Karstetter v. King Cnty. Corr. Guild, 95531-0

• Decision Date: 18 July 2019
• Docket Number: No. 95531-0,95531-0
• Parties: Jared KARSTETTER and Julie Karstetter, his spouse, who together form a marital community, Petitioners, v. KING COUNTY CORRECTIONS GUILD, a nonprofit corporation doing business as a labor union; Randy Weaver, Sonya Weaver, Leonard Orth, Katherine Orth, Garrin Clark, Gabriel Vigil, Respondents, and William B. Aitchison, Anil S. Karia, Trevor Caldwell, individually and as representatives; and Public Safety Law Group, a legal services public corporation, Defendants.
• Court: Washington Supreme Court

193 Wash.2d 672

444 P.3d 1185

Jared KARSTETTER and Julie Karstetter, his spouse, who together form a marital community, Petitioners,

v. KING COUNTY CORRECTIONS GUILD, a nonprofit corporation doing business as a labor union; Randy Weaver, Sonya Weaver, Leonard Orth, Katherine Orth, Garrin Clark, Gabriel Vigil, Respondents,andWilliam B. Aitchison, Anil S. Karia, Trevor Caldwell, individually and as representatives; and Public Safety Law Group, a legal services public corporation, Defendants.

No. 95531-0

Supreme Court of Washington.

Argued October 23, 2018

Filed July 18, 2019

Judith A. Lonnquist, Law Offices of Judith A. Lonnquist, P.S., 1218 3rd Avenue, Suite 1500, Seattle, WA 98101-3083, for Petitioners.

Dmitri L. Iglitzin, Barnard Iglitzin & Lavitt LLP, 18 W. Mercer Street, Suite 400, Seattle, WA 98119-3971, Rory W. Leid, Peter Roy Barnett, Cole | Wathen | Leid | Hall, P.C., 303 Battery Street, Seattle, WA 98121-1419, for Respondents.

Patrick N. Rothwell, Davis Rothwell Earle & Xochihua PC, 520 Pike Street, Suite 2500, Seattle, WA 98101-4083, for Defendants.

Jesse Andrew Wing, Jeffrey Lowell Needle, MacDonald Hoague & Bayless, 705 2nd Avenue, Suite 1500, Seattle, WA 98104-1745, for Amicus Curiae (Washington Employment Lawyers Association).

Valerie Davis McOmie, Attorney at Law, 4549 NW Aspen Street, Camas, WA 98607-8302, Daniel Edward Huntington, Richter-Wimberley PS, 422 W. Riverside Avenue, Suite 1300, Spokane, WA 99201-0305, for Amicus Curiae (Washington State Association for Justice Foundation).

WIGGINS, J.

¶1 Far from the lawyers of old, who toiled "alone in a solitary office ... unhallowed by humanizing domestic associations,"¹ today’s attorneys often work together with lawyers and nonlawyers alike, for clients ranging from nonprofits and government agencies to massive, multijurisdictional corporations. See Hugh D. Spitzer, Model Rule 5.7 and Lawyers in Government Jobs—How Can They Ever Be "Non-Lawyers"?, 30 GEO. J. LEGAL ETHICS 45, 47 (2017) ("An increasing number of law graduates with licenses to practice are not engaged in traditional legal jobs."); Orly Lobel, Lawyering Loyalties: Speech Rights and Duties within Twenty-First-Century New Governance, 77 FORDHAM L. REV . 1245, 1262 (2009) (in-house attorneys have "administrative, managerial, and compliance responsibilities that are outside the direct scope of their legal roles"); Grace M. Giesel, The Ethics or Employment Dilemma of In-House Counsel, 5 GEO. J. LEGAL ETHICS 535, 544 (1992) (explaining that in-house counsel are considered "an essential component of the management team" by corporations and that these "attorneys affect the full range of corporate decisions"). The evolution in legal practice has uniquely affected the in-house attorney employee and generated unique legal and ethical questions unlike anything contemplated by our Rules of Professional Conduct (RPCs).

¶2 The case before us today presents just such a question: we must decide whether modern in-house employee attorneys should be treated differently from traditional private practice lawyers under our RPCs. We conclude that they should.

¶3 Solely in the narrow context of in-house employee attorneys, contract and wrongful discharge suits are available, provided these suits can be brought without violence to the integrity of the attorney-client relationship. Accordingly, we hold that Jared Karstetter alleged legally cognizable claims and pleaded sufficient facts to overcome a CR 12(b)(6) motion of dismissal. We reverse the Court of Appeals’ ruling dismissing Karstetter’s claims and remand the case to the trial court for further proceedings consistent with this opinion.

Facts and Procedural History

¶4 Karstetter worked for labor organizations representing King County corrections officers for over 20 years. In 1987, Karstetter began working directly for the King County Corrections Officers Guild (Guild). Throughout his employment with the Guild, Karstetter operated under successive 5-year contracts that provided for just cause termination. This termination clause states,

Consistent with the rights and expectations of the members that the GUILD represents ATTORNEY may be terminated for just cause. The definition of Just Cause shall be the same definition that is currently contained in the Collective Bargaining Agreement for GUILD members. In the event that the GUILD wishes to exercise this provision, due notice shall be provided to ATTORNEY and an opportunity to correct any behavior that GUILD deems inappropriate. ATTORNEY shall be afforded fundamental due process and an opportunity to answer to any and all charges. Termination of this Agreement shall be reserved as a final option.

CP at 13 (employment contract).²

¶5 Eventually, Karstetter formed his own law firm and worked primarily for the Guild. He offered services to at least one other client. His employment contracts remained substantially the same. Karstetter’s wife also worked for the Guild as Karstetter’s office assistant.

¶6 In 2016, the King County ombudsman’s office contacted Karstetter regarding a whistle-blower complaint concerning parking reimbursements to Guild members. The Guild’s vice-president directed Karstetter to cooperate with the investigation. The Guild sought advice from an outside law firm, which advised the Guild to immediately terminate Karstetter. In April 2016, the Guild took this advice and, without providing the remedial options listed in his contract, fired Karstetter.

¶7 In response, Karstetter and his wife filed suit against the Guild, alleging, among other things, breach of contract and wrongful discharge in violation of public policy. The Guild moved to dismiss the suit for failure to state a claim. The trial court partially granted the motion but allowed Karstetter's claims for breach of contract and wrongful termination to proceed. On interlocutory review, the Court of Appeals reversed and remanded the case, directing the trial court to dismiss Karstetter’s remaining breach of contract and wrongful termination claims. Karstetter v. King County Corr. Guild, 1 Wash. App. 2d 822, 407 P.3d 384 (2017). Karstetter sought review here, which we granted.

Analysis

¶8 The Guild argues that Karstetter’s breach of contract and wrongful discharge claims are precluded by our ethical rules and should have been dismissed. Dismissal under CR 12(b)(6) is warranted only if we conclude that the plaintiff cannot prove any set of facts justifying recovery. Kinney v. Cook, 159 Wash.2d 837, 842, 154 P.3d 206 (2007) (quoting Tenore v. AT&T Wireless Servs., 136 Wash.2d 322, 330, 962 P.2d 104 (1998) ). All facts alleged in the complaint are taken as true, and we may consider hypothetical facts supporting the plaintiff’s claim. Id. Whether Karstetter has alleged legally cognizable claims is a question of law that we review de novo. Hoffer v. State, 110 Wash.2d 415, 420, 755 P.2d 781 (1988), adhered to on recons., 113 Wash.2d 148, 776 P.2d 963 (1989).

1. RPC 1.16 does not necessarily prohibit in-house attorney employment claims

¶9 RPC 1.16(a)(3) states that "a lawyer shall not represent a client ... if ... the lawyer is discharged." This rule robustly protects a client’s right to terminate an attorney at any time, for any reason. RPC 1.16 cmt. 4; Belli v. Shaw, 98 Wash.2d 569, 577, 657 P.2d 315 (1983). Clients must trust their lawyers. When a client loses confidence in his or her attorney, the trust relationship is fractured, and a client must be allowed to discharge that attorney in order to engage another, better-suited advocate. In this traditional attorney-client relationship, RPC 1.16 would almost certainly prohibit a lawyer from bringing employment claims against a client. But such an interpretation of RPC 1.16 is neither required nor reasonable in the nontraditional circumstances of in-house attorney employees.

¶10 The Guild asserts that to protect individual clients and the public generally, RPC 1.16 applies to all attorneys without exception. But in and of itself, RPC 1.16 does not stand for this proposition. The rule simply states that clients may discharge their attorneys. RPC 1.16(a)(3). The rule specifies no reasons or requirements a client must meet to discharge an attorney—termination is allowed "at any time, with or without cause." RPC 1.16 cmt. 4. Importantly, however, RPC 1.16 does not recognize, let alone discuss, the nontraditional circumstances surrounding in-house attorneys and whether the rule does or should apply in that context. We have not "set out any all-encompassing rule for how violation of any RPC in connection with a contract might affect that contract’s enforceability." LK Operating, LLC v. Collection Grp., LLC, 181 Wash.2d 48, 89, 331 P.3d 1147 (2014). Nor have we interpreted our ethical rules as providing absolute insulation from attorney-client litigation. See Kimball v. Pub. Util. Dist. No. 1 of Douglas County, 64 Wash.2d 252, 258, 391 P.2d 205 (1964) (discharged counsel may seek recovery for unjust enrichment).³ Indeed, our professional rules themselves "do not apply uniformly to all lawyers." Chism v. Tri-State Constr., Inc., 193 Wash. App. 818, 839, 374 P.3d 193 (2016) (citing RPC 1.11 (concerning only government lawyers)). RPC 1.16 does not expressly prohibit Karstetter’s claims.

2. In-house attorneys face unique employment expectations and should not always be treated the same as private practice lawyers under the RPCs

¶11 The unique employment status of and demands on in-house attorneys counsel against a rigid interpretation of RPC 1.16. Today’s legal employees operate differently from private sector attorneys. See Gen. Dynamics Corp. v. Superior Court, 7 Cal. 4th 1164, 1171-73, 876 P.2d 487, 32 Cal. Rptr. 2d 1 (1994). Economic success for in-house attorneys, unlike a law firm partner, "is tied directly to a single employer, at whose sufferance they serve." Id. at 1172, 32 Cal. Rptr. 2d 1, 876 P.2d 487 ; Crews v. Buckman Labs. Int’I, Inc., 78 S.W.3d 852, 860-61 (Tenn. 2002). The professional...