Polk v. Yellow Freight System, Inc.

• Decision Date: 10 November 1986
• Docket Number: No. 84-1596,84-1596
• Citation: 801 F.2d 190
• Parties: 41 Fair Empl.Prac.Cas. 1279, 42 Empl. Prac. Dec. P 36,761 Sonsearaharay POLK, Plaintiff-Appellee, v. YELLOW FREIGHT SYSTEM, INC., an Indiana Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 190

801 F.2d 190

41 Fair Empl.Prac.Cas. 1279,

42 Empl. Prac. Dec. P 36,761

Sonsearaharay POLK, Plaintiff-Appellee, v. YELLOW FREIGHT SYSTEM, INC., an Indiana Corporation Defendant-Appellant.

No. 84-1596.

United States Court of Appeals Sixth Circuit.

Argued July 22, 1986.

Decided Sept. 11, 1986.

Rehearing and Rehearing En Banc Denied Nov. 10, 1986.

Geoffrey L. Smith--Lead Counsel Detroit, Mich., Frederick R. Damm, Ronald E. Sandhaus argued, Yellow Freight System, Inc., Overland Park, Kan., for defendant-appellant.

Michael Pitt argued, Detroit, Mich., for plaintiff-appellee.

Before LIVELY, Chief Judge; and KENNEDY and BOGGS, Circuit Judges.

CORNELIA G. KENNEDY, Circuit Judge.

Defendant-appellant, Yellow Freight System, Inc. ("defendant"), appeals the judgment of the United States District Court for the Eastern District of Michigan granting plaintiff-appellee, Sonsearaharay Polk, recovery for her discharge from defendant's employ. The jury found that plaintiff was discharged without "just cause," that she was discharged in retaliation for her assertion of certain rights granted to her under Michigan law, and that she suffered emotional distress as a result of defendant's intentionally outrageous conduct. For the reasons set forth below, we reverse in part and remand the case for a new trial on plaintiff's claim that defendant discharged her because she visited the Michigan Civil Rights Commission ("MCRC").

Defendant is a regulated common carrier of general commodities by motor vehicle. Defendant, an Indiana corporation, has its corporate headquarters in Overland Park, Kansas, and operates many terminal facilities throughout the United States. Plaintiff is a black female. She was employed at defendant's Melvindale, Michigan, terminal in various clerical capacities from June 28, 1972, until May 10, 1979, when she was suspended for insubordination. Plaintiff was discharged a few days later.

Sheila Evans, a white female, had been promoted to office manager on October 2, 1978, a position which gave her direct supervisory authority over plaintiff. Plaintiff was disciplined shortly after Evans' promotion for her refusal to comply with an instruction from Evans. A memorandum regarding the incident was placed in plaintiff's personnel file. The next disciplinary incident involving plaintiff and Evans occurred on May 3, 1979. On that date, Evans reprimanded plaintiff for selling raffle tickets to co-workers during work hours, and placed a memorandum in plaintiff's personnel file. On May 4, 1979, plaintiff was disciplined by Ivan Waterbury, the terminal manager, for discussing internal company business with a customer. On May 8, 1979, plaintiff visited the MCRC. Her charge of discrimination against defendant was filed with the MCRC some time later, approximately three weeks after her discharge. On May 9, 1979, plaintiff requested access to her personnel file in accordance with the Bullard-Plawecki Employee Right-to-Know Act, Mich.Comp.Laws Ann. Sec. 423.501 et seq.; she was given access on May 23, 1979. On May 10, 1979, Evans noticed plaintiff typing something at her desk that did not appear to be work-related. Evans asked to see the document and plaintiff refused to show it to her. An argument ensued and Waterbury came over to investigate. He also asked to see the paper and plaintiff refused to show it to him. He informed plaintiff that she was suspended and that he was going to recommend that she be discharged for insubordination. The Employee Review Committee reviewed the matter as required by company policy and authorized plaintiff's discharge effective May 17, 1979.

On May 19, 1979, plaintiff filed for unemployment benefits with the Michigan Employment Security Commission ("MESC"). On June 18, 1979, the MESC disqualified her for full unemployment benefits on the grounds that her discharge was for "misconduct." The ruling was upheld in a redetermination on July 30, 1979. Plaintiff appealed the redetermination to an appeal referee, who conducted a full evidentiary hearing on September 4, 1979. The referee issued findings and an order rejecting plaintiff's claim on January 4, 1980, finding that plaintiff's discharge was caused by her own misconduct in refusing instructions from Evans and Waterbury on May 10, 1979.

Plaintiff appealed the referee's decision to the Employment Security Board of Review, which affirmed the decision on April 15, 1981. Having exhausted all her administrative remedies, plaintiff then appealed her disqualification to the Wayne County, Michigan, Circuit Court, which affirmed the disqualification on March 23, 1982.

Plaintiff instituted this action in Wayne County Circuit Court on July 14, 1981. Defendant timely removed the case to the United States District Court for the Eastern District of Michigan pursuant to 28 U.S.C.A. Sec. 1332.

Plaintiff sought recovery against defendant on five theories: (1) that she was discharged on account of her race, in violation of the Elliott-Larsen Civil Rights Act, Mich.Comp.Laws Ann. Sec. 37.2101 et seq.; (2) that she was discharged for pursuing rights granted to her by the Elliott-Larsen Civil Rights Act, id.; (3) that she was discharged in retaliation for requesting to see the contents of her personnel file, in violation of her rights under the Bullard-Plawecki Employee Right-to-Know Act, Mich.Comp.Laws Ann. Sec. 423.501 et seq.; (4) that she was discharged without "just cause" in violation of an implied contract between herself and defendant; and (5) that she suffered severe emotional distress as a result of defendant's intentional outrageous conduct.

On November 23, 1984, the jury found for defendant on plaintiff's claim of race discrimination. It found for plaintiff on the other four counts. The jury determined that plaintiff's lost earnings and benefits resulting from her discharge to the date of the verdict were $121,300. The jury further found plaintiff's compensatory damages for the intentional infliction of emotional distress and indignity and anguish because of the retaliatory discharge to be $25,000 prior to her discharge and $50,000 after her discharge. ¹ On August 2, 1984, the District Court awarded plaintiff reinstatement, "front pay," ² attorney's fees in the amount of $14,250, and costs in the amount of $591.80.

Defendant appeals the Court's decision on all four counts.

I. PRECLUSION

Defendant argues first that the District Court erred in holding that the decision of the state court that plaintiff was discharged for misconduct did not preclude relitigation in this action that she was discharged for any other reason. ³ We find that plaintiff's claim that defendant fired her without just cause is precluded, but that plaintiff's other claims are not.

The Full Faith and Credit Statute, 28 U.S.C.A. Sec. 1738, requires all United States courts to afford the same full faith and credit to state court judgments that would apply in the state's own courts. The Supreme Court reemphasized the meaning of this statute in Kremer, supra note 3, when it stated that federal courts must apply state rules of preclusion in determining the effect of state court judgments. 465 U.S. at 481-82, 102 S.Ct. at 1897-98. Therefore, this Court must determine what preclusive effect, if any, Michigan state courts would give the decision of the Wayne County Circuit Court in subsequent claims by plaintiff regarding the cause of her termination. ⁴

Michigan courts recognize the preclusive effect of final determinations by administrative agencies whether or not these determinations have been reviewed in a state court proceeding. See Senior Accountants, Analysts & Appraisers Ass'n v. City of Detroit, 399 Mich. 449, 249 N.W.2d 121 (1976). Under Michigan law, the doctrines of res judicata and collateral estoppel "apply to administrative determinations adjudicatory in nature particularly where ... a method of appeal is provided and it is clear that it was the legislative intention to make the determination final in the absence of an appeal." Roman Cleanser Co. v. Murphy, 386 Mich. 698, 704 n. 5, 194 N.W.2d 704, 706 n. 5 (1972) (citation omitted).

The Michigan Supreme Court has adopted the test set forth in section 68 of the Restatement of the Law of Judgments as the applicable standard for collateral estoppel in Michigan: "Where a question of fact essential to the judgment is actually litigated and determined by a valid and final judgment, the determination is conclusive between parties in a subsequent action on a different cause of action...." Senior Accountants, 399 Mich. at 458, 249 N.W.2d 121 (footnote omitted). Res judicata, on the other hand, precludes parties from raising in subsequent litigation all matters "which properly belonged to the subject of [previous] litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time." Gursten v. Kenney, 375 Mich. 330, 335, 134 N.W.2d 764 (1965) (quoting Henderson v. Henderson, 3 Hare 100, 115 (67 Eng.Rep. 313)).

The MESC found in four levels of review, and the Wayne County Circuit Court affirmed, that plaintiff was discharged for "misconduct," an act which disqualifies a worker for full unemployment compensation benefits under the Michigan Employment Security Act, Mich.Comp.Laws Ann. Sec. 421.1 et seq. ("ESA"). See Mich.Comp.Laws Ann. Sec. 421.29(1)(b). ⁵ Plaintiff now asserts that she was fired without "just cause" in violation of an implied employment agreement between her and defendant. In Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980), the Michigan Supreme Court held that express or implied contracts to dismiss only for "just cause" were enforceable in the same manner as other contracts. The jury found that such a contract existed here and that defendant violated the contract by discharging plaintiff without just cause. We need not address defendant's contentions that these findings were not supported by the evidence,...