Christine Blanda v. Martin & Seibert, LC ( 2019 )

FILED
No. 19-0317 – Blanda v. Martin & Seibert November 22, 2019
released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
WORKMAN, J., dissenting: SUPREME COURT OF APPEALS
OF WEST VIRGINIA
“The most frequently used exception to at-will employment, a wrongful
discharge claim that alleges the termination violated public policy, seeks to balance the
employer’s interest in operating a business efficiently and profitably, the employee’s
interest in earning a livelihood, and society’s interest in seeing its public policies carried
out.”1 In light of the egregious facts pled here, this Court should have taken the opportunity
to recognize a public-policy exception to at-will employment when an employee is
terminated for reporting her employer’s alleged theft of client funds by overbilling for legal
services to the proper authorities. West Virginia’s criminal statutes reflect myriad
expressions of the public policy to encourage the reporting of crimes and correction of
activities harmful to our citizenry.2
In Palmateer v. International Harvester Co., 421 N.E.2d 876 (Ill. 1981), the
Illinois Supreme Court addressed this very issue and expanded its common law to protect
1
Margaret C. Hobday, Protecting Economic Stability: The Washington Supreme
Court Breathes New Life in the Public-Policy Exception to At-Will Employment for
Domestic Violence Victims, 17 Wm. & Mary J. Women & L. 87, 95 (2010) (footnotes and
quotation marks omitted).
2
See Syl. Pt. 2, Birthisel v. Tri-Cities Health Servs. Corp., 188 W. Va. 371, 424
S.E.2d 606 (1992) (“To identify the sources of public policy for purposes of determining
whether a retaliatory discharge has occurred, we look to established precepts in our
constitution, legislative enactments, legislatively approved regulations, and judicial
opinions.”). “Inherent in the term ‘substantial public policy’ is the concept that the policy
will provide specific guidance to a reasonable person.” Id. at syl. pt. 3.
1
the whistle-blower. In Palmateer, an employee was fired after reporting possible criminal
violations by a co-worker to local law enforcement authorities and agreeing to assist in any
resulting investigation and trial. Noting the importance of “citizen crime-fighters,” the
court quite appropriately declared that, “[t]here is no public policy more important or more
fundamental than the one favoring the effective protection of the lives and property of
citizens.” Id. at 879. “The law is feeble indeed if it permits [an employer] to take matters
into its own hands by retaliating against its employees who cooperate in enforcing the law.”
Id. at 880.
The majority has expressly sanctioned retaliatory conduct by employers
where their employees blow the whistle for theft of client funds by over-billing practices,
criminal conduct prohibited by West Virginia Code § 61-3-24 (2014). The majority has
squandered an opportunity to protect West Virginia workers from retaliation for reporting
criminal wrongdoing in the workplace that affects the public. In view of the majority’s
answer to the certified question, even if Petitioner were able to prove that every scintilla of
her allegations are true—that she uncovered and ultimately reported state and federal
criminal conduct and was fired as a result—she and other similarly situated employees are
simply without recourse. This runs contrary to our precedent of Harless v. First National
Bank in Fairmont, 162 W. Va. 116, 125-26, 246 S.E.2d 270, 276 (1978), legal equity, and
common sense.
2
The majority narrowly focuses on the perceived maelstrom of litigation
which would ensue if it “threw open the gates” to retaliatory discharge claims which are
based on whistle-blowing for common criminal statutes. In this case, Petitioner allegedly
uncovered overbilling at the law firm where she worked and ultimately reported this to the
FBI. It appears the majority cherry-picks the holding from Harless, yet forgets that Harless
itself involved highly similar allegations: a bank employee suspected his employer of
violating certain provisions of the West Virginia Consumer Credit and Protection Act,
which acts affected bank customers. The Court found that the Act provides a civil action
for the third-party victim and criminal penalties for certain violations. Based on the nature
of the conduct Mr. Harless purported to blow the whistle on, the Court concluded:
We have no hesitation in stating that the Legislature intended
to establish a clear and unequivocal public policy that
consumers of credit covered by the Act were to be given
protection. Such manifest public policy should not be
frustrated by a holding that an employee of a lending institution
covered by the Act, who seeks to ensure that compliance is
being made with the Act, can be discharged without being
furnished a cause of action for such discharge.
Id. at 125-26, 246 S.E.2d at 276 (1978). How is the conduct Petitioner alleges any different
in character? Like the bank in Harless, Martin & Seibert allegedly violated a criminal
3
statute and the Rules of Professional Conduct, and in so doing victimized a third party—
the clients. The majority leaves that question unanswered. 3
However, our inquiry is not limited simply to whether a particular law or
regulation has been violated; rather, our inquiry must focus on whether some “important
public policy interest embodied in the law has been furthered by the whistleblowing
activity.” Gutierrez v. Sundancer Indian Jewelry, 868 P.2d 1266, 1273 (N.M. 1993)
(citations omitted). The majority’s answer to the certified question rests upon the
3
Notably, the employer was a law firm whose members allegedly violated the West
Virginia Rules of Professional Conduct—a clear expression of public policy related to
policing the conduct of lawyers for the preeminent goal of protecting the public.
While courts generally look to constitutional or legislative pronouncements, some
courts have found an expression of significant public policy in professional codes of ethics.
See e.g., Paralegal v. Lawyer, 783 F.Supp. 230, 232 (E.D.Pa. 1992). The court in Paralegal
found that the Pennsylvania Rules of Professional Conduct as adopted by the Pennsylvania
Supreme Court pursuant to state constitutional powers, Pa. Const. art. 5, § 10(c), could
provide the basis for a public policy exception to the at-will employment rule. See
Paralegal, 783 F.Supp. at 232 (finding public policy against falsifying material facts and
evidence from Rules 3.3(a)(1), 3.4(a), and 3.4(b)). In that case, a paralegal whose employer
was being investigated by the state bar was terminated after she learned that the attorney-
employer had created a false record to exculpate himself and so informed the lawyer who
was representing the employer in disciplinary proceedings.
Taking Petitioner’s allegations as true, defendants would appear to have violated
the West Virginia Rules of Professional Conduct by over-billing and misrepresenting to
clients who had performed work for which they were paying. See Rule 7.1 W.Va. Rules
Prof’l Conduct (prohibiting false or misleading communications about lawyer’s services);
and 8.4(c) (defining “professional misconduct” to include “dishonesty, fraud, deceit or
misrepresentation”). In Lawyer Disciplinary Bd. v. Hall, 234 W. Va. 298, 765 S.E.2d 187(2014), this Court discussed the significant public interests necessarily involved in attorney
discipline matters. Id. at 309, 765 S.E.2d at 198.
4
incomprehensible conclusion that our criminal statutes do not express a substantial public
policy of the State. While the determination of what constitutes a substantial public policy
is often the Achilles heel of a Harless claim, we need not struggle to find it here. West
Virginia Code § 61-3-24 constitutes the voice of the Legislature and there is a substantial
public policy interest embedded in the statute sufficient to support a Harless claim.4
In its refusal to find a substantial public policy under a criminal statute,
“absent some prior legislative or judicial expression on the subject,” the majority utterly
fails to comprehend that the Legislature has spoken to public policy considerations when
it criminalized the very behavior set forth in West Virginia Code § 61-3-24. “Under the
West Virginia Constitution, Article VI, Section 1, and Article V, Section 1—the latter
insuring separation of powers among the legislative, the executive and judicial branches of
government—enactment of criminal statutes is solely a legislative function.” State v.
Grinstead, 157 W. Va. 1001, 1013, 206 S.E.2d 912, 920 (1974). The Legislature enacted
this statute to protect a broad societal interest and the Legislature translated that “public
policy into law.” Shell v. Metropolitan Life Ins. Co., 183 W. Va. 407, 413, 396 S.E.2d 174,
180 (1990). West Virginia Code § 61-3-24 prohibits criminal activity that is undeniably
4
In discussing this exact statute, this Court has stated that “[t]he obvious purpose
of W. Va. Code § § 61-3-24(a) and (b) is to discourage the act of obtaining money, goods,
labor, services and other things of value by false pretenses.” State v. Zain, 207 W. Va. 54,
61, 528 S.E.2d 748, 755 (1999).
5
“injurious to the public or against public good[.]” Cordle v. Gen.l Hugh Mercer Corp., 174
W. Va. 321, 325, 325 SE.2d 111, 114 (1984). Public policy
generally captures the communal conscience and common
sense of our state in matters of public health, safety, morals,
and general welfare. Another definition includes those matters
fundamental to citizens’ social rights, duties, and
responsibilities. Once identified, the public policy becomes a
benchmark in the application of our legal principles.
Dorshkind v. Oak Park Place of Dubuque II, L.L.C., 835 N.W.2d 293, 300 (Iowa 2013)
(quotation marks and citations omitted).
The majority’s conclusion reflects a radical departure from the remainder of
the country, many of which have either statutory or common law requirements, along with
limitations on such a cause of action. “There are numerous laws—federal and state, as well
as statutory and common law—that exist to protect the whistleblowing employee.” Frank
J. Cavico, Private Sector Whistleblowing and the Employment-At-Will Doctrine: A
Comparative Legal, Ethical, and Pragmatic Analysis, 45 S. Tex. L. Rev. 543, 548-49
(2004) (footnotes omitted).
The fact that our Legislature has not seen fit to enact a private sector whistle-
blower statute does not permit this Court to abdicate its responsibility to address this issue
of importance: whether and under what circumstances retaliation for blowing the whistle
on a violation of a criminal statute is in contravention of a substantial public policy of this
6
State.5 Harless is, after all, a creation of the common law rather than a legislative fiat. This
Court has a responsibility to provide guidance and continue to shape that common law
cause of action when faced with matters that are fundamental to citizens’ social rights,
duties, and responsibilities.
Other states have not permitted legislative inaction to preclude a judicial
response for these employees. For instance, in Wholey v. Sears Roebuck, 803 A.2d 482(Md. 2002), the court held that a clear public policy mandate exists in Maryland that
protects employees from termination for reporting suspected criminal activities to the
appropriate law enforcement authorities. And “[t]o qualify for the public policy exception
to at-will employment, the employee must report the suspected criminal activity to the
appropriate law enforcement or judicial official, not merely investigate suspected wrong-
doing and discuss that investigation with co-employees or supervisors.” Id. at 496; see also
Miller v. U.S. Foodservice, Inc., 405 F. Supp. 2d 607 (D. Md. 2005) (finding that Maryland
law protects an employee from retaliatory discharge for employee’s cooperation in an
ongoing criminal investigation). Similarly, in Palmer v. Brown, 752 P.2d 685, 686 (Kan.
1988) the Kansas Supreme Court provided common law whistle-blower protection for an
5
Nor does the absence of the Legislature’s broad proclamation of a “public policy”
basis for the criminal statute at issue preclude the statute from reflecting precisely that.
Our criminal code is simply not worded in such a fashion. Therefore, rather than idly
awaiting a legislative declaration that a criminal statute represents a “substantial public
policy” to which the majority could comfortably default, it was incumbent upon it to
examine the statute—and our criminal code as a whole—to determine whether it represents
such a public policy. Instead, the majority suggests somehow the Legislature has not
spoken to this issue. The enactment of the statute itself plainly suggests otherwise.
7
employee discharged for reporting to authorities that a co-worker was committing
Medicaid fraud by billing for services that had not been performed. The Palmer court held
that “[i]t has long been recognized as public policy to encourage citizens to report crimes.”
Id. at 689.
Within the last ten years, this Court even foresaw the necessity of clarifying
our holding in Harless for allegations precisely like those Petitioner presents. In Swears v.
R.M. Roach & Sons, Inc., 225 W. Va. 699, 696 S.E.2d 1 (2010), the former employee
sought to rely on our criminal laws as the source of public policy. Rejecting his claim, this
Court explained that the allegations amounted to nothing more than an alleged violation of
a criminal statute that would affect the financial interests of a private corporation; they did
not involve a claimed violation of public policy or anything that might be injurious to the
public good. This Court noted, however, that
[w]hile the alleged criminal conduct complained of was not
reported to law enforcement officials in the case sub judice, if
a case arises in which such a report is made to the proper
authorities, such a factual scenario could present a question as
to whether there is a substantial public policy to protect an
employee, of a private employer, who reports suspected
criminal conduct to the appropriate governmental authorities
and is retaliated against as a result of such reporting.
Id. at 705 n.8, 696 S.E.2d at n.8.
In marked contrast to Swears, which involved fiduciary duties owed to a
private company, Petitioner’s claim is rooted in allegations of both public policy violations
8
related to criminal activity and financial harm to some of this state’s citizenry. Simply put,
Petitioner claims criminal conduct which directly affected third-party client(s) of the firm,
not merely the owners or shareholders of the firm. Thus, the instant case is directly on
point with Harless as well as Frohnapfel v. ArcelorMittal USA LLC, 235 W. Va. 165, 772
S.E.2d 350 (2015). In Frohnapfel, we found an employee who alleged that he was
discharged for reporting violations of a permit issued under authority of the West Virginia
Water Pollution Control Act, and for making complaint to his employer about those
violations, established the predicate substantial public policy required by Harless. In
Frohnapfel, we held: “The mere citation of a statutory provision is not sufficient to state a
cause of action for retaliatory discharge without a showing that the discharge violated the
public policy that the cited provision clearly mandates.” Id. at 170-71, 772 S.E.2d at 355-
56 (citing Swears, 225 W. Va. at 705, 696 S.E.2d at 7). Petitioner has met that burden.
Petitioner alleged her employer, a law firm, committed crimes by overbilling clients and
those claims clearly trigger substantial public policy concerns.
Moreover, given the inartful wording of the majority’s syllabus point five, it
is unclear whether its holding is limited to the specific statute at issue—West Virginia Code
§ 61-3-24—or “suspected criminal conduct” of any type. Under the majority’s crimped
reading of Harless, a prison guard who reported that her co-workers committed crimes by
gang-raping an inmate, and then was fired by the jail for making such report, would have
no retaliatory discharge claim under the public policy set forth in West Virginia Code §
9
61-8B-3.6 Such a ruling would be wholly contrary to the public good and contrary to an
employee’s fundamental social duty and responsibility. If the majority intended its new
syllabus point to apply only to the specific statute at issue, its imprecise wording reference
“suspected criminal conduct” certainly suggests retaliation for reporting criminal behavior
of any type is now effectively protected conduct for West Virginia employers.
Thus, this Court should have answered the certified question in the
affirmative and held: an alleged violation of West Virginia Code § 61-3-24 constitutes a
substantial public policy of the State of West Virginia and may support a Harless claim
when an employee reports the alleged criminal conduct to an appropriate government
authority under penalty of perjury. This ruling would recognize the long-established
proposition that substantial public policy encourages citizens to report crimes. See
Lachman v. Sperry-Sun Well Surveying Co., 457 F.2d 850, 853 (10th Cir. 1972) (“[I]t is
public policy . . . everywhere to encourage the disclosure of criminal activity.”). Effective
implementation of that policy requires the cooperation of citizens possessing knowledge
thereof. Employees are the first to learn of activities in the workplace that may have an
adverse effect upon the public and are in the best position to bring to a halt that conduct
before harm is done.
6
See W.Va. Code § 61-8B-3 (providing first degree sexual assault includes, inter
alia, sexual intercourse by forcible compulsion with either serious bodily injury or
employment of a deadly weapon).
10
The employer’s conduct alleged here is repugnant to the public policy of the
State of West Virginia and should not be pardoned by this Court. Petitioner’s report of
suspected criminal activity of her employer to the FBI served the public interest in deterring
crime and the interests of innocent persons who stood to suffer specific financial harm.
Retaliation by her employer impairs the public interest and the “employer’s motivation for
the discharge [was allegedly] to contravene some substantial public policy principle.” Syl.,
in part, Harless, 162 W. Va. 125, 246 S.E.2d 270.
The majority’s failure to expand Harless to the facts presented here
constitutes neither judicial restraint nor neutrality, but rather an active participation in
perpetuating injustice. This is particularly true when the judiciary can craft a narrow
exception that protects the interests of responsible, law-abiding employers while holding
accountable those whose activities threaten the public interest. Society can never eradicate
wrongdoing, but this Court should shield from retaliation those citizens who, urged on by
their integrity and social responsibility, speak out to protect the public.
11