Crews v. Buckman Laboratories Intern., Inc.

• Court: Tennessee Supreme Court
• Writing for the Court: William M. Barker, J.
• Citation: Crews v. Buckman Laboratories Intern., Inc., 78 S.W.3d 852 (Tenn. 2002)
• Decision Date: 24 May 2002
• Parties: Julia Beth CREWS v. BUCKMAN LABORATORIES INTERNATIONAL, INC.

78 S.W.3d 852

Julia Beth CREWS v. BUCKMAN LABORATORIES INTERNATIONAL, INC.

Supreme Court of Tennessee, at Jackson.

May 24, 2002.

Rehearing Denied July 9, 2002.

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Donald A. Donati and William B. Ryan, Memphis, Tennessee, for the appellant, Julia Beth Crews.

Frederick J. Lewis, Thomas L. Henderson, and Whitney K. Fogerty, for the appellee, Buckman Laboratories International, Inc.

David A. Burkhalter, II and Ronald A. Rayson, Knoxville, Tennessee, and R. Sadler Bailey, Memphis, Tennessee, for Amicus Curiae, Tennessee Trial Lawyers Association.

OPINION

WILLIAM M. BARKER, J., delivered the opinion of the court, in which FRANK F. DROWOTA, III, C.J., and E. RILEY ANDERSON, ADOLPHO A. BIRCH, Jr., and JANICE M. HOLDER, JJ., joined.

The sole issue in this case is whether an in-house lawyer can bring a common-law claim for retaliatory discharge when she was terminated for reporting that her employer's general counsel was engaged in the unauthorized practice of law. The trial court dismissed the plaintiff's complaint for failure to state a claim, and the dismissal was affirmed by the Court of Appeals. We hold that in-house counsel may bring a common-law action for retaliatory discharge resulting from counsel's compliance with a provision of the Code of Professional Responsibility that represents a clear and definitive statement of public policy. Accordingly, the judgment of the Court of Appeals is reversed, and this case is remanded for further proceedings.

FACTUAL BACKGROUND

We granted permission to appeal to review whether the trial court should have granted a motion to dismiss a complaint under Tennessee Rule of Civil Procedure 12.02(6) for the failure to state a common-law claim for retaliatory discharge. The plaintiff, Ms. Julia Beth Crews, was allegedly discharged from her position as in-house counsel for defendant Buckman Laboratories International, Inc. ("Buckman") for reporting that Buckman's general counsel was engaged in the unauthorized practice of law. Because a Rule 12.02(6) motion to dismiss admits the truth of the complaint's relevant and material averments, see, e.g., Givens v. Mullikin, 75 S.W.3d 383, 391 (Tenn.2002), we "must construe the complaint in favor of the plaintiff, accept the allegations of fact as true, and deny the motion unless it appears that the plaintiff can establish no facts supporting the claim that would warrant relief," see, e.g., Doe v. Sundquist, 2 S.W.3d 919, 922 (Tenn.1999).

According to the allegations of the complaint, the plaintiff was hired by Buckman in 1995 as associate general counsel in its legal department, and while working in this capacity, she reported to Buckman's General Counsel, Ms. Katherine Buckman Davis. Sometime in 1996, the plaintiff discovered that Ms. Davis, who "held herself out as a licensed attorney," did not possess a license to practice law in the State of Tennessee. The plaintiff became concerned that Ms. Davis was engaged in the unauthorized practice of law, and she discussed her suspicions with a member of Buckman's Board of Directors.¹

Ms. Davis eventually took and passed the bar exam, but the plaintiff learned some time later that Ms. Davis had yet to complete the requirements for licensure by taking the Multi-State Professional Responsibility Examination. The plaintiff informed Buckman officials of the continuing problem, and she advised them on how best to proceed. On June 17, 1999, Ms. Davis allegedly entered the plaintiff's office, yelling that she was frustrated with the plaintiffs actions. The plaintiff responded that she also was frustrated with the situation, to which Ms. Davis remarked that "maybe [the plaintiff] should just leave." The plaintiff declined to leave, and she later received a below-average raise for the first time during her tenure at Buckman, despite having been told earlier by Ms. Davis that she was "doing a good job in position of Associate Counsel."

In August, the plaintiff sought legal advice concerning her ethical obligations, and based on this advice, she informed the Board of Law Examiners of Ms. Davis's situation. The Board later issued a showcause order asking Ms. Davis to clarify certain facts in her bar application. Upon receipt of the order, Ms. Davis demanded to know from the plaintiff what information the Board possessed in its application file. The plaintiff stated that she knew nothing of the file, and she told Ms. Davis that her actions were threatening and inappropriate. Ms. Davis then apologized, but she immediately proceeded to schedule the plaintiffs performance review.

The plaintiff then informed Mr. Buckman and the Vice President of Human Resources that "the situation [had become] untenable and that she could not function under those circumstances." They agreed that the plaintiff should be immediately transferred to a position away from Ms. Davis's supervision and that she should eventually leave the company altogether within six to nine months. However, while the plaintiff was "in the midst of working out the new arrangement," Ms. Davis informed her that her services would no longer be needed. More specifically, Ms. Davis told her that "since [the plaintiff] had given her notice of resignation, it was logically best to end the Plaintiffs association with Buckman." Although the plaintiff denied that she had resigned, her computer was confiscated; she was placed on personal leave; and she was given a notice of termination.

On April 10, 2000, the plaintiff filed suit against Buckman in the Shelby County Circuit Court, alleging a common-law action for retaliatory discharge in violation of public policy. Seeking a declaratory judgment and damages, the plaintiff alleged that

[p]rior to Plaintiff's reporting of Davis'[s] unauthorized conduct in May 1999, Plaintiff was advised by Davis that she was doing a good job in position of Associate Counsel. After learning that the Defendant [Buckman] faced possible liability, Davis began a campaign of retaliation against Plaintiff. This retaliation was based on Plaintiffs reporting of Davis'[s] unauthorized conduct to Buckman officials and the Board of Law Examiners. The retaliation culminated in Plaintiff's termination from Buckman.... Plaintiff's discharge constitutes blatant retaliation for complying with her ethical and statutory duties.

Buckman then moved to dismiss the complaint under Rule of Civil Procedure 12.02(6) for failure to state a claim upon which relief may be granted. On June 11, 2000, the trial court granted Buckman's motion, though its specific reasoning is not contained in the record before this Court.

The plaintiff then appealed to the Court of Appeals, which affirmed the dismissal of the complaint. The intermediate court listed three primary reasons why in-house counsel could not state a claim for retaliatory discharge in Tennessee: (1) the important public policy of regulating the practice of law "is adequately served by the existing protections of Tennessee's statutes and the Code of Professional Responsibility," and that in-house counsel does not need an action for retaliatory discharge to comply with the Disciplinary Rules; (2) recognition of such an action would "seriously impair the special relationship of trust between an attorney and his or her client" and "might have the effect of chilling the attorney-client relationship"; and (3) allowing damages as a remedy for retaliatory discharge would have "the effect of shifting to the employer the costs of in-house counsel's adherence to the Disciplinary Rules...."

We then granted the plaintiff permission to appeal to decide whether in-house counsel may assert a common-law cause of action for retaliatory discharge when counsel is discharged in retaliation for reporting incidents of unauthorized practice of law. We hold that in-house counsel may indeed bring a common-law action of retaliatory discharge resulting from counsel's compliance with an ethical duty that represents a clear and definitive statement of public policy. Accordingly, the judgment of the Court of Appeals is reversed, and this case is remanded to the trial court for further proceedings.

STANDARD OF APPELLATE REVIEW

When reviewing a dismissal of a complaint under Rule 12.02(6), this Court must take the factual allegations contained in the complaint as true and review the trial court's legal conclusions de novo without giving any presumption of correctness to those conclusions. See, e.g., Doe v. Sundquist, 2 S.W.3d 919, 922 (Tenn.1999). Moreover, because a motion to dismiss a complaint under Tennessee Rule of Civil Procedure 12.02(6) challenges only the legal sufficiency of the complaint, courts should not dismiss a complaint for failure to state a claim based upon the perceived strength of a plaintiff's proof. See, e.g., Givens v. Mullikin, 75 S.W.3d 383, 406 (Tenn.2002) (citing White v. Revco Discount Drug Centers, Inc., 33 S.W.3d 713, 718 (Tenn.2000)). Instead, courts should grant a motion to dismiss only when it appears that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief. See, e.g., Trau-Med of America v. Allstate Ins. Co., 71 S.W.3d 691, 696 (Tenn.2002).

IN-HOUSE COUNSEL AND THE TORT OF RETALIATORY DISCHARGE

Tennessee has long adhered to the employment-at-will doctrine in employment relationships not established or formalized by a contract for a definite term. See, e.g., Bennett v. Steiner-Liff Iron & Metal Co., 826 S.W.2d 119, 121 (Tenn. 1992). Under this "employment at will" doctrine, both the employer and the employee are generally permitted, with certain exceptions, to terminate the employment relationship "at any time for good cause, bad cause, or no cause." See Sullivan v. Baptist Mem'l Hosp., 995 S.W.2d 569, 574 (Tenn.1999). This relationship recognizes (1) that employers should be free to make their own business judgments without undue court interference, see Mason v. Seaton, 942...