• Tennessee Supreme Court Clarifies Reporting Requirement for Whistleblower Claims
  • July 24, 2015 | Authors: David E. Long; LaToyia B. Trotter
  • Law Firm: Leitner, Williams, Dooley & Napolitan, PLLC - Knoxville Office
  • The Tennessee Supreme Court recently issued an important decision that clarifies the reporting requirement to qualify as a whistleblower in a retaliatory discharge action. Charles Haynes v. Formac Stables, Inc., No., W2013-00535-SC-R11-CV (Tenn. March 27, 2015).

    Summary of the Case:

    Plaintiff was employed as a horse groomer for the defendant. Defendant fired Plaintiff in June 2010, and Plaintiff subsequently filed an action based on the common law theory of retaliatory discharge, as well as statutory retaliatory discharge under the Tennessee Public Protection Act (“TPPA”), Tenn. Code Ann. §50-1-304 (2015).

    Defendant filed a motion to dismiss, so Plaintiff amended his complaint to further allege that he suffered a head injury at work on April 3, 2010 when one of the horses kicked him. Plaintiff averred that he informed Defendant’s owner of his injury and requested to leave to seek medical care. According to Plaintiff, the owner would not grant him permission to leave and, instead, told Plaintiff that he could only seek treatment from the on-site veterinarian, from which he could only obtain horse sutures to seal the wound. Plaintiff further contended that Defendant stated that Plaintiff “could ‘find [him]self another job’” if Plaintiff did not like said option. Haynes, No., W2013-00535-SC-R11-CV, at *2 (alternations in original). Plaintiff alleges that he therefore consented to the sutures out of fear that he would be terminated. According to the complaint, Plaintiff continued to complain about severe headaches over the course of three months as a result of allegedly improper care, and he was later terminated on June 29, 2010. Plaintiff alleges that he was terminated because he refused to keep quiet about the “illegal stitching procedure.” Id., at *2.

    Defendant, again, filed a motion to dismiss for failure to state a claim. Defendant argued that Plaintiff does not have a cause of action for retaliatory discharge because Plaintiff did not inform anyone of the Defendant’s “illegal activity” besides the Defendant’s owner. The trial court dismissed the Plaintiff’s action, and the Court of Appeals affirmed. The Tennessee Supreme Court reviewed the action to determine an issue of first impression: whether an employee asserting a whistleblower claim of retaliatory discharge must report his employer’s alleged illegal conduct to someone besides the wrongdoer if the wrongdoer is the manager, owner, or the company’s highest ranking officer. On de novo review, the Court concluded that the Plaintiff failed to state a viable claim for retaliatory discharge because he did not report the alleged illegal medical procedure to someone besides the Defendant’s owner, whom Plaintiff alleged was also the wrongdoer.

    Analysis of Authority:

    Because Tennessee is an at-will state, employers may fire employees “for good cause, bad cause, or no cause at all.” Stein v. Davidson Hotel Co., 945 S.W.2d 714, 716 (Tenn. 1997). However, one exception to the doctrine is the former employee’s ability to bring an action against her former-employer based on retaliatory discharge if the four elements are met:

    • (1) that an employment-at-will relationship existed;
    • (2) that the employee was discharged[;]
    • (3) that the reason for the discharge was that the employee attempted to exercise a statutory or constitutional right, or for any other reason which violates a clear public policy evidenced by an unambiguous constitutional, statutory, or regulatory provision; and
    • (4) that a substantial factor in the employer’s decision to discharge the employee was the employee’s exercise of protected rights or compliance with clear public policy.

    Haynes, No., W2013-00535-SC-R11-CV, at *3 (quoting Crews v. Buckman Labs. Int’l, Inc., 78 S.W.3d 852, 862 (Tenn. 2002)). Alternatively, former employees may also submit a whistleblower action pursuant to the TPPA if the employee is “discharged or terminated solely . . . for refusing to remain silent about [ ] illegal activities.” Id. (quoting Tenn. Code Ann. § 50-1-304(b)). The main difference between the statutory and common law retaliatory discharge is that the TPPA requires that the employee’s refusal to remain silent about the illegal activity was the sole reason for the employee’s termination, and the common low retaliatory discharge only requires that it was a substantial factor.

    For both the statutory and common law claims, the employee must show that his reporting the illegal activity “furthered a clear public policy.” Gossett v. Tractor Supply Co., 320 S.W.3d 777, 788 (Tenn. 2010). Furthermore, the court in Merryman v. Central Park System, Inc., No. 01A01-9203CH00076, 1992 WL 330404, at *7 (Tenn. Ct. App. 1992), stated that the illegal activity may be reported internally to company management or externally to a regulatory agency or law enforcement. The court in Merryman concluded that the plaintiff was not a whistleblower because he had not reported the alleged illegal activity to anyone besides the supervisor responsible for the illegal conduct. Haynes, No., W2013-00535-SC-R11-CV, at *4 (citing Id.). 

    In Emerson v. Oak Ridge Research Inc., 187 S.W.3d 364, 371 (Tenn. Ct. App. 2005), the court relied on the Merryman court’s decision and concluded that the employee satisfied the reporting requirement by reporting her supervisor’s sexual harassment to said supervisor, who was also the company’s manager. The court pointed out that the wrongdoer was both the supervisor and the manager and that the plaintiff reported the illegal conduct to the local bar association in an effort to obtain legal representation. Id. at n. 1. The court held that the plaintiff satisfied the reporting requirement, specifically because reporting the illegal conduct to the wrongdoer constituted reporting the conduct to both the manager and supervisor. Id. at n. 2. 

    In Lawson v. Adams, 338 S.W.3d 486, 497 (Tenn. Ct. App. 2010), the court overruled the Merryman opinion. In Lawson, the plaintiff did not qualify as a whistleblower because he only reported his employer’s unsafe trucks to the owner responsible for the unsafe conditions. Id. There, the court also did not adopt what appeared to be an exception created by Emerson - that reporting the conduct to the wrongdoer meets the reporting requirement if the wrongdoer holds more than one of the following titles: supervisor, manager, owner, or the employer’s highest ranking officer.

    Analysis of Opinions:

    In the current case, the Court of Appeals rejected Plaintiff’s argument that Emerson is analogous and should be followed in the present case. The Court of Appeals reasoned that Emerson did not create an exception that applied to the case at bar, which is evident by the fact that the court in Lawson did not follow said exception. It held that Plaintiff failed to properly report Defendant’s illegal activity to someone besides the Defendant’s owner and thus failed to state a claim for retaliatory discharge.

    Upon review by the Tennessee Supreme Court, the Court pointed out that there was split authority on the appellate level regarding the reporting requirements for a whistleblower claim. The Court was faced with the dilemma “to preserve the exception established in Emerson or, in the alternative, to adopt a rule that uniformly requires employees to report illegal activity to someone other than the offending party—which will necessarily be an outside entity when, as here, the offending supervisor, the sole manager, and the company owner are the same person.” Haynes, No., W2013-00535-SC-R11-CV, at *6. Plaintiff argued that the lower courts and the court in Lawson erred by not applying the exception that Plaintiff contends was created in Emerson. He further contended that denying whistleblower status in this case would make it easier for managers and owners to avoid liability in retaliatory discharge cases and that it would discourage internal reporting to owners, managers, or officers responsible for illegal activity. 

    The Defendant, however, argued that plaintiff failed to meet the reporting requirement for retaliatory discharge when he merely reported illegal conduct to the responsible party because said report only pursued a private interest rather than furthering a clear public interest. The court pointed out that other jurisdictions followed Defendant’s notion: Fowler v. Criticare Home Health Services, Inc., 10 P. 3d 8, 15 (Kan. Ct. App. 2000) (concluding that an employee who informed his general manager about the illegality of a shipment that the employee was instructed to ship was not a whistleblower); Drummond v. Land Learning Foundation, 358 S.W.3d 167, 171 (Mo. Ct. App. 2011) (reasoning that “[r]eporting to the wrongdoer does not expose the wrongdoer or his wrongdoing and, thus . . . [does not] remedy a public ill.”); Guy v. Mutual of Omaha Ins. Co., 79 S.W.3d 528, 537 n.4 (concluding that the employee must show that the whistleblowing “serves a public purpose that should be protected . . . [and is] not merely private or proprietary, but instead seek[s] to further the public good.”); see also Lykins v. Certain Teed Corp., 555 F. App’x 791, 794 (10th Cir. 2014); Chipp v. Salvation Army, No. B167508, 2004 WL 729216, at *4 (Cal. Ct. App. Apr. 6, 2004).

    The Court upheld the Court of Appeals’ decision that Emerson did not create an exception to the reporting requirement for whistleblower claims, and it overruled the Emerson decision. It reasoned that if an employee reports illegal activity only to the individual(s) responsible for that activity, who already knows of their wrongdoing, the employee has failed to expose the illegal activity. The Court recognized that its conclusion will eliminate internal reporting as an option when the wrongdoer is the manager, owner, or highest authority within the company because, in those instances, reporting to an outside person or entity is the only way to actually remedy the illegal conduct to serve a public purpose. However, in order to prevent unintended expansion of whistleblowing as an exception to the employment-at-will doctrine, the Court felt that narrowing the whistleblowing exception was appropriate and necessary. Thus, the Court held that the Plaintiff failed to “blow the whistle” in a way that aligns with the purpose of and public policy behind whistleblowing. It therefore affirmed the lower courts’ dismissal of the Plaintiff’s amended complaint because it failed to state a claim upon which relief could be granted.

    Analysis of Precedent:

    This opinion sets a profound precedent for retaliatory discharge cases. The Court overrule the Emerson holding that reporting the alleged illegal activity to a wrongdoer who holds two titles for the employer is sufficient to qualify as whistleblowing for the purpose of alleging retaliatory discharge. See Emerson, 187 S.W.3d at n. 1. The decision in Haynes also creates a higher burden for employees alleging retaliatory discharge claims. Not only does an employee have to report the illegal or unsafe activity, but he is also required to report the activity to an outside person or entity if the wrongdoer is the person placed in a position by the employer to ensure that the conduct does not occur. When viewing the Court’s decision from a public policy standpoint, rather than convenience or practicality, the Court’s opinion in Haynes is preferred. The purpose of the whistleblowing exception to the employment-at-will doctrine is to ensure that illegal activity occurring within a business or organization, which usually affects the public, is reported to an individual or other entity that will actually remedy the activity. If the person to whom the activity is reported is the same person who is approving, encouraging, and/or otherwise conducting the wrongdoing, then reporting the activity to said person would be futile. Therefore, although the Haynes opinion creates a greater hurdle for employees claiming retaliatory discharge, it aligns the whistleblowing exception to its original purpose thus protecting said exception from potential abuse.