Gann v. Fruehauf Corp.

• Decision Date: 30 May 1995
• Docket Number: No. 93-7566,93-7566
• Citation: 52 F.3d 1320
• Parties: Bill J. GANN, Plaintiff-Appellee/Cross-Appellant, v. FRUEHAUF CORPORATION, Defendant-Appellant/Cross-Appellee, and Connecticut General Life Insurance Company, et al., Defendants/Cross-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1320

52 F.3d 1320

32 Fed.R.Serv.3d 959

Bill J. GANN, Plaintiff-Appellee/Cross-Appellant, v. FRUEHAUF CORPORATION, Defendant-Appellant/Cross-Appellee, and Connecticut General Life Insurance Company, et al.,

Defendants/Cross-Appellees.

No. 93-7566.

United States Court of Appeals, Fifth Circuit.

May 30, 1995.

Peyton S. Irby, Jr., Watkins, Ludlam & Stennis, Jackson, MS, for appellant.

John M. Mooney, Jr., Jackson, MS, for Gann.

Steven H. Begley, Walter D. Willson, Wells, Wells, Marble & Hurst, Jackson, MS, for Conn. Gen., et al.

Appeals from the United States District Court for the Southern District of Mississippi.

Before REYNALDO G. GARZA, DeMOSS and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

The Appellant/Cross-Appellee Fruehauf Corporation ("Fruehauf") appeals a jury verdict finding that Fruehauf wrongfully discharged Appellee/Cross-Appellant Bill Gann ("Gann") in violation of Washington state law and a Rule 11 monetary sanction imposed on its counsel. Gann appeals the district court's entrance of summary judgment in favor of Fruehauf and Cross-Appellees Connecticut General Life Insurance Company ("Connecticut General"), Karen Goralski ("Goralski"), Julie Szemborski ("Szemborski"), Carolyn Robinson ("Robinson"), and Mongoose Administrators, Inc. ("Mongoose") on his claims that they violated the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Sec. 1001, and the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), 29 U.S.C. Sec. 1162. We AFFIRM in part and REVERSE in part.

FACTS AND PROCEDURAL HISTORY

Gann became an employee of Fruehauf in 1984 in California. Fruehauf transferred Gann to its state of Washington branch in April 1986. Gann hurt himself at work in January 1988, and filed for worker's compensation benefits in Washington on July 15, 1988. Fruehauf transferred Gann to its Mississippi branch in August 1988, and terminated Gann's employment on November 2, 1988.

In April 1989, Gann filed this action in a federal court in Mississippi. The defendants included Fruehauf (which maintained an employee benefit plan in which Gann participated), Connecticut General (which provided long-term group disability insurance to Fruehauf in support of the employee benefit plan), Goralski (the administrator of certain employee benefit plans for Fruehauf), Szemborski In his complaint, Gann asserted that all the defendants improperly denied his claim for disability benefits in violation of ERISA and COBRA. Gann also asserted a claim of wrongful discharge against Fruehauf in violation of a Washington statute, Wash.Rev.Code Sec. 51.48.025(1), claiming that Fruehauf discharged him because he had filed for worker's compensation benefits.

(a benefit analyst for Connecticut General), Robinson (a benefit analyst for Connecticut General) and Mongoose (the administrator of Gann's continuation coverage under the employee benefit plan established by Fruehauf).

The district court dismissed Gann's ERISA and COBRA claims on a summary judgment motion by the defendants, but allowed Gann's wrongful discharge claim to go to a jury. The jury rendered a verdict in favor of Gann for $112,500.

Fruehauf's Appeal

Fruehauf raises several arguments on appeal contending that: (1) the district court erred in applying Washington, instead of Mississippi, law to the wrongful discharge claim; (2) the jury verdict is against the overwhelming weight of the evidence; (3) the damages awarded by the jury are not substantiated by the evidence; (4) a J.N.O.V., New Trial, and/or Remittitur should have been granted; and (5) the district court erred in imposing sanctions on Fruehauf and its counsel.

I

Fruehauf argues that the district court erred in applying Washington law to Gann's wrongful discharge claim. In his complaint, Gann argues that Fruehauf wrongfully discharged him because he pursued his rights for worker's compensation. Such motivations behind a discharge are made actionable by a Washington statute. Wash.Rev.Code Sec. 51.48.025(1). Mississippi law, however, does not recognize such a cause of action, as all employment contracts for an indefinite term are terminable at will for any reason. Green v. Amerada-Hess Corp., 612 F.2d 212, 214 (5th Cir.), cert. denied, 449 U.S. 952, 101 S.Ct. 356, 66 L.Ed.2d 216 (1980).

The conflict of law rules of the state in which the district court is located are to be used in determining the applicable law. Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3, 4, 96 S.Ct. 167, 167-68, 46 L.Ed.2d 3 (1975). A district court's determination of state law is reviewed de novo by an appellate court. Allison v. ITE Imperial Corp., 928 F.2d 137, 139 (5th Cir.1991). Here, the district court is located in Mississippi. ¹ Mississippi courts have held that a "center of gravity" or "the most substantial relationship" rule applies. White v. Malone Properties, Inc., 494 So.2d 576, 578 (Miss.1986).

In interpreting this rule for tort actions, Mississippi courts have applied the criteria of Secs. 6 and 145 of the Restatement (Second) of Conflict of Laws. McDaniel v. Ritter, 556 So.2d 303, 310 (Miss.1989). ² Although Mississippi is the state where the injury (termination) occurred, Sec. 145(2)(a), but we view the conduct causing the injury to have occurred in Washington, ³ Sec. 145(2)(b). Section 145(2)(c), the domicile, residence, place of incorporation, and place of business of the parties, points to Mississippi as Gann's residence at the time of his termination. Fruehauf, on the other hand, conducted business in California, Washington, and Mississippi, and had its principal headquarters in Michigan. Finally, Sec. 145(2)(d), the place where the relationship between the parties is centered, points to Washington. Gann worked for Fruehauf in Washington, his injury occurred in Washington, and the act which he claims prompted his discharge by Fruehauf, the filing for and receiving of worker's compensation benefits, occurred in Washington.

                Sec. 145 lists it as the first factor to be considered, the place of injury is not the sole determinative factor.  Mitchell v. Craft, 211 So.2d 509, 512-13 (Miss.1968).  Further, the criteria are not strict elements that must always be present for a state's law to be applied, nor is the formula to be precisely followed in every instance.  "The principles of Sections 6 and 145 of the Restatement (Second) defy mechanical application--they are less 'rules of law' than generally-stated guideposts."  McDaniel v. Ritter, supra, at 310.   A literal interpretation of the two sections, however, would have the courts focus upon the states picked out by the criteria of Sec. 145.  Allison v. ITE Imperial Corp., supra, at 141.   These states would then be compared using the criteria of Sec. 6.  Id
                

Although the parties had contacts with other states according to the analysis of Sec. 145, the states with the most interest in this matter, a major component of the Sec. 6 analysis, are Mississippi and Washington. Fruehauf argues that Mississippi has the greater interest, as the place of the injury is Mississippi, and Gann was a resident of Mississippi at the time of the discharge. Further, Fruehauf argues that Mississippi has a compelling interest in the correct application of its employment laws to the employment activities within Mississippi.

With respect to the facts of this case, we disagree with Fruehauf's assessment. The relationship of the parties centers mostly on Washington. Gann worked for Fruehauf in Washington for approximately two and a half years, and it is in Washington where Gann hurt himself and filed for worker's compensation benefits. Although the termination occurred in Mississippi, the period of time in which Gann resided in Mississippi was only three months. We think it significant that the trial court found that the record supports the finding that the contract of employment was made between Gann and Fruehauf outside of Mississippi and prior to Gann's arrival in Mississippi to perform his duties for Fruehauf. We think that under the unique circumstances of this case Washington's interest in this matter is paramount to that of Mississippi. We note, additionally, that the right given by Washington, to obtain worker's compensation benefits without fearing discharge, would be unnecessarily diluted if workers could be dispatched to other states so that they could be discharged in contravention of the policies of the state of Washington. ⁴

II

Fruehauf next argues that the jury verdict in favor of Gann on the wrongful discharge cause of action was against the overwhelming weight of the evidence and should be reversed.

In reviewing jury verdicts, the appellate court must view all of the evidence in favor of the prevailing party. Gibraltar Sav. v. LDBrinkman Corp., 860 F.2d 1275, 1297 (5th Cir.1988), cert. denied, 490 U.S. 1091, 109 S.Ct. 2432, 104 L.Ed.2d 988 (1989). "Weighing the conflicting evidence and the inferences to be drawn from that evidence, and determining the relative credibility of the witnesses, are the province of the jury, and its decision must be accepted if the record contains any competent and substantial evidence tending fairly to support the verdict." Id. "Substantial evidence, while something less than the weight of the evidence, is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if different conclusions also might be supported by the evidence." Id.

In order to establish a prima facie claim under Washington law for wrongful discharge, Gann must prove (1) that he exercised his right for worker's compensation or told Fruehauf that he was going to exercise his right; (2) that he was discharged; and (3) that there was a causal connection between the exercise of his legal right and the discharge. Wilmot v. Kaiser Aluminum & Chemical Corp., 118 Wash.2d 46, 821 P.2d 18, 28-29 (1991). Once Gann meets this standard, Fruehauf must articulate a legitimate reason for the discharge. Id. 821...