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Blanda v. Martin & Seibert, L.C.

Supreme Court of Appeals of West Virginia

November 22, 2019

CHRISTINE BLANDA, Petitioner
v.
MARTIN & SEIBERT, L.C., WALTER M. JONES III, GEOFFREY A. HADDAD, MICHAEL M. STEVENS, E. KAY FULLER, SUSAN R. SNOWDEN, AND NIKKI MOORE GRESS, Respondents

          Submitted: October 16, 2019

          Certified Question from the United States District Court for the Southern District of West Virginia, Charleston Division The Honorable John T. Copenhaver, Judge Civil Action No. 2:16-cv-957

          Richard Neely, Esq. NEELY & CALLAGHAN Charleston, West Virginia Counsel for the Petitioner

          Richard M. Wallace, Esq. Daniel J. Burns, Esq. Charleston, West Virginia Counsel for the Respondents

          JUSTICE ARMSTEAD, deeming himself disqualified, did not participate in the decision of this case.

          JUDGE WHARTON, sitting by temporary assignment.

          JUSTICE HUTCHISON, deeming himself disqualified, did not participate in the decision of this case.

          JUDGE EWING, sitting by temporary assignment.

         SYLLABUS BY THE COURT

         1. "A de novo standard is applied by this Court in addressing the legal issues presented by a certified question from a federal district or appellate court." Syllabus Point 1, Light v. Allstate Ins. Co., 203 W.Va. 27');">203 W.Va. 27, 506 S.E.2d 64 (1998).

         2. "The rule that an employer has an absolute right to discharge an at will employee must be tempered by the principle that where the employer's motivation for the discharge is to contravene some substantial public policy principle, then the employer may be liable to the employee for damages occasioned by this discharge." Syllabus, Harless v. First Nat'l Bank in Fairmont, 162 W.Va. 116, 246 S.E.2d 270 (1978).

         3. "To identify the sources of public policy for purposes of determining whether a retaliatory discharge has occurred, we look to established precepts in our constitution, legislative enactments, legislatively approved regulations, and judicial opinions." Syllabus Point 2, Birthisel v. Tri-Cities Health Servs. Corp., 188 W.Va. 371');">188 W.Va. 371, 424 S.E.2d 606 (1992).

         4. "Inherent in the term 'substantial public policy' is the concept that the policy will provide specific guidance to a reasonable person." Syllabus Point 3, Birthisel v. Tri-Cities Health Servs. Corp., 188 W.Va. 371');">188 W.Va. 371, 424 S.E.2d 606 (1992).

         5. West Virginia Code § 61-3-24 (2014) does not constitute a substantial public policy under Harless v. First National Bank, 162 W.Va. 116');">162 W.Va. 116');">162 W.Va. 116');">162 W.Va. 116, 246 S.E.2d 270 (1978), and its progeny, to protect an employee of a non-public employer who reported suspected criminal conduct to the appropriate authority and claims to have been retaliated against as a result.

          WALKER, CHIEF JUSTICE.

         Christina Blanda was an accounts receivable clerk employed by the law firm of Martin & Seibert, L.C. She claims that she was fired in retaliation for voicing her concerns about illegal billing practices by the firm. She first filed a whistleblower claim under the Dodd-Frank Act[1] in the United States District Court for the Southern District of West Virginia, but her claim was rendered not viable by a recent decision of the Supreme Court of the United States.[2] Now, she contends that her only recourse is a common law unlawful discharge claim under Harless v. First National Bank in Fairmont.[3] She alleges that West Virginia Code § 61-3-24 is a substantial public policy sufficient to support her Harless claim and Respondents disagree. So, this case is before us on the following certified question from the District Court:

Does West Virginia Code § 61-3-24 constitute a substantial public policy of the State of West Virginia that would support a cause of action for wrongful discharge in violation of public policy pursuant to Harless v. First National Bank, 162 W.Va. 116');">162 W.Va. 116');">162 W.Va. 116');">162 W.Va. 116 [246 S.E.2d 270] (1978), and its progeny?

         We reformulate the certified question and answer it in the negative.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Because the parties did not accompany the certified question with a statement of facts, [4] the District Court provided a brief statement of the case from pending motions for summary judgment that contain "[t]he facts relevant to the question, showing fully the nature of the controversy out of which the question arose."[5] For purposes of considering the single question of law before us, we rely on the facts as relayed by the District Court, which we summarize here.

         Ms. Blanda was an accounts receivable clerk employed by Martin & Seibert, L.C. and was tasked with billing clients for the hours worked by the firm's employees and attorneys. Ms. Blanda alleges that she began noticing irregularities such as billing clients for paralegal and secretary services at the attorney's hourly rate. She decided in 2013 that the firm was engaging in illegal billing practices. Ms. Blanda began persistently voicing her concerns to others at the law firm, including the individual Respondents.[6] The law firm never took formal disciplinary action against Ms. Blanda for her complaints, and she did not threaten to report its activities to an outside law enforcement agency or elsewhere. But, Ms. Blanda believed that actions taken by the law firm showed an intent to discharge her in retaliation for voicing her concerns.

         For example, in early 2014, Ms. Blanda was instructed to begin cross-training with another employee. But Ms. Blanda claims that it amounted to her training the other employee with no reciprocal training. Ms. Blanda also alleges that, later that year, the firm's policy encouraging employees to discuss concerns with their supervisor was taken away from her when one of the Respondents told her that she could no longer express her concerns about the law firm's billing practices. On December 4, 2014, after meeting with some of the Respondents, Ms. Blanda was issued a formal warning notice pertaining to her job performance. Ms. Blanda asserts that the claims in the notice were false.

         And, on January 23, 2015, Ms. Blanda noticed that the law firm had posted her job for hiring. Ms. Blanda immediately contacted one of the law firm's attorneys, Lisa Green, who had become aware of the billing irregularities. According to the facts presented by the District Court, Ms. Green suspected that the law firm may be setting up Ms. Blanda to take the blame for them. Ms. Green confirmed her suspicions and immediately contacted attorney Michael Callaghan, former Assistant United States Attorney and chief of the Criminal Division in the Southern District of West Virginia, for advice on reporting Respondents' conduct to the West Virginia State Bar and the Federal Bureau of Investigations (FBI). According to Ms. Green, Mr. Callaghan contacted the FBI that day; in turn, Ms. Green advised Ms. Blanda to contact Mr. Callaghan for advice.

         After speaking with Mr. Callaghan, Ms. Blanda believed that she should gather evidence to protect herself. On January 26, 2015, Ms. Blanda e-mailed 227 attachments to herself that consisted of raw billable hour data from the law firm's timekeeping files. The law firm's monitoring system detected the e-mails and Ms. Blanda was immediately fired for violating the firm's employee handbook policy prohibiting the disclosure of confidential information, including compensation data, and subjecting violators to termination. After she was fired, Ms. Blanda also took paper files from the law firm. Ultimately, the FBI "raided" the law firm based, in part, on information Ms. Blanda provided to them after her discharge. It has since disbanded as a result. Ms. Blanda later applied for unemployment benefits stating that she was discharged for emailing timesheets to herself in violation of firm policy. She reiterated the same during her deposition.

         Ms. Blanda then filed a whistleblower claim against Respondents under the Dodd-Frank Act.[7] But, because Ms. Blanda did not report the alleged violation to the Securities and Exchange Commission, her claim became no longer viable following the decision of the Supreme Court of the United States in Digital Realty Trust, Inc. v. Somers.[8]So, Ms. Blanda contends that her only recourse is a common law retaliatory discharge claim under Harless v. First National Bank in Fairmont, [9] under which she alleges that she was discharged in violation of the substantial public policy embodied in West Virginia Code § 61-3-24 (obtaining money by false pretenses).[10] Respondents counter that our decision in Swears v. R.M. Roach & Sons, Inc., [11] has already considered this issue and forecloses Ms. Blanda's theory. The District Court found that a certified question was appropriate in this circumstance, as it believes that an authoritative determination regarding this question will aid employers, discharged employees, and courts in identifying situations where Harless provides an alternative means of recourse when the Dodd-Frank Act's whistleblower protections are unavailable.

         II. STANDARD OF REVIEW

         We undertake plenary review of the legal question presented in this case. As this Court has previously stated, "[a] de novo standard is applied by this Court in addressing the legal issues presented by a certified question from a federal district or appellate court."[12]

         III. DISCUSSION

         Under long-standing West Virginia law, employees are considered to be employed at will, meaning that absent a contract or statute to the contrary, they serve at the will and pleasure of their employer and can be discharged at any time, with or without cause.[13] The exception to this doctrine of employment at-will that we take up in answering the certified question before us is referred to as the public policy exception, which this Court first recognized in Harless v. First National Bank In that case, the Court held

[t]he rule that an employer has an absolute right to discharge an at will employee must be tempered by the principle that where the employer's motivation for the discharge is to contravene some substantial public policy principle, then the employer may be liable to the employee for damages occasioned by this discharge.[14]

         So, "a cause of action for wrongful discharge exists when an aggrieved employee can demonstrate that his/her employer acted contrary to a substantial public policy in effectuating the termination."[15] As we have explained, '"public policy' is that principle of law which holds that no person can lawfully do that which has a tendency to be injurious to the public or against public good . . . even though no actual injury may have resulted therefrom in a particular case to the public."[16]

         Determining what constitutes a substantial public policy for purposes of a Harless claim is another matter. As we held in Birthisel v. Tri-Cities Health Servs. Corp., [17] "[t]o identify the sources of public policy for purposes of determining whether a retaliatory discharge has occurred, we look to established precepts in our constitution, legislative enactments, legislatively approved regulations, and judicial opinions." In that case, we clarified that our use of "substantial" to modify "public policy" in Harless was expressly "designed to exclude claims based on insubstantial considerations."[18] Elaborating on this concept, we stated:

The term "substantial public policy" implies that the policy principle will be clearly recognized simply because it is substantial. An employer should not be exposed to liability where a public policy standard is too general to provide any specific guidance or is so vague that it is subject to different interpretations.[19]

         We also held in syllabus point three of Birthisel that "[i]nherent in the term 'substantial public policy' is the concept that the policy will provide specific guidance to a reasonable person."[20] Later, in Feliciano v. 7-Eleven, Inc., we observed that "to be substantial, a public policy must not just be recognizable as such but be so widely regarded as to be evident to employers and employees alike."[21]

         In Birthisel, we considered whether nursing regulations and general language contained in the social workers licensing statute met the threshold definition of substantial public policy.[22] In concluding that the plaintiff had failed to establish the existence of a substantial public policy, we emphasized the need for specific guidance:

Neither of these provisions contain any specific guidance. Their general admonitions as to the requirement of good care for patients by social workers do not constitute the type of substantial and clear public policy on which a retaliatory discharge claim can be based. If such a general standard could constitute a substantial public policy, it would enable a social worker to make a challenge to any type of procedure that the worker felt violated his or her sense of good service.[23]

         In rejecting plaintiffs contentions, we recognized that "[m]ost of our retaliatory discharge cases involve violations of statutes that we deem to articulate a substantial public policy."[24]

         As we have warned, courts are to "proceed cautiously if called upon to declare public policy absent some prior legislative or judicial expression on the subject."[25]In addition, "despite the broad power vested in the courts to determine public policy," courts are to "exercise restraint" when using such power.[26] So, "[i]t is only when a given policy is so obviously for or against the public health, safety, morals or welfare that there is a virtual unanimity of opinion in regard to it, that a court may constitute itself the voice of the community so declaring."[27]

         Ms. Blanda argues that "it should be obvious that stealing money by stealth, armed force, or trick contravenes a substantial West Virginia public policy to the extent that West Virginia continues to be a Judeo-Christian polity." She also argues that West Virginia Code § 61-3-24(f) provides that prosecution under that statute "does not bar or otherwise affect adversely any right or liability to damages, forfeiture, or other civil remedy arising from any or all elements of the criminal offense." This provision, Ms. Blanda contends, is a specific legislative mandate showing that the Legislature intended that there be a private right of action arising from the criminal statute. Ms. Blanda acknowledges that this Court has not yet determined whether stealing contravenes a substantial public policy, but urges us to find that the statute is persuasive evidence that stealing violates the public policy of this State.

         Respondents counter that Ms. Blanda's theory is foreclosed by our prior precedent in Swears v. R.M Roach & Sons, Inc., [28] in which this Court held that the West Virginia statutes criminalizing embezzlement and larceny-West Virginia Code § 61-3-20 and § 61-3-13-do not "form the basis for a possible violation of a substantial public policy."[29] Respondents contend that the statute here, West Virginia Code § 61-3-24, which criminalizes obtaining money by false pretenses, is in the very same chapter of the criminal code as the statutes at issue in Swears and deals with virtually identical conduct.

         In Swears, a former Controller of R.M. Roach believed that his direct supervisor, Steven Roach, had committed serious fiscal misconduct and reported his findings to the other two main principals of the company.[30] Mr. Swears alleged that, following his report to the other company principals, Mr. Roach retaliated against him to try to force him to resign.[31] After he was ultimately terminated, Mr. Swears filed an action alleging wrongful discharge in violation of public policy. Specifically, he claimed that he was terminated in retaliation for his report that Steven Roach was engaging in alleged "improper conduct detrimental to the company" and conduct "in breach of Mr. Roach's fiduciary duties owed to the company and that amounted to misappropriation of company funds" in violation of state statutory and common law.[32] He also claimed that his termination "violated substantial public policy principles governing fiduciary relationships, misappropriation of funds and corporate requirements and standards."[33]

         The issue in Swears was whether an employee's reporting of alleged criminal conduct committed by a principal of a private company amounted to a substantial public policy, providing a basis for a Harless claim.[34] Mr. Swears alleged that communication of possible criminal conduct to a company principal constituted a substantial public policy. In determining that Mr. Swears had failed to identify any source of public policy that his employer had contravened, this Court stated:

While Mr. Swears cites to two criminal statutes to support his assertions, this Court takes note that the statutes, W.Va. Code § 61-3-20 (2004) (Repl. Vol. 2005) and W.Va. Code § 61-3- 13 (1994) (Repl. Vol. 2005), deal with embezzlement and larceny, respectively. Mr. Swears explains that the "West Virginia Legislature has articulated a clear public policy against such misconduct by criminalizing embezzlement and larceny." However, neither criminal statute expresses a public policy component such that the statutes may form the basis for a possible violation of a substantial public policy to support a claim for wrongful discharge. The mere citation of a statutory provision is not sufficient to state a cause of action for retaliatory discharge without a showing that the discharge violated the public policy that the cited provision clearly mandates.[35]

         Rejecting Mr. Swears's attempt to elevate his complaint to the company principals to the level of a violation of substantial public policy, this Court explained that the allegations constituted an alleged violation of the financial interests of a private corporation. Critically, they did not involve a "claimed violation of public policy or anything that might be injurious to the public good."[36] Thus, we affirmed the circuit court's grant of summary judgment to the employer in that case.[37]

         In footnote 8 of Swears, we also hypothesized in dicta, with no legal analysis, that reporting alleged criminal conduct to law enforcement officials could call for more analysis, stating:

if a case arises in which such a report is made to the proper authorities, such a factual scenario could present a question as to whether there is a substantial public policy to protect an employee, of a private employer, who reports suspected criminal conduct to the appropriate governmental authorities and is retaliated against as a result of such reporting. See supra, note 7.[38]

         Ms. Blanda argues that this case is not like Swears, but is more akin to Lilly v. Overnight Transp. Co., [39] in which this Court held that a worker who was terminated for refusing to drive a truck with defective brakes had a cause of action under Harless. Ms. Blanda contends that, much like the driver in Lilly, she did not want to be part of an illegal scheme to defraud the law firm's clients.

         Ms. Blanda's argument ignores an important distinction. Citing Lilly, [40] this Court observed in footnote 9 of Swears that our wrongful discharge cases that have reviewed assertions of criminal conduct have found a substantial public policy violation to exist only when the claimant was terminated for refusing to engage in illegal activity.[41] But Ms. Blanda does not allege retaliation because she refused to engage in an illegal activity, but rather, because she engaged in whistleblower activity by internally voicing her concerns about the billing irregularities and alleged criminal activity to another firm employee. Thus, Lilly is not applicable to this case.[42]

         In light of this, and in light of footnote 8 in Swears and the specific set of facts presented by the District Court here, we find the question certified by the District Court is too broad. So, we reformulate the certified question under our power to do so[43] as follows: Does West Virginia Code § 61-3-24 (Repl. Vol. 2014) constitute a substantial public policy under Harless v. First National Bank, 162 W.Va. 116');">162 W.Va. 116');">162 W.Va. 116');">162 W.Va. 116, 246 S.E.2d 270 (1978), and its progeny, to protect an employee of a non-public employer who reported suspected criminal conduct to the appropriate authority and claims to have been retaliated against as a result? We are firmly convinced that it does not. As this ...


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