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Palmateer v. International Harvester Co.





Appeal from the Appellate Court for the Third District; heard in that court on appeal from the Circuit Court of Rock Island County, the Hon. Dan H. McNeal, Judge, presiding.


The plaintiff, Ray Palmateer, complains of his discharge by International Harvester Company (IH). He had worked for IH for 16 years, rising from a unionized job at an hourly rate to a managerial position on a fixed salary. Following his discharge, Palmateer filed a four-count complaint against IH, alleging in count II that he had suffered a retaliatory discharge. According to the complaint, Palmateer was fired both for supplying information to local law-enforcement authorities that an IH employee might be involved in a violation of the Criminal Code of 1961 (Ill. Rev. Stat. 1979, ch. 38, par. 1-1 et seq.) and for agreeing to assist in the investigation and trial of the employee if requested. The circuit court of Rock Island County ruled the complaint failed to state a cause of action and dismissed it; the appellate court affirmed in a divided opinion. (85 Ill. App.3d 50.) We granted Palmateer leave to appeal to determine the contours of the tort of retaliatory discharge approved in Kelsay v. Motorola, Inc. (1978), 74 Ill.2d 172.

In Kelsay the plaintiff was discharged in retaliation for filing a worker's compensation claim. The court noted that public policy strongly favored the exercise of worker's compensation rights; if employees could be fired for filing compensation claims, that public policy would be frustrated. Despite a dissent urging that the creation of a new tort should be left to the legislature, the court said, "We are convinced that to uphold and implement this public policy a cause of action should exist for retaliatory discharge." (74 Ill.2d 172, 181.) The court then considered the claim for damages, and decided that punitive damages would be allowed in retaliatory discharge cases, but only in the future. The creation of the new tort, at a time when decisions in other jurisdictions conflicted on whether such a firing would be actionable, was sufficiently unexpected that Motorola was not required to pay punitive damages to Kelsay. This court directed, however, that in subsequent cases punitive damages would be available. 74 Ill.2d 172, 189.

With Kelsay, Illinois joined the growing number of States recognizing the tort of retaliatory discharge. The tort is an exception to the general rule that an "at-will" employment is terminable at any time for any or no cause. (Pleasure Driveway & Park District v. Jones (1977), 51 Ill. App.3d 182, 190.) This general rule is a harsh outgrowth of the notion of reciprocal rights and obligations in employment relationships — that if the employee can end his employment at any time under any condition, then the employer should have the same right. (Summers, Individual Protection Against Unjust Dismissal: Time for a Statute, 62 Va. L. Rev. 481, 484-85 (1976).) As one 19th century court put it:

"May I not refuse to trade with any one? May I not forbid my family to trade with any one? May I not dismiss my domestic servant for dealing, or even visiting, where I forbid? And if my domestic, why not my farm-hand, or my mechanic, or teamster? * * *

* * * All may dismiss their employes at will, be they many or few, for good cause, for no cause or even for cause morally wrong, without being thereby guilty of legal wrong." Payne v. Western & Atlantic R.R. Co. (1884), 81 Tenn. 507, 518-20.

Recent analysis has pointed out the shortcomings of the mutuality theory. With the rise of large corporations conducting specialized operations and employing relatively immobile workers who often have no other place to market their skills, recognition that the employer and employee do not stand on equal footing is realistic. (Blades, Employment At Will vs. Individual Freedom: On Limiting the Abusive Exercise of Employer Power, 67 Colum. L. Rev. 1404, 1405 (1967).) In addition, unchecked employer power, like unchecked employee power, has been seen to present a distinct threat to the public policy carefully considered and adopted by society as a whole. As a result, it is now recognized that a proper balance must be maintained among the employer's interest in operating a business efficiently and profitably, the employee's interest in earning a livelihood, and society's interest in seeing its public policies carried out.

By recognizing the tort of retaliatory discharge, Kelsay acknowledged the common law principle that parties to a contract may not incorporate in it rights and obligations which are clearly injurious to the public. (See People ex rel. Peabody v. Chicago Gas Trust Co. (1889), 130 Ill. 268, 294.) This principle is expressed forcefully in cases which insist that an employer is in contempt for discharging an employee who exercises the civic right and duty of serving on a jury. (People v. Vitucci (1964), 49 Ill. App.2d 171, 172; People v. Huggins (1930), 258 Ill. App. 238, 243; see also Ill. Rev. Stat. 1979, ch. 38, par. 155-3 (making it a contempt of court to fire or discipline an employee for attending court when subpoenaed as a witness).) But the Achilles heel of the principle lies in the definition of public policy. When a discharge contravenes public policy in any way the employer has committed a legal wrong. However, the employer retains the right to fire workers at will in cases "where no clear mandate of public policy is involved" (Leach v. Lauhoff Grain Co. (1977), 51 Ill. App.3d 1022, 1026). But what constitutes clearly mandated public policy?

There is no precise definition of the term. In general, it can be said that public policy concerns what is right and just and what affects the citizens of the State collectively. It is to be found in the State's constitution and statutes and, when they are silent, in its judicial decisions. (Smith v. Board of Education (1950), 405 Ill. 143, 147.) Although there is no precise line of demarcation dividing matters that are the subject of public policies from matters purely personal, a survey of cases in other States involving retaliatory discharges shows that a matter must strike at the heart of a citizen's social rights, duties, and responsibilities before the tort will be allowed. Thus, actions for retaliatory discharge have been allowed where the employee was fired for refusing to violate a statute. Examples are: Petermann v. International Brotherhood of Teamsters Local 396 (1959), 174 Cal.App.2d 184, 344 P.2d 25 (for refusing to commit perjury); Tameny v. Atlantic Richfield Co. (1980), 27 Cal.3d 167, 610 P.2d 1330, 164 Cal.Rptr. 839 (for refusing to engage in price-fixing); Harless v. First National Bank (W. Va. 1978), 246 S.E.2d 270 (for refusing to violate a consumer credit code); O'Sullivan v. Mallon (1978), 160 N.J. Super. 416, 390 A.2d 149 (for refusing to practice medicine without a license). It has also been allowed where the employee was fired for refusing to evade jury duty (Nees v. Hocks (1975), 272 Or. 210, 536 P.2d 512; Reuther v. Fowler & Williams, Inc. (1978), 255 Pa. Super. 28, 386 A.2d 119), for engaging in statutorily protected union activities (Glenn v. Clearman's Golden Cock Inn, Inc. (1961), 192 Cal.App.2d 793, 13 Cal.Rptr. 769), and for filing a claim under a worker's compensation statute (Sventko v. Kroger Co. (1976), 69 Mich. App. 644, 245 N.W.2d 151; Frampton v. Central Indiana Gas Co. (1973), 260 Ind. 249, 297 N.E.2d 425).

The action has not been allowed where the worker was discharged in a dispute over a company's internal management system (Keneally v. Orgain (1980), ___ Mont. ___, 606 P.2d 127), where the worker took too much sick leave (Jones v. Keogh (1979), 137 Vt. 562, 409 A.2d 581), where the worker tried to examine the company's books in his capacity as a shareholder (Campbell v. Ford Industries, Inc. (1976), 274 Or. 243, 546 P.2d 141), where the worker impugned the company's integrity (Abrisz v. Pulley Freight Lines, Inc. (Iowa 1978), 270 N.W.2d 454), where the worker refused to be examined by a psychological-stress evaluator (Larsen v. Motor Supply Co. (1977), 117 Ariz. 507, 573 P.2d 907), where the worker was attending night school (Scroghan v. Kraftco Corp. (Ky. App. 1977), 551 S.W.2d 811), or where the worker improperly used the employer's Christmas fund (Jackson v. Minidoka Irrigation District (1977), 98 Idaho 330, 563 P.2d 54).

The cause of action is allowed where the public policy is clear, but is denied where it is equally clear that only private interests are at stake. Where the nature of the interest at stake is muddled, the courts> have given conflicting answers as to whether the protection of the tort action is available. Compare the inconsistent results where the discharge was for opposition to sexual discrimination or harassment (McCluney v. Jos. Schlitz Brewing Co. (E.D. Wis. 1980), 489 F. Supp. 24, and Monge v. Beebe Rubber Co. (1974), 114 N.H. 130, 316 A.2d 549), for refusal to falsify official reports (Hinrichs v. Tranquilaire Hospital (Ala. 1977), 352 So.2d 1130, and Trombetta v. Detroit, Toledo & Ironton R.R. Co. (1978), 81 Mich. App. 489, 265 N.W.2d 385), and over internal company disputes regarding product safety (Geary v. United States Steel Corp. (1974), 456 Pa. 171, 319 A.2d 174, and Pierce v. Ortho Pharmaceutical Corp. (1979), 166 N.J. Super. 335, 399 A.2d 1023).

It is clear that Palmateer has here alleged that he was fired in violation of an established public policy. The claim is that he was discharged for supplying information to a local law-enforcement agency that an IH employee might be violating the Criminal Code, for agreeing to gather further evidence implicating the employee, and for intending to testify at the employee's trial, if it came to that. Because of the procedural posture of the case, these allegations must be accepted as true. (Fitzgerald v. Chicago Title & Trust Co. (1978), 72 Ill.2d 179, 187.) There is no public policy more basic, nothing more implicit in the concept of ordered liberty (see Palko v. Connecticut (1937), 302 U.S. 319, 325, 82 L.Ed. 288, 292, 58 S.Ct. 149, 152), than the enforcement of a State's criminal code. (See Hewitt v. Hewitt (1979), 77 Ill.2d 49, 61-62; Jarrett v. Jarrett (1979), 78 Ill.2d 337, 345.) There is no public policy more important or more fundamental than the one favoring the effective protection of the lives and property of citizens. See Ill. Const. 1970, Preamble; Marbury v. Madison (1803), 5 U.S. (1 Cranch) 137, 163, 2 L.Ed. 60, 69.

No specific constitutional or statutory provision requires a citizen to take an active part in the ferreting out and prosecution of crime, but public policy nevertheless favors citizen crime-fighters. "Public policy favors the exposure of crime, and the cooperation of citizens possessing knowledge thereof is essential to effective implementation of that policy. Persons acting in good faith who have probable cause to believe crimes have been committed should not be deterred from reporting them by the fear of unfounded suits by those accused." (Joiner v. Benton Community Bank (1980), 82 Ill.2d 40, 44.) Although Joiner involved actions for malicious prosecution, the same can be said for the citizen employee who fears discharge. Public policy favors Palmateer's conduct in volunteering information to the law-enforcement agency. Once the possibility of crime was reported, Palmateer was under a statutory duty to further assist officials when requested to do so. (Ill. Rev. Stat. 1979, ch. 38, par. 31-8.) Public policy thus also favors Palmateer's agreement to assist in the investigation and prosecution of the suspected crime.

The foundation of the tort of retaliatory discharge lies in the protection of public policy, and there is a clear public policy favoring investigation and prosecution of criminal offenses. Palmateer has stated a cause of action for retaliatory discharge.

IH contends that even if there is a public policy discouraging violations of the Criminal Code, that public policy has too wide a sweep. IH points out that the crime here might be nothing more than the theft of a $2 screwdriver. It feels that in the exercise of its sound business judgment it ought to be able to properly fire a managerial employee who recklessly and precipitously resorts to the criminal justice system to handle such a personnel problem. But this response misses the point. The magnitude of the crime is not the issue here. It was the General Assembly, the People's representatives, who decided that the theft of a $2 screwdriver was a problem that should be resolved by resort to the criminal justice system. IH's business judgment, no matter how sound, cannot override that decision. "[T]he employer is not so absolute a sovereign of the job that there are not limits to his prerogative." (Tameny v. Atlantic ...

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