Mackenzie v. Miller Brewing Co.

• Decision Date: 20 March 2001
• Docket Number: No. 97-3542.,97-3542.
• Citation: 2001 WI 23,241 Wis.2d 700,623 N.W.2d 739
• Parties: Jerold J. MACKENZIE, Plaintiff-Respondent-Cross-Appellant-Petitioner, v. MILLER BREWING COMPANY and Robert L. Smith, Defendants-Appellants-Cross-Respondents, Patricia G. BEST, Defendant-Cross-Respondent.
• Court: Wisconsin Supreme Court

241 Wis.2d 700

2001 WI 23

623 N.W.2d 739

Jerold J. MACKENZIE, Plaintiff-Respondent-Cross-Appellant-Petitioner, v. MILLER BREWING COMPANY and Robert L. Smith, Defendants-Appellants-Cross-Respondents, Patricia G. BEST, Defendant-Cross-Respondent.

No. 97-3542.

Supreme Court of Wisconsin.

Oral argument November 28, 2000.

Decided March 20, 2001.

For the plaintiff-respondent-cross appellant-petitioner there were briefs by Michael A. Whitcomb and Michael A.I. Whitcomb, S.C., Milwaukee, and Gerald P. Boyle and Boyle, Boyle & Smith, S.C., Milwaukee, and oral argument by Michael A. Whitcomb and Gerald P. Boyle.

For the defendants-appellants-cross respondents and for the defendant-cross respondent there was a brief by Mary Pat Ninneman, John A. Casey, Frank J. Daily and Quarles & Brady LLP, Milwaukee, and oral argument by John A. Casey and Frank J. Daily.

An amicus curiae brief was filed by C. Gregory Stewart, Philip B. Sklover, Lorraine C. Davis and Robert J. Gregory, Washington, D.C., and Dennis R. McBride, Milwaukee, on behalf of the Equal Employment Opportunity Commission.

An amicus curiae brief was filed by Patrick O. Dunphy, Mark L. Thomsen and Cannon & Dunphy, S. C., Brookfield, on behalf of the Wisconsin Academy of Trial Lawyers.

An amicus curiae brief was filed by Lisa M. Bergersen, Bethany C. McCurdy and Lindner & Marsack, S. C., Milwaukee, on behalf of the Human Resources Management Association (HRMA).

An amicus curiae brief was filed by Donald L. Heaney, Kenneth B. Axe and Lathrop & Clark, Madison, on behalf of Wisconsin Manufacturers and Commerce.

¶ 1. JON P. WILCOX, J.

The question in this case is whether an at-will contract employee can maintain an action against his or her employer in tort for intentional misrepresentation to induce continued employment. Because we believe that it would be imprudent for this court to recognize such a cause of action at this time, we conclude that those who are party to an at-will contract must seek recourse in contract rather than tort law. ¶ 2. The plaintiff in this case, Jerold J. Mackenzie (Mackenzie), sued Miller Brewing Company (Miller) in tort for intentional misrepresentation and wrongful termination.¹ Mackenzie also sued his supervisor, Robert L. Smith (Smith), in tort for intentional misrepresentation and tortious interference with prospective contract.² Finally, Mackenzie sued a coworker, Patricia G. Best (Best), for tortious interference with contract. After a jury trial in the Circuit Court for Milwaukee County, Louise M. Tesmer, Judge, Mackenzie was awarded $24,703,000 against Smith and Miller.³ The court of appeals overturned the circuit court decision. For the reasons set forth below, we now affirm the court of appeals ruling.

I

¶ 3. Mackenzie was hired by Miller in 1974 as an area manager of Miller distributors with a salary grade level of 7.⁴ In 1982 he had progressed to grade level 14, and he attained the position of Sales Services and Development Manager reporting to Smith in 1987. In late 1987 Miller undertook a corporate reorganization, which led to a transfer of many of Mackenzie's responsibilities. Concerned, Mackenzie asked Smith whether the reorganization affected his grade level. Smith responded that it did not. In 1989 Miller reevaluated the grade levels of 716 positions, including Mackenzie's. As a result, Mackenzie's position was downgraded to grade level 13. The reevaluation, however, was prospective and applied to the position, not the employee. Therefore, Mackenzie was grandfathered as a grade level 14, even though his position was a grade level 13. That same year, Mackenzie's secretary, Linda Braun, made a sexual harassment complaint against him. She made another sexual harassment complaint against him in 1990.

¶ 4. In August of 1992 Miller sent a memo to employees whose positions had been downgraded but who had been grandfathered to their current grade level informing them that they would be downgraded to their position grade level. Therefore, as of January 1, 1993, Mackenzie would be at grade level 13. He would receive the same salary and benefits of a grade level 14, but he would not be entitled to any future grants of stock options.

¶ 5. On March 23, 1993, Best, a Miller distributor services manager who had previously reported to Mackenzie, told her supervisor, Dave Goulet, that Mackenzie had told her about a sexually suggestive episode of the "Seinfeld" television show, which made her uncomfortable. Miller immediately investigated the matter and Mackenzie denied sexually harassing Best. After concluding its investigation, Miller discharged Mackenzie for "exercising poor judgment."

¶ 6. Mackenzie subsequently commenced this suit on September 29, 1994. He alleged four causes of action in tort against Miller, Smith, and Best: (1) intentional misrepresentation against Smith and Miller; (2) tortious interference with prospective contract against Smith; (3) tortious interference with contract against Best; and (4) wrongful termination against Miller. His theory supporting the intentional misrepresentation torts against Smith and Miller was that Miller had a duty to disclose after the 1987 reorganization that his position had been grandfathered and that Smith misrepresented to Mackenzie that he would not be affected by the reorganization. In support of the tortious interference claim against Best, he contended that she improperly induced Miller to terminate Mackenzie by fraudulently misrepresenting to Miller that she felt harassed by his discussion of the Seinfeld program. The circuit court denied the defendants' motion to dismiss.

¶ 7. However, the circuit court did grant Miller's motion for summary judgment as to the wrongful termination claim, but allowed Mackenzie's three remaining claims to survive. On June 23, 1997, a jury trial began and resulted in a verdict three weeks later. The jury awarded $6,501,500 in compensatory damages and $18,000,000 in punitive damages against Miller on the intentional misrepresentation claim. The jury also awarded $1,500 in compensatory damages and $500,000 in punitive damages against Smith on the same tort. The jury found Smith liable for tortious interference with Mackenzie's promotion and awarded him compensatory damages of $100,000. Finally, the jury failed to award Mackenzie any compensatory damages for tortious interference with contract against Best, but did award him $1,500,000 in punitive damages. The circuit court reduced the punitive damages against Smith to $100,000—giving Mackenzie the option to take the reduction or risk a new trial on the issue of damages—and dismissed Mackenzie's claim against Best because the jury failed to award compensatory damages. Miller and Smith appealed.

¶ 8. In an exhaustive opinion, the court of appeals reversed the judgment of the circuit court. Mackenzie v. Miller Brewing Co., 2000 WI App 48, 234 Wis. 2d 1, 608 N.W.2d 331. The majority found that this court's recent ruling in Tatge v. Chambers & Owen, Inc., 219 Wis. 2d 99, 579 N.W.2d 217 (1998), foreclosed the tort of intentional misrepresentation in the employment at-will context. Mackenzie, 2000 WI App 48 at ¶ 25. The court proceeded to examine whether Miller had a duty to disclose information to Mackenzie that potentially affected his decision to continue employment at Miller and determined that the creation of such a duty "would undermine sound public policy." Id. at ¶ 43.

¶ 9. Then Judge Charles Schudson, writing for the majority, examined Mackenzie's evidence to determine whether even if the court were to recognize such a tort, Mackenzie had met the elements. Id. at ¶¶ 44-61. In the court's view, Mackenzie failed to present any credible evidence upon which the jury's verdict could be based. Id. at ¶¶ 46, 48. Therefore, the court rejected his claim and reversed the circuit court decision.⁵ Id. at ¶ 102.

II

¶ 10. Although Mackenzie's claim is fraught with problems, we need only examine the first issue. For Mackenzie, the insurmountable obstacle is that Wisconsin does not recognize a cause of action for the tort for intentional misrepresentation to induce continued employment in the at-will employment context. Nor do we now recognize such a cause of action. Because Mackenzie does not state a cause of action, Miller's motion to dismiss should have been granted by the circuit court.

A

[1]

¶ 11. This case requires us to revisit the question of whether there is a cause of action for the tort of misrepresentation in the employment context. Whether or not a plaintiff has a cause of action in tort is a question of law subject to de novo review. Slawek v. Stroh, 62 Wis. 2d 295, 317, 215 N.W.2d 9 (1974).

[2]

¶ 12. Although it is unclear when employment at-will became an embedded fixture of Wisconsin employment relations, we first implicitly recognized the doctrine in 1871. See Prentiss v. Ledyard, 28 Wis. 131, 133 (1871).⁶ Recent scholarship on at-will employment has indicated that the doctrine was the default rule for employment contracts in this country because of a severe labor shortage in the late eighteenth and throughout the nineteenth centuries.⁷ This scholarship calls into question the view that employment at-will was created at the end of the nineteenth century to benefit employers.⁸ Regardless, we recently acknowledged the centrality of employment at-will in Hausman v. St. Croix Care Ctr., 214 Wis. 2d 655, 663, 571 N.W.2d 393 (1997), by asserting that "[t]he employment-at-will doctrine is an established general tenet of workplace relations in this jurisdiction." This is because the employment-at-will rule serves the interests of employees as well as employers.⁹ It works to the employees' advantage to have an at-will contract that allows them to leave their employers at any time for any reason.¹⁰ An employment contract with a specific term could lock an employee into a disadvantageous relationship. The at-will doctrine provides employees and employers with much needed...