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Tuesday, May 23, 2017

Missouri Supreme Court Clarifies Wrongful Discharge in Violation of Public Policy Claim

On May 16, 2017, the Missouri Supreme Court issued an opinion in Newsome v. Kansas City, Missouri School District, No. SC95538 (Mo. banc), which clarified Missouri law by holding that on a wrongful discharge in violation of public policy claim:  (1) the judge, not the jury, decides whether a legal violation occurred; and (2) a preventative report of wrongdoing can support such a claim.  By way of background, a public policy wrongful discharge claim allows an employee to sue an employer if the employee was terminated for refusing to violate the law or any public policy found in the constitution, statutes, or regulations or for reporting violations of the law to superiors or proper authorities.  In Newsome, plaintiff (purchasing manager for the school district) refused to approve one purchase request and reported two purchase requests to his supervisor on the basis that the requests violated Missouri’s school contracting law (R.S.Mo. § 432.070).  Three days after the second report, plaintiff was given the option of resigning with severance or termination of employment, and later brought the wrongful discharge claim.  The jury returned a verdict in plaintiff’s favor and awarded $500,000 in damages, and the school district appealed.

On appeal, the school district argued that the trial court had erred by giving the jury the plaintiff-requested instruction that an element of the wrongful discharge claim was that plaintiff “reasonably believed” the payment requests violated Missouri’s school contracting law and that the jury should have been instructed that it needed to find that the requests violated the law to find the employer liable.  The Missouri Supreme Court found that the “reasonably believed” instruction was erroneous, but also found that the jury should not be instructed about an actual violation of law because that element “is an issue of law for the circuit court to decide in determining whether plaintiff has made a prima case. . . . before submission of the case to the jury.”  This ruling is significant because: (1) it rejects an argument made by plaintiffs in these cases that they only need to prove that they “reasonably believed” that the conduct violated the law; and (2) it clarifies that the judge, not the jury, decides whether the alleged conduct violated the law, and, if the judge finds no violation occurred, the claim presumably would be dismissed. 

The school district further argued on appeal that the verdict in plaintiff’s favor should be reversed because plaintiff only refused to approve and reported “requests” for payments that “would” violate public policy, rather than payments made in violation of the school district contracting law.  The Missouri Supreme Court rejected this argument, holding that plaintiff “did not have to wait for the purchase to be finalized before he reported his concerns.”  The Court found that accepting the school district’s argument “would mean no whistleblower protection for preventative reporting, which would be inconsistent with” the purpose of such a claim.  Therefore, employers should be aware that terminating an employee for making a preventative report of illegal activity could subject them to liability.

The foregoing is for informational purposes only, does not constitute legal advice regarding any particular situation, and should not be relied on as such.  Please contact one of our labor and employment lawyers if you have any questions.  The choice of a lawyer is an important decision and should not be based solely on advertisements.

This update was prepared by Charles S. Elbert and Kevin A. Sullivan.

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