Guy v. Mutual of Omaha Ins. Co.

• Decision Date: 12 July 2002
• Citation: 79 S.W.3d 528
• Parties: Ronald M. GUY v. MUTUAL OF OMAHA INSURANCE COMPANY.
• Court: Tennessee Supreme Court

79 S.W.3d 528

Ronald M. GUY v. MUTUAL OF OMAHA INSURANCE COMPANY.

Supreme Court of Tennessee, at Jackson.

July 12, 2002.

COPYRIGHT MATERIAL OMITTED

Herbert E. Gerson and Thomas J. Walsh, Jr., Memphis, Tennessee, for the appellant, Mutual of Omaha Insurance Company.

Donald A. Donati and William B. Ryan, Memphis, Tennessee, for the appellee, Ronald M. Guy.

Douglas S. Johnston, Jr., Nashville, Tennessee, and R. Sadler Bailey, Memphis, Tennessee, for the 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., E. RILEY ANDERSON, ADOLPHO A. BIRCH, JR., and JANICE M. HOLDER, JJ., joined.

The principal issue in this case is whether the Tennessee "Whistleblower" Act, Tenn.Code Ann. § 50-1-304, preempts the common law tort of retaliatory discharge when an at-will employee is discharged for reporting illegal or unethical activity. The defendant has appealed a denial of its motion for summary judgment, arguing that section 50-1-304 governs all claims by employees who assert that they have been discharged for whistleblowing activity and, therefore, that the plaintiff must prove that the sole reason for his discharge was his reporting of another agent's illegal conduct. On appeal to this Court, we hold (1) that the statute does not preempt the common law tort, and thus, under the common law, the plaintiff need only demonstrate that his whistleblowing activity was a substantial factor motivating his discharge; and (2) that a genuine issue of material fact exists as to whether the plaintiffs whistleblowing activity was a substantial factor in his discharge. Consequently, we affirm the judgment of the Court of Appeals denying summary judgment in this case.

FACTUAL BACKGROUND

The plaintiff, Ronald Guy, was employed by the defendant, Mutual of Omaha Insurance Company ("Mutual"), on an at-will basis from June 1992 until the date he was discharged in April 1995. Mr. Guy primarily worked as the General Manager of Mutual's Memphis division office. As the General Manager, he was responsible for recruiting and training insurance agents, managing the administrative functions of the Memphis office, and overseeing the agents in the West Tennessee division.

The events leading to Mr. Guy's termination from Mutual began in September 1992 when Mr. Jerry Mack Roberson, a licensed insurance agent operating in Dyer County, Tennessee, applied to become an agent with Mutual. While Mr. Guy was reviewing his application for employment, Roberson was assigned an "agent production number" by Mutual's home office in Omaha, Nebraska. Roberson was also given — from a disputed source — an "agent's kit" containing various materials, including an "Underwriter's Manual" and insurance contact cards. The parties are in dispute as to whether Mutual ever officially hired Roberson as a contracted agent.

Nevertheless, it is undisputed that in December 1992, Roberson made a sales call on Ms. Doris Johnson of Dyersburg, Tennessee, during which he represented himself as an agent of both Mutual and John Hancock Insurance Company. At the end of their meeting, Ms. Johnson decided to purchase an annuity from Mutual. In payment, she gave Roberson a Tupperware stock certificate for 145 shares, as well as checks made payable to Mutual totaling approximately $70,000. In return, Roberson gave Ms. Johnson a John Hancock sales receipt. He then deposited the checks into his personal bank account.

Over the course of a year, Roberson sent checks to Ms. Johnson, which he represented to be "annuity checks." However, they were written on his personal checking account, and one check was returned for insufficient funds. He also kept the stock certificate in his personal possession even though it was made payable to Mutual.

Finally, early in 1994, Roberson contacted Mr. Guy and disclosed to him that he had Ms. Johnson's stock certificate. Roberson forwarded the stock certificate to Mr. Guy, who in turn assigned Houston Jones, another of Mutual's agents, to find out from Ms. Johnson whether she still wanted the stock to be sold and the proceeds invested with Mutual. When Ms. Johnson met with Mr. Jones, she informed him of the "annuity" she had purchased from Roberson, and she showed Mr. Jones the John Hancock receipt that he had given to her. She also told him that one of the annuity checks Roberson sent to her had "bounced." Mr. Jones suspected possible theft and reported Roberson's conduct to Mr. Guy.

When Mr. Guy learned that Roberson possibly misappropriated some of Ms. Johnson's money, he reported the incident to the Tennessee Department of Commerce and Insurance. He also believed that John Hancock could suffer sanctions as a result of the improper conduct by Roberson, one of its contracted agents. Consequently, Mr. Guy contacted the managing director at John Hancock and informed him of the situation. However, because Mr. Guy allegedly had no knowledge that Roberson had represented himself as a Mutual agent, he did not believe that Mutual was in any way involved in the fraud perpetrated on Ms. Johnson. He therefore failed to report the incident to anyone at Mutual until almost eight months later when he first became aware of Mutual's potential involvement in this situation. On October 13, 1994, he reported it to Mutual's law division.

On November 4, 1994, Mr. Guy received a positive performance evaluation and an increase in his salary. Several days later, on November 17, 1994, Mutual received a letter from the Tennessee Department of Commerce and Insurance. The Department explained that because Mutual assigned to Roberson an agent production number and supplied him with materials normally given to all agents of the company, Mutual allowed Roberson to represent himself as a Mutual agent. Accordingly, the Department required Mutual to reimburse Ms. Johnson $67,147.83 as a result of the money that Roberson had misappropriated. On December 16, 1994, Mutual agreed to make restitution to Ms. Johnson and, after further clarification of her total monetary losses, ultimately reimbursed her $63,781.72. Four days later, Mutual reduced Mr. Guy's salary by half and reduced his bonus income by 25% in order to offset the Memphis office's losses from the previous year.

Meanwhile, in late 1994, one of Mr. Guy's female agents had complained to him that she had been sexually harassed by the Memphis District Sales Manager, who was under Mr. Guy's supervision. Mr. Guy reported her complaint to his supervisor, and an investigation ensued. On January 13, 1995, Mr. Guy received a letter marked "Personal and Confidential" from the Human Resources Department informing him that the investigation had been completed and that no action would be taken. As a follow-up measure, Mr. Guy was instructed to distribute copies of Mutual's policy on sexual harassment to the employees and agents of his division. However, for some inexplicable reason, the letter itself was also distributed to the personnel in the Memphis division, which included the agent who made the complaint. After receiving the letter, the agent became upset, approached Mr. Guy, and told him that she "felt threatened." He responded that he "didn't know what she expected." On January 26, 1995, the agent reported this incident and her conversation with Mr. Guy to Mutual's home office. However, no disciplinary action was immediately taken.

On February 1, 1995, employees of Mutual and representatives of the Tennessee Department of Commerce and Insurance met with Doris Johnson and wrote an annuity for her in the amount of $63,781.72 to reimburse her for the funds misappropriated by Jerry Mack Roberson. The annuity was delivered to Ms. Johnson on February 13, 1995.

Following the resolution of the Roberson incident, Dave Rooney, Mr. Guy's supervisor, wrote a letter to Mr. Guy on March 1, 1995, expressing "serious concern" over Mr. Guy's "lack of judgment" in (1) his failure to report the Roberson incident to Mutual when he reported it to state authorities, and (2) his mishandling of the sexual harassment complaint. As a result of his "unacceptable performance," Mr. Guy was placed on "written notice," resulting in an additional 20% reduction in his monthly bonus income. Finally, the letter concluded by admonishing him that continued unacceptable performance could result in termination of his employment.

While Mr. Guy was on written notice, he learned that Greg Paylor, one of Mutual's managers who had previously worked under his supervision, was taking a position in Mutual's Tupelo, Mississippi office. On April 5, 1995, Mr. Guy telephoned Greg's father, Larry Paylor, who was also an acquaintance of Mr. Guy's, to warn him that this move would not be beneficial to Greg's career. At the time of this telephone call, Larry Paylor was employed with Metropolitan Life Insurance Company ("Metlife"), one of Mutual's business competitors. Concerned with his son's career with Mutual, Mr. Paylor reported this conversation to Mutual's human resources department. In his description of the conversation that had transpired, he explained that Mr. Guy made several disparaging remarks about Mutual's business operations, its management, and its decision to transfer Greg Paylor to Tupelo. For example, Mr. Guy told him that Tupelo is the "Kiss of Death" for Mutual managers, because they are given "no benefits, no guarantees, no [clerical support], and [they work on] commission only." Mr. Guy also told him that Greg should either work at Metlife as a manager or request that he be transferred back to Mutual's Memphis office. Mr. Guy warned that until then, Greg "had better keep a look over his shoulder all the time."

On April 19, 1995, Mutual terminated Mr. Guy's employment with its company. Mutual advised Mr. Guy that his termination was based on "unacceptable performance as demonstrated by failure to use judgment consummate with the position of General...