Nelson Steel Corp. v. McDaniel

• Decision Date: 23 March 1995
• Docket Number: No. 94-SC-291-DG,94-SC-291-DG
• Citation: 898 S.W.2d 66
• Parties: , 10 IER Cases 737 NELSON STEEL CORPORATION, Appellant, v. Dale McDANIEL, Appellee.
• Court: United States State Supreme Court — District of Kentucky

Page 66

898 S.W.2d 66

63 USLW 2621, 10 IER Cases 737

NELSON STEEL CORPORATION, Appellant, v. Dale McDANIEL, Appellee.

No. 94-SC-291-DG.

Supreme Court of Kentucky.

March 23, 1995.

Rehearing Denied June 8, 1995.

Deno C. Capello, Jr., Weinberg & Capello, Lexington, for appellant.

John W. Morgan, Theresa Gilbert, Denney, Morgan & Rather, Lexington, for appellee.

LEIBSON, Justice.

Appellee, Dale McDaniel, filed suit in Fayette Circuit Court against Nelson Steel Corporation, alleging his employment with Nelson Steel was wrongfully terminated because he had filed workers' compensation claims "while under the employment of a previous employer." Emphasis added. McDaniel had pursued two previous, legitimate claims for compensable injuries before going to work for Nelson Steel Corporation.

Nelson Steel Corporation moved for summary judgment contesting the reason for discharge, claiming that McDaniel "was an at-will employee ... laid off from his employment at Nelson Steel as a result of a reduction in work load and work availability for employees," and further stating as a "second reason ... that Kentucky case law is silent regarding causes of action for discharge of employees because they have filed workers' compensation claims against former employers."

The employee, by affidavit, has presented persuasive evidence that the reason he was terminated at the time when his employer decided to lay off workers was because of his previous workers' compensation claims record: his present employer believed these previous claims would adversely affect Nelson Steel's workers' compensation insurance rates. The employee's evidence included a letter from his shop supervisor which was enclosed with his last paycheck substantiating this as the reason for his layoff, and adding: "I truly regret this since I felt you were one of the most qualified, energetic people working on the erection crew but economics doesn't permit us to retain you at this time." ¹

At oral argument on cross motions for summary judgment, the trial court left unresolved whether McDaniel was entitled to summary judgment based on his evidence proving he was discharged because he had filed previous claims against a former employer. Instead, the trial judge focused on what he described as the "legal issue." The trial judge stated the "legal issue" was whether the legislative policy represented by the Workers' Compensation Act, and in particular by KRS 342.197(1), constitutes grounds to support a wrongful discharge claim in present circumstances. The trial court concluded the provisions of the act did not cover the present situation, overruled the employee's motion for summary judgment, and sustained the employer's motion for summary judgment. The employee appealed the summary judgment.

Since the employee presented strong evidence that the reason for discharge was because of his previous workers' compensation claims against a former, different employer, which might affect the present employer's insurance rates, the only possible reason for sustaining the summary judgment would be that this evidence did not present any genuine issue of material fact. See Steelvest, Inc. v. Scansteel Service Ctr., Ky., 807 S.W.2d 476 (1991) and Paintsville Hospital Co. v. Rose, Ky., 683 S.W.2d 255 (1985).

The Court of Appeals recognized that the real issue in the case was not whether McDaniel was terminated as a result of his prior workers' compensation claims, but "whether the retaliatory discharge exception to the terminable-at-will doctrine encompasses compensation claims filed against prior employers." The Court of Appeals concluded, "[w]e cannot agree [with the trial court] that the protection KRS 342.197 affords injured workers is limited to claims against the current employer." The Court of Appeals reversed the judgment, remanding for further proceedings.

The employer, Nelson Steel Corporation, moved this Court for further review, which we have granted. The employee filed no cross-motion for discretionary review to preserve the question whether he was entitled to a summary judgment because the evidence that he was fired for having filed workers' compensation claims in the past is essentially unrefuted, although he argues this in his brief. The failure to file a cross-motion for discretionary review, as provided for in CR 76.21, would foreclose further consideration of this aspect of the Court of Appeals' decision if we were inclined to agree that a wrongful discharge claim can be asserted in present circumstances. However, this becomes moot because, for reasons to be stated, we have concluded the employee's evidence does not support a claim for wrongful discharge, and the trial court's summary judgment should have been affirmed.

KRS 342.197 provides in pertinent part:

(1) No employee shall be harassed, coerced, discharged, or discriminated against in any manner whatsoever for filing and pursuing a lawful claim under this chapter.

....

(3) Any individual injured by any act in violation of the provisions of subsection (1) or (2) of this section shall have a civil cause of action in Circuit Court to enjoin further violations, and to recover the actual damages sustained by him, together with the costs of the law suit, including a reasonable fee for his attorney of record.

The narrow issue before us is to decide whether the phrase "for filing and pursuing a lawful claim under this chapter" (KRS 342.197(1), supra, extends to legitimate claims against previous employers which the present employer perceives as constituting an economic risk in the form of higher premiums for its workers' compensation insurance coverage. As the Court of Appeals states, no Kentucky case specifically addresses the prior employer question. Nevertheless, we interpret the seminal case on this subject, Firestone Textile Co. Div. v. Meadows, Ky., 666 S.W.2d 730 (1983), as both establishing the basis for an employee to seek damages for wrongful discharge because he was fired for filing or pursuing a workers' compensation claim, and also as setting the limitations on claims of this nature, and we do not view the Firestone case as accommodating a cause of action in present circumstances. This is because the gravamen of the holding in Firestone was to recognize the employee "has a cause of action for retaliatory discharge when the discharge is motivated by the desire to punish the employee for seeking the benefits to which he is entitled by law" (Id. at 734), whereas discharge here was not retaliatory in nature but for economic reasons, albeit such reasons had their basis in saving on the cost of workers' compensation insurance premiums.

The Firestone Textile Co. Div. v. Meadows exception to Kentucky's long-standing "terminable at-will" doctrine in workers' compensation cases is limited by the language of the case. In Firestone we found the situation analogous to Pari-Mutuel Clerks' Union v. Ky. Jockey Club, Ky., 551 S.W.2d 801 (1977), wherein our Court had recognized a cause of action for wrongful discharge for an employee who alleged he was discharged in violation of KRS 336.130(1) because he authorized a labor union to represent him for purposes of collective bargaining. In Firestone Textile Co. Div. v. Meadows, as in the Pari-Mutuel Clerks' Union case, the discharge was retaliatory in nature.

The appellee has cited Overnite Transp. Co. v. Gaddis, Ky.App., 793 S.W.2d 129 (1990), a case involving an employee who was discharged before filing a formal claim. In Overnite Transp. Co., the Court of Appeals construed KRS 342.197 as follows:

Although the legislature used the connective word "and" in according protection for those persons "filing and pursuing a lawful claim," we think there is reasonable justification to regard "and" as "or" in KRS 342.197 in order to accomplish its purpose. This has the effect of placing employees who have filed or are pursuing a lawful claim for workers' compensation benefits within the protective ambit of the anti-retaliation provision. Id. at 132.

But Overnite Transp. Co. is consistent with Firestone Textile Co. Div. because both involved allegations the employer discharged its employee in retaliation for making a claim. Overnite Transp. Co. may be regarded as an essentially reasonable statutory construction of KRS 342.197, but not as authority for extending the principle of retaliatory discharge to present circumstances.

In Firestone, we cited to Brockmeyer v. Dun & Bradstreet, 113 Wis.2d 561, 335 N.W.2d 834 (1983) as persuasive for the legal premise that "a narrow public policy exception should be adopted" to the general rule that in an employment at-will situation the employee may quit, or the employer may discharge, "for good cause, for no cause, or for a cause that some might view as morally indefensible." 666 S.W.2d at 731. The "narrow public policy exception" is stated in Brockmeyer as limited to those situations where "the discharge is contrary to a fundamental and well-defined public policy as evidenced by existing law.... The public policy must be evidenced by a constitutional or statutory provision." 335 N.W.2d at 840.

In Grzyb v. Evans, Ky., 700 S.W.2d 399 (1985), rejecting an employee's wrongful discharge claim based on allegations he was discharged "because he had fraternized with a female hospital employee" in violation of his constitutionally protected right to "freedom of association," we further explained:

We adopt, as an appropriate caveat to our decision in Firestone Textile Co. Div. v. Meadows, supra, the position of the Michigan Supreme Court in Suchodolski v. Michigan Consolidated Gas Co. 412 Mich. 692, 316 N.W.2d 710 (1982). The Michigan court held that only two situations exist where "grounds for discharging an employee are so contrary to public policy as to be actionable" absent "explicit legislative statements prohibiting the discharge." 316 N.W.2d at 711. First, "where the alleged reason for...