Baldwin v. Sisters of Providence in Washington, Inc.

• Decision Date: 02 March 1989
• Docket Number: No. 54771-8,54771-8
• Citation: 112 Wn.2d 127,769 P.2d 298
• Court: Washington Supreme Court
• Parties: , 124 Lab.Cas. P 57,263, 4 IER Cases 208 Timothy BALDWIN, Respondent, v. SISTERS OF PROVIDENCE IN WASHINGTON, INC., a Washington corporation, d/b/a St. Peter Hospital; David L. Bjornson and "Jane Doe" Bjornson, husband and wife; Gary Brenner and "Jane Doe" Brenner, husband and wife; Darrell Stewart and "Jane Doe" Stewart, husband and wife, Appellants.

Page 127

112 Wn.2d 127

769 P.2d 298, 124 Lab.Cas. P 57,263,

4 IER Cases 208

Timothy BALDWIN, Respondent, v. SISTERS OF PROVIDENCE IN WASHINGTON, INC., a Washington

corporation, d/b/a St. Peter Hospital; David L. Bjornson

and "Jane Doe" Bjornson, husband and wife; Gary Brenner and

"Jane Doe" Brenner, husband and wife; Darrell Stewart and

"Jane Doe" Stewart, husband and wife, Appellants.

No. 54771-8.

Supreme Court of Washington,

En Banc.

March 2, 1989.

Bogle & Gates, Michael P. Mirande, Delbert D. Miller, Seattle, for appellants.

Swanson, Parr, Cordes, Younglove, Peeples & Wyckoff, P.S., Douglas P. Wyckoff, Olympia, for respondent.

DOLLIVER, Justice.

Defendants Sisters of Providence in Washington, Inc., St. Peter Hospital, and several hospital administrators seek review from a trial judgment in a wrongful termination suit in favor of plaintiff Timothy Baldwin.

The Sisters of Providence operate St. Peter Hospital in Olympia. In 1981, plaintiff became employed at St. Peter as a respiratory therapist. Under the terms of the employee manual, St. Peter may discharge its employees for "just cause", which is defined as "any gross violation of conduct ..." The manual also provides a 4-step grievance procedure for resolving employee complaints. Under the procedure, the grievance first goes to the employee's supervisor, the department head, the personnel director, and finally to the hospital administrator.

On January 30, 1985, a female patient reported she had been sexually molested on January 29. The assailant was described as a fairly tall man having a long beard, long dark hair pulled back in a ponytail, and wearing a blue jacket. The nursing supervisor thought the assailant may have been the plaintiff because the description matched and because he was the only respiratory therapist on duty at the time of the incident. Respiratory therapists are the only employees who wear blue jackets. The supervisor reported this to the director of respiratory therapy, the co-directors of nursing services, and the patient's physician. When plaintiff arrived for work on January 30, he was told there was a problem involving him, and he was not to work that evening, although he would be paid for the shift. The next morning, the director of respiratory therapy informed his supervisor of the complaint. An investigative team of administrators was organized. The team was comprised of the two co-directors of nursing services, the director of personnel, and Darrell Stewart, an assistant to the hospital administrator.

On February 1, a meeting was held at which plaintiff was informed of the complaint and the investigation. An investigation ensued in which hospital records, including the female patient's medical history, and security records were reviewed and hospital personnel were interviewed. On February 22, plaintiff was fired.

On March 18, 1985, plaintiff filed suit alleging, among other theories, breach of an implied covenant that his discharge would be based upon just cause. The trial court denied a defense motion for summary judgment and for a directed verdict based upon plaintiff's failure to exhaust the grievance procedure.

Both parties submitted proposed jury instructions as to the applicable law on the breach of contract theory. Defendants proposed two instructions. One instruction proposed by defendants defined just cause as a good faith, fair and honest reason supported by substantial evidence. Another proposed instruction was similar, but added the objective requirement that the just cause determination be reasonable. The trial court declined to give either instruction and drafted its own instruction which reads in pertinent part as follows:

You are instructed that St. Peter Hospital had the right to terminate the plaintiff, for any reason, at any time, unless the plaintiff can prove that St. Peter Hospital had created an atmosphere of job security and fair treatment with promises, found in employment manuals or policies, of specific treatment in specific situations whereby plaintiff was induced thereby to remain on the job and not actively seek other employment.

If you find plaintiff has sustained his burden of proof, then plaintiff's employment could only be terminated for just cause and the burden of proof shifts to defendant to prove by a preponderance of the evidence that on February 22, 1985, plaintiff was terminated from his employment for just cause.

"Just cause" means that under the facts and circumstances existing at the time the decision is made, an employer had a good, substantial and legitimate business reason for terminating the employment of a particular employee.

In closing argument, plaintiff's attorney relied heavily on this instruction. The jury, in answer to special interrogatories, found (1) plaintiff was excused from resorting to the grievance procedure because it would be futile, (2) the employment contract contained a requirement that discharge would be based upon just cause, and (3) the hospital did not have just cause in discharging plaintiff.

The trial court denied a defense motion for judgment notwithstanding the verdict and entered judgment in favor of plaintiff. The defendants appealed directly to this court.

I

Generally, contractual grievance procedures must be exhausted before parties resort to the courts. Tombs v. Northwest Airlines, Inc., 83 Wash.2d 157, 162, 516 P.2d 1028 (1973); Lew v. Seattle Sch. Dist. 1, 47 Wash.App. 575, 577, 736 P.2d 690 (1987). There are exceptions to the exhaustion doctrine based upon considerations of fairness or practicality. See South Hollywood Hills Citizens Ass'n v. King Cy., 101 Wash.2d 68, 74, 677 P.2d 114 (1984). One such exception is recognized where pursuing the available remedies would be futile. Moran v. Stowell, 45 Wash.App. 70, 77, 724 P.2d 396, review denied, 107 Wash.2d 1014 (1986). Generally, futility addresses a showing of bias or prejudice on the part of discretionary decisionmakers. See Orion Corp. v. State, 103 Wash.2d 441, 458, 693 P.2d 1369 (1985).

The Superior Court denied defense motions for summary judgment and directed verdict based upon plaintiff's failure to show the futility of exhausting the contractual grievance remedies. Defendants do not challenge that the first three steps of the grievance process were futile as plaintiff's supervisor, department head, and the personnel director were actively engaged in the investigation. They do challenge plaintiff's failure to pursue the fourth step and take the grievance to the hospital administrator.

First, defendants contend the Superior Court misplaced the burden of proof on summary judgment. On a motion for summary judgment, the moving party has the burden of showing there is no genuine issue of material fact, but this does not relieve the nonmoving party of the burden of producing evidence that would support a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986); Grimwood v. University of Puget Sound, Inc., 110 Wash.2d 355, 359, 753 P.2d 517 (1988). The nonmoving party must set forth specific facts showing a genuine issue and cannot rest on mere allegations. Anderson, 477 U.S. at 256, 106 S.Ct. at 2514; Grimwood, 110 Wash.2d at 359-60, 753 P.2d 517. In denying the defense motion, the Superior Court stated:

On this record, the defendants have not carried their burden of showing that there are no issues of fact with respect to the possible futility of plaintiff's efforts to exhaust contractual remedies.

Defendants do not point to any specific pleadings, affidavits, or depositions showing the absence of evidence on the issue of futility. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Seven Gables Corp. v. MGM/UA Entertainment Co., 106 Wash.2d 1, 12-13, 721 P.2d 1 (1986). Therefore, the Superior Court was correct in its determination that defendants did not meet their initial burden of showing there were no issues of fact regarding futility.

Defendants further contend the Superior Court erred in not directing a verdict in defendants' favor on the issue of futility. In considering a motion for a directed verdict, the court must view the evidence in the light most favorable to the nonmoving party, and the denial of the motion should be reversed only if no evidence or reasonable inference exists which would be sufficient to sustain a verdict for the nonmoving party. Cherberg v. Peoples Nat'l Bank, 88 Wash.2d 595, 606, 564 P.2d 1137 (1977). In the plaintiff's case in chief, plaintiff testified he felt taking his grievance to the hospital administrator would be futile because the assistant administrator was involved in the investigation as a representative of the administrator. The record shows the assistant was regularly delegated duties by the administrator, although there is no allegation the assistant was actually pursuing the investigation on behalf of the administrator. Plaintiff does not allege the hospital administrator was personally involved in the investigation or had predetermined the case. On this testimony, defendants made a motion for a directed verdict. The trial court denied the motion because there was an inference of bias based upon the involvement of the assistant administrator in the investigation.

Defendants cite one case where the subjective belief the available procedures would be futile was not sufficient to invoke the exception. See Smith v. General Elec. Co., 63 Wash.2d 624, 625-27, 388 P.2d 550 (1964). The principle that a subjective belief of futility is sufficient to invoke the exception would conflict with the strong bias toward requiring exhaustion in Washington. However, aside from plaintiff's subjective belief, the evidence also indicates (1) a close working relationship between the administrator and the assistant administrator, (2) a situation where the first three persons in the grievance process were actively involved in the...