Peterson v. Browning

• Decision Date: 13 May 1992
• Docket Number: No. 900401,900401
• Citation: 832 P.2d 1280
• Parties: , 123 Lab.Cas. P 57,086, 7 IER Cases 801 Vern L. PETERSON, Plaintiff, v. BROWNING, a Utah corporation, and David W. Rich, Defendants.
• Court: Utah Supreme Court

Page 1280

832 P.2d 1280

60 USLW 2755, 123 Lab.Cas. P 57,086,

7 IER Cases 801

Vern L. PETERSON, Plaintiff, v. BROWNING, a Utah corporation, and David W. Rich, Defendants.

No. 900401.

Supreme Court of Utah.

May 13, 1992.

David B. Havas, Michelle E. Heward, Ogden, for Peterson.

William B. Bohling, David R. Money, Michael Patrick O'Brien, Sharon E. Sonnenreich, Salt Lake City, for Browning and Rich.

DURHAM, Justice:

In 1987, Vern Peterson filed a complaint in federal court against his former employer, Browning, and its personnel director, alleging, among other things, constructive termination in violation of Utah public policy. Peterson was a customs officer with Browning. In support of his public policy claim, Peterson alleges that he was terminated because of his refusal to falsify tax documents in violation of Utah and Missouri law and customs documents in violation of federal law.

This matter has been certified from the United States District Court for the District Does an action for termination of employment based upon the public policy exception to the employment-at-will doctrine for violation of or refusal to violate federal, other state, or Utah law sound in tort or contract?

of Utah pursuant to rule 41 of the Utah Rules of Appellate Procedure. The question of law certified to this court for consideration is:

On its face, the certified question appears to be singular, but in effect it has two parts: (1) Does the public policy exception to Utah's employment-at-will doctrine encompass violations of federal law and the laws of other states as well as violations of Utah law? (2) Does that exception sound in tort or contract? ¹

THE PUBLIC POLICY EXCEPTION GENERALLY

The public policy exception to the employment-at-will doctrine restricts an employer's right to terminate an employee for any reason. Burk v. K-Mart Corp., 770 P.2d 24, 28 (Okla.1989) (public policy exception attempts to balance competing interests of society, employee, and employer). Under the exception, the at-will doctrine will not insulate an employer from liability where an employee is fired in a manner or for a reason that contravenes a clear and substantial public policy. Utah recognizes the public policy exception to the at-will doctrine. Hodges v. Gibson Products Co., 811 P.2d 151, 165 (Utah 1991); Loose v. Nature-All Corp., 785 P.2d 1096, 1097 (Utah 1989). ²

Actions falling within the public policy exception typically involve termination of employment for (1) refusing to commit an illegal or wrongful act, (2) performing a public obligation, or (3) exercising a legal right or privilege. Jill S. Goldsmith, Note, Employment-at-Will--Employers May Not Discharge At-Will Employees for Reasons that Violate Public Policy--Wagenseller v. Scottsdale Memorial Hospital, 1986 Ariz.St.L.J. 161, 166-67. Here, Peterson alleges that he was terminated for refusing to commit an unlawful act. In a number of cases, other courts have found that the public policy exception applies in similar circumstances. See, e.g., Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980) (employee discharged for refusing to engage in illegal price fixing); Petermann v. International Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of Am. Local 396, 174 Cal.App.2d 184, 344 P.2d 25 (1959) (employee terminated for refusing to commit perjury); Trombetta v. Detroit, Toledo & Ironton R.R., 81 Mich.App. 489, 265 N.W.2d 385 (1978) (employee discharged for declining to illegally manipulate state-mandated pollution sampling results); O'Sullivan v. Mallon, 160 N.J.Super. 416, 390 A.2d 149 (1978) (employee terminated for refusing to perform medical procedure for which she was not licensed); Harless v. First Nat'l Bank, 162 W.Va. 116, 246 S.E.2d 270 (1978) (employee discharged for refusing to violate consumer protection law); Ostrofe v. H.S. Crocker Co., 740 F.2d 739 (9th Cir.1984), cert. dismissed, 469 U.S. 1200, 105 S.Ct. 1155, 84 L.Ed.2d 309 (1985) How a court defines "public policy" is a determining factor in whether it will invoke the public policy exception. Wagenseller v. Scottsdale Memorial Hosp., 147 Ariz. 370, 377, 710 P.2d 1025, 1032 (1985); Note, Protecting Employees At Will Against Wrongful Discharge: The Public Policy Exception, 96 Harv.L.Rev.1931, 1947 (1983) [hereinafter Protecting Employees ]. We acknowledge that the term "public policy" is open-ended, Hodges, 811 P.2d at 165, and varies from court to court and from case to case. See generally Protecting Employees at 1947-50 (discussing arbitrariness with which courts define public policy). We will not attempt here to define the full scope of the term "public policy" for purposes of the exception to the at-will doctrine. At this point, it is sufficient to say that declarations of public policy can be found in our statutes and constitutions. Hodges, 811 P.2d at 165-66; Berube v. Fashion Centre, Ltd., 771 P.2d 1033, 1043 (Utah 1989). This does not mean that all statements made in a statute are expressions of public policy. "[M]any statutes simply regulate conduct between private individuals, or impose requirements whose fulfillment does not implicate fundamental public policy concerns." Foley v. Interactive Data Corp., 47 Cal.3d 654, 254 Cal.Rptr. 211, 217, 765 P.2d 373, 379 (1988). A number of courts have refused to recognize a cause of action unless the public policy allegedly violated is clear or substantial, see, e.g., Larsen v. Motor Supply Co., 117 Ariz. 507, 573 P.2d 907 (1977) (refusing to recognize public policy action where employees terminated for refusing to consent to take psychological stress evaluation test); Lampe v. Presbyterian Med. Ctr., 41 Colo.App. 465, 590 P.2d 513 (1978) (refusing to recognize public policy action based on broad, general language of nursing statute); Jones v. Keogh, 137 Vt. 562, 409 A.2d 581 (1979) (refusing to recognize action where employee was discharged over leave time dispute); Ward v. Frito-Lay, Inc., 95 Wis.2d 372, 290 N.W.2d 536 (1980) (refusing to recognize public policy violation where employee was fired because relationship with co-worker was causing dissension in work place), or clearly mandated, see Wagenseller, 147 Ariz. at 377, 710 P.2d at 1032; Parnar v. Americana Hotels, 65 Haw. 370, 652 P.2d 625, 631 (1982); Palmateer v. International Harvester Co., 85 Ill.2d 124, 52 Ill.Dec. 13, 15-16, 421 N.E.2d 876, 878-79 (1981); Boyle v. Vista Eyewear, Inc., 700 S.W.2d 859, 871 (Mo.Ct.App.1985); Geary v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174, 180 (1974); Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081, 1089 (1984).

(employee discharged for refusing to participate in conspiracy to violate Sherman Antitrust Act).

This court has indicated that it will narrowly construe the public policies on which a wrongful termination action may be based. Caldwell v. Ford, Bacon & Davis Utah, Inc., 777 P.2d 483, 485 (Utah 1989); Berube, 771 P.2d at 1043. It is not the purpose of the exception to eliminate employer discretion in discharging at-will employees, Hodges, 811 P.2d at 165, or to impose a requirement of "good cause" for the discharge of every employee. Accordingly, we hold that the public policy exception applies in this state when the statutory language expressing the public conscience is clear and when the affected interests of society are substantial. The identification of clear and substantial public policies will require case-by-case development.

SCOPE OF EXCEPTION: VIOLATIONS OF FEDERAL LAW AND LAWS OF

OTHER STATES

We turn first to the question of whether the public policy exception as recognized in this state includes violations of federal law and the laws of other states in addition to violations of Utah law. In Adler v. American Standard Corp., 538 F.Supp. 572 (D.Md.1982), a discharged employee alleged, among other things, that he was terminated from his employment after he threatened to expose violations of federal tax laws. He claimed that the tendency of the firing was to prevent disclosure of illegalities in contravention of federal policy. In response, the employer argued that in an action raising a state's public policy It is in no way offensive to state sovereignty to engraft federal public policy within the civil law. If [the employer's] arguments were to be adopted, this Court would accept the proposition that the [state], as a matter of public policy of its own, should not be concerned with serious violations of federal law.... This Court cannot agree that the [state] should close its eyes and, as a matter of policy, not be concerned with violations of federal law.

exception, an employee could not rely on federal law as the source of the public policy contravened. In concluding that federal law can be incorporated as the public policy of a state, the court stated:

Id. at 578-79. A number of state courts likewise have recognized that certain federal laws may properly form the basis for a wrongful termination action under a state's public policy exception. See Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980) (state action based on violation of federal price fixing laws); Boyle v. Vista Eyewear, Inc., 700 S.W.2d 859 (Mo.Ct.App.1985) (state action based on violation of federal Food and Drug Administration regulations); Sabine Pilot Service, Inc. v. Hauck, 687 S.W.2d 733 (Tex.1985) (state action based on violation of federal water pollution laws).

We are not prepared to hold, however, that a violation of any federal or other state's law automatically provides the basis for a wrongful termination action based on the Utah public policy exception. Many ancient, anachronistic, and unenforced criminal sanctions remain on the books of local, state, and national governments. Violations of such laws would not necessarily violate Utah public policy. To provide the basis for an action under the public policy exception, a violation of a state or federal...