IN THE SUPREME COURT OF TENNESSEE
AT JACKSON
April 1, 2002 Session
JULIA BETH CREWS v. BUCKMAN LABORATORIES
INTERNATIONAL, INC.
Appeal by Permission from the Court of Appeals, Western Section
Circuit Court for Shelby County
No. CT-001642-00 Hon. D’Army Bailey, Judge
No. W2000-01834-SC-R11-CV - Filed May 24, 2002
The sole issue in this case is whether an in-house lawyer can bring a common-law claim for
retaliatory discharge when she was terminated for reporting that her employer’s general counsel was
engaged in the unauthorized practice of law. The trial court dismissed the plaintiff’s complaint for
failure to state a claim, and the dismissal was affirmed by the Court of Appeals. We hold that in-
house counsel may bring a common-law action for retaliatory discharge resulting from counsel’s
compliance with a provision of the Code of Professional Responsibility that represents a clear and
definitive statement of public policy. Accordingly, the judgment of the Court of Appeals is reversed,
and this case is remanded for further proceedings.
Tenn. R. App. P. 11; Judgment of the Court of Appeals Reversed; Case Remanded
WILLIAM M. BARKER, J., delivered the opinion of the court, in which FRANK F. DROWOTA , III, C.J.,
and E. RILEY ANDERSON, ADOLPHO A. BIRCH, JR., and JANICE M. HOLDER, JJ., joined.
Donald A. Donati and William B. Ryan, Memphis, Tennessee, for the appellant, Julia Beth Crews.
Frederick J. Lewis, Thomas L. Henderson, and Whitney K. Fogerty, for the appellee, Buckman
Laboratories International, Inc.
David A. Burkhalter, II and Ronald A. Rayson, Knoxville, Tennessee, and R. Sadler Bailey,
Memphis, Tennessee, for Amicus Curiae, Tennessee Trial Lawyers Association.
OPINION
FACTUAL BACKGROUND
We granted permission to appeal to review whether the trial court should have granted a
motion to dismiss a complaint under Tennessee Rule of Civil Procedure 12.02(6) for the failure to
state a common-law claim for retaliatory discharge. The plaintiff, Ms. Julia Beth Crews, was
allegedly discharged from her position as in-house counsel for defendant Buckman Laboratories
International, Inc. (“Buckman”) for reporting that Buckman’s general counsel was engaged in the
unauthorized practice of law. Because a Rule 12.02(6) motion to dismiss admits the truth of the
complaint’s relevant and material averments, see, e.g., Givens v. Mullikin, __ S.W.3d __, __ (Tenn.
2002), we “must construe the complaint in favor of the plaintiff, accept the allegations of fact as true,
and deny the motion unless it appears that the plaintiff can establish no facts supporting the claim
that would warrant relief,” see, e.g., Doe v. Sundquist, 2 S.W.3d 919, 922 (Tenn. 1999).
According to the allegations of the complaint, the plaintiff was hired by Buckman in 1995
as associate general counsel in its legal department, and while working in this capacity, she reported
to Buckman’s General Counsel, Ms. Katherine Buckman Davis. Sometime in 1996, the plaintiff
discovered that Ms. Davis, who “held herself out as a licensed attorney,” did not possess a license
to practice law in the State of Tennessee. The plaintiff became concerned that Ms. Davis was
engaged in the unauthorized practice of law, and she discussed her suspicions with a member of
Buckman’s Board of Directors.1
Ms. Davis eventually took and passed the bar exam, but the plaintiff learned some time later
that Ms. Davis had yet to complete the requirements for licensure by taking the Muti-State
Professional Responsibility Examination. The plaintiff informed Buckman officials of the
continuing problem, and she advised them on how best to proceed. On June 17, 1999, Ms. Davis
allegedly entered the plaintiff’s office, yelling that she was frustrated with the plaintiff’s actions.
The plaintiff responded that she also was frustrated with the situation, to which Ms. Davis remarked
that “maybe [the plaintiff] should just leave.” The plaintiff declined to leave, and she later received
a below-average raise for the first time during her tenure at Buckman, despite having been told
earlier by Ms. Davis that she was “doing a good job in position of Associate Counsel.”
In August, the plaintiff sought legal advice concerning her ethical obligations, and based on
this advice, she informed the Board of Law Examiners of Ms. Davis’s situation. The Board later
issued a show-cause order asking Ms. Davis to clarify certain facts in her bar application. Upon
receipt of the order, Ms. Davis demanded to know from the plaintiff what information the Board
possessed in its application file. The plaintiff stated that she knew nothing of the file, and she told
Ms. Davis that her actions were threatening and inappropriate. Ms. Davis then apologized, but she
immediately proceeded to schedule the plaintiff’s performance review.
The plaintiff then informed Mr. Buckman and the Vice-President of Human Resources that
“the situation [had become] untenable and that she could not function under those circumstances.”
They agreed that the plaintiff should be immediately transferred to a position away from Ms. Davis’s
1
This Director then requested an opinion from the Board of Professional Responsibility based on a
hypothetical scenario mirroring the situation at Buckman. The Board replied that a person without a Tennessee law
license may not be employed as general counsel in this state and that the failure to have such a license constitutes the
unauthorized practice of law.
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supervision and that she should eventually leave the company altogether within six to nine months.
However, while the plaintiff was “in the midst of working out the new arrangement,” Ms. Davis
informed her that her services would no longer be needed. More specifically, Ms. Davis told her that
“since [the plaintiff] had given her notice of resignation, it was logically best to end the Plaintiff’s
association with Buckman.” Although the plaintiff denied that she had resigned, her computer was
confiscated; she was placed on personal leave; and she was given a notice of termination.
On April 10, 2000, the plaintiff filed suit against Buckman in the Shelby County Circuit
Court, alleging a common-law action for retaliatory discharge in violation of public policy. Seeking
a declaratory judgment and damages, the plaintiff alleged that
[p]rior to Plaintiff’s reporting of Davis’[s] unauthorized conduct in May 1999,
Plaintiff was advised by Davis that she was doing a good job in position of Associate
Counsel. After learning that the Defendant [Buckman] faced possible liability, Davis
began a campaign of retaliation against Plaintiff. This retaliation was based on
Plaintiff’s reporting of Davis’[s] unauthorized conduct to Buckman officials and the
Board of Law Examiners. The retaliation culminated in Plaintiff’s termination from
Buckman. . . . Plaintiff’s discharge constitutes blatant retaliation for complying with
her ethical and statutory duties.
Buckman then moved to dismiss the complaint under Rule of Civil Procedure 12.02(6) for failure
to state a claim upon which relief may be granted. On June 11, 2000, the trial court granted
Buckman’s motion, though its specific reasoning is not contained in the record before this Court.
The plaintiff then appealed to the Court of Appeals, which affirmed the dismissal of the
complaint. The intermediate court listed three primary reasons why in-house counsel could not state
a claim for retaliatory discharge in Tennessee: (1) the important public policy of regulating the
practice of law “is adequately served by the existing protections of Tennessee’s statutes and the Code
of Professional Responsibility,” and that in-house counsel does not need an action for retaliatory
discharge to comply with the Disciplinary Rules; (2) recognition of such an action would “seriously
impair the special relationship of trust between an attorney and his or her client” and “might have
the effect of chilling the attorney-client relationship”; and (3) allowing damages as a remedy for
retaliatory discharge would have “the effect of shifting to the employer the costs of in-house
counsel’s adherence to the Disciplinary Rules . . . .”
We then granted the plaintiff permission to appeal to decide whether in-house counsel may
assert a common-law cause of action for retaliatory discharge when counsel is discharged in
retaliation for reporting incidents of unauthorized practice of law. We hold that in-house counsel
may indeed bring a common-law action of retaliatory discharge resulting from counsel’s compliance
with an ethical duty that represents a clear and definitive statement of public policy. Accordingly,
the judgment of the Court of Appeals is reversed, and this case is remanded to the trial court for
further proceedings.
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STANDARD OF APPELLATE REVIEW
When reviewing a dismissal of a complaint under Rule 12.02(6), this Court must take the
factual allegations contained in the complaint as true and review the trial court’s legal conclusions
de novo without giving any presumption of correctness to those conclusions. See, e.g., Doe v.
Sundquist, 2 S.W.3d 919, 922 (Tenn. 1999). Moreover, because a motion to dismiss a complaint
under Tennessee Rule of Civil Procedure 12.02(6) challenges only the legal sufficiency of the
complaint, courts should not dismiss a complaint for failure to state a claim based upon the perceived
strength of a plaintiff’s proof. See, e.g., Givens v. Mullikin, __ S.W.3d __, __ (Tenn. 2002) (citing
White v. Revco Discount Drug Centers, Inc., 33 S.W.3d 713, 718 (Tenn. 2000)). Instead, courts
should grant a motion to dismiss only when it appears that the plaintiff can prove no set of facts in
support of the claim that would entitle the plaintiff to relief. See, e.g., Trau-Med of America v.
Allstate Ins. Co., __ S.W.3d __, __ (Tenn. 2002).
IN-HOUSE COUNSEL AND THE TORT OF
RETALIATORY DISCHARGE
Tennessee has long adhered to the employment-at-will doctrine in employment relationships
not established or formalized by a contract for a definite term. See, e.g., Bennett v. Steiner-Liff Iron
& Metal Co., 826 S.W.2d 119, 121 (Tenn. 1992). Under this “employment at will” doctrine, both
the employer and the employee are generally permitted, with certain exceptions, to terminate the
employment relationship “at any time for good cause, bad cause, or no cause.” See Sullivan v.
Baptist Mem’l Hosp., 995 S.W.2d 569, 574 (Tenn. 1999). This relationship recognizes (1) that
employers should be free to make their own business judgments without undue court interference,
see Mason v. Seaton, 942 S.W.2d 470, 474 (Tenn. 1997), and (2) that employees may “refuse to
work for a [person] or company” and “may exercise [their rights] in the same way, to the same
extent, for the same cause or want of cause as the employer,” see Payne v. Western & Atl. R.R., 81
Tenn. (13 Lea) 507, 518-19 (1884), overruled on other grounds, Hutton v. Waters, 132 Tenn. 527,
544, 179 S.W. 134, 138 (1915). Indeed, this Court has noted that an employer’s “‘ability to make
and act upon independent assessments of an employee’s abilities and job performance as well as
business needs is essential to the free-enterprise system.’” Mason, 942 S.W.2d at 474 (quoting
Clifford v. Cactus Drilling Corp., 353 N.W.2d 469, 474 (Mich. 1984)).
However, an employer’s ability to discharge at-will employees was significantly tempered
by our recognition in Clanton v. Cain-Sloan Co., 677 S.W.2d 441 (Tenn. 1984), of a cause of action
for retaliatory discharge. Since that time, we have further recognized that an at-will employee
“generally may not be discharged for attempting to exercise a statutory or constitutional right, or for
any other reason which violates a clear public policy which is evidenced by an unambiguous
constitutional, statutory, or regulatory provision.” See Stein v. Davidson Hotel Co., 945 S.W.2d 714,
716-17 (Tenn. 1997). Therefore, in contrast to the purposes typically justifying the employment-at-
will doctrine, an action for retaliatory discharge recognizes “that, in limited circumstances, certain
well-defined, unambiguous principles of public policy confer upon employees implicit rights which
must not be circumscribed or chilled by the potential of termination.” Id.
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This Court has not previously addressed the issue of whether a lawyer may pursue a claim
of retaliatory discharge against a former employer. At least initially, we must recognize that this case
differs significantly from the usual retaliatory discharge case involving non-lawyer employees.
When the discharged employee served as in-house counsel, the issue demands an inquiry into the
corporation’s expectations as the lawyer’s sole employer and client, the lawyer’s ethical obligations
to the corporation, and the interest of the lawyer—in her character as an employee—in having
protections available to other employees seeking redress of legal harm. Therefore, because this issue
is one of first impression in this state, it is perhaps helpful to examine how other jurisdictions have
addressed it.
DECISIONS OF OTHER STATES RELATING TO DISCHARGE
IN VIOLATION OF PUBLIC POLICY
Several jurisdictions have grappled with how to balance the competing interests involved in
these types of cases. Although the rationales often differed, most of the earlier cases on this subject
held that a lawyer could not bring a retaliatory discharge action based upon the lawyer’s adherence
to his or her ethical duties. See, e.g., Willy v. Coastal Corp., 647 F. Supp. 116 (S.D. Tex. 1986);
McGonagle v. Union Fid. Corp., 556 A.2d 878 (Pa. Super. Ct. 1989); Herbster v. North Am. Co. for
Life & Health Ins., 501 N.E.2d 343 (Ill. App. Ct. 1986). This line of cases culminated in Balla v.
Gambro, Inc., 584 N.E.2d 104 (Ill. 1991), in which the Illinois Supreme Court reviewed the other
cases and set forth several rationales why in-house counsel should not be permitted to assert an
action for retaliatory discharge. These rationales included (1) that because “[i]n-house counsel do
not have a choice of whether to follow their ethical obligations as attorneys licensed to practice law,”
id. at 109, lawyers do not need an action for retaliatory discharge to encourage them to abide by their
ethical duties; and (2) that recognizing such an action would affect the foundation of trust in
attorney-client relationships, which would then make employers “naturally hesitant to rely upon in-
house counsel for advice regarding [the employer’s] potentially questionable conduct.” Id. at 110.
In more recent years, however, other states have permitted a lawyer, under limited
circumstances, to pursue a claim of retaliatory discharge based upon termination in violation of
public policy. The principal case permitting such an action is General Dynamics Corp. v. Rose, 876
P.2d 487 (Cal. 1994), in which the California Supreme Court rejected the views held by Balla and
others and established an analytical framework permitting a lawyer to sue for retaliatory discharge.
According to this framework, a lawyer is generally permitted to assert a retaliatory discharge action
if the lawyer is discharged for following a mandatory ethical duty or engaging in conduct that would
give rise to an action by a non-lawyer employee. Id. at 502-03. However, the General Dynamics
Court cautioned that the lawyer bringing the action could not rely upon confidential information to
establish the claim and that any unsuccessful lawyer breaching his or her duty of confidentiality was
subject to disciplinary sanctions. Id. at 503.
Following California’s lead, the Supreme Judicial Court of Massachusetts has also permitted
in-house counsel to assert a limited retaliatory discharge action. In GTE Products Corp. v. Stewart,
653 N.E.2d 161 (Mass. 1995), the court questioned why the employee’s status as an attorney should
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preclude an action: “It thus seems bizarre that a lawyer employee, who has affirmative duties
concerning the administration of justice, should be denied redress for discharge resulting from trying
to carry out those very duties.” Id. at 166 (internal quotation marks and citation omitted). However,
while the Stewart Court permitted a limited retaliatory discharge action based upon a lawyer’s refusal
to violate “explicit and unequivocal statutory or ethical norms,” it also restricted the scope of such
an action to that in which “the claim can be proved without any violation of the attorney’s obligation
to respect client confidences and secrets.” Id. at 167.
Finally, and most recently, the Montana Supreme Court also held that in-house counsel
should be permitted to bring retaliatory discharge actions when necessary to protect public policy.
In Burkhart v. Semitool, Inc., 5 P.3d 1031 (Mont. 2000), the court discussed the rationales in favor
of adopting such an action and noted that while clients have a right to discharge counsel at any time
and for any reason, this right does not necessarily apply to in-house counsel. Instead, the court
reasoned that “by making his or her attorney an employee, [the employer] has avoided the traditional
attorney-client relationship and granted the attorney protections that do not apply to independent
contractors, but do apply to employees . . . .” Id. at 1039. Moreover, unlike the previous cases
recognizing such an action, the Burkhart Court permitted lawyers to disclose the employer’s
confidential information to the extent necessary to establish a retaliatory discharge claim. Id. at 1041
(relying upon Montana Rule of Professional Conduct 1.6(b)(2) adopted from the ABA’s Model
Rules of Professional Conduct).
REJECTION OF THE RATIONALES ADVANCED BY BALLA
AND OTHER CASES
Considering these two general approaches to retaliatory discharge actions based upon
termination in violation of public policy, we generally agree with the approaches taken by the courts
in General Dynamics, Stewart, and Burkhart. The very purpose of recognizing an employee’s action
for retaliatory discharge in violation of public policy is to encourage the employee to protect the
public interest, and it seems anomalous to protect only non-lawyer employees under these
circumstances. Indeed, as cases in similar contexts show, in-house counsel do not generally forfeit
employment protections provided to other employees merely because of their status or duties as a
lawyer.2
Moreover, we must reject the rationales typically set forth by Balla and the Court of Appeals
in this case to generally deny lawyers the ability to pursue retaliatory discharge actions. Balla’s
principal rationale was that recognition of a retaliatory discharge action was not necessary to protect
2
For example, courts have permitted in-house lawyers to sue for age and race discrimination in violation of
federal law, Stinneford v. Spiegel Inc., 845 F. Sup p. 12 43, 1 245 -47 (N .D. Ill. 19 94); Golightly-Howell v. Oil, Chem.
& Atomic Workers Int’l Union, 806 F. Supp. 921, 924 (D. Colo. 1992); to sue for protections unde r a state
“whistleblower” statute, Parker v. M & T Chems., Inc., 566 A.2d 21 5, 220 (N.J. Super. Ct. App. D iv. 1989); to sue for
breach of exp ress and imp lied em ploym ent contracts, Chyten v. Lawrence & H owell Invs., 46 Cal. Rptr. 2d 459, 464-65
(Cal. Ct. App. 199 3); Nordling v. Northern State Power Co., 478 N.W.2d 498, 502 (Minn. 1991); and to sue based on
implied covenants of good faith and fair dealing, Go lightly-Ho well, 806 F. Supp. at 924.
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the public interest so long as lawyers were required to follow a code of ethics. Indeed, relying on
Balla, the intermediate court in this case specifically concluded that statutory and ethical
proscriptions are sufficient to protect the public policy against the unauthorized practice of law and
that in-house counsel do not need incentives, by way of a cause of action for retaliatory discharge,
to comply with the Disciplinary Rules.
We respectfully disagree that the public interest is adequately served in this context without
permitting in-house counsel to sue for retaliatory discharge. It is true that counsel in this case was
under a mandatory duty to not aid a non-lawyer in the unauthorized practice of law, see Tenn. Sup.
Ct. R. 8, DR 3-101(A),3 and the intermediate court was also correct that lawyers do not have the
option of disregarding the commandments of the Disciplinary Rules. This is not to say, however,
that lawyers can never choose to violate mandatory ethical duties, as evidenced by the number of
sanctions, some more severe than others, imposed upon lawyers by this Court and the Board of
Professional Responsibility for such violations.
Ultimately, sole reliance on the mere presence of the ethical rules to protect important public
policies gives too little weight to the actual presence of economic pressures designed to tempt in-
house counsel into subordinating ethical standards to corporate misconduct. Unlike lawyers
possessing a multiple client base, in-house counsel are dependent upon only one client for their
livelihood. As the General Dynamics Court acknowledged,
the economic fate of in-house attorneys is tied directly to a single employer, at whose
sufferance they serve. Thus, from an economic standpoint, the dependence of in-
house counsel is indistinguishable from that of other corporate managers or senior
executives who also owe their livelihoods, career goals and satisfaction to a single
organizational employer.
876 P.2d at 491.
The pressure to conform to corporate misconduct at the expense of one’s entire livelihood,
therefore, presents some risk that ethical standards could be disregarded. Like other non-lawyer
employees, an in-house lawyer is dependent upon the corporation for his or her sole income,
benefits, and pensions; the lawyer is often governed by the corporation’s personnel policies and
employees’ handbooks; and the lawyer is subject to raises and promotions as determined by the
corporation. In addition, the lawyer’s hours of employment and nature of work are usually
determined by the corporation. See, e.g., Nordling v. Northern State Power Co., 478 N.W.2d 498,
502 (Minn. 1991) (noting reasons why an in-house lawyer should also be considered an employee).
To the extent that these realities are ignored, the analysis here cannot hope to present an accurate
picture of modern in-house practice. Cf. Givens, __ S.W.3d at __ (recognizing the practical reality
that a lawyer’s independent professional judgment may be influenced by a third party,
3
Mode l Rule 5.5(b ) impo ses a similar man datory duty: “A lawyer shall not . . . assist a p erson who is not a
mem ber o f the bar in the performance of activity that constitutes the unauthorized p ractice of law.”
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notwithstanding the presence of specific prohibitions in the Code of Professional Responsibility
against such conduct).
We also reject Balla’s reasoning that recognition of a retaliatory discharge action under these
circumstances would have a chilling effect upon the attorney-client relationship and would impair
the trust between an attorney and his or her client. This rationale appears to be premised on one key
assumption: the employer desires to act contrary to public policy and expects the lawyer to further
that conduct in violation of the lawyer’s ethical duties. We are simply unwilling to presume that
employers as a class operate with so nefarious a motive, and we recognize that when employers seek
legal advice from in-house counsel, they usually do so with the intent to comply with the law.
Moreover, employers of in-house counsel should be aware that the lawyer is bound by the
Code of Professional Responsibility, 4 and that the lawyer may ethically reveal client confidences and
secrets in many cases. See Tenn. Sup. Ct. R. 8, DR 4-101(C). Therefore, with respect to the
employer’s willingness to seek the advice of the lawyer for legally questionable conduct, the nature
of the relationship should not be further diminished by the remote possibility of a retaliatory
discharge suit. In fact, “[t]here should be no discernible impact on the attorney-client relationship
[by recognition of a retaliatory discharge action], unless the employer expects his counsel to blindly
follow his mandate in contravention of the lawyer’s ethical duty.” See Elliot M. Lonker, General
Dynamics v. Superior Court: One Giant Step Forward for In-House Counsel or One Small Step Back
to the Status Quo?, 31 Cal. W. L. Rev. 277, 298 n.139 (1995). Therefore, we conclude that little,
if any, adverse effect upon the attorney-client relationship will occur if we recognize an action for
discharge in violation of public policy.
Finally, we reject Balla’s assertion that allowing damages as a remedy for retaliatory
discharge would have the effect of shifting to the employer the costs of in-house counsel’s adherence
to the ethics rules. The very purpose of permitting a claim for retaliatory discharge in violation of
public policy is to encourage employers to refrain from conduct that is injurious to the public
interest. Because retaliatory discharge actions recognize that it is the employer who is attempting
to circumvent clear expressions of public policy, basic principles of equity all but demand that the
costs associated with such conduct also be borne by the employer.
Indeed, permitting the employer to shift the costs of adhering to public policy from itself to
an employee—irrespective of whether the employee is also a lawyer—strikes us as an inherently
improper balance “between the employment-at-will doctrine and rights granted employees under
well-defined expressions of public policy.” See Stein, 945 S.W.2d at 717 (Tenn. 1997). If anything,
the “public interest is better served [when] in-house counsel’s resolve to comply with ethical and
4
See Tenn. Sup. Ct. R. 8, Preliminary Statement (stating that the Code provisions “do define the type of ethical
conduct that the public has a right to expect”); cf. Mourad v. Automobile Club Ins. Ass’n, 465 N.W .2d 395, 400 (Mich.
Ct. App. 1991) (“Defendants, by hiring plaintiff as an attorney, knew or should have known that plaintiff was bound by
the code of professional conduct . . . .”).
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statutorily mandated duties is strengthened by providing judicial recourse when an employer’s
demands are in direct and unequivocal conflict with those duties.” Stewart, 653 N.E.2d at 167.
In summary, we find unpersuasive the rationales set forth by Balla and other cases which
equate the employment opportunities of in-house counsel with those of a lawyer possessing a larger
client base. While in-house counsel may be a lawyer, we must further recognize that he or she is also
an employee of the corporation, with all of the attendant benefits and responsibilities. Therefore,
we hold that a lawyer may generally bring a claim for retaliatory discharge when the lawyer is
discharged for abiding by the ethics rules as established by this Court.
PROPER STANDARD TO APPLY IN TENNESSEE
In Tennessee, the elements of a typical common-law retaliatory discharge claim are as
follows: (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. See, e.g., Reynolds v. Ozark Motor Lines, Inc., 887 S.W.2d
822, 825 (Tenn. 1994); Anderson v. Standard Register Co., 857 S.W.2d 555, 558 (Tenn. 1993);
Chism v. Mid-South Milling Co., 762 S.W.2d 552, 556 (Tenn. 1988).
However, as we have noted throughout this opinion, this case does not present the typical
retaliatory discharge claim. Consequently, while the special relationship between a lawyer and a
client does not categorically prohibit in-house counsel from bringing a retaliatory discharge action,
other courts have held that it necessarily shapes the contours of the action when the plaintiff was
employed as in-house counsel. For example, the courts in General Dynamics and Stewart held that
a lawyer could pursue a retaliatory discharge claim, but only if the lawyer could do so without
breaching the duty of confidentiality. See General Dynamics, 876 P.2d at 504; Stewart, 653 N.E.2d
at 167-68. Indeed, the California Supreme Court went so far as to forewarn lawyers that those who
revealed confidential information in a retaliatory discharge suit, without a basis for doing so under
the ethics rules, would be subject to disciplinary proceedings. General Dynamics, 876 P.2d at 504.
Since 1970, lawyers in this state have been subject to the Tennessee Code of Professional
Responsibility, and, at least with respect to the ethical duty of confidentiality, our Code is similar
to the ethical provisions relied upon in General Dynamics and Stewart. The Disciplinary Rules
generally require that a lawyer not knowingly reveal the confidences or secrets of a client. See Tenn.
Sup. Ct. R. 8, DR 4-101(B)(1). However, this rule is subject to some limited exceptions, including
when the client consents, when compelled by law or court order, or when necessary to prevent the
client from committing a crime. See DR 4-101(C). A lawyer may also reveal client confidences and
secrets as a defensive measure against “accusations of wrongful conduct,” though no exception
permits a lawyer to reveal client confidences or secrets “offensively” to establish a claim against a
client, except in fee-collection disputes. Id.
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If we perceive any shortcomings in the holdings of General Dynamics and Stewart, it is that
they largely take away with one hand what they appear to give with the other. Although the courts
in these cases gave in-house counsel an important right of action, their respective admonitions about
preserving client confidentiality appear to stop just short of halting most of these actions at the
courthouse door. With little imagination, one could envision cases involving important issues of
public concern being denied relief merely because the wrongdoer is protected by the lawyer’s duty
of confidentiality. Therefore, given that courts have recognized retaliatory discharge actions in order
to protect the public interest, this potentially severe limitation strikes us as a curious, if not largely
ineffective, measure to achieve that goal.
However, some courts following versions of the Model Rules of Professional Conduct have
reached different conclusions concerning a lawyer’s ability to use confidential information in a
retaliatory discharge action. Unlike Disciplinary Rule 4-101(C), Model Rule 1.6(b)(2) permits a
lawyer to reveal “information relating to the representation of a client” when the lawyer reasonably
believes such information is necessary “to establish a claim or defense on behalf of the lawyer in a
controversy between the lawyer and the client . . . .” (emphasis added). Although some
commentators have asserted that this provision merely permits lawyers to use confidential
information in fee-collection disputes as under the Model Code,5 the plain language of the Model
Rule is clearly more broad than these authorities would presume. In fact, at least one state supreme
court has held that this language permits in-house counsel to reveal confidential information in a
retaliatory discharge suit, at least to the extent reasonably necessary to establish the claim. See
Burkhart, 5 P.3d at 1041 (stating that a lawyer “does not forfeit his rights simply because to prove
them he must utilize confidential information. Nor does the client gain a right to cheat the lawyer
by imparting confidences to him.” (citation omitted)); see also Oregon State Bar Legal Ethics
Comm., Formal Op. 1994-136 (stating that the “plain language” of a provision similar to Model Rule
1.6(b)(2) “permits disclosure [of client confidences and secrets] to establish a wrongful discharge
claim” to the extent reasonably necessary to do so).
We agree with the approach taken by the Model Rules, and pursuant to our inherent authority
to regulate and govern the practice of law in this state, see In re Burson, 909 S.W.2d 768, 773 (Tenn.
1995), we hereby expressly adopt a new provision in Disciplinary Rule 4-101(C) to permit in-house
counsel to reveal the confidences and secrets of a client when the lawyer reasonably believes that
such information is necessary to establish a claim or defense on behalf of the lawyer in a controversy
between the lawyer and the client. This exception parallels the language of Model Rule of
Professional Conduct 1.6(b)(2), and we perceive the adoption of a similar standard to be essential
in protecting the ability of in-house counsel to effectively assert an action for discharge in violation
of public policy. Nevertheless, while in-house counsel may ethically disclose such information to
the extent necessary to establish the claim, we emphasize that in-house counsel “must make every
effort practicable to avoid unnecessary disclosure of [client confidences and secrets], to limit
5
See 1 Geoffery C. Hazard, Jr. & W . William Ho des, Law of Lawyering: A Handbook on the Model Rules
of Professional Conduct § 1.1 6:10 1, at 12 8 (2d ed. 199 0 & Supp. 19 96).
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disclosure to those having the need to know it, and to obtain protective orders or make other
arrangements minimizing the risk of disclosure.” Model Rule 1.6 Comment 19.
ANALYSIS OF THE COMPLAINT IN THIS CASE
Having found that in-house counsel are not categorically prohibited from maintaining
retaliatory discharge actions against their former employers, we now examine whether the plaintiff
in this case has stated such a claim in her complaint. As for the first element, the existence of an at-
will employment relationship, the complaint alleges only that the “Plaintiff became employed with
Defendant Buckman” initially as a legal assistant and that she “began working as an attorney in
Buckman’s Legal Department” after becoming licensed to practice law. Although we are unable to
determine from the complaint whether this employment relationship is alleged to have been at-will
or based upon an employment contract, we will presume that the plaintiff intended to allege an at-
will employment relationship. See, e.g., Rose v. Tipton County Pub. Works Dep’t, 953 S.W.2d 690,
691 (Tenn. Ct. App. 1997) (stating that the law initially presumes that “an employee is an employee
at will”). Accordingly, viewing the complaint in a light most favorable to the plaintiff, we conclude
that the first element of this tort has been sufficiently alleged.
The next issue, then, is whether the complaint alleges the existence of a “clear public policy
which is evidenced by an unambiguous constitutional, statutory, or regulatory provision.” To
establish this second element, the plaintiff argues that the ethical rules relating to the unauthorized
practice of law—such as Disciplinary Rule 3-101(A), which places upon lawyers a mandatory ethical
duty “not [to] aid a non-lawyer in the unauthorized practice of law”—are for the protection of the
public interest and may serve as the basis for a retaliatory discharge action. We agree.
It cannot seriously be questioned that many of the duties imposed upon lawyers by the
Tennessee Code of Professional Responsibility represent a clear and definitive statement of public
policy. Indeed, we have previously expressly recognized that specific “provisions of the Code of
Professional Responsibility, promulgated by the Supreme Court and authorized by the Tennessee
Constitution and statutes, reflect public policy . . . .” Swafford v. Harris, 967 S.W.2d 319, 322
(Tenn. 1998) (addressing Disciplinary Rule 7-109(C)); see also Spiegel v. Thomas, Mann & Smith,
P.C., 811 S.W.2d 528, 531 (Tenn. 1991) (addressing Canon 2 and Disciplinary Rule 2-108).
Although we need not conclude today that every provision of the Code of Professional
Responsibility reflects an important public policy, there can be no doubt that the public has a
substantial interest in preventing the unauthorized practice of law. As this Court has acknowledged,
“the purpose of regulation[s] governing the unauthorized practice of law is . . . to serve the public
right to protection against unlearned and unskilled advice in matters relating to the science of the
law.” See Burson, 909 S.W.2d at 777 (citations and internal quotation marks omitted). Further, the
Court of Appeals has recognized that regulations proscribing the unauthorized practice of law are
designed to protect “the public from being advised and represented in legal matters by incompetent
and unreliable persons over whom the judicial department could exercise little control.” Bar Ass’n
of Tenn., Inc. v. Union Planters Title Guar. Co., 46 Tenn. App. 100, 126, 326 S.W.2d 767, 779
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(1959) (citation omitted). As such, we find here the existence of a clear public policy evidenced by
the ethical duty not to aid in the unauthorized practice of law.
To be clear, although the plaintiff was not under a mandatory ethical duty to report Ms.
Davis’s alleged unauthorized practice of law to the Board of Law Examiners, she certainly possessed
a permissive duty to report Ms. Davis’s conduct.6 Ethical Consideration 1-3 is clear that “[a]lthough
lawyers should not become self-appointed investigators or judges of applicants for admission, they
should report to proper officials all unfavorable information they possess relating to the character
or other qualifications of applicants.” As such, given the clear expression of this permissive duty,
combined with the clear expression of public policy in Disciplinary Rule 3-101(A), we hold that the
complaint has sufficiently alleged the existence of a clear public policy evidenced by an
unambiguous provision of the Tennessee Code of Professional Responsibility.
Next, we examine whether the complaint has sufficiently alleged that the plaintiff was
discharged from her employment with Buckman. With regard to these allegations, we note that the
plaintiff has asserted that she was constructively discharged from her position as in-house counsel.
Although we have previously held that a claim of constructive discharge is not a claim in and of
itself, such a claim does allege that a plaintiff’s resignation was not voluntary due to the intolerable
nature of the working conditions. See Phillips v. Interstate Hotels Corp. No. L07, 974 S.W.2d 680,
687 (Tenn. 1998) (plurality opinion) (citation omitted). Consequently, we now conclude that
allegations of a constructive discharge are generally sufficient to establish the element of termination
under a common-law action for retaliatory discharge, provided that the remaining elements of the
tort are established. Cf. Campbell v. Florida Steel Corp., 919 S.W.2d 26, 34 (Tenn. 1996).
Here, we find that the complaint has fairly raised an allegation that the plaintiff did not
voluntarily leave her employment with Buckman. Importantly, after her final encounter with Ms.
Davis, the corporation is alleged to have removed the plaintiff’s computer; to have placed the
plaintiff on temporary leave; and to have given the plaintiff a notice of termination. Under these
circumstances, the allegation is fairly raised that a reasonable person would have felt compelled to
resign, cf. id., and we therefore conclude that the plaintiff has sufficiently alleged a termination of
employment necessary to state a claim for relief.
Finally, we examine whether the complaint alleges that a substantial factor in Buckman’s
decision to discharge the plaintiff was her adherence to her ethical duties under the Code of
Professional Responsibility. Here, the plaintiff alleges that the sole motivation for the constructive
discharge was her adherence to her ethical duties to report the unauthorized practice of law to the
Board of Law Examiners. Accordingly, we conclude that the existence of this element has likewise
6
Discip linary Rule 1-1 03(A) imposes a mandatory d uty to report clear violations of Disciplinary Rule 1-102,
which itself proh ibits violations of a Disciplinary R ule. However, Rule 1-1 02 applies only to violations by lawyers, and
because Ms. Davis was not yet licensed at the time the p laintiff repo rted he r conduct to the Board of Law Exam iners,
it appears that the plaintiff’s only mandatory duty here was to refrain from furthering Ms. Davis’s application for
adm ission to the bar under Disciplinary Rule 1-10 1(B ).
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been sufficiently alleged in the complaint and that, consequently, the plaintiff has stated a cause of
action for retaliatory discharge in violation of public policy.
CONCLUSION
In summary, we hold that in-house counsel may bring a common-law action of retaliatory
discharge resulting from counsel’s compliance with a provision of the Code of Professional
Responsibility that represents a clear and definitive statement of public policy. We also hold that
the complaint in this case, which alleges discharge for reporting the unauthorized practice of law,
states a claim for relief.
Furthermore, in accordance with an Order filed simultaneously with the judgment and
opinion in this case, we hold that a lawyer may ethically disclose the employer’s confidences or
secrets when the lawyer reasonably believes that such information is necessary to establish a claim
against the employer. However, the lawyer must make every effort practicable to avoid unnecessary
disclosure of the employer’s confidences and secrets; to limit disclosure to those having the need to
know the information; and to obtain protective orders or make other arrangements minimizing the
risk of unnecessary disclosure. Accordingly, we reverse the judgment of the Court of Appeals, and
we remand this case to the Shelby County Circuit Court for further proceedings consistent with this
opinion.
Costs of this appeal are assessed to the appellee, Buckman Laboratories International, Inc.
____________________________________
WILLIAM M. BARKER, JUSTICE
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