Beam v. IPCO Corp.

• Citation: 838 F.2d 242
• Decision Date: 01 March 1988
• Docket Number: No. 87-1194,87-1194
• Parties: , 108 Lab.Cas. P 55,853, 2 Indiv.Empl.Rts.Cas. 1697 Bernard BEAM, Plaintiff-Appellant, v. IPCO CORPORATION, d/b/a Sterling Optical, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 242

838 F.2d 242

56 USLW 2511, 108 Lab.Cas. P 55,853,

2 Indiv.Empl.Rts.Cas. 1697

Bernard BEAM, Plaintiff-Appellant, v. IPCO CORPORATION, d/b/a Sterling Optical, Defendant-Appellee.

No. 87-1194.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 2, 1987.

Decided Jan. 29, 1988.

As Amended March 1, 1988.

Roger L. Imes, Hale, Skemp, Hanson & Skemp, LaCrosse, Wis., for plaintiff-appellant.

Frank C. Morris, Jr., Epstein, Becker Borsody & Green, P.C., Washington, D.C., for defendant-appellee.

Before CUMMINGS, CUDAHY and KANNE, Circuit Judges.

CUDAHY, Circuit Judge.

Bernard Beam brought this diversity action against his former employer, IPCO Corporation ("IPCO"), seeking back pay and other monetary damages for wrongful discharge. The district court granted IPCO's motion to dismiss for failure to state a claim under which relief could be granted.

On appeal Beam argues that the district court applied an overly narrow interpretation of Wisconsin's public policy exception to the employment at will doctrine. IPCO seeks an order affirming the dismissal of Beam's suit and directing Beam to pay its costs and fees on appeal. We conclude that Beam's consultation with his attorney was not protected by any clear and compelling Wisconsin policy and was at most consistent with, rather than compelled by, any policy that could even arguably have applied. We therefore affirm the district court's dismissal of the complaint. We decline to impose sanctions on Beam because there was a colorable, though ultimately incorrect, argument for application of the unjust discharge remedy.

I.

In November 1981, IPCO hired Beam to manage an optical store, an outlet in the Sterling Optical chain, in La Crosse, Wisconsin. In January 1985, Beam received a letter from his supervisor reprimanding him for alleged deficiencies in his work. Concerned about his position and convinced that his supervisor's charges were unfounded, Beam consulted an attorney. At his attorney's request, Beam disclosed some of his outlet's financial data. Beam's attorney then wrote a letter to Beam's supervisor in which he used the financial data to argue that Beam's performance had been mischaracterized in the supervisor's letter. Within a week, IPCO sent a letter to Beam's attorney and a mailgram to Beam indicating that Beam had been fired for disclosing confidential company information.

Beam filed this wrongful discharge action in July 1986, alleging that IPCO had fired him for consulting with an attorney. Beam maintained that the discharge violated a clear Wisconsin public policy, reflected in various provisions of the state's statutes and constitution, of protecting citizens' rights to take their legal problems to attorneys. When IPCO fired him in violation of this policy, according to Beam, it became liable under the unjust discharge remedy recognized in Brockmeyer v. Dun & Bradstreet, 113 Wis.2d 561, 335 N.W.2d 834 (1983), and subsequent Wisconsin cases.

In January 1987, the district court granted IPCO's motion to dismiss Beam's complaint for failure to state a claim. On appeal, Beam seeks reversal and reinstatement of his complaint. IPCO argues that the district court's dismissal should be affirmed and that Beam should be ordered to pay IPCO's costs and attorney's fees.

II.

Before considering the legal sufficiency of Beam's claim, it would be useful to clarify the procedural posture of this case. Dismissal for failure to state a claim upon which relief can be granted is appropriate where a review of the complaint, taking all factual allegations in the complaint as true, reveals that no viable cause of action exists. Greene v. Finley, 749 F.2d 467, 468 (7th Cir.1984). If "matters outside the pleading are presented to and not excluded by the court" in connection with a motion to dismiss for failure to state a claim, the district court is required to treat the motion to dismiss as a summary judgment motion. National Family Ins. Co. v. Exchange Nat'l Bank, 474 F.2d 237, 239 (7th Cir.), cert. denied, 414 U.S. 825, 94 S.Ct. 129, 38 L.Ed.2d 59 (1973); Fed.R.Civ.P. 12(b). Failure to make this conversion and to provide litigants with appropriate notice to permit supplementation of the record can constitute reversible error. See, e.g., Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 31 L.Ed.2d 569 (1972).

The record upon which the district court decided IPCO's motion to dismiss included more than the pleadings and supporting briefs. Both Beam and IPCO submitted documentary exhibits to the district court: Beam's complaint included a copy of the February 20, 1985 mailgram notifying him of his termination; IPCO's memorandum in support of its motion to dismiss included a copy of the January 14, 1985 letter of reprimand from Beam's supervisor to Beam. ¹ Beam's exhibit poses no problem under Rule 12(b) because the district court is entitled to consider exhibits attached to the complaint as part of the pleadings. See Griswold v. E.F. Hutton & Co., 622 F.Supp. 1397, 1402-03 (N.D.Ill.1985); 5 C. Wright & A. Miller, Federal Practice and Procedure Sec. 1357 at 593 (1969). Under a strict interpretation of Rule 12(b), however, the district court may have erred by not expressly rejecting IPCO's exhibit or, in the alternative, converting the motion into a summary judgment motion. None of the facts contained in the letter of reprimand, however, played any part in the district court's decision approving the motion to dismiss. IPCO did not contend, and the district court did not hold, that Beam was fired for the deficiencies described in the letter. The district court's evaluation of the motion to dismiss turned instead on whether IPCO was permitted to fire Beam for his interactions with his counsel. The district court's failure to provide any formal indication that it excluded IPCO's exhibit from consideration does not, under these circumstances, preclude us from reviewing the district court's order as an appeal of a motion to dismiss. ²

III.

In reviewing the dismissal of Beam's complaint, we ask whether an employee fired for consulting an attorney about an employment dispute has a legal remedy under the public policy exception to Wisconsin's employment at will doctrine. ³ Under the at will doctrine, an employer could fire an employee who lacked explicit contractual protections " 'for good cause, for no cause, or for cause morally wrong.' " Brockmeyer v. Dun & Bradstreet, 113 Wis.2d 561, 567, 335 N.W.2d 834, 837 (1983) (quoting Payne v. Western & Atl. R.R., 81 Tenn. 507, 519-20 (1884), overruled on other grounds, Hutton v. Watters, 132 Tenn. 527, 179 S.W. 134 (1915)). Since Brockmeyer, Wisconsin has recognized a narrow public policy exception to the at will rule. In delineating the boundaries of the discharge remedy, the court in Brockmeyer attempted to balance employers' needs for "sufficient flexibility to make needed personnel decisions" against employees' "job security interests" and the public interest in protecting employee actions that advance "well established public policies." Id. at 574, 335 N.W.2d at 841. It therefore limited the range of policies under which an employee might claim this protection to "stated public polic[ies] as reflected in the constitution and statutes of Wisconsin." Id. at 578, 335 N.W.2d at 842. Under this standard, the court held that Charles Brockmeyer, a supervisory employee who had been reprimanded for taking an unscheduled vacation, smoking marijuana with his subordinates and having an affair with his secretary, had failed to show that his discharge violated policies underlying Wisconsin statutes protecting business reputations and workers' pursuit of employment. The court also found no factual support for Brockmeyer's contention that he had been fired for declaring his intention to answer truthfully if called to testify in a sex discrimination suit brought by his former secretary.

In the two unjust discharge cases that it has decided since Brockmeyer, the Wisconsin Supreme Court has adjusted the balance between preserving employers' and employees' freedom to bargain over discharge protections on the one hand and promoting worker job security and public policies on the other. Wandry v. Bull's Eye Credit Union, 129 Wis.2d 37, 384 N.W.2d 325 (1986), involved the termination of a credit union cashier for refusing to reimburse her employer for losses resulting from a bad check that she claimed to have accepted with the approval of her supervisor. The court reversed the dismissal of the cashier's complaint, finding that the complaint had properly described a discharge in violation of a clear public policy against the use of "coercive economic power to shift the burden of a work related loss from the employer to the employee." Although the express language of the relevant statute, Wis.Stat.Ann. 103.455 (West 1974), does not address discharges--it speaks only to deductions from wages imposed without an admission or objective determination that the employee was at fault--the court held that "[t]he public policy of a statute may be invoked in contexts outside the precise reach of the statute." Id. at 46-47, 384 N.W.2d at 329.

Any impression that Wandry presaged a broadening of Brockmeyer 's "narrow public policy exception" was dispelled by the Wisconsin Supreme Court's most recent unjust discharge decision. In Bushko v. Miller Brewing Co., 134 Wis.2d 136, 396 N.W.2d 167 (1986), Stephen Bushko, a supervisor at a container plant, claimed that he had been fired in violation of clear public policies reflected in statutory and state constitutional provisions concerning industrial safety and free speech. Bushko's dismissal was ostensibly for complaining about his employer's practices with respect to plant safety, hazardous wastes and "honesty." The court held that Bushko could not get to the jury by alleging that he had been dismissed for actions merely "consistent with" public policies. The cause of action set out in Brockmeyer, the...