darnall's response to A+'s motion for summary judgment reads in
pertinent part, as follows:
DEFENDANT'S ALLEGED UNDISPUTED FACT - NUMBER 3
In late October, 1994, one of Darnall's female co-
workers complained to A+'s supervisory personnel that
Darnall had engaged in inappropriate behavior which,
apparently to the employee and certainly to A+, was deemed
to constitute sexual harassment. Garrett aff. at ¶ ¶ 2-3. That
employee, Diana Rollinson, complained that Darnall had
made inappropriate, unwelcome sexually graphic comments
to her, of a very personal nature, that made her very
uncomfortable.2 ...
2
Specifically, Ms. Rollinson reported that, while the
two were alone at A+'s offices one evening, Darnall told her
that he had learned at Lamaze class that his pregnant wife's
labor could be quickened with ejaculation of semen and
massaging of the breasts. Garrett Aff at ¶ 2.
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***
PLAINTIFF'S RESPONSE
The only true reproach by anyone at Defendant A+,
until the date of termination, was a statement by Ms. Cindi
Smith, Vice President of Human Resources, that Plaintiff
had possibly offended Ms. Dianna Rollinson with a comment
regarding his wife's pregnancy in late October 1994. At that
time, Plaintiff could not recall any questionable statements
made, and Ms. Smith did not know the specifics. Plaintiff
later realized it occurred at a staff meeting on a Monday
following a Lamaze class he attended with his pregnant wife.
During the staff meeting, he was asked many questions by
his staff. Plaintiff answered their questions concerning the
class because the staff members appeared to be genuinely
interested. Apparently, the statement was made by Plaintiff
while answering their questions. At no point did Plaintiff
acknowledge that any conversation had gotten out of hand.
Ms. Smith maintained that the statement was simply an
unintentional misunderstanding and definitely was not a
problem. Further, it would not be reported in his personnel
file. He apologized to Ms. Rollinson. No further complaints
were made known to Plaintiff until termination. ...
Shortly after he began his employment with A+, Darnall became
concerned about the accounting practices of the corporation. Particularly he
found that a check in the amount of $30,000 had been drawn on the general
operating account of A+ on June 1, 1993, payable to the Defendant James
Bradley Smith, with no supporting documentation. Darnall questioned Brad
Smith and received four differing explanations for the $30,000 check. First, that
it was a part of the proceeds of the sale of a previous company to A+; second, it
was a loan payback for money previously loaned by Smith to A+; third, that it
was compensation to him over and above what Medicare would allow and that
he did not want to report it to Medicare or the IRS, and fourthly, that it was a
loan to him by A+ for which he had documentation at home. Not being satisfied
with these explanations, Darnall went to the outside auditors of the company to
discuss the problem with them. On January 20, 1995, one day after his meeting
with the auditors, Darnall was terminated.
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II. TENNESSEE CODE ANNOTATED SECTION 50-1-304
(Public Protection Act)
At common law Tennessee recognized the "employee-at-will" rule which
provides that employment for an indefinite term is a contract at will and can be
terminated by either party at any time without cause. Combs v. Standard Oil Co.,
166 Tenn. 88, 59 S.W.2d 525 (1933).
In sustaining the common law rule this court has said:
The rule has been well established in this state that a
contract of employment for an indefinite term is a contract at
will and can be terminated by either party at any time without
cause. Graves v. Anchor Wire Corp. of Tennessee, 692
S.W.2d 420 (Tenn.App.1985). In Payne v. Western &
Atlantic Railroad Co., 81 Tenn. 507 (1884), the Supreme
Court said:
All may dismiss their employees at will, be they
many or few, for good cause, for no cause or even
for cause morally wrong without being thereby
guilty of legal wrong.
Randolph v. Dominion Bank, 826 S.W.2d 477, 478 (Tenn. App. 1991).
This principle is still viable in Tennessee except where modified by
statute. Whitaker v. Care-Moore, Inc., 621 S.W.2d 395 (Tenn. App. 1981).
Tennessee Code Annotated section 50-1-304 is a narrowly crafted
statutory exception to the common law "employee-at-will" rule.
Tennessee Code Annotated section 50-1-304 provides in pertinent part:
(a) No employee shall be discharged or terminated solely for
refusing to participate in, or for refusing to remain silent
about, illegal activities.
***
(c) As used in this section, "illegal activities" means
activities which 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.
(d) any employee terminated in violation of subsection (a)
shall have a cause of action against the employer for
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retaliatory discharge and any other damages to which the
employee may be entitled.
The historical background for this statute and our limited experience
under it has been addressed by the United States District Court for the Eastern
District of Tennessee:
This statutory cause of action, enacted in 1990, embodies a
common law cause of action previously considered by the
Tennessee Supreme Court in Watson v. Cleveland Chair Co.,
789 S.W.2d 538, 544 (Tenn.1989) (recognizing "a cause of
action for retaliatory discharge . . . when an at-will employee
is terminated solely for refusing to participate, or remain
silent about illegal activities") and in Chism v. Mid-South
Milling Co., Inc., 762 S.W.2d 552, 555-57 (Tenn.1988)
(recognizing the cause of action, though not on the facts of
the case).
However, both cases hesitated to fully validate the cause
of action. The Watson court expressed its reluctance "to
establish public policy or adopt an exception to the common
law by placing [its] imprimatur thereon in the absence of
some constitutional or legislative precedent." Watson, 789
S.W.2d at 544. The Chism court emphasized resting the
cause of action upon public policy clearly "evidenced by an
unambiguous constitutional, statutory or regulatory
provision." Chism, 762 S.W.2d at 556. Public policy
guidance is necessary because at the heart of the law of
retaliatory discharge is the balance between the employer's
undeniable right to terminate an at-will employee over
management and policy decisions and the employee's right to
protection from unlawful discharge. Id. at 555; Watson, 789
S.W.2d at 540; Clanton v. Cain-Sloan Co., 677 S.W.2d 441,
445 (Tenn.1984).
As noted above, the Tennessee General Assembly
enacted the Act in 1990, thereby satisfying the Tennessee
Supreme Court's concern for clear public policy guidance.
The statute's language nearly adopts verbatim the language
found in the earlier cases. Recent cases specifically
addressing Tenn. Code Ann. § 50-1-304, though, are very few
in number.
Griggs v. Coca-Cola Employees' Credit Union, 909 F.Supp. 1059, 1063 (E.D.
Tenn. 1995).
In order to get to the heart of the issue in this case, it is necessary to
clearly establish the distinction between retaliatory discharge under other
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statutory and common law exceptions to the employee-at-will doctrine and the
very limited statutory exception thereto established by Tennessee Code
Annotated section 50-1-304. In Johnson v. St. Francis Hosp., Inc., 759 S.W.2d
925 (Tenn. App. 1998), the Western Section of the Court of Appeals was dealing
with a retaliatory discharge for filing a workers compensation claim. Relying on
Hansome v. North Western Cooperage Co., 679 S.W.2d 273 (Mo. 1984), the
court asserted four elements to establish a prima facie case of retaliatory
discharge, to-wit:
1. Plaintiff's status as an employee of the defendant before injury.
2. Plaintiff's exercise of his right to seek workers compensation.
3. Employer's discharge of or discrimination against Plaintiff.
4. An exclusive causal relationship between Plaintiff's actions and
Defendant's actions.
In the context of a retaliatory discharge for workers compensation
related activities, this court questioned the correctness of the fourth factor set
forth in Johnson and the Supreme Court granted an appeal to reconcile the
factors needed for a prima facie case of retaliatory discharge in a workers'
compensation context. The Supreme Court held:
Based on the principles stated in Clanton v. Cain-Sloan
Co., Chism v. Mid-South Milling Co., Inc. and Johnson v.
Saint Francis Hosp., Inc., the following elements are found
to establish a cause of action for discharge in retaliation for
asserting a workers' compensation claim: (1) The plaintiff
was an employee of the defendant at the time of the injury;
(2) the plaintiff made a claim against the defendant for
workers' compensation benefits; (3) the defendant terminated
the plaintiff's employment; and (4) the claim for workers'
compensation benefits was a substantial factor in the
employer's motivation to terminate the employee's
employment.
Anderson v. Standard Register Co., 857 S.W.2d 555, 558 (Tenn. 1993).
Johnson v. St. Francis Hosp., Inc., 759 S.W.2d 925 (Tenn. App. 1988)
dealt with workers' compensation retaliatory discharge and was decided two
years before the enactment of Tennessee Code Annotated section 50-1-304. The
first case dealing specifically with this "whistle blower" statute was Merryman
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v. Central Parking System, Inc., et al, No. 01A01-9203-CH-00076, 1992 WL
330404, (Tenn. App. Nov. 13, 1992). It was decided after the decision of this
court in Anderson v. Standard Register Co., 1992 WL 63421 (Tenn. Ct. App.
April 1, 1992), but before the Supreme Court issued its opinion on appeal.
Anderson v. Standard Register Co., 857 S.W.2d 555 (Tenn. June 28, 1993).
Merryman adopted the four factors of Johnson v. St. Francis Hosp., Inc.,
including the "exclusive causal relationship" factor without making clear that this
"exclusive causal relationship" factor is mandated by the particular language of
Tennessee Code Annotated section 50-1-304, rather than by Johnson v. St.
Francis Hosp., Inc. This fourth factor of Johnson did not survive Anderson v.
Standard Register Co., but was rather converted therein to a "substantial factor"
test in worker compensation related retaliatory discharge.
It results that the four factor test set forth in Johnson v. St. Francis
Hosp., Inc., 759 S.W.2d 925, 928 (Tenn. App. 1988) is the correct test only
because Tennessee Code Annotated section 50-1-304(a) provides that "no
employee shall be discharged or terminated solely for refusing to participate in,
or for refusing to remain silent, about illegal activities." (emphasis added)
Thus considering this case in the limited context of Tennessee Code
Annotated section 50-1-304 and not in the context of retaliatory discharge in
general, the four factor Johnson test is valid.
The limited number of cases actually addressing Tennessee Code
Annotated section 50-1-304 indicate that the plaintiff has indeed a formidable
burden in establishing elements number two and four of the cause of action.
Griggs v. Coca-Cola Employees' Credit Union, 909 F.Supp. 1059, 1063;
Merryman v. Central Parking System, Inc., No. 01A01-9203-CH-00076 1992
WL 330404 and Leeman v. Edwards, No. 01A01-9401-CV-00050 1994 WL
560889 (Tenn. App. Oct. 14, 1994) (both overruled on other grounds).
III. SUMMARY JUDGMENT
The often repeated rules governing summary judgment are outlined in
Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993). The evidence must be taken by the
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trial court and by this court in the light most favorable to the plaintiff as the
nonmoving party and all reasonable inferences from the facts of the case must be
construed in favor of Darnall.
The four elements of a cause of action under Tennessee Code
Annotated section 50-1-304 are:
(1) The plaintiff's status as an employee of the Defendant;
(2) The plaintiff's refusal to participate in, or to remain silent about,
illegal activities;
(3) The employer's discharge of the employee; and
(4) An exclusive causal relationship between the plaintiff's refusal to
participate in or remain silent about illegal activities and the employer's
termination of the employee. Griggs v. Coca-Cola Employees' Credit Union,
909 F.Supp. 1059, 1063 (E.D. Tenn. 1995).
Elements (1) and (3) are clearly met in this case. There is enough
evidence in the record as held by the trial judge to preclude summary judgment
as to element number (2).
It is the inability of the plaintiff to establish the "exclusive causal
relationship" between his alleged "whistle blower" activities and his termination
by A+ that dooms his case. The persistent inquiries by Darnall into activities
predating his employment with A+ and his conference with the outside auditors
the day before his termination may have been the main reason for his discharge
and probably were at least a substantial part of the reason for his discharge.
However, this substantial factor rationale will not avoid summary judgment.
In analyzing the causation element necessary to sustain an action under
Tennessee Code Annotated section 50-1-304, the United States District Court for
the Eastern District of Tennessee held:
The fourth element requires Griggs to demonstrate "an
exclusive causal relationship between the plaintiff's refusal to
participate in or to remain silent about illegal activities and the
employer's termination of the employee." Merryman, 1992 WL
-8-
330404, at p. *6; Leeman, 1994 WL 560889, at p. *2. The
pertinent language of Tenn.Code Ann. § 50-1-304(a) (emphasis
added) reads: "No employee shall be discharged or terminated
solely for refusing to participate in, or for refusing to remain
silent about, illegal activities." Griggs invites the Court to read
the statute and the language from Merryman as intending the
employer's unlawful behavior to only have been a "substantial"
factor in the discharge (Court File No. 11, pp. 10-14). The Court
declines to do so.
The rule of statutory construction requires the Court to
yield to the legislature's intention. Business Brokerage Centre v.
Dixon, 874 S.W.2d 1, 5 (Tenn.1994); City of Blaine v. John
Coleman Hayes, 818 S.W.2d 33, 37 (Tenn.App.1991) (citations
omitted); Lockhart v. Jackson-Madison Cty. Gnl. Hosp., 793
S.W.2d 943, 945 (Tenn.App.1990) (citations omitted); see also
First Am. Nat. Bank-Eastern v. F.D.I.C., 782 F.2d 633, 636-37
(6th Cir.1986). In order to give effect to the legislature's intent,
courts look primarily to "the natural and ordinary meaning of the
language used, when read in the context of the entire statute, and
without any forced or subtle construction to limit or extend the
import of the language." City of Blaine, 818 S.W.2d at 37
(citations omitted).
Here, the language is clear. An employer may not
discharge an employee "solely for refusing to participate in, or for
refusing to remain silent about, illegal activities." Tenn. Code
Ann. § 50-1-304(a). Nothing in the remainder of the section
indicates the Court should read the statute differently. Nothing
in Merryman and Leeman, the only two cases directly addressing
the statute, indicate the Court should read the statute differently.
Griggs v. Coca-Cola Employees' Credit Union, 909 F.Supp. 1059, 1065 (E.D.
Tenn. 1995).
This court, in discussing Tennessee Code Annotated section 50-1-304,
has stated:
Prior to the passage of T.C.A. § 50-1-304, the appellate
courts had not clearly settled on whether a plaintiff was required
to show that protected activity was either a substantial factor or
the sole cause of termination. But the statute supplied the
answer; it clearly requires the employee to show that the sole
cause of his termination was his refusal to remain silent about
illegal activities in the workplace.
Hubrig v. Lockheed Martin Energy Systems, Inc., No. 03A01-9711-CV-00525
1998 WL 240128, * 11 (Tenn. App. May 4, 1998) perm. to app. denied,
concurring in results only (Tenn. Oct. 12, 1998).
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The legislature chose the language used in Tennessee Code Annotated
50-1-304 and provided a very limited exception to the common law rule
governing "at will" employment. There is substantial evidence in the record at
bar to establish a causal relationship between Darnall's sexually explicit
comments to Ms. Rollinson and his subsequent discharge by his employer for
alleged sexual harassment. The necessary "exclusive" causal relationship
between the statutorily protected activities and the discharge of Darnall cannot
be established, and the action of the trial court in sustaining the motion for
summary judgment of A% Homecare, Inc. is affirmed.
Plaintiff further asserts that the president and sole stockholder of A%
Homecare, Inc., James D. Smith, is liable under Tennessee Code Annotated
section 50-1-304. Smith is not an "employer" under Tennessee Code Annotated
section 50-1-304 and cannot be liable to the plaintiff under the statute. Carr v.
United Parcel Service, 955 S.W.2d 832 (Tenn. 1997) and Williams v. Williamson
County Board of Education, 890 S.W.2d 788, 790 (Tenn. App. 1994).
The judgment of the trial court is affirmed and costs are assessed against
the Appellant.
_______________________________________
WILLIAM B. CAIN, JUDGE
CONCUR:
_____________________________________
BEN H. CANTRELL, P.J., M.S.
CONCURRING IN SEPARATE OPINION
WILLIAM C. KOCH, JR., JUDGE
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