Becker v. Cmty. Health Sys., Inc.

• Decision Date: 14 August 2014
• Docket Number: No. 31234–8–III.,31234–8–III.
• Citation: 332 P.3d 1085
• Court: Washington Court of Appeals
• Parties: Gregg BECKER, Respondent, v. COMMUNITY HEALTH SYSTEMS, INC. d/b/a Community Health Systems Professional Services Corporation d/b/a Community Health Systems PSC, Inc., d/b/a Rockwood Clinic P.S.; and Rockwood Clinic, P.S., Petitioners.

332 P.3d 1085

Gregg BECKER, Respondent,

v.COMMUNITY HEALTH SYSTEMS, INC. d/b/a Community Health Systems Professional Services Corporation d/b/a Community Health Systems PSC, Inc., d/b/a Rockwood Clinic P.S.; and Rockwood Clinic, P.S., Petitioners.

No. 31234–8–III.

Court of Appeals of Washington, Division 3.

Aug. 14, 2014.

Stellman Keehnel, Katherine Ann Heaton, DLA Piper LLP, Seattle, WA, Keller W. Allen, Mary Margaret Palmer, Law Firm of Keller W. Allen PC, Spokane, WA, for Petitioner.

Mary Elizabeth Schultz, Mary Schultz Law PS, Spangle, WA, for Respondent.

BROWN, A.C.J.

¶ 1 Rockwood Clinic PS (Rockwood) and its parent company, Community Health Systems Inc. (CHS), successfully petitioned for discretionary review of a decision denying their CR 12(b)(6) motion to dismiss Gregg Becker's claim for wrongful discharge in violation of public policy. Rockwood and CHS contend Mr. Becker cannot establish the jeopardy element because a myriad of statutes and regulations adequately promote the public policy of honesty in corporate financial reporting, rendering a private common law tort remedy superfluous. We disagree with Rockwood and CHS, and affirm.

FACTS

¶ 2 In February 2011, Rockwood recruited Mr. Becker to be its chief financial officer (CFO), a job he performed admirably. CHS had acquired Rockwood with a business strategy to improve profitability. Upon doing so, CHS represented to investors and creditors it expected Rockwood to sustain a $4 million operating loss in 2012. However, in October 2011, Mr. Becker correctly projected Rockwood's earnings before interest, taxes, depreciation, and amortization (EBITDA) as showing a $12 million operating loss in 2012. This projection was significantly important to investors and creditors as a measure of Rockwood's and, by relation, CHS's financial health. Additionally, CHS had to report this projection to the U.S. Securities and Exchange Commission (SEC). As CFO, Mr. Becker had to ensure this projection was not false or misleading.

¶ 3 Rockwood and CHS demanded Mr. Becker recalculate his EBITDA projection to show a target $4 million operating loss in 2012. Mr. Becker refused to submit the $4 million figure because he reasonably believed it would require overstating income and understating expenses, fraudulently misleading investors and creditors in violation of criminal laws. Rockwood and CHS rated his job performance as “ ‘unacceptable,’ ” placed him on a probationary “ ‘performance improvement plan,’ ” and gave him an ultimatum to either submit the $4 million figure or lose his job. Clerk's Papers (CP) at 735–36. Then, he told Rockwood's chief executive officer (CEO) and CHS's internal auditor he thought Rockwood and CHS were using the false $4 million figure to fraudulently mislead investors and creditors. Mr. Becker hypothesized that, upon acquiring Rockwood, CHS procured investments and credits using the false $4 million figure. He reported his concerns to Rockwood and CHS but did not report the misconduct to law enforcement agencies. Soon, Mr. Becker saw signs that Rockwood and CHS were preparing to use his subordinate to submit the false $4 million figure under the auspices of his department. Mr. Becker detailed these matters in writing to Rockwood and CHS, advising them he would have no choice but to resign unless they responded appropriately to abate the misconduct. They sent him a one-line e-mail accepting his resignation the next day.

¶ 4 In February 2012, Mr. Becker sued in superior court for wrongful discharge in violation of public policy. He additionally filed a whistle-blower retaliation complaint with the U.S. Occupational Safety and Health Administrative (OSHA). Apparently, his OSHA complaint remains unresolved. Rockwood and CHS removed his civil suit to federal district court. But after Mr. Becker amended his complaint to remove references to federal law, the federal district court remanded his case.

¶ 5 Back in superior court, Rockwood and CHS moved unsuccessfully to dismiss Mr. Becker's amended complaint under CR 12(b)(6) for failure to state a cognizable claim for relief. The trial court certified the ruling for interlocutory review regarding whether Mr. Becker can establish the jeopardy element in his claim for wrongful discharge in violation of public policy. This court granted discretionary review regarding whether other available means for promoting the public policy of honesty in corporate financial reporting are adequate.

ANALYSIS

¶ 6 The issue is whether the trial court erred under CR 12(b)(6) in declining to dismiss Mr. Becker's claim for wrongful discharge in violation of public policy. Rockwood and CHS contend Mr. Becker cannot establish the jeopardy element because a myriad of statutes and regulations adequately promote the public policy of honesty in corporate financial reporting, rendering a private common law tort remedy superfluous. Our review is de novo. See Korslund v. DynCorp Tri–Cities Servs., Inc., 156 Wash.2d 168, 182, 125 P.3d 119 (2005); Hoffer v. State, 110 Wash.2d 415, 421, 755 P.2d 781 (1988).

¶ 7 A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” CR 8(a)(1). Otherwise, a trial court may dismiss the complaint on motion for “failure to state a claim upon which relief can be granted.” CR 12(b)(6). Dismissal is proper if, accepting all factual allegations as true, “it appears beyond doubt that the plaintiff can prove no set of facts, consistent with the complaint, which would entitle the plaintiff to relief.” Corrigal v. Ball & Dodd Funeral Home, Inc., 89 Wash.2d 959, 961, 577 P.2d 580 (1978); see Barnum v. State, 72 Wash.2d 928, 929–30, 435 P.2d 678 (1967). Thus, dismissal is proper where the plaintiff has an “ ‘insuperable bar to relief’ ” appearing on the face of the complaint. Hoffer, 110 Wash.2d at 421, 755 P.2d 781 (quoting 5 Charles Wright & Arthur Miller, Federal Practice § 1357, at 604 (1969)); accord Cutler v. Phillips Petroleum Co., 124 Wash.2d 749, 755, 881 P.2d 216 (1994). We will consider hypothetical situations, including facts argued for the first time on appeal, that the complaint could conceivably allege to justify relief for the plaintiff. Halvorson v. Dahl, 89 Wash.2d 673, 674–75, 574 P.2d 1190 (1978); Bravo v. Dolsen Cos., 125 Wash.2d 745, 750, 888 P.2d 147 (1995).

¶ 8 Washington provides a private common law tort remedy when an employer discharges an at-will employee “for a reason that contravenes a clear mandate of public policy.” ¹Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 233, 685 P.2d 1081 (1984). This claim usually arises where the employer discharges the employee for (1) “refusing to commit an illegal act”; (2) “performing a public duty or obligation”; (3) “exercis[ing] a legal right or privilege”; or (4) engaging in “ ‘whistleblowing’ activity.” Dicomes v. State, 113 Wash.2d 612, 618, 782 P.2d 1002 (1989). But the elements are the same regardless of what conduct prompts this claim.

¶ 9 To prevail on a claim of wrongful discharge in violation of public policy, a plaintiff must establish (1) “the existence of a clear public policy (the clarity element)”; (2) “that discouraging the conduct in which [the plaintiff] engaged would jeopardize the public policy (the jeopardy element)”; (3) “that the public-policy-linked conduct caused the dismissal (the causation element)”; and (4) “[t]he defendant [is not] able to offer an overriding justification for the dismissal (the absence of justification element).” Gardner v. Loomis Armored, Inc., 128 Wash.2d 931, 941, 913 P.2d 377 (1996) (adopting these elements from Henry H. Perritt, Jr., Workplace Torts: Rights and Liabilities §§ 3.7, .14, .19, .21 (1991) [hereinafter Perritt, Workplace Torts] ). The parties dispute whether Mr. Becker's amended complaint establishes the jeopardy element.

¶ 10 To establish the jeopardy element, the plaintiff must show he or she “engaged in particular conduct, and the conduct directly relates to the public policy, or was necessary for the effective enforcement of the public policy.” Id. at 945, 913 P.2d 377 (citing Perritt, Workplace Torts,supra, § 3.14, at 75–76). Thus, the plaintiff must argue “ ‘other means for promoting the policy ... are inadequate.’ ” Id. (omission in original) (quoting Perritt, Workplace Torts,supra, § 3.14, at 77). In other words, the plaintiff must argue the actions he or she took were the “ only available adequate means ” to promote the public policy. Danny v. Laidlaw Transit Servs., Inc., 165 Wash.2d 200, 222, 193 P.3d 128(2008).

¶ 11 Our Supreme Court first recognized the claim of wrongful discharge in violation of public policy in Thompson, 102 Wash.2d at 232, 685 P.2d 1081. There, a divisional controller sued his corporate employer, alleging the employer discharged him, as a warning to other controllers, for instituting accurate accounting procedures complying with the Foreign Corrupt Practices Act of 1977 (FCPA), 15 U.S.C. §§ 78m, 78dd–1 to –2, 78ff. Id. at 223, 234, 685 P.2d 1081. The Thompson court held the divisional controller could recover under a private common law tort remedy if he could prove his allegations. Id. at 234, 685 P.2d 1081. The court reasoned the employer's action would contravene the public policy prohibiting bribery of foreign officials and requiring transparency in accounting by discouraging other controllers from complying with the FCPA. Id. at 234, 685 P.2d 1081.

¶ 12 Our Supreme Court first articulated and applied the jeopardy element in Gardner, 128 Wash.2d at 941, 945–46, 913 P.2d 377. There, an armored vehicle driver sued his employer for wrongful discharge in violation of public policy, alleging the employer discharged him for exiting the vehicle to disarm an attacker inside a bank. Id. at 933–35, 913 P.2d 377. The Gardner court concluded the threat of discharge would jeopardize the public policy of supporting altruism and protecting human life by discouraging an employee like...