McCabe v. Wal-Mart Assocs., Inc.

• Decision Date: 04 December 2019
• Docket Number: No. CV-18-939,CV-18-939
• Citation: 591 S.W.3d 335,2019 Ark. App. 566
• Parties: Jessica MCCABE and Amy Purdy, Appellants v. WAL-MART ASSOCIATES, INC., Appellee
• Court: Arkansas Court of Appeals

2019 Ark. App. 566

591 S.W.3d 335

Jessica MCCABE and Amy Purdy, Appellants

v.WAL-MART ASSOCIATES, INC., Appellee

No. CV-18-939

Court of Appeals of Arkansas, DIVISIONS I, II & III.

Opinion Delivered December 4, 2019

Pinnacle Law Group, by: Matthew A. Kezhaya, Bentonville, for appellants.

Kutak Rock LLP, Fayetteville, by: Scott Jackson and Bailey Knapp, for appellee.

BRANDON J. HARRISON, Judge

The first issue is whether Jessica McCabe and Amy Purdy can bridge the moat that is the at-will employment doctrine and go forward on their complaint against Wal-Mart Associates, Inc. McCabe and Purdy sued their former employer under two legal theories while alleging that their employment was terminated for an improper reason—meaning they were wrongfully discharged. The Benton County Circuit Court dismissed the complaint against Walmart under Arkansas Rule of Civil Procedure 12(b)(6) (2019). The court accepted the company's argument that McCabe and Purdy had failed to state viable claims for relief given the specific allegations and the contours of the at-will employment doctrine.

The dismissal segues to the second point on appeal. After the dismissal, on Walmart's motion and in the face of the plaintiffs' written opposition, the circuit court ordered McCabe and Purdy to pay Walmart a $13,685 attorney fee.

On de novo review, we affirm the dismissal of the entire complaint with prejudice.¹ But we reverse and remand on the fee issue because the court abused its discretion by awarding a substantial fee given the record and the law.

Next, the details.

I. McCabe and Purdy's Complaint

A. Walmart's Policies²

McCabe and Purdy alleged in the circuit court that they had an employment contract with Walmart whose terms were stated in the company's employment policies. They also alleged, among other things, that Walmart violated its open-door policy when it terminated their employment and thereby breached the company's promise to refrain from retaliating against an employee who used the policy.

Pursuant to Arkansas Rule of Civil Procedure 10(c), Walmart attached copies of the policies at issue to its motion to dismiss. Each policy contains this language:

This information does not create an express or implied contract of employment or any other contractual commitment. Walmart may modify this information at its sole discretion without notice, at any time, consistent with applicable law. Employment with Walmart is on an at-will basis, which means that either Walmart or the associate is free to terminate the employment relationship at any time for any or no reason, consistent with applicable law.

Walmart's written open-door policy—which also contains the language just quoted—encourages employees to report "ideas, suggestions, and concerns" to anyone in the company. The open-door policy also states:

Retaliation for initiating an open door communication or cooperating in a review relating to any open door communication, is strictly prohibited. Any associate who retaliates against another associate for initiating or cooperating in an open door review will be subject to disciplinary action, up to and including termination.

There is more. Walmart's Global Statement of Ethics contains a statement to "Speak up for good" and encourages employees to "[u]se the Open Door Communications process." "It's important for each of us to create a work environment where everyone can raise concerns of ethics issues without fear of retaliation." Walmart also states the following in its Global Statement of Ethics :

Walmart will not terminate, demote or otherwise discriminate against associates for raising concerns. Also, it is important for co-workers not to isolate associates who have raised concerns—such associates should be treated with respect. Any change in treatment toward an associate who has raised a concern could be seen as a form of retaliation.

And the Global Statement contains this at-will language:

This Statement of Ethics provides an introduction to the responsibilities of all associates, along with an overview of certain important policies. It's an important part of your employment with Walmart; however, it's not intended to create an express or implied contract of employment in and of itself. It is also not inclusive of all applicable company policies. ... Employment with Walmart is on an at-will basis—where permitted by law—meaning associates are free to resign at any time for any or no reason. Violations of this Statement of Ethics may result in disciplinary action up to and including termination.

With these policies in mind, we turn to McCabe and Purdy's complaint, whose allegations are presumed true at the Rule 12(b)(6) stage. Ark. Dep't of Envtl. Quality v. Brighton Corp. , 352 Ark. 396, 102 S.W.3d 458 (2003).

B. Jessica McCabe's Case

Having viewed the facts alleged in her complaint as true, we nonetheless hold that McCabe's two claims, one for promissory estoppel (detrimental reliance) and one for breach of contract, fail as a matter of law.

McCabe worked as a discovery specialist at Walmart's home office in Bentonville, Arkansas, and therefore had access to company records. Her boyfriend was terminated from Walmart and wanted to know what his disciplinary records contained. McCabe accessed the records and read them to her boyfriend because he "desired to utilize the open-door policy to raise a complaint about the cause and manner of his termination." McCabe alleged that no policy restricted her use of the disciplinary records for this purpose. At some point an "anonymous tipster" reported her conduct as an ethics violation, and her employment was terminated. McCabe said that Walmart fired her "for reading the disciplinary records to her boyfriend" but failed to comply with its own policies when it terminated her employment.

These facts do not state a claim for wrongful discharge that can skirt the at-will doctrine under current law. As we will develop further below, generally speaking, an employer or an employee may terminate an employment relationship at will. Kimble v. Pulaski Cty. Special Sch. Dist. , 53 Ark. App. 234, 921 S.W.2d 611 (1996). An employer may discharge an at-will employee for good cause, no cause, or even a morally wrong reason. Id. Here, McCabe's at-will employment status was stated in pertinent Walmart documents. More to the point given the specifics of the complaint, McCabe's allegation that Walmart violated its open-door policy related to her boyfriend, not her. McCabe did not allege that she herself engaged in some open-door communication and was retaliated against by Walmart for doing so. Given the record before us, McCabe had no actionable contractual right or reliance interest that insulated her from being terminated "for reading the disciplinary records to her boyfriend." We therefore have no hesitation affirming the circuit court's dismissal of McCabe's claims with prejudice given the pleaded allegations, even if they are true. We acknowledge her grievance against Walmart, but she did not state a viable claim against it.

C. Amy Purdy's Case

The remaining plaintiff presents a closer call. Taking her allegations as true, which we must do at this point, Purdy plainly used Walmart's open-door process to report that a married salaried associate was having an affair with an unwed hourly associate. Purdy alleged that the relationship violated Walmart's policies because the two colleagues were on the same team, and their "constant flirtations" interfered with her (Purdy's) work. The open-door communication about the affair was had with Amy Sellar, who was Purdy's supervisor. The hourly employee was later moved to a different team.

During this time, Purdy worked as a discovery specialist at Walmart and was promoted to a senior discovery specialist. About two months after her promotion, Purdy saw that her job title had not been changed to reflect the promotion. So she decided to use a department list to verify that her job code and title matched codes and titles of other senior discovery specialists. Purdy alleged that the department list was not restricted in any manner, nor did a policy forbid her from using the list to verify the information sought.

Walmart terminated Purdy's employment after it learned what she had done. Purdy in turn alleged that Walmart fired her under the pretext that she had engaged in unacceptable "personal conduct" and violated an "information policy." The real reason for the termination, according to Purdy, was that she had reported the coworkers' affair. As we have recited, Walmart's open-door policy prevents retaliation for engaging in an open-door communication. Purdy also alleged that Walmart "failed to adhere to post-termination policies."

As with McCabe, Purdy raised breach-of-contract and promissory-estoppel claims in her complaint. Purdy essentially alleged that she had "valid and enforceable contracts" with Walmart to work in exchange for compensation as outlined in the company's policies. The complaint also alleged that there were "implicit terms" of an employment contract. The promissory-estoppel claim was largely based on the notion that Purdy reasonably relied to her detriment on Walmart's promise not to retaliate against her for engaging in an open-door communication concerning her coworkers' affair.

As mentioned earlier, Arkansas's at-will employment doctrine generally bars an employee from recovering against an employer that has ended the employment relationship. Cottrell v. Cottrell , 332 Ark. 352, 965 S.W.2d 129 (1998). Our supreme court has, however, recognized two exceptions to the at-will doctrine. The first is based on an "implied contract" theory; the second is rooted in public policy.

The implied-contract exception permits a lawsuit based on the theory that an employer who promises an employee that he or she will not be discharged without cause must honor that promise. Gladden v. Ark. Children's Hosp. , 292 Ark. 130, 728 S.W.2d 501 (1987). The employer must have expressly made such an...