Drake v. Advance Const. Service, Inc., 96-60578

• Decision Date: 02 July 1997
• Docket Number: No. 96-60578,96-60578
• Citation: 117 F.3d 203
• Parties: 134 Lab.Cas. P 58,279, 12 IER Cases 1813 William DRAKE, Plaintiff-Appellant, v. ADVANCE CONSTRUCTION SERVICE, INC.; Arrow Construction, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 203

117 F.3d 203

134 Lab.Cas. P 58,279, 12 IER Cases 1813

William DRAKE, Plaintiff-Appellant, v. ADVANCE CONSTRUCTION SERVICE, INC.; Arrow Construction Inc., Defendants-Appellees.

No. 96-60578.

United States Court of Appeals Fifth Circuit.

July 2, 1997.

Jim D. Waide, III, Victor Israel Fleitas, Waide & Chandler, P.A., Tupelo, MS, David C. Owen, Columbus, MS, for Plaintiff-Appellant.

Marty N. Martenson, Smith, Currie & Hancock, Atlanta, GA, Gary Erwin Friedman, Phelps Dunbar, Jackson, MS, for Defendants-Appellees.

Appeal from the United States District Court for the Northern District of Mississippi.

Before SMITH, BARKSDALE and BENAVIDES, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

For the summary judgment awarded Advance Construction Services, Inc., and Arrow Construction, Inc., against William Drake in this Mississippi diversity action, we conclude that material fact issues exist for Drake's employment termination (allegedly for refusing to falsify reports to the Government); and that, if he was so discharged, this falls within Mississippi's public policy exception to its employment-at-will doctrine. Accordingly, we REVERSE and REMAND.

I.

In 1994, the United States Army Corps of Engineers (COE) contracted with Arrow for the performance of channel improvements at a creek in Mississippi. Although Arrow subcontracted part of the work, it remained responsible for laying the filter cloth, bedding material, and rip-rap (rock).

Arrow employed Drake in July 1994 to serve as Quality Control Manager. Drake did not have a written employment contract for a specific duration. His duties included preparing and submitting to the COE a daily, form Quality Control Report (QCR), including a description of any deficiencies in the work performed that day.

On 20 December 1994, Drake observed deficiencies in the placement of rip-rap. He reported on his QCR for that day that rip-rap was being dropped from above the slope resulting in displacement of the bedding stone and tearing of the filter cloth. The next day, Drake again included similar deficiency information in his QCR. Two days later, he was discharged.

In this action against Arrow and Advance (alleged to be Arrow's alter ego), Drake alleged that, on 20 December 1994, Arrow's vice president instructed him not to report deficiencies in the work in his QCRs; and that he was discharged because he filed accurate reports describing the deficiencies. He claimed that his discharge was in violation of the public policy of Mississippi because he refused to commit an illegal act.

The parties consented to proceed before a magistrate judge. Summary judgment was awarded Arrow and Advance. The court concluded that, based on the summary judgment record, the "[d]eliberate failure to note a deficiency in the placement of rip-rap, while perhaps unprofessional or immoral, is not an illegal act".

II.

Drake contends, inter alia, that genuine issues of material fact exist on whether he was discharged for refusing to commit an illegal act. (In granting summary judgment, the court did not address either Advance's motion for partial summary judgment on the ground that it is not a proper party to this action, or Drake's contention that Arrow is the alter ego of Advance. We need not do so, either, because a remand is necessitated by our conclusion that genuine issues of material fact exist on Drake's discharge.)

We review a summary judgment de novo, using the same criteria as the district court and viewing all facts, and the inferences to be drawn from them, in the light most favorable to the non-movant, Drake. E.g., Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871, 115 S.Ct. 195, 130 L.Ed.2d 127 (1994). The judgment is proper if, based on the summary judgment record, there is no material fact issue and the movant "is entitled to a judgment as a matter of law". FED. R. CIV. P. 56(c).

Mississippi follows "the common law rule that a contract for employment for an indefinite term may be terminated at the will of either party". Kelly v. Mississippi Valley Gas Co., 397 So.2d 874 (Miss.1981). But, in McArn v. Allied Bruce-Terminix Co., Inc., 626 So.2d 603, 607 (Miss.1993), the Mississippi Supreme Court created a "narrow public policy exception" to that rule; an employee discharged either for refusing to participate in an illegal act, or for reporting illegal acts of his employer to the employer or anyone else, is not barred by the employment-at-will doctrine from bringing a tort action against his employer. Id.

Drake contends that the first prong of the exception (refusal to participate in an illegal act) is applicable, because he was discharged for refusing to follow Arrow's instructions to omit deficiencies from the QCRs submitted to the COE. According to Drake, submission of a QCR which falsely reported no deficiencies in Arrow's work would have constituted a violation of 18 U.S.C. § 1001, which provides:

(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully--

(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;

(2) makes any materially false, fictitious, or fraudulent statement or representation; or

(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;

shall be fined under this title or imprisoned not more than 5 years, or both.

(Emphasis added.)

A.

Accepting Drake's factual scenario as true for summary judgment purposes, the appellees respond that such concealment of deficiencies still would not have constituted a violation of § 1001 because it was not "material", inasmuch as the COE either knew about, or would have discovered, the deficiencies. A false statement is "material" if it has "a...