Belline v. K-Mart Corp., K-MART

• Decision Date: 22 August 1991
• Docket Number: K-MART,No. 90-3331,90-3331
• Citation: 940 F.2d 184
• Parties: , 120 Lab.Cas. P 56,774, 6 Indiv.Empl.Rts.Cas. 1121 Frank G. BELLINE, Plaintiff-Appellant, v.CORPORATION, a Michigan corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 184

940 F.2d 184

60 USLW 2133, 120 Lab.Cas. P 56,774,

6 Indiv.Empl.Rts.Cas. 1121

Frank G. BELLINE, Plaintiff-Appellant, v. K-MART CORPORATION, a Michigan corporation, Defendant-Appellee.

No. 90-3331.

United States Court of Appeals, Seventh Circuit.

Argued April 8, 1991.

Decided July 31, 1991.

Rehearing and Rehearing En Banc Denied Aug. 22, 1991.

Bogdan Martinovich, Ray & Glick, William J. Provenzano (argued), Provenzano & Associates, Libertyville, Ill., for plaintiff-appellant.

Allan E. Lapidus, Carol L. Van Hal (argued), Vedder, Price, Kaufman & Kammholz, Chicago, Ill., for defendant-appellee.

Before BAUER, Chief Judge, and CUDAHY and EASTERBROOK, Circuit Judges.

CUDAHY, Circuit Judge.

Our task in this diversity case is to divine the contours of the rather amorphous Illinois common law tort of retaliatory discharge. Frank Belline brought suit against his former employer, K-Mart Corporation, claiming that he was fired from his job in retaliation for reporting to K-Mart management suspicious behavior on the part of his supervisor. K-Mart assumes the truth of Belline's allegations for the purpose of its summary judgment motion but responds that Belline's termination for his internal report regarding his supervisor's irregular conduct is not actionable as retaliatory discharge because it implicates no public policy. The district court entered summary judgment in favor of K-Mart, concluding that the type of disclosure Belline made does not warrant protection because it falls outside "the heart of a citizen's social rights, duties, and responsibilities." Palmateer v. International Harvester Co., 85 Ill.2d 124, 52 Ill.Dec. 13, 15-16, 421 N.E.2d 876, 878-89 (1981). Because, by our reading, Illinois law encourages all citizens to ferret out and expose possible criminal activity in the workplace, we reverse.

I.

Frank Belline was employed as resident assistant manager of the K-Mart store in Wheeling, Illinois from February 1984 until May 1988. On November 15, 1987, while Belline was on duty, a Rotary Club representative entered the store to retrieve goods that he claimed had been set aside for him by the store manager, Dennis Dobberke. After telephoning Dobberke at home to verify the transaction, Belline released the merchandise. Dobberke explained that an itemized list of the goods and a payment check were locked in his desk and assured Belline that he would record the transaction later that evening. Belline mentioned the unusual incident to two of his co-workers--Scott Timmons, store security manager, and Pamela Bryan, assistant manager. As a result, when Dobberke returned to the store, all three employees kept a vigilant eye upon him. None of the three, however, spotted Dobberke running a check through the cash register. To Belline's knowledge, moreover, no such check was ever processed.

Timmons relayed word of Dobberke's suspicious behavior to Larry Clark, regional security manager. When Clark summoned Belline to his office, Belline himself recounted the precise course of events. He also notified Clark of his discovery that Dobberke had been improperly authorizing payment to an employee for days that the employee did not work. Although Belline pursued the Dobberke inquiry through the appropriate professional channels, he never reported the matter to the police. After an internal investigation, Dobberke was ultimately demoted and transferred to Ames, Iowa.

Belline charges K-Mart with penalizing all three employees who played a role in exposing Dobberke's suspect activities--Timmons, Bryan and himself. In February 1988, shortly after the close of the Dobberke investigation, Timmons was demoted from security manager to stockperson, a job that entails unloading trucks and hauling shopping carts from the parking lot. Shortly thereafter, Timmons was transferred to Elgin, Illinois. In March 1988, Belline himself was put on probation and on May 11, 1988, he was discharged, allegedly for unsatisfactory performance. Belline claims that Dobberke's replacement, the new store manager Tim Rommel, inadvertently let slip the reasons for his dismissal, bluntly stating: "You got Dobberke, I got you." Belline Dep. at 190. Finally, Belline maintains that Pam Bryan, the third participant in the investigation, was also demoted: in June 1988, Bryan was transferred from her position as resident assistant manager of the K-Mart Wheeling store to a post as a merchandise assistant at a much smaller store 330 miles away in Madison, Indiana.

Belline filed suit charging K-Mart with retaliatory discharge and breach of his employment contract. The district court granted summary judgment in favor of K-Mart on both claims. Dismissing Belline's disclosure as just an internal report divulging a possible violation of company procedure or a crime, the district court concluded that it raised no issue of public policy. See Mem. Op. and Order of Dist. Ct. at 4. Instead, because the district court deemed the report to involve a purely private matter, it held that Illinois law would not support Belline's cause of action for retaliatory discharge. The court also determined that Belline had no case for breach of employment contract because the K-Mart employee handbook never promised him any contract rights in continuing employment. On the contrary, numerous acknowledgments which Belline signed explicitly cautioned him that "nothing in this booklet should be interpreted as providing employment for any definite period of time as your employment is at will and can be terminated by yourself or the Company at any time with or without cause." Id. at 2.

Belline advances three arguments on appeal. First, he contends that the district court erred in holding that only those employees who report crimes to the police or other public officials may receive succor under Illinois law. He maintains, moreover, that the protective shield Illinois law extends over whistleblowers should not depend upon the magnitude of the crime reported. Finally, he argues that K-Mart breached the promise implicit in its Policy on Integrity and Conflict of Interest that no employee would be discharged for reporting questionable activities, such as the removal of merchandise from a store without proper payment.

II.

As usual, we review the district court's entry of summary judgment de novo, drawing all reasonable inferences in favor of the non-moving party, here Frank Belline. See Anderson v. Liberty Lobby, 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In accordance with the Supreme Court's recent directive in Salve Regina College v. Russell, --- U.S. ----, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991), moreover, we review de novo the district court's interpretation of state law. In exercising our obligation to provide meaningful appellate review in diversity cases, we must strive to parse state law and, if necessary, forecast its path of evolution.

A. Retaliatory Discharge

As a general rule, an employment contract of unspecified duration may be terminated at any time with or without cause. Because unfettered employer power may threaten the public welfare, however, Illinois law recognizes an exception to the general rule of at-will employment: it permits an employee who is dismissed in violation of a clearly mandated public policy to bring a cause of action for retaliatory discharge. Recognition of this tort strikes an appropriate balance among competing interests--the employer's interest in efficient operation of a business, the employee's interest in earning a livelihood and society's interest in the well-being of its citizens. See Palmateer, 52 Ill.Dec. at 15, 421 N.E.2d at 878.

The tort of retaliatory discharge comprises three distinct elements: first, an employee must establish that she has been discharged; second, she must demonstrate that her discharge was in retaliation for her activities; and, finally, she must show that the discharge violates a clear mandate of public policy. See Hinthorn v. Roland's of Bloomington, 119 Ill.2d 526, 116 Ill.Dec. 694, 696, 519 N.E.2d 909, 911 (1988). But, as the Illinois Supreme Court has observed the "Achilles heel of the principle lies in the definition of public policy." Palmateer, 52 Ill.Dec. at 15, 421 N.E.2d at 878. Struggling to articulate some formulation of the term, the Palmateer court declared that "public policy concerns what is right and just and what affects the citizens of the State collectively.... [A] matter must strike at the heart of a citizen's social rights, duties, and responsibilities before the tort will be allowed." Id. at 52 Ill.Dec. at 15-16, 421 N.E.2d at 878-79.

Although no law compels an individual to step forward and communicate his suspicions regarding criminal activity, public policy clearly favors the exposure of crime. A society's fundamental concern for the lives and property of its citizens is embodied in the criminal code. But the risk of discharge may deter employees who reasonably believe that crimes have been committed from acting on the information. To encourage citizen crime-fighters, Illinois law thus shields employees who volunteer such information from retaliatory discharge. In Palmateer, for example, the Illinois Supreme Court held that an employee who alleged that he had been fired because he notified the local law-enforcement agency of his co-worker's possible violation of the state criminal code had stated a cause of action for retaliatory discharge. "There is no public policy more basic, nothing more implicit in the concept of ordered liberty ... than the enforcement of a State's criminal code," the court pronounced. Id. at 52 Ill.Dec. at 16, 421 N.E.2d at 879; see also Johnson v. World Color Press, Inc., 147 Ill.App.3d 746, 101 Ill.Dec. 251, 498 N.E.2d 575 (1986) (allowing retaliatory discharge action by employee fired for disclosing what he believed to be violations of federal securities laws); Petrik v. Monarch Printing Corp., 111 Ill.App.3d 502, 67 Ill.Dec. 352, ...