Turner v. Allstate Ins. Co.
| Decision Date | 18 June 1990 |
| Docket Number | No. 88-1816,88-1816 |
| Parties | 115 Lab.Cas. P 56,307, 5 Indiv.Empl.Rts.Cas. 722, 30 Fed. R. Evid. Serv. 290 Stewart M. TURNER, Plaintiff-Appellee, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Joseph C. Bird (argued), Stark, Readan & Finnerty, Christopher E. LeVasseur, Rupp, Ehrlich, Foley & Serwer, Troy, Mich., for plaintiff-appellee.
Robert M. Vercruysse (argued), Daniel B. Tukel, Butzel, Long, Gust, Klein & Van Zile, Detroit, Mich., for defendant-appellant.
Before WELLFORD and RYAN, Circuit Judges, and CONTIE, Senior Circuit Judge.
Allstate Insurance Company and its related companies appeal from a judgment in favor of Stewart Turner on his wrongful discharge claim. Allstate raises three issues:
1. Whether the trial court erred by instructing the jury that, under Michigan law, Allstate had the burden of proving just cause for terminating Turner;
2. Whether the trial court erred in refusing to give Allstate's requested business judgment instruction; and
3. Whether the trial court abused its discretion in refusing to allow Allstate to introduce certain statistical evidence.
We conclude that none of the assignments of error warrant reversal and, therefore, we shall affirm the judgment entered in accordance with the jury's verdict.
Stewart Turner was employed as an insurance agent by Allstate from 1968 to 1986 under a written contract drafted by Allstate. Among the terms and conditions of the employment agreement was a provision prohibiting Turner's termination except for "just cause." An "act of dishonesty, such as, ... falsification of any Company or industry plan documents...." was specifically listed as "just cause" for employment termination.
On January 6, 1986, Allstate fired Turner on the ground that he had falsified internal company documents by submitting to the company Allstate's Customer Service Request Form falsely representing that a number of Turner's customers were entitled to a discount for homeowner's insurance policy premiums. The discount is known as the "protective device discount" ("PDD"). The discount program, which Allstate introduced in 1981, offered a five percent discount on every homeowner's policy if the customer's home was equipped with a smoke alarm on each floor excluding the basement, deadbolt locks on exterior doors, and a fire extinguisher on the premises. The savings on a typical homeowner's policy amounted to approximately $7.50 per year.
Following his termination, Turner sued Allstate for breach of contract. At trial, neither party disputed the terms of the employment agreement and Turner stipulated that Allstate's condition that he had falsified company documents was indeed the reason Allstate fired him, and not a mere pretext. Thus, the only liability issue to be litigated was whether Turner had falsified a company document.
The first and second issues raised on appeal concern, respectively, the correctness of the trial court's instructions to the jury concerning the burden of proof of just cause or its absence and Allstate's request for a business judgment instruction.
Over Allstate's objection, the trial court assigned to Allstate the burden of proving that it had just cause for discharging Turner. The court also instructed the jury that it could consider only whether Turner had falsified a company document, not whether it believed that Allstate's decision to discharge Turner was reasonable. The jury was instructed that if it found a single falsification, it was to find in favor of Allstate.
The third issue concerns the admissibility of comparative statistical data Allstate compiled relating to the percentage of Allstate customers in the Midland area, and statewide, who had been given the PDD.
Neither party disputes that Michigan law governs the contract issues in this case; however, the parties disagree as to who has the burden of proving the existence or absence of just cause for termination of an employment contract in Michigan. Turner argues that, in Michigan, the burden is assigned to the employer. Allstate insists the plaintiff has the burden of proving that Allstate lacked just cause to terminate his employment and, at trial, requested that the trial court give the following instruction:
Since plaintiff had a contract with Allstate, he must then prove that he was performing according to the terms of that contract, up to the time of his termination. That is, he must prove by a preponderance of the evidence that he was not violating the terms of the contract by falsifying company documents. If the plaintiff does not prove that he was not falsifying company documents then your inquiry is over and then you must find for the defendant.
(Emphasis added.) The district court disagreed and assigned the burden to the defendant, giving the following instruction:
The plaintiff has offered evidence that he performed his contract in all respects up to the time of discharge. This evidence is undisputed. The burden then shifted to defendant to prove that it had legal cause for the plaintiff's discharge.
* * * * * *
If the defendant proves that the plaintiff falsified at least one document within the meaning of the contract, then you shall return a verdict for the defendant.
If the defendant does not prove that the plaintiff falsified at least one document, then you shall return a verdict for the plaintiff.
We conclude that the district court did not err in so instructing the jury.
The court's jury instruction correctly states the law as announced by the Michigan Supreme Court in Johnson v. Jessop, 332 Mich. 501, 503, 51 N.W.2d 915, 917 (1952), and Saari v. George C. Dates & Associates, Inc., 311 Mich. 624, 628, 19 N.W.2d 121, 122-23 (1945). Those cases declare that proof of "just cause" for termination of an employment relationship is to be treated as an affirmative defense on which the defendant has the burden of proof. 1 A more recent decision by the Michigan Court of Appeals has reiterated the Michigan rule. 2 None of these cases have been overruled. 3 Allstate argues that Michigan law on the subject is not settled. It claims that at least two cases, Obey v. McFadden Corp., 138 Mich.App. 767, 776-79, 360 N.W.2d 292, 296-97 (1984), lv. denied, 422 Mich. 911 (1985), and Duke v. Pfizer, 668 F.Supp. 1031, 1040 (E.D.Mich.1987), aff'd, 867 F.2d 611 (6th Cir.1989), hold that, in a breach of employment contract action under Michigan law, the employee has the burden of proving that the employer breached the contract by discharging the employee without just cause. We do not deem these decisions dispositive.
The language in Obey, on which Allstate relies and to which the court in Duke made reference, is a quotation from the trial court's jury instructions to the effect that the plaintiff bears the burden of showing that the employer "breached a contract by terminating [the employee] without good cause." Obey, 138 Mich.App. at 776, 360 N.W.2d at 296. However, the correctness of that instruction was not at issue in Obey. Toward the close of its decision, the Obey court said that, "[h]aving [been] shown a good cause contract, ... [we] must address the question ... whether sufficient reasons had been shown to justify [plaintiff's ] termination." 138 Mich.App. at 779, 360 N.W.2d at 297 (emphasis added). It then held that the trial court should have granted the employer a directed verdict because the plaintiff conceded that he had engaged in illegal transactions for which his suspension and ultimate termination was proper. Id., 360 N.W.2d at 297. The court's subsequent statements assessing the evidence as failing to show the employer breached a "contractual duty to discharge plaintiff in a timely manner," id. at 778-79, 360 N.W.2d at 297-98, are dicta which do not contradict the Michigan Supreme Court's Johnson, Saari, and Milligan decisions on the burden of proof issue.
Duke, a federal trial court decision, likewise sheds no helpful light on the issue involved here. In discussing its understanding of Michigan law concerning the burden of proof in wrongful discharge actions, the district court stated that the "rule plaintiff excises from Rasch, supra," assigning the burden of proof of just cause to the employer, "is counter intuitive and makes little sense." 668 F.Supp. at 1040. That observation, whatever it is worth, does not comport with settled Michigan law as made explicit by the Michigan Supreme Court in Johnson, Saari, and Milligan, and reiterated by the Michigan Court of Appeals in Rasch. In all events, the district court's observation is a mere dictum since its decision did not turn on that point.
We think the district court correctly applied Michigan law in assigning the burden of proof on just cause to Allstate.
Allstate claims the trial court should have instructed the jury that it could not question Allstate's business judgment that falsification of company documents was just cause for termination under the contract. While the trial court declined to give Allstate's requested jury instruction, we think the charge it gave contained all the essential elements Allstate requested and, what is more important, correctly stated the law.
A comparison of Allstate's requested instruction and the trial court's charge confirms that the court merely distilled Allstate's proposed instruction to its essential elements by eliminating argumentative language. The instruction Allstate requested stated:
You are not to substitute your judgment for the defendant's business judgment that just cause is dishonesty, defined as the falsification of company documents, or to decide this case on what you would have done if you had been the employer.
You should keep in mind that the defendant is entitled to take all reasonable steps to insure the Allstate Insurance Company operates in a...
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