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Herbster v. No. Amer. Co. For Life & He. Ins.

OPINION FILED NOVEMBER 26, 1986.

ROBERT W. HERBSTER, PLAINTIFF-APPELLANT,

v.

NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Kane County; the Hon. Marvin D. Dunn, Judge, presiding. JUSTICE STROUSE DELIVERED THE OPINION OF THE COURT:

The plaintiff, Robert W. Herbster, a licensed attorney, brought suit for retaliatory discharge against his employer, North American Company for Life and Health Insurance (North American). The suit was premised on plaintiff's refusal to destroy or remove documents from North American's files which had been requested in lawsuits pending in the Federal court in Alabama against North American and other insurance companies. These documents were generated by North American in its actuarial department and contained information which, if made available to the Alabama plaintiffs, tended to support allegations of fraud in the sale of so-called flexible annuities sold by North American. On December 28, 1984, the trial court granted North American's motion for summary judgment. This appeal followed.

The plaintiff was employed as chief legal officer and vice-president in charge of the legal department for North American under an oral contract which was terminable at will. Plaintiff claimed that he was discharged for refusing to destroy or remove discovery information. He further alleged that if he had not refused, it would have constituted a fraud on the Federal court of Alabama and would have caused him to violate Rules 1-102(5) and 7-109(a) of the Code of Professional Responsibility (87 Ill.2d Rules 1-102(5), 7-109(a)).

North American filed its motion for summary judgment charging that: (1) there was no genuine issue as to any material fact; (2) there was no cause of action for retaliatory discharge by an attorney who is terminated by his client; (3) plaintiff was discharged because of the quality of his work; and (4) they never ordered, demanded, or directed plaintiff to destroy or remove any discovery information.

The trial court granted summary judgment to North American because of the attorney-client relationship. Plaintiff appeals.

• 1 There are two elements to a claim for retaliatory discharge: (1) the employer discharged the employee in retaliation for the employee's activities, and (2) the discharge was in contravention of a clearly mandated public policy. Midgett v. Sackett-Chicago, Inc. (1984), 105 Ill.2d 143, 148; Palmateer v. International Harvester Co. (1981), 85 Ill.2d 124.

There is no question that there are public policy considerations in this case to support the second element of the tort. Supreme Court Rules would be contravened (87 Ill.2d Rules 1-102, 7-102(a)(3), 7-109(a)); justice would be obstructed (see, e.g., Ill. Rev. Stat. 1983, ch. 38, par. 31-4(a)); and destroying documents would be fundamentally incompatible with this State's broad discovery policies (Consolidation Coal Co. v. Bucyrus-Erie Co. (1982), 89 Ill.2d 103, 118). Clearly, these matters "strike at the heart of a citizen's social rights, duties, and responsibilities." Palmateer v. International Harvester Co. (1981), 85 Ill.2d 124, 130.

We must decide, however, whether an attorney, as general counsel and an employee of a corporation, is entitled to bring a claim for retaliatory discharge. Counsel does not cite nor does our research disclose any case on point. Therefore, we must examine the historical considerations of the tort itself and whether plaintiff is an employee within the meaning of established case law.

• 2 In 1978, our supreme court determined that an employee discharged for taking advantage of the benefits of the Workers' Compensation Act (Act) (Ill. Rev. Stat. 1977, ch. 48, par. 138.1 et seq.), even though he was terminable at will, could sue for the tort of retaliatory discharge. (Kelsay v. Motorola, Inc. (1978), 74 Ill.2d 172.) The tort was recognized as an exception to the general rule that an at-will employee has no recourse for discharge. The court held that an employer's otherwise absolute power to terminate at will should not prevail when it was exercised to prevent an employee from asserting his statutory rights under the Act and that the Act itself would be seriously undermined if such conduct were permitted. In so holding, the court realized that many employees whose common law rights had been supplanted by the Act would be left without a remedy since they would want to keep their jobs rather than seek compensation under the Act. (Kelsay v. Motorola, Inc. (1978), 74 Ill.2d 172, 182.) The court refused to accept a construction of the Act which allowed employers to place employees in the position of choosing between their jobs and seeking compensation. 74 Ill.2d 172, 184.

In Palmateer v. International Harvester Co. (1981), 85 Ill.2d 124, the supreme court again considered the tort of retaliatory discharge. An employee of International Harvester alleged that he was discharged both for supplying information to local law-enforcement authorities that another employee might be involved in a violation of the Criminal Code and for agreeing to assist in the investigation and trial of the employer if requested. The court emphasized the growing need for the tort of retaliatory discharge as an exception to the general rule that an at-will employment is terminable without cause at any time. 85 Ill.2d 124, 128.

With the rise of large corporations conducting specialized operations, and the employment of relatively immobile workers who often have no other place to market their skills, this exception realistically recognized that an employer and an employee do not stand on equal footing. The exception also recognized that unchecked employer power presented a distinct threat to public policies adopted by society as a whole. Thus, the court maintained a proper balance between the employer's interest in operating a business efficiently, the employee's interest in earning a livelihood, and society's interest in seeing that public policies are carried out. (Palmateer v. International Harvester Co. (1981), 85 Ill.2d 124, 129.) The court reviewed retaliatory-discharge cases from other States. The cause of action was generally allowed when a well-defined public policy was at stake. Where purely private interests were concerned and there was no well-defined public policy, the claim was disallowed. 85 Ill.2d 124, 131.

As the lower courts in Illinois applied the law, they were not in accord when employees were covered by a union contract with a grievance procedure to protect them. Midgett v. Sackett-Chicago, Inc. (1984), 105 Ill.2d 143, resolved that conflict in holding that there was no valid reason to protect non-contractual employees while limiting contractual employees to remedies under collective-bargaining agreements. The punitive damages remedy afforded by the tort of retaliatory discharge added a remedy not provided for in union contracts, and such damages should discourage an employer's misconduct in the future. Midgett v. Sackett-Chicago, Inc. (1985), 105 Ill.2d 143, 150.

Recently, the supreme court again extended the tort of retaliatory discharge to apply to a municipal employee who sought benefits under the Workers' Compensation Act. (Boyles v. Greater Peoria Mass. Transit District (1986), 113 Ill.2d 545.) The court, however, limited its expansion by upholding a statute prohibiting punitive damages against municipalities.

Although the tort has been extended since it was recognized less than a decade ago, the supreme court admonished against expanding it in Barr v. Kelso-Burnett Co. (1985), 106 Ill.2d 520. The court stated:

"[T]his court has not, by its Palmateer and Kelsay decisions, `rejected a narrow interpretation of the retaliatory discharge tort' and does not `strongly support' the expansion of the tort. The common law doctrine that an employer may discharge an employee-at-will for any reason or for no reason is still the law in Illinois * * *." (106 Ill.2d ...


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