McClanahan v. Remington Freight Lines, Inc., 79S02-8801-CV-12

• Docket Nº: No. 79S02-8801-CV-12
• Citation: 517 N.E.2d 390
• Case Date: January 06, 1988
• Court: Supreme Court of Indiana

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517 N.E.2d 390 56 USLW 2539, 2 IER Cases 1888 John H. McCLANAHAN, Appellant (Plaintiff Below),
v.
REMINGTON FREIGHT LINES, INC., and Richard Barbour,
Individually and as Agent for Remington Freight
Lines, Inc., Appellees (Defendant Below). No. 79S02-8801-CV-12. Supreme Court of Indiana. Jan. 6, 1988.

Margaret Ann Nolan, Lafayette, Phillip Burchett, Blanchester, for appellant.

Joseph T. Bumbleburg, Jeffrey J. Newell, Ball, Eggleston, Bumbleburg & McBride, Lafayette, for appellees.

SHEPARD, Chief Justice.

Today we revisit the question of the continued vitality of the employment at will doctrine. The issue turns on whether an employee fired for refusing to commit an illegal act for which he would be personally liable has a cause of action against his employer. We believe such an exception to the employment at will doctrine is appropriate under these facts.

Appellant John H. McClanahan started work in November 1981 for an indefinite term as an interstate truck driver for appellee Remington Freight Lines, Inc. Remington Freight is an Indiana business with headquarters in Remington. McClanahan and Remington Freight had no written employment agreement, and McClanahan does not contest his status as an employee at will.

In March 1982, Remington's safety director, Richard Barbour, told McClanahan

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to travel to New York to pick up a load of freight bound for Minnesota. McClanahan complied and, after loading, discovered that his load weighed approximately 78,000. Barbour had designated a route for McClanahan which required him to travel through Illinois to Minnesota. While the federal weight limit was 80,000 pounds, Illinois at the time allowed a maximum load of 75,000 pounds.

At some point after loading the truck but before arriving in Illinois, McClanahan called Barbour and informed him that his truck was too heavy to travel on Illinois roads. Barbour responded that the overload made no difference because Remington would pay any fine incurred by McClanahan. Barbour also told McClanahan that it was unlikely that he would be caught because of the absence of permanent scales along the Illinois route which Barbour had specified. McClanahan refused to drive the overweight load through Illinois, and he was ordered to return his truck to Remington's headquarters. Upon arrival, Barbour told McClanahan that he was no longer employed by Remington. According to the employee manual given to McClanahan when he was hired, refusal to carry a load constituted a "voluntary quit."

McClanahan's application for unemployment insurance benefits was denied. He appealed the decision. A hearing officer from the Indiana Employment Security Division Appellate Section conducted an administrative hearing in which McClanahan represented himself and Barbour appeared for Remington. The hearing officer questioned both McClanahan and Barbour under oath, and Barbour conducted an informal cross-examination of McClanahan. Based on this evidence, the Appeals Referee reversed the initial denial of unemployment benefits to McClanahan, ruling:

The claimant was discharged because he refused to perform an illegal act. The employer rule, under the circumstances, is not reasonable since it would require employees to violate the law.

Remington did not appeal the decision. McClanahan subsequently initiated the present lawsuit for wrongful discharge. All parties sought summary judgment. McClanahan's motion claimed that the doctrine of collateral estoppel prevented the defendants from relitigating, in the wrongful discharge case, the administrative determination that McClanahan had been discharged for refusing to commit an illegal act. Remington and Barbour sought summary judgment based on their claim that McClanahan was an employee at will and could be fired for any reason, including his refusal to drive through Illinois in an overweight truck. The trial court denied McClanahan's motion and granted the defendants' motions. McClanahan appealed.

In an eloquent opinion by Judge Sullivan, the Court of Appeals held that Remington and Barbour were not entitled to judgment as a matter of law because McClanahan had provided a sufficient factual basis for a wrongful discharge action. McClanahan v. Remington Freight Lines, Inc. (1986), Ind.App., 498 N.E.2d 1336. The Court of Appeals further ruled that the trial court correctly denied summary judgment to McClanahan because he failed to provide sufficient admissible evidence to support his claim that collateral estoppel barred relitigation of the reason for McClanahan's discharge. In doing so, the Court of Appeals stated broadly that the decisions of administrative agencies "are to be accorded collateral estoppel effect (in subsequent civil proceedings) if the proceedings are judicial in nature and no convincing reasons are advanced as to why the proceedings should not be final." Id. at 1343.

Remington and Barbour petitioned for transfer, alleging the Court of Appeals' ruling is contrary to established Indiana law. Although the parties raise numerous issues for review, we will only address two. First, we consider the right of an employee at will to bring an action for wrongful discharge when he is fired for refusing to commit an illegal act. Second, we judge the collateral estoppel effect of an administrative determination in subsequent civil actions.

Inasmuch as this appeal arises from the granting of a motion for summary judgment, our task is to determine whether

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there is a genuine issue of material fact and whether the law was correctly applied. Hamblen v. Danners, Inc. (1985), Ind.App., 478 N.E.2d 926. We must accept as true the facts alleged by the non-moving party, but we normally consider only that evidence which was before the trial court at the time it ruled on the motion for summary judgment. Romack v. Public Service Company of Indiana (1986), Ind.App., 499 N.E.2d 768, transfer granted, vacated in part, (1987), Ind., 511 N.E.2d 1024.

I. Wrongful Discharge

Prior to the mid-nineteenth century, an employer was responsible for his servant's health, welfare and security. Note, Protecting At Will Employees Against Wrongful Discharge: The Duty to Terminate Only in Good Faith, 93 Harv.L.Rev. 1816, 1824 (1980). The "English rule" stated that hiring for an unspecified term was presumed to be for at least a year and the employer was required to give a "quarter's warning" before discharging an employee who sought continued employment. By the mid-nineteenth century, however, "[e]merging notions of the freedom of contract and of the value of economic growth contributed to the evolution of the at-will doctrine...." Parnar v. Americana Hotels, 65 Hawaii 370, 652 P.2d 625, 628 (1982) (citing

Page 1

W. Blackstone, Commentaries 426). The "American rule" rejected the presumption of a yearly hiring and required the employee to bear the burden of proving that employment was for other than an indefinite term. Id. 652 P.2d at 628.

The American employment-at-will doctrine gained strength and reached its peak by the beginning of the twentieth century. At that time, the employer's right to discharge at his whim was virtually absolute. With the advent of federal and state legislation, collective bargaining, and...