|
LawMemo's reason for being: We publish Employment Law Memo - summaries of latest court decisions, one-click links to full
text, three emails per week. Try it.
|
Ross Runkel |
This slip opinion is subject to revision and may not
reflect the final opinion adopted by the Court.
Opinion
Missouri Court of Appeals Eastern District
Case Style: Thomas P. Dunn, Appellant, v.
Enterprise Rent-A-Car Company, Respondent.
Case Number: ED83240
Handdown Date: 04/12/2005
Appeal From: Circuit Court of St. Louis County,
Hon. Jack Koehr
Counsel for Appellant: Jerome J. Dobson and
Matthew John Ghio
Counsel for Respondent: Michael A. Kahn, Julie
M. Kennedy, Andrew Davis and Gordon L. Ankney
Opinion Summary:
Thomas P. Dunn ("Dunn") appeals from the trial
court's judgment granting Enterprise Rent-A-Car Company's
("Enterprise") motions for directed verdict on Dunn's claim that he
was wrongfully discharged for refusing to violate the law or a clear mandate of
public policy, and on his claim that he was wrongfully discharged in violation
of public policy for reporting conduct by Enterprise that he reasonably believed
violated federal securities laws. Dunn also appeals from the trial court's
judgment granting Enterprise's motion for judgment notwithstanding the verdict
or in the alternative, for a new trial, after the jury returned a verdict of
$4,000,000 in favor of Dunn on his claim that he was wrongfully discharged in
violation of public policy for reporting Enterprise's illegal business practices
in Missouri and other states.
REVERSED AND REMANDED IN PART; AFFIRMED IN PART.
DIVISION ONE HOLDS: The
trial court erred in granting a directed verdict on Dunn's claim that he was
wrongfully discharged for refusing to violate the law or a clear mandate of
public policy because, viewing the evidence in the light most favorable to Dunn,
we find Dunn made a submissible case that the conduct he was asked to engage in
with respect to Enterprise's financial statements in preparation for the initial
public offering would have been in violation of federal securities regulations
or a clear mandate of public policy as enunciated in those regulations. See
Johnson v. World Color Press, Inc.
, 498 N.E.2d 575 (Ill. App. Ct. 1986). The trial court also erred in granting
Enterprise's motion for a directed verdict on his claim that Enterprise
terminated his employment for reporting conduct by it that he reasonably
believed would have violated federal securities regulations because, viewing the
evidence in the light most favorable to Dunn, we find Dunn presented sufficient
evidence at trial to make a submissible case on this claim. We agree with the
trial court 's judgment, however, that Dunn failed to make a submissible case on
his claim that he was wrongfully terminated for reporting Enterprise's alleged
unlawful conduct with respect to its automobile licensing, sales tax and
surcharge practices because he failed to identify a law or clear mandate of
public policy that he believed Enterprise violated or would violate.
Citation:
Opinion Author: Booker T. Shaw, Judge
Opinion Vote: REVERSED AND REMANDED IN PART;
AFFIRMED IN PART. Draper III, P.J., and Sullivan, J., concur.
Opinion:
Thomas P. Dunn ("Dunn") appeals from the trial court's judgment
granting Enterprise Rent-A-Car Company's ("Enterprise") motions for
directed verdict on Dunn's claim that he was wrongfully discharged for refusing
to violate the law or a clear mandate of public policy, and on his claim that he
was wrongfully discharged in violation of public policy for reporting conduct by
Enterprise that he reasonably believed violated federal securities laws. Dunn
also appeals from the trial court's judgment granting Enterprise's motion for
judgment notwithstanding the verdict or in the alternative, for a new trial,
after the jury returned a verdict of $4,000,000 in favor of Dunn on his claim
that he was wrongfully discharged in violation of public policy for reporting
Enterprise's illegal business practices in Missouri and other states. We reverse
and remand in part, and affirm in part.
In reviewing a trial court's judgment granting a motion for directed verdict, we
must determine whether the plaintiff made a submissible case, i.e., whether the
plaintiff introduced substantial evidence at trial that tends to prove the
essential facts for his or her recovery. Wright v. Over-the-Road and City
Transfer Drivers, Helpers, Dockmen and Warehousemen , 945 S.W.2d 481, 489
(Mo. App. W.D. 1997). We view all the evidence in the light most favorable to
the plaintiff, giving him or her the benefit of all reasonable inferences, and
disregarding the defendant's evidence except to the extent that it aids the
plaintiff's case. Id. "'There is a presumption in favor of reversing
a trial court's grant of a motion for directed verdict unless, upon
consideration of the facts most favorable to the plaintiff, 'those facts are so
strongly against the plaintiff as to leave no room for reasonable minds to
differ as to a result.'" Id. (quoting Friend v. Holman , 888
S.W.2d 369, 371 (Mo. App. W.D. 1994)).
Viewing the evidence in the light most favorable to Dunn, we find as follows:
Dunn began working for Enterprise in 1986 as an accountant. In early 1993, Dunn
became Enterprise's corporate comptroller and an officer of the company. In
1994, Dunn earned Vice-President officer level status as corporate comptroller,
where he remained until his termination on January 4, 2001. During the time Dunn
was employed by Enterprise, he always received positive performance reviews.
Dunn testified at trial that as the company's comptroller, he certified each
year that the company's financial records were prepared in accordance with
generally accepted accounting principles ("GAAP"). It would have also
been Dunn's responsibility as corporate comptroller to certify that the
company's financial statements were prepared in accordance with GAAP for an
initial public offering ("IPO"). Dunn reported to John O'Connell
("O'Connell"), Enterprise's Chief Financial Officer, as corporate
comptroller. O'Connell reported to Enterprise's President and Chief Executive
Officer, Andy Taylor.
Enterprise is a privately held company and the majority of the company is owned
by the Taylor family. In May 1998, O'Connell directed Dunn to begin
investigating issues to enable Enterprise to prepare for an IPO. Dunn testified
that Enterprise's senior management received high cash compensation and the
company could not go public with such high levels of cash compensation. Dunn
worked on the issue of executive compensation for an IPO for over a year. Dunn
recommended that Enterprise use stock options as a substitute for cash to
address the compensation issue, which the company began doing in 1999.
In preparation for the IPO, Dunn began to take a closer look at Enterprise's
financial statements and business practices. Some of these practices included
the imposition of a surcharge on daily rental customers, billing customers for
damages to rental vehicles and selectively licensing its vehicles in certain
states. Dunn testified that he spoke to upper management about concerns he had
relating to these practices, but it was explained to him that Enterprise did not
wish to make changes.
Another issue of concern in preparation for the IPO was the rate of depreciation
Enterprise used on its vehicles. Dunn testified Enterprise purchased its
vehicles and depreciated them at the rate of 2% per month. He also testified,
however, that this depreciation rate overstated the real depreciation of
Enterprise's rental vehicles and while this was considered acceptable for a
privately held company, a depreciation rate of 2% for a publicly held company
was a violation of GAAP. Dunn testified that if Enterprise were to go public
with the IPO, GAAP would require that Enterprise lower its depreciation rate to
no more than 1.5% per month.
In June 1999, Andy Taylor invited Dunn to a company strategic planning meeting
where the company's investment banker gave a presentation suggesting that if the
company went public, it would have to reduce its depreciation rate from 2% to
1.5%. Dunn testified that Jack Taylor, Enterprise's founder, was openly opposed
to this suggestion. Shortly after this meeting, Dunn approached O'Connell and
told him he agreed with the investment banker that Enterprise's depreciation
rate would have to be decreased to 1.5% if they went public. He also told
O'Connell the U.S. Securities and Exchange Commission ("SEC") would
likely require Enterprise to report its retail car sales as a gross revenue
figure and as a separate line of business for SEC purposes. O'Connell told him
that the Taylors were not going to lower the company's depreciation rate. Dunn
subsequently received a warning at work and was placed on probation until
November 1999. Dunn also testified that after completing this probationary
period, Andy Taylor told O'Connell that Dunn could stay with Enterprise "as
long as [he] behaved."
During this same time period, Dunn was assigned responsibilities relating to the
IPO, including whether the company would have to "gross up" its retail
car sales operations and whether it would have to do "segment
reporting." As a private company, Enterprise's financial statements
disclosed only the net revenues generated from retail car sales, and not the
gross revenues generated from those sales. This permitted Enterprise the
potential to reflect a higher level of profit on its statements. As Dunn
explained, by grossing up Enterprise's retail car sales operations, Enterprise
would have to show the revenue generated from such sales on the revenue portion
of the income statement, and show the cost of sales for that revenue item in the
cost of sale section of the statement. Therefore, all the revenues and costs of
sale would be presented in the statement. In addition, as a private company,
Enterprise's financial statements did not separately set out its financials for
its three lines of business: car sales, leasing and daily rentals. Dunn told
O'Connell he believed Enterprise would be required to gross up retail car sales
and do segment reporting in connection with the IPO. O'Connell told Dunn that
senior management did not want to do this. Dunn was then assigned the
responsibility of researching and determining whether Enterprise could avoid
grossing up retail car sales and segment reporting, and whether it would have to
lower its depreciation rate to 1.5% for the IPO. Dunn reiterated to O'Connell on
several occasions that Enterprise's depreciation rate of 2% was unrealistic and
that 1.5% was the highest rate Enterprise could be able to use for the IPO.
In order for a company to offer stock to the public, it must file a Form S-1
with the SEC. With respect to the Form S-1, as corporate comptroller, Dunn
testified he was responsible for preparing Enterprise's financial statements in
accordance with GAAP. The financial statements would be provided to and audited
by Enterprise's auditor, Ernst & Young. During the audit process, Dunn and
other senior managers would be asked to sign a management representation letter,
certifying that the financial statements were prepared according to GAAP. Ernst
& Young would then issue an audit opinion letter attached to the Form S-1,
stating that the financial statements were prepared according to GAAP. Dunn
testified that Ernst & Young would depend and rely upon Enterprise's
representations in certifying to the SEC that Enterprise's financial statements
were prepared according to GAAP.
Enterprise established October 27, 2000 as the target date for filing the Form
S-1. Dunn and his staff prepared memoranda known as "White Papers"
setting forth his department's recommendations and conclusions regarding the IPO
accounting issues. Dunn concluded Enterprise would have to lower its
depreciation rate on daily rental vehicles to 1.5%. In subsequent documents,
Dunn continued to urge Enterprise to alter its accounting methods in the areas
of depreciation and segment accounting. Dunn subsequently learned the White
Papers were rewritten without his knowledge or approval and set forth different
accounting conclusions. In October 2000, Dunn learned Enterprise extended its
target date for filing the Form S-1 from October 27, 2000, to January or
February of 2001.
Shortly after this postponement, Dunn testified he was excluded from a
presentation O'Connell made to corporate officers on the issue of depreciation.
In November 2000, O'Connell issued a memorandum announcing Enterprise was
changing its depreciation rate from 2% to a flat rate of 1.7%, which Dunn
believed was not consistent with GAAP. In December 2000, O'Connell made a
presentation to Enterprise's Board of Directors regarding the IPO. O'Connell
told the Board that Enterprise was thinking of going forward with the IPO in the
Spring of 2001. On January 4, 2001, Dunn was terminated from his employment at
Enterprise. Dunn filed his petition for wrongful discharge in the Circuit Court
of St. Louis County on May 3, 2001.
This case went to trial on March 13, 2003. After Dunn rested his case,
Enterprise moved for a directed verdict with respect to Dunn's claims that he
was wrongfully terminated for refusing to commit an illegal act and for blowing
the whistle on Enterprise's alleged illegal conduct. The trial court initially
denied Enterprise's motions. Several days later, during Enterprise's
presentation of its case, Enterprise renewed its motions for directed verdict on
these claims. The trial court reversed its previous rulings and granted
Enterprise's motions for directed verdict. The case was then only submitted to
the jury on Dunn's whistleblowing claim regarding Enterprise's alleged illegal
business practices. The jury returned a verdict in favor of Dunn in the amount
of $4,000,000. Enterprise then filed its motion for JNOV and motion for new
trial. The trial court granted Enterprise's motion for JNOV and in the
alternative, motion for new trial. This appeal follows.
In his first point on appeal, Dunn argues the trial court erred in granting
Enterprise's motion for directed verdict on his claim that he was wrongfully
discharged in violation of public policy for refusing to perform an illegal act.
Dunn contends he presented sufficient evidence to make a submissible case that
he was wrongfully terminated because he refused to prepare financial statements
for Enterprise's proposed IPO that were not in accordance with GAAP, and which
he reasonably believed would violate SEC regulations.
Generally, an employee who does not have a contract which contains a statement
of duration is an employee at-will and may be discharged at any time, with or
without cause, and the employer will not be liable for wrongful discharge. Leuthans
v. Washington Univ. , 894 S.W.2d 169, 172 (Mo. banc 1995). However, Missouri
courts have recognized public policy exceptions to the employment at-will
doctrine in Boyle v. Vista Eyewear, Inc., 700 S.W.2d 859 (Mo. App. W.D.
1985). See Porter v. Reardon Mach. Co. , 962 S.W.2d 932, 936 (Mo. App.
W.D. 1998). The public policy exception to the at-will employment doctrine
"provides that an at-will employee who has been discharged by an employer
in violation of a clear mandate of public policy has a cause of action against
the employer for wrongful discharge." Boyle , 700 S.W.2d at 871.
Public policy "finds its sources in . . . the letter and purpose of a
constitutional, statutory or regulatory provision or scheme . . . ." Id.
An employee has a cause of action for wrongful discharge if he or she was
discharged for: "(1) refusing to perform an illegal act or an act contrary
to a strong mandate of public policy; (2) reporting wrongdoing or violations of
law or public policy by the employer or fellow employees to superiors or third
parties; (3) acting in a manner public policy would encourage . . . ; or (4)
filing a workers' compensation claim." Porter , 962 S.W.2d at
935-36. In order to make a submissible case for wrongful discharge based upon
the first public policy exception listed above, that the employee was discharged
for refusing to perform an illegal act or an act contrary to a strong mandate of
public policy, the plaintiff must demonstrate the "conduct required of him
by the employer would have amounted to a violation of a statute, constitutional
provision or regulation . . . , and also that his discharge was attributable to
a refusal to perform the unlawful act . . . ." Crockett v. Mid-America
Health Services , 780 S.W.2d 656, 658 (Mo. App. W.D. 1989).
In the case before us, we must determine whether Dunn made a submissible case on
his claim that he was wrongfully discharged in violation of public policy for
refusing to perform an illegal act or an act contrary to a clear mandate of
public policy. Enterprise argues it violated no law and did not request Dunn to
violate any law, and therefore Dunn failed to make a submissible case on this
cause of action.
Dunn relies upon SEC Regulation S-X, 17 C.F.R. Part 210, which sets forth the
form, content of, and requirements for financial statements required to be filed
with the SEC pursuant to the Securities Act of 1933, 15 U.S.C. section 77a et
seq. , and the Securities Exchange Act of 1934, 15 U.S.C. section 78a et
seq. , to support his claim that he refused to violate the law or a clear
mandate of public policy. The trial court's judgment granting Enterprise's
motion for directed verdict on Dunn's claim that he was discharged for refusing
to violate the law was based upon its belief that any action Dunn refused to
perform could not have violated any law. We find the trial court's judgment in
this respect erroneous.
Before a private company can offer securities for sale on a public stock
exchange, it must file certain documents with the SEC, including the Form S-1
and financial statements that have been prepared in accordance with SEC
regulations. See 17 C.F.R. Part 229 (Regulation S-K); 17 C.F.R section
239.11 (Form S-1). Regulation S-X requires that financial statements be prepared
in accordance with GAAP, and statements not prepared in accordance with GAAP
"will be presumed to be misleading or inaccurate . . . ." 17 C.F.R.
section 210.4-01(a)(1). As Enterprise's corporate comptroller and chief
accountant, Dunn testified he was responsible for preparing its financial
statements, which would have included the financial statements attached to the
Form S-1. Dunn presented evidence at trial that the accounting methods
Enterprise directed him to use in financial statements related to its IPO were
not in accordance with GAAP. Dunn also presented evidence at trial to establish
that he refused to comply with Enterprise's instructions to use improper
accounting methods to prepare its financial statements, and that he was
terminated as a result of this refusal.
Although the actions Dunn was directed to perform did not ultimately violate the
law because Enterprise postponed its IPO, we believe Dunn should still be
protected by the public policy exceptions to the employment at-will doctrine for
his refusal to perform those actions. While no Missouri case has directly
addressed this issue and set of factual circumstances, the Illinois Court of
Appeals in Johnson v. World Color Press, Inc. , 498 N.E.2d 575 (Ill. App.
Ct. 1986), has, and we find its analysis and holding instructive here.
In Johnson , the plaintiff was the senior vice-president and chief
financial officer of a privately owned subsidiary of a publicly-traded company. Id.
at 576. He was terminated by the company and subsequently filed a petition for
retaliatory discharge alleging he was terminated due to his opposition to
certain accounting practices of the company which he believed violated federal
securities laws. Id. Specifically, the plaintiff alleged certain company
accounting practices did not conform with GAAP and their effect was to overstate
the income of the company and to inflate the company's asset valuation. Id.
at 577. The plaintiff specifically relied on Regulation S-X. Id. at 580.
The Illinois court acknowledged the tort of retaliatory discharge as an
exception to the general at-will employment doctrine and that a cause of action
for retaliatory discharge may be brought by a plaintiff when he or she is
terminated "in violation of a clearly mandated public policy." Id.
at 576. The court concluded that this mandate could be national in its scope and
the Securities Act of 1933 and the Securities Exchange Act of 1934
"establish a clearly mandated public policy." Id. at 576-77.
The court reasoned, "[t]he Securities Act of 1933 . . . was designed to
provide investors with full disclosure of material information concerning public
offerings of securities in commerce, to protect investors against fraud, and to
promote ethical standards of honesty and fair dealing." Id. at 577.
It also found the Securities Exchange Act of 1934 "was intended principally
to protect investors against manipulation of stock prices through regulation of
transactions upon securities exchanges and in over-the-counter markets, and to
impose regular reporting requirements on companies whose stock is listed on
national securities exchanges." Id. The court noted, "public
policy favors full disclosure, truthfulness and accuracy in the financial
reports made by businesses to the government and to the public, and that an
employee who voices objection to practices which he reasonably believes violate
this policy should be protected from being discharged as a result of such
objection." Id. at 578. The court ultimately reversed and remanded
the trial court's judgment dismissing the plaintiff's petition for retaliatory
discharge because the plaintiff sufficiently alleged he was discharged in
retaliation for his actions, and his termination was in violation of a clearly
mandated public policy. Id. at 580.
We agree with the court's reasoning in Johnson that the Securities Act of
1933 and the Securities Exchange Act of 1934 "establish a clearly mandated
public policy" requiring companies who seek to offer securities on a public
stock exchange to provide full financial disclosures to inform and protect
future investors. See id. at 576-78. Similarly, we conclude that
an employee who is terminated from his or her employment for objecting to
practices he or she reasonably believes violate this policy, such as Dunn in our
case, should be protected from termination. See id. at 578.
The defendants in the Johnson case proceeded to make several arguments,
similar to Enterprise in our case, contending that the plaintiff did not make a
submissible case for retaliatory discharge. We will address two of these
arguments below as they are instructive to our analysis and holding.
First, the defendants in Johnson argued the plaintiff failed to plead
facts that showed an actual violation of federal securities laws. Id. The
court held "a plaintiff attempting to state a cause of action for
retaliatory discharge after being fired for reporting possible illegal
activity need not allege or prove conclusively the law has been violated
in order to state a cause of action." Id. (emphasis added). The
court further noted that an employee who has a reasonable belief that illegal
activity is taking place should be able to report such belief to his or her
superiors without fear of termination. Id.
As in Johnson , under the circumstances of this case, where Dunn is
alleging a cause of action for wrongful discharge after being terminated for
refusing to perform what he reasonably believed to be illegal conduct or conduct
against a clear mandate of public policy, we find it was not necessary for him
to "allege or prove conclusively the law has been violated in order to
state a cause of action." Id. This is particularly true where Dunn's
refusal may have been one reason, if not one of the primary reasons, that
Enterprise decided to extend the deadline for the IPO.
Additionally, Dunn testified the reason he refused to prepare the financial
statements contrary to GAAP was because he was attempting to stop Enterprise's
efforts to submit unlawful documents with respect to its IPO. Because he may
have been instrumental in helping to prevent what he reasonably believed to be
an unlawful act, he should be protected by law for his efforts. It is illogical
under this set of circumstances that the public policy exception to the
employment at-will doctrine would fail to protect Dunn from termination of his
employment because Enterprise ultimately did not complete the alleged unlawful
act.
The defendants in Johnson also argued that federal securities laws do not
apply to the company because it is not a publicly-owned company. Id. at
579. The court found, however, that it was reasonable for the plaintiff to
believe that improper accounting entries in the financial statements of the
privately-held company could be incorporated into and affect the financial
statements of the publicly held parent company and could possibly mislead
investors and place the parent company in violation of the securities laws. Id.
The court held the "plaintiff should not be charged with knowing
conclusively whether the securities laws have been violated, but rather an
allegation that he reasonably believed the complained of practices might be
illegal was sufficient." Id.
We agree with the court's reasoning in Johnson and find this argument,
also made by Enterprise, equally unpersuasive. Similar to the plaintiff in Johnson
, Dunn reasonably believed, based upon the evidence presented, that financial
statements prepared by him, using improper accounting methods would be
incorporated into the registration statement that Enterprise was planning to
file with the SEC in connection with its IPO. At the time Dunn refused to
prepare the financial statements, Enterprise had a deadline for filing its
registration statement and was taking the necessary steps to meet this deadline.
Dunn should not be denied protection under the public policy exception to the
employment at-will doctrine for refusing to perform an illegal act or act
contrary to a clear mandate of public policy simply because Enterprise decided
to postpone the IPO and not complete its alleged unlawful act.
Viewing the evidence in the light most favorable to Dunn, we find Dunn presented
sufficient evidence at trial that the conduct he was asked to engage in with
respect to Enterprise's financial statements in preparation for the IPO would
have been in violation of federal securities regulations and a clear mandate of
public policy as enunciated in those regulations. Dunn also presented sufficient
evidence at trial that linked his termination from Enterprise with his failure
to perform this unlawful conduct. Because we find Dunn made a submissible case
on this cause of action, the trial court erred in granting a directed verdict on
this claim. We reverse and remand this point for further proceedings consistent
with this opinion. Point I is granted.
In his second point on appeal, Dunn argues the trial court erred in granting
Enterprise's motion for directed verdict on his claim that he was wrongfully
discharged in violation of public policy for blowing the whistle on Enterprise
for attempting to use accounting methods in connection with its proposed IPO
that were not in accordance with GAAP. Dunn argues public policy encourages
employees to report suspected illegal conduct before it occurs, and Dunn
reasonably believed that Enterprise would have violated federal laws and
regulations by submitting financial statements to the SEC that were prepared
using improper accounting methods.
As already discussed above in our analysis of Dunn's first point on appeal, we
review the trial court's grant of Enterprise's motion for directed verdict to
determine whether Dunn made a submissible case. See Wright, 945 S.W.2d at
489.
In this point, Dunn claims he made a submissible case under the second public
policy exception to the employment at-will doctrine, which requires the
employee, in order to have a cause of action under this exception, to report
"serious misconduct that constitutes violations of the law and of such well
established and clearly mandated public policy . . . ." Boyle , 700
S.W.2d at 878. The trial court appears to have granted Enterprise's motion for
directed verdict on this claim based on its belief that the whistleblower
exception to the employment at-will doctrine requires proof that the violation
of law or clear mandate of public policy had already been committed at the time
the employee reports the conduct. We agree with Dunn that this narrow
interpretation of the law is inconsistent with the purpose of public policy.
The essential issue before us here is whether an employee can make a submissible
case for wrongful discharge on the whistleblower exception to the employment
at-will doctrine when he or she is terminated for reporting in good faith that
his or her employer is about to violate the law. We have found no Missouri
caselaw directly on point. Public policy does, however, encourage employees to
report suspected wrongdoing by co-workers. See Brenneke v.
Department of Missouri , 984 S.W.2d 134, 138-39 (Mo. App. W.D. 1998); Faust
v. Ryder Commercial Leasing & Serv. , 954 S.W.2d 383, 390-91 (Mo. App.
W.D. 1997). Public policy would certainly not be served by requiring an employee
to wait until his or her employer completes the unlawful act before reporting it
and before being protected by the whistleblower exception to the employment
at-will doctrine.
Here, merely because Enterprise decided to postpone its IPO should not diminish
Dunn's claim that he was terminated from his employment for reporting
Enterprise's accounting practices that were not in compliance with federal
securities regulations. Even though Enterprise's actions ultimately did not
violate federal securities regulations because it did not file the necessary IPO
documents with the SEC, Dunn could still demonstrate at trial that he had a
reasonable belief Enterprise would have violated securities laws by filing
financial statements with the SEC that were not prepared according to GAAP, and
that Enterprise intended to do so promptly. See Johnson , 498
N.E.2d at 579 (holding the "plaintiff should not be charged with knowing
conclusively whether the securities laws have been violated, but rather an
allegation that he reasonably believed the complained of practices might be
illegal was sufficient."); McQ uary v. Bel Air Convalescent Home, Inc.
, 684 P.2d 21, 24 (Or. Ct. App. 1984) (finding "the social harm from
reporting in good faith a complaint that may turn out, after investigation, to
be unfounded is potentially far less than the harm of not reporting a
well-founded complaint for fear of the consequences.").
Viewing the evidence in the light most favorable to Dunn, we find he presented
sufficient evidence at trial to make a submissible case on his claim that
Enterprise terminated his employment for reporting conduct by it that he
reasonably believed would have violated federal securities regulations. We
reverse and remand the trial court's judgment granting Enterprise's motion for a
directed verdict on this claim for further proceedings consistent with this
opinion. Point II is granted.
In his third point on appeal, Dunn argues the trial court erred in granting
Enterprise's motion for judgment notwithstanding the verdict ("JNOV")
on his claim that he was discharged in violation of public policy for blowing
the whistle on Enterprise for engaging in illegal business practices.
Specifically, Dunn argues he was not required to prove the conduct he reported
violated any statute, regulation or constitutional provision, and he proved that
he reported suspected illegal activity to the appropriate internal authorities
at Enterprise.
Our review of the trial court's judgment granting a motion for JNOV is
essentially the same as our standard of review of the trial court's granting of
a motion for directed verdict. Giddens v. Kansas City S. Ry. Co., 29
S.W.3d 813, 818 (Mo. banc 2000), cert. denied , 532 U.S. 990
(2001). We review the trial court's grant of a motion for JNOV to determine
whether the plaintiff made a submissible case. Leo Journagan Const. Co., Inc.
v. City Utilities of Springfield, Mo. , 116 S.W.3d 711, 723 (Mo. App. S.D.
2003). In determining whether a submissible case was made, we view the evidence
in the light most favorable to Dunn, giving him the benefit of all reasonable
inferences that can be drawn from the evidence, disregarding all unfavorable
evidence and inferences. Id. "There is a presumption that favors
reversal of a JNOV granted to a defendant, unless the favorable evidence and
inferences are so strongly against the plaintiff as to leave no room for
reasonable minds to differ as to the result." Id. We will affirm the
trial court's judgment if it is supported by any of the reasons set forth in
defendant's motion for JNOV. Faust , 954 S.W.2d at 388.
In this point, Dunn is again claiming he made a submissible case under the
second public policy exception to the employment at-will doctrine, for reporting
"serious misconduct that constitutes violations of the law and of such well
established and clearly mandated public policy . . . ." Boyle, 700
S.W.2d at 878.
In order for Dunn to make a submissible case on his claim of wrongful discharge
for reporting Enterprise's alleged unlawful conduct, Dunn was required to
identify a law or clear mandate of public policy that he believed Enterprise
violated or would violate with respect to its automobile licensing, sales tax
and surcharge practices. Id. While we agree with Dunn that in order to
make a submissible case on this claim he was not required to prove an actual
violation of law, he was still required to cite some legal authority for his
belief that such conduct by Enterprise was unlawful or contrary to a clear
mandate of public policy. Unlike the claims Dunn asserts in his first and second
points on appeal, where he relies on federal securities regulations, the record
before us reflects that Dunn failed to cite any such law or clear mandate of
public policy with respect to this claim. As such, we agree with the trial
court's judgment that Dunn failed to make a submissible case on this cause of
action and affirm its grant of Enterprise's motion for JNOV. Point III is
denied.
In his fourth and final point on appeal, Dunn argues the trial court erred in
alternatively granting Enterprise's motion for new trial on his claim that he
was wrongfully discharged in violation of public policy for blowing the whistle
on Enterprise for engaging in illegal business practices. In its judgment
granting Enterprise's motion for JNOV on this claim, the trial court granted in
the alternative Enterprise's motion for new trial if on appeal, we reversed its
grant of the JNOV. Because we are affirming the trial court's grant of JNOV on
this claim as discussed in our analysis above of Dunn's third point, it is no
longer necessary for us to address this point on appeal. Point IV is denied.
REVERSED AND REMANDED IN PART; AFFIRMED IN PART.
Separate Opinion:
None
This slip opinion is subject to revision and may not
reflect the final opinion adopted by the Court.
Home | Free Trial | Products & Prices
| Feeds
| Caselaw Database
| Sample
EEOC
| NLRB
| Nat'l Arbitration Ctr
| Supreme Court
| Articles
| Lawyers
Employment Law
Blog | Arbitration Blog
| Employment Law 101
Employment Law Memo | NLRB Law Memo | Arbitration Law Memo
Editor: Ross
Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright
LawMemo,
Inc.