Silberstein v. Pro-Golf

• Decision Date: 01 April 2008
• Docket Number: Docket No. 275195.
• Citation: 278 Mich. App. 446,750 N.W.2d 615
• Court: Court of Appeal of Michigan — District of US
• Parties: Ronald N. SILBERSTEIN, Plaintiff/Counter-Defendant-Appellee, v. PRO-GOLF OF AMERICA, INC., Defendant/Counter-Plaintiff-Appellant, and Pro-Golf International, Inc., Pro-Golf.Com, Inc., and Ajay Sports, Inc., Defendants-Appellants, and Tom Itin, Defendant.

750 N.W.2d 615

278 Mich. App. 446

Ronald N. SILBERSTEIN, Plaintiff/Counter-Defendant-Appellee, v. PRO-GOLF OF AMERICA, INC., Defendant/Counter-Plaintiff-Appellant, and Pro-Golf International, Inc., Pro-Golf.Com, Inc., and Ajay Sports, Inc., Defendants-Appellants, and Tom Itin, Defendant.

Docket No. 275195.

Court of Appeals of Michigan.

Submitted February 12, 2008, at Detroit.

Decided April 1, 2008, at 9:10 a.m.

Morris & Doherty, P.C. (by E. Michael Morris), Birmingham, for the plaintiff.

Jeffery D. Meek & Associates (by Jeffery D. Meek), Livonia, for the defendants.

Before: BECKERING, P.J., and SAWYER and FORT HOOD, JJ.

PER CURIAM.

In this action seeking damages for wrongful discharge, defendants appeal as of right the November 8, 2006, judgment entered in plaintiff's favor. Defendants also appeal the March 20, 2006, order granting, in part, plaintiff's motion for summary disposition and the December 6, 2006, order denying defendants' motion for remittitur. We affirm.

In August of 1999, defendant Ajay Sports, Inc. (Ajay), hired plaintiff Ronald Silberstein as its chief financial officer (CFO) and chief administrative officer (CAO). Thereafter, plaintiff became the CFO and CAO for defendants Pro-Golf International, Inc. (PGI), Pro-Golf.com, Inc. (PGC), and Pro-Golf of America, Inc. (PGOA). Ajay is the publicly traded parent company of PGI, PGC, and PGOA, a franchise company. Tom Itin is the chief executive officer (CEO) and chairman of the board for all four corporate defendants.¹

Defendants terminated plaintiff's employment on January 5, 2004. Itin testified that Ajay and its subsidiary companies suffered financially from 1999 to 2003, and that the board of directors voted to discharge plaintiff in order to reduce costs. Plaintiff subsequently filed a complaint against defendants, alleging wrongful discharge in violation of public policy, tortious interference with an advantageous business relationship or expectancy, and conversion. Specifically, plaintiff alleged that Itin pressured him to "cook the books" by making accounting entries in violation of securities and franchise laws and regulations, and that defendants discharged him because of his refusal to do so. Defendants then filed a motion for summary disposition on all counts, arguing that plaintiff's termination did not fall under the public-policy exception to the at-will employment doctrine, that he was terminated because of poor performance and work force reductions, and that his termination was justified by after-acquired evidence of his own misconduct. Defendants alleged that during discovery, they learned that plaintiff stored pornography on his company computer, sexually harassed other employees, received "kickbacks," and made "questionable" expense charges.

In March of 2004, PGOA filed a counterclaim against plaintiff, alleging breach of contract, breach of fiduciary obligations, and fraud. The counterclaim alleged that plaintiff breached his confidentiality agreement with PGOA, that he received "kickbacks" from PGOA's independent auditors, and that he used PGOA funds to reimburse himself for personal expenses. PGOA asked that plaintiff disgorge any benefits that he wrongfully retained. Plaintiff subsequently filed a motion for summary disposition with regard to PGOA's counterclaim.

Following a February 2006 hearing, Judge Rae Lee Chabot ruled on both parties' motions for summary disposition. The court stated, in relevant part:

All right, as to Plaintiff's motion for summary disposition as to the counter-claim, as to the breach of contract claim, the Court is granting that motion.

[Defendants] have failed to present any evidence that Plaintiff breached the confidentiality agreement other than speculation. . . .

Regarding the breach of fiduciary duty claim, this is also dismissed, or granted, as Defendants have failed to provide sufficient evidence in support of this claim. However, the claim for fraud relating to the expense account, the summary disposition is denied. There is sufficient evidence that Plaintiff has charged certain items to the corporate Defendants during his employment and has failed to return those items after his termination, thus, that portion of the motion is denied.

All right, regarding [Defendants'] motion for summary disposition. Again, I'm going to grant in part and deny in part. The motion to dismiss the claim for wrongful termination is denied as Plaintiff has alleged he was terminated due to his refusal to violate not only generally accepted accounting principles [GAAP], but also Sarbanes-Oxley, as well as SEC and FTC rules and regulations. However, to the extent that Plaintiff claims he was terminated for failure to disobey GAAP, this claim is dismissed pursuant to [Suchodolski v. Michigan Consolidated Gas Co., 412 Mich. 692, 316 N.W.2d 710 (1982)].

All right, [Defendants'] assertion that Plaintiff was terminated due to a work force reduction is denied as sufficient [evidence] has been presented to indicate this was a pretext for the wrongful termination such that the issue should be decided by the ultimate fact finder.

[Defendants'] assertion that Plaintiff's claim is barred by the After Acquired Evidence Doctrine is also denied. This doctrine serves to limit damages, not to limit claims. Thus, that portion of the motion is denied but it may be considered as to damages.

Finally, regarding Plaintiff's claim for conversion, this claim is dismissed . . . as Plaintiff has failed to sufficiently allege or to present substantively admissible evidence in support of this claim. I think I hit them all.

The court issued its findings in an order dated March 20, 2006, reiterating that plaintiff's motion for summary disposition was granted with regard to PGOA's counterclaim "concerning purported `referral fees' and/or `kickbacks. . . .'"

At trial, Judge Charles W. Simon, Jr., refused to admit evidence of plaintiff's alleged "kickbacks" in light of the March 20, 2006, order. The jury returned a verdict in favor of plaintiff, awarding him $700,000 in economic damages and $150,000 in damages for emotional injury. Thereafter, the trial court issued an amended judgment for $1,320,168.43, including the $850,000 jury verdict, attorney fees, costs, and interest. Defendants subsequently filed a motion for a new trial, judgment notwithstanding the verdict (JNOV), and remittitur. Following a December 6, 2006, hearing, the trial court denied the motion.

I

Defendants first argue that the trial court improperly instructed the jury on the public-policy exception to the at-will employment doctrine. We disagree.

Claims of instructional error are generally reviewed de novo on appeal. Cox v. Flint Bd. of Hosp. Managers, 467 Mich. 1, 8, 651 N.W.2d 356 (2002). But, when the standard jury instructions do not adequately cover an area and a party requests a supplemental instruction, the trial court is obligated to give the instruction if it properly informs the jury of the applicable law and is supported by the evidence. Bouverette v. Westinghouse Electric Corp., 245 Mich.App. 391, 401-402, 628 N.W.2d 86 (2001). The determination whether a supplemental instruction is applicable and accurate is within the trial court's discretion. Stoddard v. Manufacturers Nat'l Bank of Grand Rapids, 234 Mich.App. 140, 162, 593 N.W.2d 630 (1999).

Generally, employment relationships are terminable at will, with or without cause, "at any time for any, or no, reason." Suchodolski, supra at 695, 316 N.W.2d 710. There is, however, an exception to the at-will employment doctrine "based on the principle that some grounds for discharging an employee are so contrary to public policy as to be actionable." Id. A cause of action for wrongful discharge may be implied "where the alleged reason for the discharge of the employee was the failure or refusal to violate a law in the course of employment." Id.

Defendants argue that this public-policy exception only applies where the reason for the employee's discharge was the failure or refusal to violate the law and that the trial court improperly instructed the jury that defendants were liable for wrongful discharge if one of the reasons for plaintiff's discharge was the refusal or failure to violate the law.² In so arguing defendants rely on our Supreme Court's pronouncement in Suchodolski, supra at 695, 316 N.W.2d 710, that "a cause of action for wrongful termination . . . has been found to be implied where the alleged reason for the discharge of the employee was the failure or refusal to violate a law. . . ." Id. (emphasis added). Suchodolski, however, sets forth the facts that a plaintiff must allege to bring a cause of action for discharge in violation of public policy. Contrary to defendants' argument, Suchodolski does not address a plaintiff's burden of proof on a claim of discharge in violation of public police. In Pratt v. Brown Machine Co., 855 F.2d 1225 (C.A.6, 1988), the plaintiffs brought a claim for public-policy discharge, relying in part on our Supreme Court's decision in Suchodolski. Pratt, supra at 1227, 1236. In Pratt, the district court instructed the jury that the plaintiffs were required to prove that the employee's refusal to violate the law "`was a determinative factor in the [employer's] decision to terminate the employment relationship.'" Id. at 1236 (emphasis added). On appeal, the court determined that this was a proper instruction on the parties' relative burdens of proof. Id. at 1238.

Defendants additionally argue that the trial court erred in basing its jury instructions on the instructions for other types of employment actions. But, as plaintiff correctly asserts, courts of this state have recognized that public-policy claims are analogous to claims made under § 2 of the Whistleblowers' Protection Act (WPA), MCL 15.362, and that the WPA is analogous to antiretaliation provisions of other employment-discrimination statutes. In fact, restrictions on an employer's ability to...