Laws v. Aetna Finance Co., Civ. A. No. GC 84-231-D-D.

• Decision Date: 17 July 1987
• Docket Number: Civ. A. No. GC 84-231-D-D.
• Citation: 667 F. Supp. 342
• Parties: David LAWS, Plaintiff, v. AETNA FINANCE COMPANY, ITT Consumer Financial Corporation, American Bankers Life Assurance Company, ITT Life Insurance Corporation, ITT Lyndon Life Insurance Company, ITT Lyndon Property Insurance Company, Charles C. Pratt and Brian P. Brouillard, Defendants.
• Court: U.S. District Court — Northern District of Mississippi

667 F. Supp. 342

David LAWS, Plaintiff, v. AETNA FINANCE COMPANY, ITT Consumer Financial Corporation, American Bankers Life Assurance Company, ITT Life Insurance Corporation, ITT Lyndon Life Insurance Company, ITT Lyndon Property Insurance Company, Charles C. Pratt and Brian P. Brouillard, Defendants.

Civ. A. No. GC 84-231-D-D.

United States District Court, N.D. Mississippi, Greenville Division.

July 17, 1987.

H.L. Merideth, Jr., Greenville, Miss., Larry S. Bush, University, Miss., for plaintiff.

Fred C. DeLong, Jr., Jerome C. Hafter, Greenville, Miss., for defendants.

MEMORANDUM OPINION

DAVIDSON, District Judge.

This cause is presently before the court on the motion for summary judgment of defendants Aetna Finance Company, ITT Consumer Financial Corporation, Charles C. Pratt and Brian P. Brouillard. Having reviewed the briefs, depositions, exhibits and being otherwise fully advised in this matter, the court is in a position to rule on defendants' motion.

I Background

The plaintiff, David Laws (Laws), is a 43 year-old resident of Washington County, Mississippi. He was first employed by defendant Aetna Finance Corporation (Aetna) on April 28, 1975 at Aetna's branch in Hattiesburg, Mississippi. Laws was hired as assistant branch manager and later promoted to branch manager on May 26, 1975. In February or March 1977, Laws was transferred to Aetna's branch office in Greenville, Mississippi where he was employed as branch manager until his discharge on September 6, 1983.

Laws was allegedly discharged at that time by Aetna because he would not "pack" insurance policies with loans that he made on behalf of Aetna to borrowers in the State of Mississippi, or because Laws failed to meet Aetna's required penetration (sales volume) for such "packing". Packing is a practice of adding various forms of insurance coverage to a borrower's loan package, collecting a premium for said coverage, and through deceptive dealings or practices, neither informing the borrower that the loan repayment schedule includes the cost of insurance nor offering the borrower an opportunity to decline such coverage. Compliance with the purported packing requirement would, Laws says, violate not only the federal Truth-In-Lending Act, 15 U.S.C.A. § 1601 et seq., but also Mississippi's Small Loan Regulatory Law, § 75-67-101 et seq., Miss.Code Ann. (1972). Such unlawful and unconscionable conduct, if proven, could subject Laws to civil, 15 U.S.C.A. § 1640, and criminal penalties, 15 U.S.C.A. § 1611.

This action was originally filed in the Circuit Court for Washington County, Mississippi in August 1984. Aetna removed the action to this court in September 1984 based on diversity of citizenship.

Relying on a firm belief that it is clear as a matter of law that Laws has no cause of action under Mississippi law for wrongful termination, neither Aetna nor the other defendants bringing this motion have contested or disputed Laws' factual allegations. In effect, Aetna says that even if Laws could prove that he was terminated for refusal to conduct unsavory and possibly illegal business practices on behalf of his employer, Laws has no grounds for suit because he was an at-will employee terminable at Aetna's whim. The court is not prepared to place itself in the unseemly position of condoning possibly illegal activity on the part of an employer by allowing such activity to stand as grounds for an employee's termination. Even an at-will employee should not be called upon to choose between abiding by the law or forfeiting his employment. Accordingly, defendants' motion for summary judgment will be denied for the reasons more fully set out below.

II Applicable Law

The court is of the opinion that the Mississippi Supreme Court has not previously decided a case applicable or similar to the case sub judice. From all indications, this is a matter of first impression under Mississippi law. It is unfortunate indeed that the matter did not remain before a Mississippi court for resolution. Laws seeks here the recognition of a public policy exception to the terminable at will doctrine where an employee is asked to perform illegal acts on behalf of his employer. Although no Mississippi court has previously reviewed a case coming on in this posture, the court is prepared to make its Erie-bound guess in favor of hearing the merits of Laws' complaint at trial. See Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

The current Mississippi law is clearly that an employment for an indefinite term not supported by any consideration to the employer except the rendition of services in exchange for wages is an employment at will, terminable at any time by either party. See Shaw v. Burchfield, 481 So.2d 247 (Miss.1985); Kelly v. Mississippi Valley Gas Co., 397 So.2d 874 (Miss.1981); Montgomery Ward & Co. v. Skinner, 200 Miss. 44, 25 So.2d 572 (1946); Rape v. Mobile & O.R. Co., 136 Miss. 38, 100 So. 585 (1924). The State of Mississippi has followed this rule for over 100 years. See Butler v. Smith & Tharpe, 35 Miss. (6 Geo.) 457 (1858).

While it is not the province of this court to create new law for Mississippi, Green v. Amerada-Hess Corp., 612 F.2d 212 (5th Cir.1980), cert. denied, 449 U.S. 952, 101 S.Ct. 356, 66 L.Ed.2d 216 (1980), the court is permitted to "reach the decision that we think a state court would reach." Dipascal v. New York Life Ins. Co., 749 F.2d 255, 260 (5th Cir.1985). Additionally, as the Fifth Circuit has recently cautioned, in the Erie context: "We are emphatically not permitted to do merely what we think best; we must do that which we think the Mississippi Supreme Court would deem best." (emphasis in original) Jackson v. Johns-Manville Sales Corp., 781 F.2d 394, 397 (5th Cir.1986). In the opinion of the court, the Mississippi Supreme Court would not find that Aetna is entitled to judgment as a matter of law, Fed.R.Civ.P. 56(c), thus any ruling on the dispositive issues of this case must be deferred at this juncture.

The Fifth Circuit recently provided a framework for resolving cases which present an Erie guess situation in Jackson v. Johns-Manville Sales Corp. Although the Fifth Circuit was concerned with how an appellate court would make an Erie guess when called upon to do so, the court believes the framework set out in Jackson is helpful here.

When making an Erie guess in the absence of specific guidance from the Mississippi Supreme Court, our prediction of state law looks to: (1) lower state court decisions and Supreme Court dicta, (2) the lower court ruling in this case, (3) the general rule on the issue, (4) the rule in other states looked to by Mississippi courts when they formulate the substantive law of Mississippi, and (5) other available legal sources, such as treatises and law review commentaries.

Jackson, 781 F.2d at 397. The court now addresses each of these sources as they apply to the present case.

A. Lower State Court Decisions and Supreme Court Dicta

There are no lower court decisions available to the court on the issue presented herein, i.e., whether an employee may state a cause of action for wrongful discharge based on his refusal to participate in the unlawful enterprise of his employer. Dicta from Mississippi Supreme Court cases, however, persuades the court that the Mississippi court would recognize a cause of action under the circumstances alleged here, changing direction from its previous unaltered adherence to the rule stated in Kelly, supra.

The court first addresses defendants' argument that Kelly is the indisputable and indefeasible law in Mississippi on employment at will, now and forevermore. The court does not agree that Kelly should be construed so broadly. Rather, there are less expansive interpretations of the Kelly decision which differ significantly from defendants' view of that case.

One interpretation, which Laws contends is correct, is that Kelly simply reflected judicial unwillingness to tamper with a detailed statutory scheme that regulated one aspect of the employer-employee relationship. This was a scheme under which the Legislature had chosen to provide employees some workers' compensation rights and remedies, but not a remedy for retaliatory discharge. Language from Kelly is consistent with this interpretation, as the Supreme Court said: "In our view, if we adopted the public policy exception requested in this case recognizing a cause of action for retaliatory discharge for filing a workers' compensation claim we would be expressing a public policy different from that expressed by the Legislature in our Workmen's Compensation Law." Id. at 877. The Mississippi court also suggested that its review of the employment at-will rule in Kelly was limited to the workers' compensation context:

Our Workmen's Compensation Law does not contain a provision for retaliatory discharges, nor does it contain a provision for making it a crime for an employer to discharge an employee for filing a claim. If we create the remedy sought by plaintiff in this cause, we would thereby engraft on the law an exception different from that expressed by the Legislature. (emphasis added)

Id. at 876. The instant case presents no problem of engrafting an exception onto any existing statutory law, since the terminable at will doctrine is a judicially created one and can thus be modified by the judiciary.

A secondary view of Kelly is that the public policies underlying Laws' discharge are not contained in any statutory scheme as to which there was any basis for assuming that either Congress or the Mississippi Legislature would have contemplated the need for an anti-retaliation provision. Unlike the Workers' Compensation Law involved in Kelly, the public policies embodied in the statutes at issue here (Truth-in-Lending Act and Small Loan Regulatory Act) are designed to establish a clear public policy that consumers of credit covered by the statutes are to be given protection. Such manifest public...