Charles Haynes v. Formac Stables, Inc.

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
October 16, 2013 Session
CHARLES HAYNES v. FORMAC STABLES, INC.
Direct Appeal from the Circuit Court for Obion County
No. CC-10-CV-204 William B. Acree, Judge
No. W2013-00535-COA-R3-CV - Filed December 4, 2013
Plaintiff filed retaliatory discharge suit against his former employer, Defendant. According
to his complaint, Defendant’s owner engaged in illegal activity. Plaintiff complained to
Defendant’s owner of the illegal activity and was subsequently terminated. The trial court
dismissed Plaintiff’s complaint because Plaintiff did not report the illegal activity to any
person or entity other than the Defendant’s owner, who was a participant in the illegal
activity. Plaintiff contends that where a company’s owner is a participant in illegal activity,
reporting the illegal activity solely to the owner should not preclude a retaliatory discharge
claim premised on refusal to remain silent. We do not agree and therefore affirm the trial
court’s dismissal of Plaintiff’s complaint.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed and
Remanded
D AVID R. F ARMER, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and H OLLY M. K IRBY, J., joined.
Justin S. Gilbert, Jonathan L. Bobbitt and Jessica Farris Salomus, Jackson, Tennessee, for
the appellant, Charles Haynes.
James M. Glasgow, Jr., Memphis, Tennessee, and Michael Patrick McGartland and Eugene
Emil Borchardt, Fort Worth, Texas, for the appellee, Formac Stables, Inc.
OPINION
I. B ACKGROUND AND P ROCEDURAL H ISTORY
Charles Haynes was employed by Formac Stables, Inc. (“Formac”) as a horse
groomer. Mr. Haynes’s employment with Formac ended in June 2010. Mr. Haynes
subsequently filed a complaint alleging retaliatory discharge for refusal to remain silent
(“whistleblowing”) under the common law of Tennessee and the Tennessee Public Protection
Act (“TPPA”). Tenn Code Ann. § 50-1-304 (2008 & Supp. 2013). Formac responded, filing
a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to
Tennessee Rule of Civil Procedure 12.02(6). Mr. Haynes then filed an amended complaint
that alleged the following facts:
Defendant employed Plaintiff as a horse groomer.
On or about April 3, 2010, Plaintiff was kicked in the head by a horse named
“Bruce Pearl,” a stud Tennessee Walker.
Plaintiff asked Defendant’s owner that he be allowed to obtain appropriate
medical treatment for the injury.
Defendant’s owner refused the request.
Instead, Defendant’s owner informed Plaintiff that the only treatment available
to Plaintiff would be for a veterinarian to stitch the Plaintiff’s bleeding head
with horse stitches.
Defendant informed Plaintiff that if he did not like the treatment option by a
veterinarian, he could “find your own way back to Tennessee and find yourself
another job.”
Having no other option, and faced with losing his job otherwise, Plaintiff
underwent the inappropriate medical treatment by the veterinarian. But he did
not remain silent about what he, in good faith, believed to be illegal medical
treatment. See, e.g., Tenn. Code Ann. 63-6-201 (stating requirements to
practice medicine upon human beings); see also, General Rules Governing
Veterinarians, at 1730-01-13(10)(stating that unprofessional conduct includes
human treatment). Plaintiff did protest this to Defendant’s owner and to the
veterinarian.
Plaintiff experienced headaches in April, May, and June. Still incensed about
the indignity and illegality of being treated by an animal doctor, he continued
his protests, including explaining how the headaches werer [sic] due to not
being seen by an appropriate medical examiner. There was no one in a higher
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position within Defendant’s company than Defendant’s owner.
On or about June 29, 2010, Defendant’s owner abruptly terminated Plaintiff’s
employment. The true, substantial motivating reason for the termination was
Plaintiff’s continued opposition and/or refusal to remain silent about what he
reasonably perceived to be illegal activity–treatment by an animal doctor for
a human injury.
Formac responded by filing an amended 12.02(6) motion to dismiss, contending that
the amended complaint failed to state a claim upon which relief can be granted.
The trial court granted Formac’s motion and dismissed Mr. Haynes’s amended
complaint. The trial court stated that in order to maintain a whistleblower retaliatory
discharge cause of action under Tennessee common law and TPPA, the plaintiff must report
the alleged illegal activity to some entity other than those persons who were engaged in the
illegal activity. See Collins v. AmSouth Bank, 241 S.W.3d 879, 885 (Tenn. Ct. App. 2007).
Because Mr. Haynes’s complaint stated that he only reported the illegal activity to Formac’s
owner, who was a participant in the illegal activity, the trial court concluded that Mr.
Haynes’s complaint was insufficient to maintain his cause of action.
Mr. Haynes filed a motion to alter or amend judgment, contending that although
generally a plaintiff must report illegal activity to someone other than those persons who
participated in the illegal activity, there is an exception where the offending party is the
owner or manager of the defendant. Mr. Haynes contended that the 2005 Tennessee Court
of Appeals case Emerson v. Oak Ridge Research, Inc., 187 S.W.3d 364 (Tenn. Ct. App.
2005), created such an exception. The trial court declined to recognize an exception and
denied Mr. Haynes’s motion. Mr. Haynes subsequently filed a notice of appeal to this Court.
II. I SSUE P RESENTED
The sole issue in this case, as we perceive it, is whether a plaintiff states a cause of
action for whistleblower retaliatory discharge where he or she only reported the illegal
activity to the owner of the company, who was the one engaging in the allegedly illegal
activity.
III. S TANDARD OF R EVIEW
A motion to dismiss for failure to state a claim under Tennessee Rule of Civil
Procedure 12.02(6) tests only the legal sufficiency of the complaint itself, not the strength
of the plaintiff’s proof. Cook v. Spinnaker’s of Rivergate, Inc., 878 S.W.2d 934, 938 (Tenn.
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1994). When considering such a motion, the trial court’s task is to determine whether the
allegations of the complaint, if considered true, are sufficient to constitute a cause of action
as a matter of law. Id. The trial court should only grant a motion to dismiss if it appears that
the plaintiff cannot establish any facts in support of the claim that would warrant relief. Doe
v. Sundquist, 2 S.W.3d 919, 922 (Tenn. 1999). We will review the trial court’s grant of a
motion to dismiss de novo, with no presumption of correctness. Stein v. Davidson Hotel Co.,
945 S.W.2d 714, 716 (Tenn. 1997).
IV. D ISCUSSION
Tennessee has long recognized the doctrine of employment-at-will, which establishes
the right of either an employer or an employee to terminate an employment relationship at
any time, for good cause, bad cause, or for no cause, without committing a legal wrong.
Stein v. Davidson Hotel, Co., 945 S.W.2d 714, 716 (Tenn. 1997). The doctrine of
employment-at-will was applied without exception in Tennessee for many years until 1984,
when a common law cause of action for retaliatory discharge was first recognized by the
Tennessee Supreme Court in Clanton v. Cain-Sloan Co., 677 S.W.2d 441, 445 (Tenn. 1984).
Later, the adoption of TPPA created a statutory cause of action for retaliatory discharge.
Tenn. Code Ann. § 50-1-304.
Tennessee has retained the separate common law cause of action for retaliatory
discharge since adopting the statutory cause of action under TPPA, though the two are very
similar. Guy v. Mut. of Omaha Ins. Co., 79 S.W.3d 528, 537 (Tenn. 2002). In order to
prevail on a claim of common law retaliatory discharge in Tennessee, the employee must
show that (1) an employment-at-will relationship existed between the employee and the
employer, (2) that the employee was discharged, (3) that the employee was discharged for
attempting to exercise a statutory right or for any other reason that violates a clear public
policy, and (4) that such action was a substantial factor in the employer’s decision to
discharge the employee. Lawson v. Adams, 338 S.W.3d 486, 493 (Tenn. Ct. App. 2010).
Though the requirements for statutory protection are similar, the primary difference for
employees seeking protection under TPPA is that they must establish that their refusal to
participate or remain silent was the sole reason for his or her discharge.1 Guy, 79 S.W.3d at
537.
As is alluded to above, common law and TPPA retaliatory discharge claims usually
arise in one of two factual scenarios: cases where the employee is terminated for refusing
1
In pertinent part, TPPA provides that, “No employee shall be discharged or terminated solely for
refusing to participate in, or for refusing to remain silent about, illegal activities.” Tenn. Code Ann. § 50-1-
304(b) (emphasis added).
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to participate in an illegal activity and cases where the employee is terminated for refusing
to remain silent about an illegal activity (whistleblower cases). Gossett v. Tractor Supply
Co., 320 S.W.3d 777, 787-88 (Tenn. 2010). Depending on the facts of the case, there may
be a requirement that the employee report the suspected illegal activity in order to satisfy the
third prong of retaliatory discharge, which requires that the employee be discharged for
attempting to exercise a statutory right or for another reason that violates public policy. See
Lawson, 338 S.W.3d at 493. In cases where the employee is terminated for refusing to
participate in an illegal activity, the Tennessee Supreme Court has held there is no
requirement that the employee report the illegal activity. Gossett, 320 S.W.3d at 788.
However, in whistleblower cases, the employee must show that he or she reported the illegal
activity. Id. Not only must the employee show that he or she reported the illegal activity in
whistleblower cases, the employee must show that the reporting served a public purpose,
rather than a private one. Id.; Guy, 79 S.W.3d at 538 n.4.
There is no dispute that whistleblower cases require the employee to report the illegal
activity. There are, however, questions regarding to whom the report of illegal activity must
be made in order to serve a public purpose. The court in Collins v. AmSouth Bank, 241
S.W.3d 879 (Tenn. Ct. App. 2007), which the trial court relied on to dismiss Mr. Haynes’s
complaint, stated that although the plaintiff is not required to report the illegal activity
directly to law or regulatory enforcement officials, “they must make a report to some entity
other than the person or persons who are engaging in the illegal activities.” Collins, 241
S.W.3d at 885. Tennessee courts have acknowledged that as the general reporting
requirement for whistleblower plaintiffs since it was first introduced in Merryman v. Central
Parking System, Inc., No. 01A01-9203-CH-00076, 1992 WL 330404 (Tenn. Ct. App. Nov.
13, 1992). See Lawson v. Adams, 338 S.W.3d 486, 497 (Tenn. Ct. App. 2010); Gossett v.
Tractor Supply Co., Inc., No. M2007-02530-COA-R3-CV, 2009 WL 528924, at *11 (Tenn.
Ct. App. Mar. 2, 2009); Emerson v. Oak Ridge Research, Inc., 187 S.W.3d 364, 371 (Tenn.
Ct App. 2005).
Though he acknowledges the general rule from Merryman, Mr. Haynes contends that
there is an exception. He argues that where the person engaging in illegal activity is the
owner of the company, reporting the illegal activity to that person should satisfy the reporting
requirement for whistleblower retaliatory discharge because there is no higher-ranking
person to report to internally. Mr. Haynes relies on Emerson as creating the exception. To
fully explain the possible exception, we first examine the general rule of Merryman.
The plaintiff in Merryman was hired by the defendant, Central Parking, to be a co-
pilot of its corporate aircraft. Merryman, 1992 WL 330404, at *1. The plaintiff’s immediate
supervisor was the chief pilot, with whom the plaintiff would be flying. Id. After several
years of flying together, the plaintiff noticed changes in his supervisor’s attention span,
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concentration, and balance. Id. The plaintiff approached his supervisor to discuss the danger
of the supervisor’s flying. Id. Two days later, the supervisor terminated the plaintiff. Id.
The plaintiff filed a lawsuit for retaliatory discharge. The Merryman court had to decide
whether the plaintiff’s action in reporting the unsafe practices to his supervisor, the one
engaging in the conduct, fulfilled the reporting requirement of whistleblower cases. The
court held that it did not. Id. at 7. The court pointed out that the plaintiff never tried to
involve company management or reach out to any regulatory agency, rather his conversations
with his supervisor were private in nature. Id. The Merryman court concluded the reporting
requirements for a retaliatory discharge claim clearly required greater action than was taken
by the plaintiff. Id.
In 2005, the court addressed a similar fact situation in Emerson v. Oak Ridge
Research, Inc., 187 S.W.3d 364 (Tenn. Ct App. 2005). The plaintiff in Emerson sued her
former employer for retaliatory discharge. Id. at 367. The complaint alleged that her
supervisor had sexually harassed her and created a hostile working environment. Id. In
Emerson, however, the plaintiff’s supervisor was also the owner of the defendant company.
Id. In response to the supervisor’s unwelcome advances, the plaintiff contacted the
Knoxville Bar Association and hired an attorney, who sent a letter on her behalf to the
supervisor complaining about his conduct. Id. Subsequently, the supervisor terminated the
plaintiff. Id. The defendant in Emerson relied on Merryman to argue that simply reporting
illegal activity to the offending supervisor was insufficient to qualify one as a whistleblower.
Id. at 371. The court distinguished Merryman, though the precise distinction is unclear. In
a footnote at the beginning of its Merryman discussion, the Emerson court pointed out a
factual distinction between the cases, stating that:
In Merryman, this Court ruled that simply reporting the behavior to the
offending supervisor himself instead of reporting it to company management
would not qualify the plaintiff as a whistleblower. In the case at bar, however,
plaintiff reported to both the offending supervisor and company management
when she reported to [her supervisor], as he served in both capacities. Thus,
Merryman is factually distinguishable.
Id. at n.1 (internal citations omitted). However, the court went on to say that the rule from
Merryman might actually support the plaintiff’s position because it rejected the idea that “an
employee’s actions in reporting illegal activities to a person within the employment setting,
instead of an outside entity, are merely private or proprietary, and thus do not promote public
safety and welfare.” Id. (quoting Merryman, 1992 WL 330404, at *7). The Emerson court
then noted in a second footnote that the plaintiff had contacted an outside entity about her
supervisor’s conduct by calling the Knoxville Bar Association and telling them she needed
a lawyer because her boss was sexually harassing her. Id. at n.2. The Emerson court
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concluded its case was factually distinguishable from Merryman, however it did not clarify
whether that was because it created an exception to the whistleblower reporting requirements
where the offending supervisor and company management are the same person, or because
the Emerson plaintiff reported the harassment to an outside entity.
In 2010, the Court of Appeals had a chance to address whether Emerson created the
exception in Lawson v. Adams, 338 S.W.3d 486 (Tenn. Ct. App. 2010). The facts in Lawson
were similar to those in Emerson. In Lawson, the defendant was the plaintiff’s employer and
allegedly forced the plaintiff to work in unsafe conditions despite the plaintiff’s repeated
protests. Id. at 489-92. Eventually the defendant terminated the plaintiff’s employment. Id.
at 491. The plaintiff alleged that he was terminated in response to his repeated complaints
about the unsafe conditions. Id. 492. The plaintiff admitted that his complaints were made
only to the defendant, but contended that his report of the unsafe conditions still should have
been protected. Id. The Lawson court did not agree, granting summary judgment to the
defendant. Id. at 497. The court stated,
[A]s to the Plaintiff’s common law and statutory claim that he was terminated
for refusing the remain silent about illegal activities, Plaintiff readily admitted
that he never reported the alleged illegal activity to anyone other than
Defendant, who was the person engaging in the claimed illegal activity.
Because Plaintiff never reported the claimed illegal activity to anyone other
than Defendant, we affirm the grant of summary judgment on Plaintiff’s
common law and statutory claims that he was terminated for refusing to remain
silent about illegal activities.
Id.
If Emerson had created the exception to Merryman that Mr. Haynes contends it did,
the exception clearly would have been applicable to Lawson. The Lawson court declined to
recognize such an exception. When a plaintiff brings a claim based on his refusal to remain
silent about illegal activity, the plaintiff must establish that he made “a report to some entity
other than the person or persons engaging in the allegedly illegal activities.” Id. (quoting
Collins v. AmSouth Bank, 241 S.W.2d 879 (Tenn. Ct. App. 2007). Mr. Haynes’s complaint
does not establish that he reported the illegal activity to anyone other than Formac’s owner,
who had allegedly engaged in it. We therefore affirm the trial court’s dismissal of Mr.
Haynes’s complaint for failure to state a claim.
V. C ONCLUSION
In light of the foregoing, we affirm the trial court’s dismissal of Mr. Haynes’s
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complaint. The costs of this appeal are assessed to the appellant, Charles Haynes, and his
surety.
_________________________________
DAVID R. FARMER, JUDGE
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