GTE Products Corp. v. Stewart

• Citation: 653 N.E.2d 161,421 Mass. 22
• Parties: , 64 USLW 2115, 10 IER Cases 1507 GTE PRODUCTS CORPORATION v. Jefferson Davis STEWART, Third; Dean T. Langford & others, 1 Defendants-in-Counterclaim.
• Decision Date: 01 August 1995
• Court: United States State Supreme Judicial Court of Massachusetts

Page 161

653 N.E.2d 161

421 Mass. 22, 64 USLW 2115, 10 IER

Cases 1507

GTE PRODUCTS CORPORATION v. Jefferson Davis STEWART, Third; Dean T. Langford & others,

¹

Defendants-in-Counterclaim.

Supreme Judicial Court of Massachusetts, Essex.

Argued May 3, 1995.

Decided Aug. 1, 1995.

Arthur G. Telegen, Boston, for plaintiff.

Earle C. Cooley, Boston (Paul F. Beckwith with him), for Jefferson Davis Stewart, III.

Before ABRAMS, LYNCH, O'CONNOR and GREANEY, JJ.

GREANEY, Justice.

We granted the defendant's application for direct appellate review in this case to decide whether summary judgment was properly granted to GTE Products Corporation (GTE), and individual officers and officials of the company on counterclaims brought by Jefferson Davis Stewart, III, a former in-house counsel for the lighting companies of GTE. Stewart's counterclaims were raised in his answer to an action brought by GTE seeking the return of documents, papers, and other materials taken or retained by Stewart when he left GTE's employment. (Some of the background of the case is reported in the appeal concerning GTE's seeking injunctive relief and damages, 414 Mass. 721 [1993].) The counterclaims were based on the assertion by Stewart that he had been wrongfully discharged in retaliation for his continual attempts to convince GTE management to warn the public about safety risks associated with the use of certain GTE products, and his insistence that GTE comply with Federal law governing the disposal of hazardous waste. ² We conclude that summary judgment properly was ordered in favor of GTE and the remaining defendants in counterclaim, and we direct the entry of an appropriate judgment. ³

The facts, stated in the light most favorable to Stewart based on the materials in the summary judgment record, see Alioto v. Marnell, 402 Mass. 36, 37, 520 N.E.2d 1284 (1988), are as follows.

Stewart began working for GTE in March, 1980, as an attorney in GTE's electrical equipment group. In 1986, he was named general counsel to GTE's lighting businesses, which included U.S. Lighting and Sylvania Lighting. In his capacity as general counsel, Stewart wrote a series of communications to corporate officers and officials concerning safety and liability issues related to three products manufactured by GTE's lighting businesses. ⁴ In these communications, he advocated that the company take aggressive and (presumably) costly measures to protect consumer safety and guard against possible corporate liability. In addition, when new Federal regulations on the disposal of hazardous waste were adopted, he advised GTE that a subsidiary of the company which provided lighting maintenance services would have to take the costly step of treating fluorescent and incandescent light bulbs as hazardous waste for purposes of disposal. ⁵ Stewart asserts that his advice was disregarded on some occasions and generally was not well received.

Stewart's immediate supervisor was Rolfe Trevisan, general counsel for GTE. Trevisan had consistently given Stewart high annual performance ratings, raised his salary each year, and recommended that he receive substantial bonuses. A few months before Stewart left the company, Trevisan told Stewart that his performance was "above expectations" and gave him a good rating, a raise and a bonus of over $30,000. At some point during 1991, however, Trevisan lowered Stewart's confidential promotability rating on the law department's executive continuity charts from "promotable immediately" to the lowest promotability rating of "not promotable for three to five years." ⁶

According to Stewart, it became clear to him that he was being "squeezed out" of the company after a meeting he had with Trevisan on August 7, 1991. Trevisan told him that Earl Lawson, a corporate officer and manager, had become dissatisfied with Stewart's domineering and "confrontational" style and that Stewart was going to have to learn to get along with Lawson or his future with GTE would be at risk; that Stewart should stop being the "social conscience" of the company; and that Trevisan intended to develop a set of performance objectives to "rehabilitate" Stewart as a productive member of the law department. Based on his experience advising the company on how to terminate employees, Stewart believed that Trevisan's actions likely were intended as a precursor to discharge. Concluding that he would have to abandon unpopular but (in his opinion) legally sound positions were he to remain, Stewart resigned from his employment with GTE on August 8, 1991. After Stewart left, Trevisan tried unsuccessfully to persuade him to return.

1. As a threshold question, we must decide whether Stewart's status as an attorney and in-house counsel for GTE should bar him from maintaining any action for wrongful discharge. As a general rule, an employee at will (Stewart was employed at will) may be terminated by an employer, without notice, "for almost any reason or for no reason or all." Jackson v. Action for Boston Community Dev., Inc., 403 Mass. 8, 9, 525 N.E.2d 411 (1988). In company with a majority of other jurisdictions, however, this court has recognized that an at-will employee may sue a former employer for wrongful discharge when that discharge can be shown to be in violation of a clearly defined public policy. ⁷ "Redress is available for employees who are terminated for asserting a legally guaranteed right (e.g., filing workers' compensation claim), for doing what the law requires (e.g., serving on a jury), or for refusing to do that which the law forbids (e.g., committing perjury)." Smith-Pfeffer v. Superintendent of the Walter E. Fernald State Sch., 404 Mass. 145, 149-150, 533 N.E.2d 1368 (1989). In limited circumstances, we also have permitted redress "for employees terminated for performing important public deeds, even though the law does not absolutely require the performance of such a deed." Flesner v. Technical Communications Corp., 410 Mass. 805, 810-811, 575 N.E.2d 1107 (1991) (employee terminated for cooperating with criminal investigation of employer permitted to sue for retaliatory discharge). It has been suggested that a "whistleblower" might be entitled to protection on this basis. See id. at 811 n. 3, 575 N.E.2d 1107.

Courts in jurisdictions which generally recognize an employee's action for wrongful or retaliatory discharge have, however, differed on the question whether an attorney, employed as in-house counsel, should be permitted the same right to sue for wrongful discharge as that enjoyed by other corporate employees. In Balla v. Gambro, Inc., 145 Ill.2d 492, 501, 164 Ill.Dec. 892, 584 N.E.2d 104 (1991), the Supreme Court of Illinois concluded "that, generally, in-house counsel do not have a claim ... of retaliatory discharge." ⁸ The court based its decision on the destructive impact recognition of the claim would have on the attorney-client relationship that exists between an employer and in-house counsel, id., and on its conclusion that the policy of preserving public health and safety, the basis for recognizing an employee's wrongful discharge claim, is protected adequately without recognition of the claim by the attorney's obligations under the Illinois Rules of Professional Conduct to attempt to prevent his employer from committing an illegal or harmful act and to withdraw from employment if he is requested to engage in conduct that would violate those obligations. Id. at 501-502, 504, 164 Ill.Dec. 892, 584 N.E.2d 104. It has also been noted that ethical canons and disciplinary rules give to a client the unfettered right to discharge an attorney in whom the client has lost confidence, and it has been reasoned that this precept should apply with full force to an attorney employed as in-house counsel. See Willy v. Coastal Corp, 647 F.Supp. 116, 118 (S.D.Tex.1986) (applying Texas law), rev'd on other grounds, 855 F.2d 1160 (5th Cir.1988), aff'd, 503 U.S. 131, 112 S.Ct. 1076, 117 L.Ed.2d 280 (1992). See also Herbster v. North Am. Co. for Life & Health Ins., 150 Ill.App.3d 21, 28-30, 103 Ill.Dec. 322, 501 N.E.2d 343 (1986), cert. denied, 484 U.S. 850, 108 S.Ct. 150, 98 L.Ed.2d 105 (1987). ⁹ The judge granted GTE's motion for summary judgment largely on the basis of the reasoning in these decisions.

In contrast, in the case of General Dynamics Corp. v. Rose, 7 Cal.4th 1164, 32 Cal.Rptr.2d 1, 876 P.2d 487 (1994), decided after the judge in this case ruled on GTE's motion for summary judgment, the Supreme Court of California concluded that there were sound reasons for recognizing the right of in-house counsel to sue for wrongful discharge in certain limited situations. The court noted that a claim of wrongful discharge protects more than the private interests in job security and professional reputation of the claimant. Protection of the policy expressed in the statute or rule claimed to have been violated by the employer is equally at stake, and the claimant's status as an attorney does not diminish the public interest in the furtherance of that policy. Id. at 1181, 32 Cal.Rptr.2d 1, 876 P.2d 487.

In the view of the Supreme Court of California, certain mandatory obligations and prohibitions in the ethical rules of California governing an attorney's professional conduct embody "by their nature and goals ... important values affecting the public interest at large." Id. at 1181-1182, 32 Cal.Rptr.2d 1, 876 P.2d 487. The court observed that "[a]mong other strictures on their conduct, [attorneys] may not be a party to the commission of a crime, destroy evidence or suborn perjury." Id. at 1186, 32 Cal.Rptr.2d 1, 876 P.2d 487. Thus, "[t]he case for shielding the in-house attorney ... from retaliation by the employer for either insisting on adhering to mandatory ethical norms of the profession or for refusing to violate them is ... clear," id. at 1182, 32 Cal.Rptr.2d 1, 876 P.2d 487, and in-house counsel should be permitted to pursue a claim for wrongful discharge if the...