IN THE SUPREME COURT OF ARIZONA
En Banc
B.J. LOGAN and NANCY LOGAN, ) Arizona Supreme Court
husband and wife, ) No. CV-01-0367-PR
)
Plaintiffs-Appellants, ) Court of Appeals
) Division One
v. ) No. 1 CA-CV 00-0528
)
FOREVER LIVING PRODUCTS ) Yavapai County Superior
INTERNATIONAL, INC., ALOE VERA OF ) Court
AMERICA, INC., a Texas ) No. CV 97-0748
corporation doing business as )
MAUGHAN RANCHES, and REX and RUTH )
MAUGHAN, husband and wife,1 )
) O P I N I O N
Defendant-Appellee. )
)
___________________________________)
Appeal from the Superior Court of Yavapai County
Honorable Robert M. Brutinel, Judge
REVERSED AND REMANDED
_________________________________________________________________
Memorandum Decision of the Court of Appeals
Division One
VACATED
1
Earlier orders of the court in this case designated the
defendant-appellee as Forever Living Products International, Inc.
following the caption from the court of appeals. The pleadings
from the parties list the defendants as “Aloe Vera of America,
Inc., (“AVA”) a Texas corporation, doing business as Maughan
Ranches, and Rex and Ruth Maughan, husband and wife.” We believe
the caption noted above most accurately lists the defendants-
appellees in this case.
_________________________________________________________________
Law Offices of William R. Hobson Tempe
by William R. Hobson
and
Counters & Koelbel, P.C. Tempe
by Kevin Koelbel
Lisa Counters
and
Gil Shaw, Attorney and Counselor at Law Yarnell
by Gil Shaw
Attorney for Appellants
Quarles & Brady Streich Lang Phoenix
by Robert E. Miles
Edwin B. Wainscott
Kevin D. Quigley
Attorneys for Appellees
__________________________________________________________________
J O N E S, Chief Justice
Facts and Procedural History
¶1 This is a case of alleged wrongful termination.
Defendants Rex and Ruth Maughan own Maughan Ranches, a Yavapai
County property, leased to the Maughan’s corporation, Aloe Vera of
America, Inc. The employees, plaintiffs B.J. and Nancy Logan,
owners of a separate parcel of real property, maintain they were
discharged by Rex Maughan for not selling their property to him at
the price he demanded. On motion by the defendants, the trial
court dismissed the Logans’ wrongful discharge action for failure
to state a claim under the Arizona Employment Protection Act
(AEPA), Ariz. Rev. Stat. Ann. (A.R.S.) § 23-1501 (1995 and Supp.
-2-
2001). The court of appeals affirmed in a memorandum decision.
This court granted review and now vacates the decision of the court
of appeals and reverses the dismissal by the trial court. We have
jurisdiction based on article VI, § 5(3), of the Arizona
Constitution.
¶2 When a motion to dismiss for failure to state a claim is
granted, review on appeal necessarily assumes the truth of facts
alleged in the complaint. Donnelly Constr. Co. v.
Oberg/Hunt/Gilleland, 139 Ariz. 184, 186, 677 P.2d 1292, 1294
(1984); Parks v. Macro-Dynamics, Inc., 121 Ariz. 517, 519, 591 P.2d
1005, 1007 (App. 1979) (“A Rule 12(b)(6) motion to dismiss for
failure to state a claim, which assumes the complaint’s allegations
are true, attacks the legal sufficiency of the complaint”)
(citation omitted). The factual allegations are summarized below.
¶3 Rex Maughan hired B.J. Logan in 1994 to work as a cowboy.
He also hired Nancy Logan to work on an as-needed basis.2 The
Logans owned a parcel of property on State Route 89 in Peeples
Valley, Yavapai County. Approximately June 19, 1996, the Planning
and Zoning Board of Yavapai County granted the Logans a special use
permit to develop part of their land as a “mini-storage” garage.
¶4 Rex Maughan is the sole or majority stockholder of Aloe
Vera of America, Inc. In addition to the Aloe Vera business, Rex
2
The complaint does not specify the type of work she was hired
to perform.
-3-
Maughan invests in real property. Ronald Walker is a real estate
agent who represents Rex Maughan. Approximately August 1, 1996,
Walker met with the Logans to inform them that Maughan wanted to
buy the Peeples Valley property.
¶5 The Logans initially stated that they were not interested
in selling, but later agreed to entertain an offer. The parties
were unable to come to terms regarding a sale or trade, though the
Logans offered to sell the property to Maughan for $550,000.
Approximately November 11, 1996, Walker informed the Logans that
Maughan rejected this offer. During that conversation, Walker
allegedly threatened the Logans that they would be fired if they
did not agree to sell the property to Maughan for $150,000 and that
Maughan would go to the Planning and Zoning Board to ensure that
the Logans would never get a permit for any commercial use of their
land.
¶6 Bud Maule also worked for Maughan in a position superior
to the Logans. Approximately November 27, 1996, Maule met with the
Logans and again asked them if they would sell their property to
Maughan at the price Maughan demanded. When they declined, they
were fired effective December 1, 1996. Maule indicated that he was
firing the Logans at Maughan’s direction because of their refusal
to sell the Peeples Valley property to Maughan and that the Logans
should have anticipated Maughan’s action. The issue in this case
is whether the Logans now have a wrongful discharge claim against
-4-
their former employer pursuant to the provisions of the AEPA.
Analysis
¶7 If the employees’ claim is cognizable under the statute,
the trial court erred in granting dismissal. Motions to dismiss
for failure to state a claim are not favored and should not be
granted unless it appears that the plaintiff should be denied
relief as a matter of law given the facts alleged.3 State ex rel.
Corbin v. Pickrell, 136 Ariz. 589, 594, 667 P.2d 1304, 1309 (1983)
(citations omitted).
¶8 We begin our analysis with the statute. We review de
novo the interpretation of a statute. Arizona Dep’t of Revenue v.
Dougherty, 200 Ariz. 515, 517, 29 P.3d 862, 864 ¶7 (2001). When
doing so, our foremost goal is to discern and give effect to
legislative intent. Mail Boxes, Etc., U.S.A. v. Industrial Comm’n,
181 Ariz. 119, 121, 888 P.2d 777, 779 (1995).
¶9 The AEPA, which became law in 1996, allows, inter alia,
wrongful discharge claims against employers who terminate employees
in retaliation for “[t]he exercise of the right to be free from the
extortion of fees or gratuities as a condition of employment as
protected by § 23-202.” A.R.S. § 23-1501(3)(c)(viii). This
3
Although the wrongful discharge claim does not specifically
cite the AEPA or a statute embodying public policy, it will survive
a motion to dismiss if the facts as alleged demonstrate that the
Logans are entitled to relief under any provable theory. Veach v.
City of Phoenix, 102 Ariz. 195, 197, 427 P.2d 335, 337 (1967);
Mackey v. Spangler, 81 Ariz. 113, 115, 301 P.2d 1026, 1027 (1956).
-5-
language clearly was adopted to preserve an employee’s right not to
be victimized by an employer’s extortion. Where an employee is
terminated by an employer for refusal to accept extortionate
demands by the employer, in violation of A.R.S. § 23-202, the
employee has a wrongful termination cause of action under the AEPA.
A.R.S. § 23-202
¶10 A.R.S. § 23-202 makes it a class 2 misdemeanor for
employers or their agents to extort money or property from
employees:
It is unlawful for a person charged or entrusted by
another with the employment or continuance in employment
of any workmen or laborers to demand or receive, either
directly or indirectly, from a workman or laborer
employed or continued in employment through his agency or
under his direction or control, a fee, commission or
gratuity of any kind as the price or condition of the
employment of the workman or laborer, or as the price or
condition of his continuance in such employment.
Prior to this case, section 23-202 had never been interpreted by an
appellate court.4 In discerning legislative intent, we look to the
statute’s policy, the evil it was designed to address, its words,
context, subject matter, and effects and consequences. Calvert v.
4
We are aware of the Attorney General’s opinion No. I88-010
dated January 15, 1988, in which that office opined that A.R.S. §
23-202 expressly applies to agents of the employer rather than the
employer itself. 1988 WL 249593 (Ariz. A.G.). That inquiry
involved the statute’s application, if any, to employers requiring
a minimal nonrefundable processing fee from applicants for
employment. That is not the situation here. Furthermore, the
Attorney General’s opinion does not constitute precedent regarding
statutory construction. Opinions of the Attorney General are due
our respect, but are advisory and not binding. Ruiz v. Hull, 191
Ariz. 441, 449, 957 P.2d 984, 992 (1998).
-6-
Farmers Ins. Co. of Arizona, 144 Ariz. 291, 294, 697 P.2d 684, 687
(1985).
¶11 By its language, section 23-202 applies specifically to
persons “charged . . . with employment or continuance in employment
of workmen or laborers . . . .” The person “charged” may be a
foreman or a person acting as an agent of the employer, or the
person may be the employer himself. For purposes of the AEPA,
section 23-202's reference to agents of an employer is by no means
exclusive and was not, in our judgment, intended to insulate from
the reach of the AEPA employers who engage in extortionate conduct
by sending their agents to extort on the employer’s behalf.
¶12 The protection given to employees to be free from
extortion in the workplace under section 23-202 is one of the
express purposes of the AEPA. Reading the two statutes together,
a proper interpretation is that an employer who by his agent or by
his own action terminates an employee for refusing to be the victim
of workplace extortion is subject to a wrongful termination suit.
¶13 The statute is designed to prevent employers from
exacting fees, gratuities, commissions, kickbacks, or other forms
of remuneration from employees as a condition of continuing
employment or as a condition to obtaining employment in the first
instance. On this record, the Logans were victimized by the clear
equivalent of a demand for gratuities. A demand for property at a
price well below its potential worth is a demand for a gratuity.
-7-
The Logans’ continued employment was expressly conditioned on it.
¶14 We note further that the language of section 23-202 does
not indicate to whom the fee, commission, or gratuity is ultimately
to be paid. It may be destined for a foreman or agent and be
actually pocketed by him. Or, as in this case, it may be claimed
by the employer. Because the statute does not specify who
ultimately receives the ill-gotten gain, it encompasses either
scenario.
¶15 For purposes of wrongful termination claims under the
AEPA, it is not necessary that an actual violation of a statute
occur. Wagenseller v. Scottsdale Mem. Hosp., 147 Ariz. 370, 380,
710 P.2d 1025, 1035 (1985). In Wagenseller, there was no statutory
violation; rather, the employee alleged she was discharged for
refusing to violate a statute.
¶16 The same is true here. Accepting the facts stated in the
complaint as true, the Logans refused to sell their land at less
than a third of what they believed it was worth. For this, they
were fired. Subsection (3)(c)(viii) of the AEPA focuses on the
employer’s reasons for terminating the employee and permits a
wrongful termination claim where the employer terminates the
employee for rejecting an extortion attempt under section 23-202.
Because we find that the Logans’ claim exists under the statute as
-8-
a matter of law and the motion to dismiss was improperly granted,5
we need not reach the question, raised by our associate in a
separate concurring opinion, whether a common law cause of action
of the kind asserted by the Logans may still be asserted
independent of the AEPA.6
Conclusion
¶17 The Logans’ claim of wrongful termination exists under
subsection (3)(c)(viii) of the AEPA and therefore the trial court
erred in dismissing it. Accordingly, we vacate the decision of the
court of appeals and reverse the judgment of the trial court. The
case is remanded to the trial court with instructions to reinstate
the Logans’ cause of action.
________________________________
Charles E. Jones
Chief Justice
5
We note also that the Logans may have a claim under
subsection (3)(c)(i) of the AEPA (where the employer terminates the
employee for a refusal to commit an act or omission that would
violate the Constitution of Arizona or the statutes of this state)
based on violations of A.R.S. §§ 23-202 or 13-1804(A)(8). Because
we find that the facts of this case allow a claim to be maintained
under subsection (3)(c)(viii), we need not address the possibility
of a (3)(c)(i) claim.
6
We note that the claim in Wagenseller would fit easily
within the statutory framework of the AEPA under subsection
(3)(c)(i). Wagenseller v. Scottsdale Mem. Hosp., 147 Ariz. 370,
710 P.2d 1025 (1985).
-9-
CONCURRING:
____________________________________
Ruth V. McGregor, Vice Chief Justice
____________________________________
Rebecca White Berch, Justice
____________________________________
Nanette Warner, Judge
NOTE: Due to a vacancy on this court at the time this
case was decided, the Honorable Nanette Warner, Judge of
the Superior Court in Pima County, was designated to
participate in this case under article VI, § 3 of the
Arizona Constitution.
FELDMAN, Justice, specially concurring
¶18 The court today holds that the Logans may pursue a cause
of action because a provision of the Arizona Employment Protection
Act (AEPA) allows wrongful discharge claims against an employer who
terminates an employee in retaliation for the latter’s “exercise of
the right to be free from . . . extortion . . . as a condition of
employment . . . .” Ante at ¶ 9 (quoting A.R.S. § 23-
1501(3)(c)(viii) (AEPA)).
¶19 I have no quarrel with the result, but I believe the
court’s analysis avoids the most important issue in this case. I
write separately because I would have reached the same result by a
more direct route — the one we have followed in the past. We have
-10-
held that an “employer may fire for good cause or for no cause. He
may not fire for bad cause — that which violates public policy.”
Wagenseller v. Scottsdale Mem. Hosp., 147 Ariz. 370, 378, 710 P.2d
1025, 1033 (1985).
¶20 Without question, the Logans’ discharge violated public
policy. As the court points out, Arizona law makes it a
misdemeanor for an employer to extract “either directly or
indirectly” a “fee . . . or gratuity of any kind” from an employee
as a “condition of [the employee’s] continuance in such
employment.” Ante at ¶ 10 (quoting A.R.S. § 23-202). If,
therefore, we needed a statute to set public policy on this point,
we have it. Thus, the Logans’ discharge in violation of the
state’s public policy is actionable with or without the AEPA.
¶21 One would suppose, moreover, that the court would agree
with the Logans’ submission and simply say that retaliatory firing
in these circumstances would violate the public policy of this
state even if there were no AEPA. Surely the court does not
require express legislation to authorize it to provide a remedy to
employees fired for refusing to submit to extortion. Nor should we
need a statute to provide a remedy to employees fired for returning
a jury verdict with which the employer disagreed, for refusing to
participate in the employer’s designated religious exercise, or for
reading books, newspapers, or magazines of which the employer
disapproved.
-11-
¶22 Wagenseller has not been overruled,1 and although it
recognizes the power of employers to fire at-will employees with or
without cause, it also teaches that our courts will provide a
remedy when employers use their power in a manner contrary to
public policy and thus violate the rights of their workers. No
employer should be given the power to fire, with impunity, because
an employee refused to give the employer a bargain price on his
home or other property or refused to paint the corporate logo on
the side of his home. See Ariz. Const. art. II, §§ 1 and 8,
setting forth policies promulgated by the framers of our
constitution. It would be a sad day when citizens could not look
to the courts to provide a remedy for such egregious wrongs.
¶23 Therefore, I would not duck the argument that we should
apply Wagenseller but would simply disapprove Johnson v. Hispanic
Broadcasters of Tucson, Inc., 196 Ariz. 597, 2 P.3d 687 (App.
2000), insofar as it may be interpreted to conclude that common-law
claims for wrongful termination are no longer cognizable. Id. at
599 ¶ 4, 2 P.3d at 689 ¶ 4. I would also disapprove Chaboya v.
American National Red Cross insofar as it reaches the same
conclusion. 72 F.Supp.2d 1081, 1092 (D.Ariz. 1999). I would stand
on what we previously said about the AEPA and terminations that
1
See Cronin v. Sheldon, 195 Ariz. 531, 537-38 ¶ 28, 991 P.2d
231, 237-38 ¶ 28 (1999) (the “legislative preamble sets forth
notions repugnant to the [state’s] constitution . . . .”).
-12-
violate public policy: the legislature may limit judicial remedies
only when it creates a cause of action otherwise not cognizable in
the courts, one that “originates exclusively within the statute,
would not otherwise exist, and cannot trace its antecedents to a
common law right of action.” Cronin v. Sheldon, 195 Ariz. 531, 539
¶ 39, 991 P.2d 231, 239 ¶ 39 (1999) (citing Alabam’s Freight Co. v.
Hunt, 29 Ariz. 419, 242 P. 658 (1926)). Surely we must acknowledge
that the common law recognized employees’ actions against employers
for tort and breach of contract. That really is the only question
presented in this case — whether termination for the reasons
alleged by the Logans is a tort or violates the contract of
employment.
¶24 I would answer that with an emphatic yes and reject the
idea that we must depend on the other branches of government to
permit us to open the doors of justice. See Logan v. Zimmerman
Brush Co., 455 U.S. 422, 429, 102 S.Ct. 1148, 1154 (1982)
(discussing due process protection for litigants “hoping to protect
their property or . . . attempting to redress grievances.”); see
also Kluger v. White, 281 So.2d 1 (Fla. 1973); Saylor v. Hall, 497
S.W.2d 218 (Ky. 1973).
______________________________
STANLEY G. FELDMAN, Justice
-13-