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Virginia Supreme Court Expands Wrongful Discharge Cause of Action

State Court Docket Watch Article, Spring 2013
By Michael I. Krauss
April 24, 2013

In Van Buren v. Grubb,1 the Virginia Supreme Court ruled for the first time that a non-employer may be sued for wrongful discharge if he violated Virginia public policy.

I. Background on At-Will Employment

In all fifty states, in theory, employment is at-will as a general default rule. This means that employers can fire employees for any reason, or for no reason at all, unless employers have provided to the contrary in the employment contract. This is the case, for example, for tenured employees, who can be discharged only “for cause.” In practice it is very hard to dismiss a tenured employee without proof of gross misconduct.

Most employees, though, are not tenured. Non-tenured employees can only prevail on a wrongful discharge suit if they fall into certain exceptions to at-will employment. Among those exceptions, in decreasing order of breadth, are:

1. The “covenant of good faith exception” (recognized in eleven, mostly Western states).2 This sweeping exception almost swallows up the at-will employment rule. It reads a promise of good faith and fair dealing into every employment relationship, and has been interpreted to mean either that employer personnel decisions are subject to a “just cause” standard or that terminations made in bad faith or motivated by malice are prohibited.3

2. The “implied contract exception” (recognized in thirty-seven states and the District of Columbia to a greater or lesser extent). Although employment is often not governed by a contract, an employer may make oral or written representations to employees regarding job security or procedures that will be followed before adverse employment actions are taken. If such representations are made explicitly or even impliedly, these representations may create a contract for employment and limit the right to discharge the employee. In fourteen states such explicit or implied representations may be oral or written (though in every case the discharged person bears the burden of proving their existence), while in twenty-three states only written representations may satisfy this exception.4 Thus, “employee handbook” provisions describing termination for “just cause” or under other specified circumstances, or indicating that an employer will follow specific procedures before disciplining or terminating an employee, may waive an employer’s at-will rights. So might (in fourteen states) a hiring official’s oral representations to employees that employment will continue during good performance. Only Florida, Georgia, Indiana, Louisiana, Missouri, North Carolina, Pennsylvania, Rhode Island, Texas and Virginia have neither the good faith nor the implied contract exceptions in their employment laws.5

3. The “public policy exception” (recognized in the great majority of states) prohibits discharge in violation of the state’s public policy doctrine or (typically) of a state or federal statute. For example, in most states an employer cannot terminate an employee for filing a valid workers’ compensation disability claim, or for refusing to break the law at the employer’s request or command.6

Virginia recognizes the public policy exception to at-will employment, but does not recognize implied contract or good-faith dealing exceptions. This means that Virginia employers can fire employees for any reason, or for no reason at all, unless the employment contract stipulates otherwise or there is the “public policy” exception, whereby an employee fired for reasons that shock Virginia public policy (e.g., race discrimination, resistance to the employer’s sexual harassment, etc.) may sue for wrongful discharge notwithstanding the at-will rule. The public policy exception is quite restrictive, however. As the United States District Court for the Western District of Virginia recently held in Shomo v. Junior Corp.,7 and based on the seminal case of Bowman v. State Bank of Keysville,8 public policy exceptions are applied only in the following cases:

  • ·Where an employer interferes with an employee's exercise of a statutorily created right;
  • ·Where an employer violates a statutorily created public policy intended to protect a class of persons of which the employee is a member; or
  • ·Where an employee is terminated because he refuses to engage in a criminal act.

In Shomo v. Junior Corp., a federal court applying Virginia law held that a waitress who alleged she was fired for refusing to terminate her pregnancy by abortion cannot pursue a wrongful termination cause of action, since her complaint satisfied none of those three criteria. In Shomo the plaintiff had become romantically involved with “Junior,” the son of the president of the restaurant corporation that had hired her. When the plaintiff disclosed that she was pregnant with Junior’s child, Junior allegedly told her to undergo an abortion or face termination. Subsequent to her refusal and not long afterwards, Junior’s father allegedly terminated plaintiff after telling her that customers preferred to be served by a slim waitress, not someone with a “belly.” Granting a motion to dismiss, the federal court wrote, “Terminating an employee simply because she refuses to have an abortion offends the conscience of the Court,” and noted that “there is substantial evidence that the public policy of the Commonwealth [of Virginia] seeks to limit abortion.”9 It nonetheless held for defendant in the absence of any of the Virginia exceptions stated above.10 Such was the strength of the Virginia at-will rule.

II. Van Buren v. Grubb

In that light, it is highly interesting that in Van Buren v. Grubb, a decision rendered in November 2012 in response to a reference from the Fourth Circuit Court of Appeals, the Virginia Supreme Court expanded wrongful discharge liability. The Virginia Supreme Court held that a non-employer may be sued for wrongful discharge if that non-employer was in fact the individual violator of Virginia public policy.11

The original wrongful discharge suit was filed in United States District Court by a woman who claimed to have been both the victim of gender discrimination in violation of Title VII of the Civil Rights Act of 1964, and also to have been wrongfully discharged because she would not yield to her supervisor’s repeated sexual advances. The suit was filed against Dr. Stephen Grubb, who was the owner of the Virginia limited liability corporation that employed her. The district court had dismissed the wrongful discharge suit against Dr. Grubb on the grounds that he was not plaintiff’s employer and could therefore not be sued for wrongful discharge. On appeal, the Fourth Circuit referred to the Virginia Supreme Court the question of whether a suit for wrongful discharge could be filed against a non-employer.

By a 4-3 decision, the court answered in the affirmative, ruling that if a non-employer was in fact the violator of public policy he can be sued for wrongful discharge. The majority rejected Grubb’s argument that by definition discharge can be performed only by an employer, and therefore that said employer can be liable for wrongful discharge. The majority emphasized the need to deter wrongful discharge, and that need would not be accomplished in cases such as this one without the liability of “fellow employee” Grubb. The upshot in the instant case, of course, is that the plaintiff can pursue the defendant’s personal assets, not merely the assets of the corporation.

The Chief Justice’s dissent (joined by Justices Goodwyn and McLanahan) emphasized the logical impossibility of a non-employer firing an employee. Though the supervisor’s behavior was wrongful and likely tortious, and could possibly incur personal liability for battery, it was not and could not be in violation of his duty not to discharge an employee for reasons contrary to public policy. Citing Illinois, Oregon, and Texas decisions in support, the Chief Justice argued that the duty not to wrongfully fire can only be breached by an employer, and since a breach of duty (not mere wrongfulness) is necessary for tort liability, a supervisor, or even an owner, cannot be liable for the tort of wrongful discharge.

Therefore, in this very interesting Virginia Supreme Court decision, the majority seems to have waived the need for “breach of duty” for tort liability. In Virginia, wrongfulness is now enough to incur liability, at least for the tort of wrongful discharge.

 

*Michael I. Krauss is a Professor of Law at George Mason University School of Law.

 

Endnotes

1 Virginia Supreme Court Record No. 120348, November 1, 2012.

2 Alabama, Alaska, Arizona, California, Delaware, Idaho, Massachusetts, Montana, Nevada, Utah and Wyoming recognize this doctrine. See Charles J. Muhl, The Employment-At-Will Doctrine: Three Major Exceptions, 124 Monthly Lab. Rev. 1 (Jan. 2001), at 10.

3 California appears to have been the first mover here. See Cleary v. American Airlines, Inc., 111 Cal.App.3d 443 (1980).

4 Muhl, supra note 2, at 7.

5 Id. at 7–10.

6 Again California innovated. In Petermann v. International Brotherhood of Teamsters, plaintiff business agent refused to lie to a state committee to which he had been subpoenaed to testify, and was fired as a result. The California Supreme Court held that recognizing a wrongful discharge suit would effectuate California’s policy against perjury. Holding otherwise would encourage criminal conduct by both employer and employee, the court reasoned. Petermann v. International Brotherhood of Teamsters, 174 Cal.App.2d 184, 188 (1959).

7 Shomo v. Junior Corp., No. 7:11-cv-508 (W.D. Va. June 1, 2012).

8 Bowman v. State Bank of Keysville, 331 S.E.2d 797, 331 S.E.2d 797. (Va. 1985).

9 Shomo v. Junior Corp., No. 7:11-cv-508, slip. op. at 13 (W.D. Va. June 1, 2012).

10 The plaintiff had argued that she should be protected by Virginia’s “conscience clause,” Va. Code § 18.2-75, which prohibits denial of employment to any person based on his or her refusal to participate in an abortion. However, this approach failed because, as the federal court noted, the law was intended to protect medical workers who object to taking part in abortion procedures. The law also requires that those seeking its shelter must have previously “state[d] in writing an objection to any abortion or all abortions on personal, ethical, moral or religious grounds”, something the plaintiff had failed to do.

11 Van Buren v. Grubb, Virginia Supreme Court Record, No. 120348 (November 1, 2012).