Wednesday, October 26, 2016

7th Circuit: At-Will Employee Cannot Prevail Against Coworkers Who Helped Get Him Fired

I get many, many, many calls from people who have been terminated from their job and claim that one or more of their coworkers lied about them or something they allegedly did and wonder about the legalities of such conduct.  I often have to explain that such conduct is often not subject to a claim and that even if they were, they are rare for practical reasons such as time and expense as these types of claims are what are known as "common law" claims that are pursued directly in either state or federal court.  While this sounds very discouraging, the Court of Appeals for the Seventh Circuit recently explained in a decision why at-will employment is the 'way it is.'  Indeed, the vast majority of employees in the United States are at-will.

At issue in Wesbrook v. Ulrich, (Oct. 20, 2016) was the scope of remedies a fired at-will employee might have against individual supervisors and co-workers.  The plaintiff, Dr. Stephen D. Westbrook, Ph.D. ("Westbrook"), was the former deputy director of the Marshfield Clinic, a prominent not-for-profit health care system headquartered in Marshfield, Wisconsin.  Westbrook's immediate supervisor was Dr. Humberto Vidaillet ("Vidaillet") and the defendants, Dr. Karl J. Ulrich, M.D. ("Ulrich") and Edward A. Belongia, M.D. ("Belongia") served as the president and chief executive officer and senior research scientist and research center director, respectively.

While Westboork had a good working relationship with his immediate supervisor Vidaillet, it appears his working relationship with most others, including the defendants, was "marked with internal conflict."  Westbrook's behavior as deputy director apparently led to employee complaints and departures which ultimately led to Westbrook being terminated in 2010 (though reinstated), and then placed on a performance improvement plan and then terminated again on January 2, 2012.

In 2013, Westbrook filed suit accusing Ulrich, Belongia, and two other former colleagues of tortiously interfering with his employment based on four statements that Ulrich published to the Clinic's board of directors (Westbrook's complaint contained many more allegations but by summary judgment, those were narrowed down to the four statements).  The district court allowed Westbrook's claims against Ulrich and Belongia to proceed to discovery and then they later moved for summary judgment, which was granted by the district court.  In granting the defendants' motion for summary judgment, the court acknowledged that Westbrook's "evidence of internal strife within the Clinic is strong, especially as it concerns Ulrich's possible motives," but the court found undisputed facts that showed that each of the challenged statements were true or substantially true.  Ulrich's motives where therefore immaterial.

                                               The 7th Circuit's Decision

Under Wisconsin law, a claim for tortious interference with a contract requires proof of 5 elements:

1)  the plaintiff had a contract or a prospective contractual relationship with a third party;
2)  the defendant interfered with that relationship;
3)  the interference by the defendant was intentional;
4)  there was a causal connection between the interference and damages; and
5)  the defendant was not justified or privileged to interfere.

The parties disputed the 5th element: whether the defendants' challenged statements were privileged.  Wisconsin law recognizes an important exception to the ordinary multi-factor inquiry about privilege.  If a claim for interference is based on statements that are true, the claim must fail as a matter of law, at which point, motive is immaterial.  The Court also noted that a statement may be "substantially true"--and thus privileged--even if some fine splitting of semantic hairs might leave room to argue about its literal truth.

The Court ultimately held that two of the four statements Westbrook narrowed his argument down to involved "semantic hairsplitting," one misconstrued what was actually said about him, and the fourth was unsupported by the record and immaterial. Thus, summary judgment was upheld.

                                             Preston v. Wisconsin Health Fund

Westbrook also urged the 7th Circuit to overturn precedent in Preston v. Wisconsin Health Fund, 397 F.3d 539 (7th Cir. 2005) whereby they addressed Wisconsin's law of tortious interference in the context of employment.

In affirming summary judgment in Preston, the 7th Circuit explained that an employee who alleges tortious interference by a co-worker or supervisor must prove "both that the employer did not benefit from the defendant's act and that the act was independently tortious, for example as fraud or defamation."  Westbrook challenged this two-prong test arguing that Preston improperly modified the elements of a tortious interference claim under Wisconsin law.

The 7th Circuit declined to overturn Preston for two reasons:  1)  the Wisconsin judiciary has not given them any indication that it disagrees with Preston as 12 years has passed and no Wisconsin court has disapproved or even distinguished it.  2)  they believe Preston was decided correctly:
If Preston had allowed the plaintiff's tortious interference claims to proceed to trial, it would have opened a rather broad avenue under tort law to bypass well-established limits on contract remedies for at-will employees.  Fired at-will employees who have no remedy under contract law would have incentive to sue not their employers for breach of contract but their former co-workers and supervisors under tort.  Under Westbrook's theory, a fired at-will employee would be entitled to a jury trial if there were evidence of ill will or malice on the part of a former co-worker or supervisor who participated in a firing decision.  Such evidence would not be rare.  Such a new avenue under tort law would likely "transform employment at will into employment terminable only for cause,"  Preston, 397 F.3d at 543, as the threat of personal liability in a lawsuit could easily discourage supervisors from taking adverse employment actions.
Thus, if Preston were overruled, the 7th Circuit foresaw a "floodgate of litigation" for at-will employees who are fired because of things their co-workers or supervisors communicated leading to their termination.  The 7th Circuit also opined that a change to the at-will doctrine is a matter of state law to be decided by state legislatures and courts.

The case is Wesbrook v. Ulrich, No. 15-3870 (Oct. 20, 2016).

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