IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
______________________
FILED
No. 06-60977 December 21, 2007
______________________
Charles R. Fulbruge III
Clerk
LEWIS DECARLO,
Plaintiff-Appellant
vs.
BONUS STORES, INC. D/B/A BILL’S DOLLAR STORES, INC.; JIMMY A.
SCHAFER; WILLIAM FIELDS,
Defendants-Appellees
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Appeal from the United States District Court for
the Southern District of Mississippi
___________________________________________________
Before DEMOSS, DENNIS, and OWEN, Circuit Judges.
DENNIS, Circuit Judge:
This diversity case involves two important, determinative, and unresolved
questions of Mississippi state law. We therefore have determined that our
proper course, in this diversity jurisdiction case in which we are to apply the law
of the State of Mississippi, is to CERTIFY both issues to the Supreme Court of
Mississippi.
CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR
THE FIFTH CIRCUIT TO THE SUPREME COURT OF MISSISSIPPI,
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PURSUANT TO MISSISSIPPI RULE OF APPELLATE PROCEDURE 20. TO
THE SUPREME COURT OF MISSISSIPPI AND THE HONORABLE
JUSTICES THEREOF:
I. STYLE OF THE CASE
The style of the case in which this certificate is made is Lewis DeCarlo v.
Bonus Stores, Inc. d/b/a Bill’s Dollar Stores, Inc.; Jimmy A. Schafer; William
Fields, Case No. 06-60977, in the United States Court of Appeals for the Fifth
Circuit, on appeal from the United States District Court for the Southern
District of Mississippi. Federal jurisdiction is based on diversity of citizenship.
II. STATEMENT OF THE CASE
On January 10, 2002, Lewis DeCarlo filed a retaliatory discharge claim in
federal court, naming as defendants his former employer, Bonus Stores, Inc.
d/b/a Bill’s Dollar Stores, Inc., former supervisor Jimmy Schafer, the ex-CEO of
Bonus Stores, and William Fields, a member of the Board of Directors of Bonus
Stores. The plaintiff-appellant alleges that the defendants fired DeCarlo in
retaliation for notifying the company about Schafer’s possible criminal fraud,
misappropriation and embezzlement of Bonus Stores’ funds, which the plaintiff-
appellant argues is a retaliatory discharge tort recognized by Mississippi’s
McArn exception to employment-at-will doctrine. See McArn v. Allied
Bruce-Terminix Co., Ltd., 626 So.2d 603, 607 (Miss. 1993). The district court
granted summary judgment for the defendants by concluding that McArn’s
retaliatory discharge tort (1) does not protect employees who are fired for
reporting illegal acts by co-employees instead of the employer; and (2) does not
hold liable individual defendants, i.e., co-employees that ratified the retaliatory
discharge. Subsequently, the plaintiff-appellant filed a Rule 59(e) motion to
alter or amend the judgment. The district court denied the motion, and DeCarlo
now appeals that denial. While we usually review a denial of a Rule 59(e)
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motion under an abuse of discretion standard, if the appellant is clearly
appealing the entire case solely with regards to questions of law, we construe the
appeal as concerning the merits of the summary judgment, which we review de
novo. Fletcher v. Apfel, 210 F.3d 510, 512 (5th Cir. 2000). Accordingly, we
review de novo in this case.
According to DeCarlo, the district court improperly construed the cause of
action under McArn too narrowly without any basis in Mississippi law and failed
to cite to the Mississippi Supreme Court’s two Willard cases, which DeCarlo
alleges implicitly extend McArn to his situation. See Willard v. Paracelsus
Health Care Corp., 681 So.2d 539, 541 (Miss. 1996) (“Willard I”); Paracelsus
Health Care Corp. v. Willard, 754 So.2d 437, 443 (Miss. 1999) (“Willard II”). In
Willard I and Willard II, the Mississippi Supreme Court arguably extends
McArn to a factual situation very similar to this case: a suit against both the
company and the individual supervisor over the alleged retaliatory termination
for reporting illegal activities, i.e., embezzlement, of a co-employee. Id.
Therefore, DeCarlo requests that issues (1) and (2) be certified as questions for
the Mississippi Supreme Court. We agree and certify both questions to the
Mississippi Supreme Court. The second issue would be moot if the Supreme
Court of Mississippi decides against the plaintiff-appellant on the first issue.
Both parties acknowledge the lack of any Mississippi Supreme Court
decision that directly resolves these issues. In McArn, the Mississippi Supreme
Court established a common-law tort of retaliatory discharge. “[A]n employee
who is discharged for reporting illegal acts of his employer to the employer or
anyone else is not barred by the employment at will doctrine from bringing
action in tort for damages against his employer.” McArn, 626 So. 2d at 607. In
this case, while the reported illegal acts are not of the corporate employer, the
illegal acts, i.e., possible embezzlement, do affect the employer’s business and
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third-parties, such as the stockholders. Some Mississippi cases indicate a
willingness to extend the McArn exception to reports of illegal activities that
relate to the business even if those activities are not corporate actions. See, e.g.,
Jones v. Fluor Daniel Servs. Corp., 959 So.2d 1044, 1047 (Miss. 2007) (“As in
McArn, the ‘reporting of illegal acts’ exception to the at-will employment doctrine
has been applied only when the illegal act actually had something to do with the
business itself.”) (emphasis added); Willard II, 754 So. 2d at 444 (“The prevention
of terminations such as that of [plaintiffs] is necessary to promote and encourage
employees like Willard and Sumner, who take an active interest in the
well-being of the companies that employ them.”) (emphasis added); Senseney v.
Mississippi Power Co., 914 So.2d 1225, 1228 (Miss. Ct. App. 2005) (“In [McArn],
the court established a public policy exception to the doctrine, allowing an
employee fired for refusing to follow the employer’s directive to do illegal activity
or for exposing illegal activity in the workplace to bring a wrongful termination
action.”) (emphasis added); Brandon v. Claiborne County, 828 So.2d 202, 207
(Miss. Ct. App. 2001) (acknowledging that reporting illegal acts by several
supervisors “would qualify as [an] exception[] to an at-will employee status.”);
McCrory v. Wal Mart Stores, Inc., 755 So.2d 1141, 1143 (Miss. Ct. App. 1999)
(“Thus, in the case of [McArn], the court held that an at will employee who is
terminated for refusing to obey a directive to do an illegal act, or who is
terminated for exposing illegal activity at the workplace, may, on grounds of
public policy, bring a wrongful termination action as a sort of private reward
system for resisting unlawful activity that might otherwise go undiscovered.”)
(emphasis added). Moreover, such an extension of McArn arguably fits within
the broader public policy purposes underlying McArn’s recognition of this tort,
since co-employees’ illegal activities at the workplace do affect the company and
related public third-parties, such as stockholders. McArn, 626 So.2d at 607
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(“[The] [McArn exception applies] where the illegal activity either declined by
the employee or reported by him affects third parties among the general public.
. . .”). Since the Mississippi authorities have not directly ruled on whether
McArn should be so extended, we decide to certify this question.
For the second issue regarding individual liability for retaliatory discharge
torts, in McArn, the Mississippi Supreme Court stated that an employee who
asserts a retaliatory discharge claim is “not barred by the employment at will
doctrine from bringing action in tort for damages against his employer.” 626 So.
2d at 607 (emphasis added). No Mississippi court has directly addressed
whether the at-will doctrine bars action against individual defendants who
participate in the retaliatory decision to terminate an employee within the
course and scope of their employment.1 Other state court decisions are split on
this exact issue of individual liability for retaliatory discharge torts.
At least three states, West Virginia, New Jersey, and Pennsylvania,
permit individual liability for the tort of wrongful retaliatory discharge for
individuals who personally participate in the discharge “as the principal
protagonist” even if the individual was acting within the scope of his
employment. See Ballinger v. Delaware River Port Auth., 800 A.2d 97, 110 (N.J.
2002) (describing rule in New Jersey and Pennsylvania); Harless v. First Nat’l
Bank, 289 S.E.2d 692, 698–99 (W. Va. 1982) (“The discharge serves to fix
responsibility on the employer but this does not mean that another employee
who has been the principal protagonist in obtaining the employee’s discharge
would not also be liable.”). This individual liability even extends to persons who
1
DeCarlo concedes the main individual defendant who discharged him was acting
within the scope and course of his employment. See Appellant’s Brief, at 22 (“There can be
no dispute that Schafer was acting within the scope and course of his employment as CEO
of Bonus Stores when he fired DeCarlo.”).
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participate in the decision, but did not actually fire the plaintiff. Id.
On the other hand, other state courts would deny individual liability in
this case, because (1) individual liability could be imposed only if the employee
acted outside of the scope of his employment and in his own interest, see
Bourgeous v. Horizon Healthcare Corp., 872 P.2d 852, 855-56 (N. M. 1994), which
is not the case here; or (2) the tort of retaliatory discharge was intended only to
impose liability on the corporate entity itself and not individual defendants, see
Rebarchek v. Farmers Co-Op. Elevator, 35 P.3d 892, 903 (Kan. 2001); Reno v.
Baird, 957 P.2d 1333, 1347 (Cal. 1998); Buckner v. Atl. Plant Maint., Inc., 694
N.E.2d 565, 569 (Ill. 1998) (“[T]he power to hire and fire employees is ultimately
possessed only by the employer. Consequently, the tort of retaliatory discharge
may be committed only by the employer. The agent or employee who carries out
the employer’s decision to fire will not be subject to personal liability for
retaliatory discharge.”).2 As a split in state court authority exists, and no
Mississippi Supreme Court opinion has directly addressed this issue, we also
decide to certify this issue.
III. QUESTIONS CERTIFIED
Whether the laws of Mississippi permit a retaliatory discharge claim for
discharge in retaliation for reporting a co-employee’s illegal acts that relate to
the employer’s business?
If the previous question is resolved in favor of the plaintiff-appellant:
whether the laws of Mississippi allow for individual liability for the tort of
retaliatory discharge even if the individual defendant’s participation in the
discharge was in the course and scope of his employment?
We disclaim any intention or desire that the Supreme Court of Mississippi
2
The Buckner case resolved the contrary positions on this issue taken by two
previous conflicting state intermediate appellate decisions in Illinois. 694 N.E. 2d at 570.
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confine its reply to the precise form or scope of the question certified. The
answer provided by the Supreme Court of Mississippi will determine the issues
on appeal in this case. The record in this case, together with the copies of the
parties’ briefs, is transmitted herewith.
The panel retains cognizance of the appeal in this case pending response
from the Supreme Court of Mississippi, and the Court hereby certifies to the
Supreme Court of Mississippi the above questions of law.
QUESTIONS CERTIFIED TO THE SUPREME COURT OF MISSISSIPPI.
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