Raymond R. Wiskotoni v. Michigan National Bank-West

WELLFORD, Circuit Judge,

dissenting.

I respectfully dissent from the majority’s affirmance of the district court judgment. I believe that the trial court erred, under the facts of this case, in holding that the termination in controversy was a violation of public policy. In addition, I would find the evidence insufficient for a finding of implied contract that plaintiff might be discharged only for good cause. Finally, I would find Wiskotoni to be an “officer” within the meaning of the National Bank Act, and that the defendant Bank was therefore empowered to dismiss him “at pleasure.”

The majority characterizes defendant Bank’s argument regarding public policy as merely a challenge to the jury instructions, to which it finds there was inadequate objection. The majority therefore concludes that the standard of review on this issue is whether the jury instructions were “clearly erroneous.” The Bank's brief before this court, however, attacks the trial court’s holding, in denying it summary judgment, that termination of Wiskotoni’s employment for being subpoenaed before the grand jury investigating his conduct was a violation of public policy as a matter of law. While the trial court incorporated this holding into jury instructions, the challenge involved is directed primarily to the legal holding, not to the jury instructions. We are called upon to review the trial court’s conclusion of law, and thus the standard of review should not be whether such a holding is “clearly erroneous.”

Michigan courts have not been inclined to hold discharges of at-will employees to be in contravention of public policy. The trial court acknowledged that “[ajppellate courts have approached the new doctrine on tiptoes, declining to apply it in ... situations where no clear mandate of public policy is involved.” Citing Sventko v. Kroger Co., 69 Mich.App. 644, 651, 245 N.W.2d 151, 155 (1976) (Allen, J., concurring). The Michigan Supreme Court reviewed Michigan law regarding the public policy exception in Suchodolski v. Michigan Consolidated Gas Co., 412 Mich. 692, 316 N.W.2d 710, 711 (1982). In its discussion of the public policy exception, the Suchodolski court stated:

Most often these proscriptions are found in explicit legislative statements prohibiting the discharge, discipline, or other adverse treatment of employees who act in accordance with a statutory right or duty.
The courts have occasionally found sufficient legislative expression of policy to imply a cause of action for wrongful termination even in the absence of an explicit prohibition on retaliatory discharges. Such a cause of action has been found to be implied where the alleged reason for the discharge of the employee was the failure or refusal to violate a law in the course of employment
In addition, the courts have found implied a prohibition on retaliatory discharges when the reason for a discharge was the employee’s exercise of a right conferred by a well-established legislative enactment.

316 N.W.2d at 711-12 (citations omitted). In support of its conclusion, the majority cites the Michigan laws establishing the grand jury system and penalizing witnesses’ *393failure to appear which were not relied upon by the trial court. This case clearly does not involve a “refusal to violate a law in the course of employment” or “the employee’s exercise of a right conferred by a well-established legislative enactment.” Suchodolski, 816 N.W.2d at 711 — 12. Wiskotoni did not allege that the appellant Bank intended by its actions to coerce him so that he would not appear before the grand jury; his argument, rather, is that the termination was somehow “punishment” for being subpoenaed in connection with an investigation involving his own alleged misconduct.

The Michigan decisions holding that a particular discharge was in violation of public policy fall clearly within the three categories enumerated in Suchodolski, supra. In Schwartz v. Michigan Sugar Co., 106 Mich.App. 471, 308 N.W.2d 459 (1981), the discharge was allegedly because the plaintiff, as safety director of the defendant corporation, rigorously enforced the Michigan Occupational Safety and Health Act. A Michigan statute expressly prohibited the discharge of an employee because he files a complaint, institutes a proceeding under the Act, testifies in a proceeding, or exercises a right afforded by the Act. Thus, there was an “explicit legislative statement [ ] prohibiting the discharge.” The court found under this statute that the termination violated public policy.

A discharge for “refusal to violate a law in' the course of employment” was addressed in Trombetta v. Detroit T & I R. Co., 81 Mich.App. 489, 495, 265 N.W.2d 385 (1978). In Trombetta, the appellate court reversed a summary judgment for the defendant, holding that the plaintiff’s claim that he was discharged for failure to manipulate sampling results used to file pollution control reports as required by state statute stated a cause of action. Finally, in Sventko v. Kroger Co., 69 MicLApp. 644, 245 N.W.2d 151 (1976), the court dealt with the discharge of an employee because of “the employee’s exercise of a right conferred by a well-established legislative enactment.” In Sventko, the plaintiff was discharged because he filed a workman’s compensation claim. The court found that this violated Michigan public policy. See also Clifford v. Cactus Drilling Corp., 109 Mich.App. 776, 312 N.W.2d 380, 381 (1981). Thus, each of these decisions falls clearly within the categories enumerated in Suchodolski.

Other decisions concluding that a questioned termination did not violate Michigan public policy are also instructive. In Percival v. G.M.C., 400 F.Supp. 1322, 1323-24 (E.D.Mo.1975), a Missouri federal district court applying Michigan law found that the plaintiff’s discharge, allegedly due to his attempts to correct misleading information given out by GM and conveyed to stockholders and the general public, did not fall within the exception because no clear mandate of public policy was violated. In Suchodolski, supra, the plaintiff employee had attempted to report and correct questionable internal accounting procedures of the defendant public utility. The court held that his termination was not a violation of Michigan public policy, in spite of Michigan’s extensive regulation of the accounting practices of public utilities.

The facts in the case at bar simply do not fall within any of the classifications recognized in Suchodolski. There was certainly no “explicit legislative statement [ ] prohibiting the discharge.” The termination was neither in retaliation for Wiskotoni’s “refusal to violate a law in the course of employment” nor for Wiskotoni’s exercise of a right conferred by statute, since the Bank clearly did not seek to prevent Wiskotoni from testifying before the grand jury, nor did it seek in any way to have him violate any law. In the face of the Michigan courts’ admonition that the public policy exception is to be used sparingly, the majority’s creative extension of Michigan law in this instance is unjustified. See Schipani v. Ford Motor Co., 102 Mich.App. 606, 620, 302 N.W.2d 307 (1981); Sventko, supra, 69 Mich.App. at 651, 245 N.W.2d at 155.

The reason for the grand jury investigation in this case, moreover, should not be ignored. Wiskotoni received a grand jury subpoena because it was suspected that he was involved in a numbers racket. He was *394not simply subpoenaed to testify as a witness with pertinent information: he was a supposed target of the investigation, which might well be embarrassing to the Bank as his employer. It was therefore error for the trial court to rule that “as a matter of law, termination of employment for being subpoenaed before a grand jury ... is a violation of public policy,” particularly under such circumstances.

Was the evidence presented at trial sufficient to support a finding that an implied contract existed between Wiskotoni and the Bank, and that a term of the implied contract was that Wiskotoni would be discharged only for cause? The evidence cited by the majority in support of its conclusion consists of (a) a single statement in the Bank employee manual that an employee may be terminated during his probationary period if he is not suited to the work of the Bank, without any other reason, (b) testimony by Wiskotoni that he “understood” that other employees were given valid reasons for their termination, and (c) the fact that the president of the Bank “did not dispute” a statement by Wiskotoni’s attorney that it was the Bank’s practice to dismiss for cause. I would find this evidence insufficient as a matter of law.

The primary decision relied upon by my brethren is Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579, 292 N.W.2d 880 (1980). Toussaint, as the majority states, establishes the principle under Michigan law that employer statements of policy in employee manuals can under certain circumstances give rise to implied employee contractual rights. 292 N.W.2d at 890, 892. The majority opinion fails to discuss, however, the evidence relied upon in Toussaint to support a finding of contractual rights. Toussaint testified that when he was hired he inquired about job security and was told that “as long as I did my job I would be with the company.” In addition, the manual of company policies given to Toussaint stated, expressly that “it was the ‘policy’ of the company to release employees ‘for just cause only.’ ” 292 N.W.2d at 884 n. 5. Accordingly, it was held appropriate for the jury to find that Toussaint had legitimate expectations grounded in his employer’s written policy statements set forth in the manual of policies buttressed by alleged oral representations as well. 292 N.W.2d at 885. These factual circumstances are vastly different from those in the instant case.

The majority also relies upon Schwartz v. Michigan Sugar Co., 106 Mich.App. 471, 308 N.W.2d 459 (1981). In Schwartz the court found the evidence clearly insufficient to establish anything more than plaintiff’s subjective expectancy regarding his employment. There were found no objective manifestations in Schwartz of any agreement by the employer to limit its right of discharge to “just cause” situations. Further, that court held that a “terminable at will discharge” need not necessarily be made in good faith. 308 N.W.2d at 463. The Schwartz decision, although it cites Toussaint, seems to support the Bank’s position not only on the implied contract claim but also on the “public policy” claim advanced by plaintiff.

The majority cites two other cases in support of its conclusion, Morris v. Chem-Lawn Corp., 541 F.Supp. 479 (E.D.Mich. 1982) and Marwil v. Baker, 499 F.Supp. 560 (E.D.Mich.1980). In Morris, the district court found that the plaintiff had raised an issue of material fact regarding the existence of an agreement to terminate her employment only for cause, citing Toussaint, supra. As in Toussaint, the plaintiff testified that she was told expressly that “she would have a job at Chem-Lawn as long as she carried out her duties as a secretary.” 541 F.Supp. at 481. There is no such representation asserted by Wiskotoni in the instant case.

In Marwil, the district court restated the Toussaint principle that

[i]n Michigan an employee can have contractual rights in the procedures and benefits found in statements of policy. See Toussaint .... The Court in Toussaint explained that those contractual obligations can be implicit in the policies and practices of the employer.

*395499 F.Supp. at 573. The court then examined the evidence proffered by the plaintiff. Plaintiff Marwil, a university professor whose contract was not renewed, argued that his contract with the University guaranteed a tenure review in his sixth year and a seventh terminal year. Regarding the seventh terminal year, the plaintiff cited statements of policy providing for a one-year terminal appointment when an assistant professor is not recommended for tenure at the end of the sixth year. The court found that this policy statement did not turn a six-year contract into a seven-year contract. 499 F.Supp. at 574. The court finally declined to enforce contractual obligations “based on a custom which at best finds only tenuous support in the facts.” 499 F.Supp. at 576.1

That portion of the Bank’s employee manual relied upon by plaintiff states:

Unless otherwise specified, you will be employed on a probationary basis for a period of three months. If it develops during that period that you are not pleased with your association or are not suited to the work of the Bank, your employment may be terminated, in mutual fairness, without any other reason.

(Emphasis added.) Wiskotoni argued and the majority accepted a negative inference from this statement, that if during the probationary period an employee could be terminated for no reason, after the probationary period an employee could be terminated only for cause. I cannot agree that this statement “certainly” supports the inference argued by the plaintiff. See Marwil, supra, at 574-75.

In any event, the negative inference argued from this statement falls far short of the evidence relied upon in Toussaint, supra, in which the employee manual stated expressly that it was the “policy” of the company to terminate employees “for just cause only.” Toussaint, supra, 292 N.W.2d at 884 & n. 5.

The only evidence of the Bank’s alleged “custom” of termination only for just cause is Wiskotoni’s testimony in that regard. An examination of that testimony2 reveals only Wiskotoni’s self-serving statement in response to leading questions that he “presumed” that unspecified “other employees” were terminated for good cause. No testimony of such former employees was offered, and he did not even state that they told him the reasons given for their terminations. That evidence, in my view, is inadequate to indicate there was any Bank practice as argued by plaintiff’s counsel.

The majority finally states that “Knibloe, president of the Bank, did not dispute the statement made by Wiskotoni’s attorney during cross-examination that ‘it’s your practice to dismiss for cause.’ ” That actual testimony is set out in the record:

Q: I gathered it’s your practice to dismiss for cause? You said the assistant vice president was let go because of the forgery matter. You said he was dismissed for cause, is that correct?
A: Yes, but that was not the reason he was dismissed. The forgery matter and the fraudulent loans turned up after he was dismissed, because he could no longer make himself loans to cover those previous loans. He was dismissed for other reasons.

Transcript at 97. Knibloe merely answered the second, more specific question asked by *396Wiskotoni’s attorney. I cannot glean from this question and answer that the Bank “did not dispute” Wiskotoni’s unsupported allegation.

In sum, the evidence relied upon by the majority appears to be “slender reeds on which to build a contractual term.” Marwil v. Baker, supra, 499 F.Supp. at 575. I find this evidence entirely insufficient to support a finding of an implied contractual agreement to terminate employment only for good cause.3

Finally, the majority holds that Wiskotoni, as a branch manager, was not an “officer” within the meaning of the National Bank Act, 12 U.S.C. § 24, and that therefore the Bank may not assert the Act as a defense to the implied contract.

The Bank’s by-laws expressly name branch managers as officers of the Bank; Wiskotoni was a branch manager. Wiskotoni was hired and fired by the president of the Bank, but this authority was “delegated to the Bank’s president, who generally counsels with other officers and/or directors of the bank in the exercise of those duties.” App. at 96 (testimony of the Bank’s senior vice president). In addition, section 4.2 of the Bank’s by-laws, pertaining to the Bank president, provides:

The President shall also have and may exercise such further powers and duties as from time to time may be conferred, or assigned by the Board of Directors.

App. at 87. The Bank’s Board acted through the Bank president in hiring and firing Wiskotoni; Wiskotoni should be deemed an “officer” within the meaning of the Act; he occupied a position of responsibility and discretion.

For all these reasons, I would reverse the judgment of the district court and remand with orders to dismiss appellee Wiskotoni’s cause of action.

Since I would find that Wiskotoni is not entitled to any damages, I make only a brief reference to this aspect of the case. An award for mental anguish is improper in a case for wrongful discharge. The Michigan cases relied upon to justify any such element involve torts that resulted in physical trauma or damage accompanied by mental anguish. See, e.g., Veselenak v. Smith, 414 Mich. 567, 327 N.W.2d 261 (1982); Birkhill v. Todd, 20 Mich.App. 356, 174 N.W.2d 56 (1969); Grenawalt v. Nyhuis, 335 Mich. 76, 55 N.W.2d 736 (1952). I would doubt furthermore that an award for loss of professional reputation (due more likely to the grand jury investigation than from discharge) would be appropriate in a case of this kind. See Sias v. General Motors Corp., 372 Mich. 542, 127 N.W.2d 357 (1964).

Accordingly, I would reverse the judgment entered in this case for plaintiff-appellee for all the reasons indicated, or remand, in the alternative, for a proper determination of damages.

. The majority also cites Hrab v. Hayes-Albion Corp., 103 Mich.App. 90, 302 N.W.2d 606 (1981). The court there found that the plaintiff had presented sufficient evidence to find that his contract was terminable only for cause, but did not elaborate on the evidence presented.

. Wiskotoni testified on redirect:

Q: From your work experience in Michigan National Bank, were other employees given valid reasons for termination?
A: I presumed so.
Q: Was it your understanding from the policy book and from your experience, that employees could just be let go at the will of the bank?
A: No. That was not my understanding. Q: And it was your understanding when they say reason, it meant a good reason in that policy book?
A: Yes.

Transcript at 36.

. I must note, however, that it is difficult for me to see how Wiskotoni’s being subpoenaed to appear before a grand jury investigating his involvement in a numbers racket does not constitute “good cause” for his discharge as a bank official.