Rackley v. Fairview Care Centers, Inc.

• Decision Date: 06 April 2001
• Docket Number: No. 990044.,990044.
• Citation: 23 P.3d 1022,2001 UT 32
• Parties: Cathleen L. RACKLEY, Plaintiff and Petitioner, v. FAIRVIEW CARE CENTERS, INC., Defendant and Respondent.
• Court: Utah Supreme Court

23 P.3d 1022

2001 UT 32

Cathleen L. RACKLEY, Plaintiff and Petitioner, v. FAIRVIEW CARE CENTERS, INC., Defendant and Respondent.

No. 990044.

Supreme Court of Utah.

April 6, 2001.

Rehearing Denied May 21, 2001.

Peter C. Collins, Tara L. Isaacson, Salt Lake City, for plaintiff.

Danny Quintana, Salt Lake City, for defendant.

On Certiorari to the Utah Court of Appeals

HOWE, Chief Justice:

INTRODUCTION

¶ 1 We granted certiorari to review the decision of the court of appeals holding that defendant did not violate a clear and substantial public policy when it terminated plaintiff's employment. See Rackley v. Fairview Care Ctrs., Inc., 970 P.2d 277, 282 (Utah Ct.App.1998).

BACKGROUND

¶ 2 On November 1, 1993, plaintiff Cathleen L. Rackley began working as an at-will employee for defendant Fairview Care Centers, Inc., as the administrator of a nursing home known as Fairview West. In that capacity, she made suggestions to management and took steps to bring the care facility into compliance with both federal and state law. For example, plaintiff implemented changes in payroll so that if a payday fell on a weekend or holiday, employees would be paid the first prior working day. Additionally, she informed employees that by law they were entitled to a Hepatitis B vaccination at Fairview's expense. Plaintiff also instituted changes in employee scheduling, food service, laundry service, and in the basic cleanliness, organization, and efficiency of Fairview West.

¶ 3 Sometime in February 1994, Karleen Merkley, the manager responsible for resident funds at Fairview West, informed most of the members of the staff that a check for $720 from the Veteran's Administration was expected to arrive for resident Ms. Mellen, and that Ms. Mellen was not to be notified when it came. Plaintiff was not informed of that prohibition. Sharon Mellen, Ms. Mellen's daughter-in-law who had been aiding Ms. Mellen in managing her financial affairs for many years, had requested that Ms. Mellen not be told about the money because she feared Ms. Mellen would try to use it to move out of Fairview West and attempt to live on her own. Sharon wanted to inform Ms. Mellen of the check's arrival personally and to convince her to use the money to purchase a new wheelchair.

¶ 4 In the latter part of February, upon notification that the check had arrived, Sharon went to Fairview West, signed an authorization form in the presence of a witness, and took the check and deposited it in Ms. Mellen's personal bank account.¹ Soon thereafter, plaintiff became aware that the check had arrived and had been picked up by Sharon. She notified Ms. Mellen of that fact. Ms. Mellen was upset that she had not been informed of the check's arrival or subsequent deposit and consequently requested that plaintiff contact Sharon on her behalf.

¶ 5 There is some dispute about the content of the phone call to Sharon. Plaintiff contends that she simply told Sharon she had notified Ms. Mellen of the arrival of the check and expressed concern about the impropriety of keeping the information from Ms. Mellen. Plaintiff asserts that Sharon "screamed" at her for telling Ms. Mellen about the money because "she was promised that nobody would find out about the money, that Karleen had talked to her and nobody should find out about it." Sharon contends that plaintiff called her at her place of work, yelled at her over the phone, and accused her of dishonesty and improper conduct. She stated, "[a]ll she did was kept telling me, you're stealing Ms. Mellen's money, you can't do that, you need to turn it—return the money to Fairview West. . . . She was very unprofessional. She had me in tears." Plaintiff did not then notify Joseph Peterson, owner and general manager of Fairview, of what had transpired or request investigation by any outside authority.²

¶ 6 Shortly thereafter, Sharon contacted Peterson and told him her version of what had happened. Peterson then arranged a meeting with plaintiff, Merkley, and Sallie Maroney (the manager of Fairview East) to discuss the incident. At that meeting, Merkley and Maroney received written reprimands for failing to tell Ms. Mellen about the check, and a new official policy was instituted requiring that residents be informed of all their incoming funds, regardless of who assisted them with their financial affairs. Plaintiff was reprimanded for calling Sharon at work. Peterson said he would arrange an appointment with Sharon, Maroney, plaintiff, and himself to discuss the incident. The meeting was then adjourned.

¶ 7 Days later, Peterson again called plaintiff into a meeting where he indicated that he was considering terminating her over the Mellen incident. While there is some confusion over what happened next, the parties have stipulated that for purposes of this case, plaintiff was terminated by Fairview.³ Rackley filed this action, claiming she was wrongfully discharged in violation of public policy.

¶ 8 After a bench trial, the court held that a clear and substantial public policy of notifying care facility residents of the arrival of their funds had been implicated and that notifying Ms. Mellen and contacting Sharon were actions furthering such policy. On appeal, the court of appeals reversed the trial court's judgment, holding that notifying care facility residents of the arrival of their personal funds is not required by any clear and substantial public policy, and therefore, terminating plaintiff was within Fairview's discretion under the employment-at-will doctrine. See Rackley, 970 P.2d at 282. We granted certiorari. This court has jurisdiction over this matter pursuant to section 78-2-2(3)(a) of the Utah Code.

ANALYSIS

¶ 9 The parties dispute the precise issue before us. Fairview contends that the key issue is whether notification to care center residents of the arrival of their personal funds is a clear and substantial public policy. Plaintiff disagrees and asserts that the policy at issue is not the extremely narrow policy of notifying residents of the arrival of their funds, but the broader right of residents to manage their own financial affairs. Plaintiff asserts that the court of appeals's narrow interpretation of the policy at issue erroneously requires that "all the specifics of a given employment termination scenario would have to be most specifically anticipated by constitutional provision, statute, or regulation in order [for] a claim for wrongful termination for violation of public policy [to] succeed."

¶ 10 We have held in the past that "[l]egitimate reliance on a public policy exception to the at-will rule requires an attempt to identify the proper sources of public policy and the principles which underlie it." Berube v. Fashion Ctr., Ltd., 771 P.2d 1033, 1042-43 (Utah 1989). We agree with plaintiff that if we were to require the law to be so specifically tailored, the public policy exception would be meaningless. Thus, we hold that the proper issue before us is whether a care facility resident's right to manage her own funds constitutes a clear and substantial public policy.

¶ 11 On certiorari, we review the decision of the court of appeals, not that of the trial court. See Lysenko v. Sawaya, 2000 UT 58, ¶ 15, 7 P.3d 783. Whether a clear and substantial public policy exists supporting a wrongful discharge claim based on an employer's violation of that policy is a question of law. We review the court of appeals's conclusions of law for correctness and afford them no deference. See Bear River Mut. Ins. Co. v. Wall, 1999 UT 33, ¶ 4, 978 P.2d 460.

¶ 12 Under Utah law, an employment relationship entered into for an indefinite period of time is presumed to be at-will and gives rise to a contractual arrangement where the employer or the employee may terminate the employment for any reason, except as provided by law. See Ryan v. Dan's Food Stores, Inc., 972 P.2d 395, 400 (Utah 1998); Fox v. MCI Communications Corp., 931 P.2d 857, 859 (Utah 1997); Brehany v. Nordstrom, Inc., 812 P.2d 49, 53-55 (Utah 1991); Berube, 771 P.2d at 1044; Bihlmaier v. Carson, 603 P.2d 790, 792 (Utah 1979). Both parties in this case agree that plaintiff was an at-will employee of Fairview. Thus, under ordinary circumstances, plaintiff could have been terminated for any reason and at any time.

¶ 13 However, there are exceptions to the at-will presumption. An at-will employee may overcome the at-will presumption by showing: "`(1) there is an implied or express agreement that the employment may be terminated only for cause or upon satisfaction of another agreed-upon condition; (2) a statute or regulation restricts the right of an employer to terminate an employee under certain conditions; or (3) the termination of employment constitutes a violation of a clear and substantial policy.'" Burton v. Exam. Ctr. Indus. & Gen. Med. Clinic, Inc., 2000 UT 18, ¶ 6, 994 P.2d 1261 (quoting Fox, 931 P.2d at 859); see also Ryan, 972 P.2d at 400; Retherford v. AT & T Communications, 844 P.2d 949, 958-59 (Utah 1992) (implied or express agreement and public policy exceptions); Heslop v. Bank of Utah, 839 P.2d 828, 836-38 (Utah 1992) (implied or express agreement exception); Peterson v. Browning, 832 P.2d 1280, 1281 (Utah 1992) (public policy exception); Hodges v. Gibson Prods. Co., 811 P.2d 151, 165 (Utah 1991) (same). "[E]mployers have a duty not to terminate any employee, `whether the employee is at-will or protected by an express or implied employment contract,' in violation of a clear and substantial public policy." Ryan, 972 P.2d at 404 (quoting Retherford, 844 P.2d at 960). If an employer breaches this duty, the terminated employee has a cause of action in tort against the employer. See Ryan, 972 P.2d at 404; Fox, 931 P.2d at 860; Retherford, 844 P.2d at 959; Peterson, 832 P.2d at 1283-86.

¶ 14 To succeed on a wrongful discharge claim for violation of such a public policy, plaintiff must satisfy a four-pronged test. Plaintiff must prove that (1) her employment...