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Fiumetto v. Garrett Enterprises

April 25, 2001

RHONDA FIUMETTO, PLAINTIFF-APPELLANT,
v.
GARRETT ENTERPRISES, INC., AND CLAUDIA DUNBAR GARRETT, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Lake County. No. 98--L--149 Honorable Charles F. Scott, Judge, Presiding.

The opinion of the court was delivered by: Justice Grometer

Plaintiff, Rhonda Fiumetto, appeals an order of the circuit court of Lake County dismissing her two-count second amended complaint against defendants, Garrett Enterprises, Inc. (the corporation), and Claudia Dunbar Garrett (Garrett) (collectively defendants). In count I, plaintiff asserted an action for retaliatory discharge based on violations of portions of the Unemployment Insurance Act (Unemployment Act) (820 ILCS 405/100 et seq. (West 1996)). In count II, plaintiff sought recovery on the theory that her discharge constituted tortious interference with a business advantage. Plaintiff also appeals a grant of partial summary judgment made by the trial court prior to the filing of her second amended complaint, holding that plaintiff was not entitled to pierce the corporate veil and impose liability on Garrett individually. For the following reasons, we reverse in part, affirm in part, and remand this case for further proceedings.

I. BACKGROUND

Plaintiff was employed as a dance and gymnastics instructor by Garrett Enterprises, Inc., working between 16 and 28 hours per week. The availability of work diminished over the summer, as did the number of hours plaintiff worked; however, she was scheduled to work late in July 1997. Plaintiff alleges that on July 21, 1997, she informed Garrett that she had filed for unemployment. According to plaintiff, Garrett replied, "This is the end to a bad marriage. I can't believe you filed for unemployment. *** [Y]ou're going to cost me $100 a week." Plaintiff was then terminated. Thereafter, Garrett contested plaintiff's unemployment claim and, during that proceeding, allegedly admitted that plaintiff was terminated for filing for unemployment. Garrett filed an answer disputing plaintiff's version of events.

Plaintiff was employed with the business when Garrett purchased it in 1994. Garrett was the sole shareholder and president of the corporation. No director's meetings were held. Garrett infused money into the corporation through a series of loans. Subsequent to the initiation of this action, Garrett sold all of the assets of the corporation and used some of the proceeds to satisfy loans from herself and her ex-husband. Additional facts will be discussed as they relate to the issues raised by the parties.

II. RETALIATORY DISCHARGE

Plaintiff first contends that the trial court erred in dismissing her claim for retaliatory discharge pursuant to section 2--615 of the Code of Civil Procedure. 735 ILCS 5/2--615 (West 1998). The propriety of a dismissal under section 2--615 is a question of law, which we review de novo. Board of Directors of Bloomfield Club Recreation Ass'n v. Hoffman Group, Inc., 186 Ill. 2d 419, 424 (1999). In order to establish a cause of action for retaliatory discharge, plaintiffs must demonstrate that they were discharged in retaliation for their activities and that the discharge violated a clear mandate of public policy. Hartlein v. Illinois Power Co., 151 Ill. 2d 142, 160 (1992). Retaliatory discharge actions have traditionally been allowed in two situations: when an employee is discharged for seeking workers' compensation benefits and when an employee is discharged for reporting misconduct by the employer. Howard v. Zack Co., 264 Ill. App. 3d 1012, 1022 (1994). It is undisputed that plaintiff was discharged, and plaintiff has alleged that the motivation for this discharge was retaliation for seeking unemployment benefits. Hence, the issue presented here is whether a discharge in retaliation for seeking benefits under the Unemployment Act (820 ILCS 405/100 et seq. (West 1996)) violates public policy such that it supports a cause of action for retaliatory discharge. We conclude that it does.

Plaintiff asserts that her discharge violated public policy as expressed in the Unemployment Act. See 820 ILCS 405/100 (West 1996).

The Unemployment Act contains the following extensive statement of its underlying purpose:

"As a guide to the interpretation and application of this Act the public policy of the State is declared as follows: Economic insecurity due to involuntary unemployment has become a serious menace to the health, safety, morals and welfare of the people of the State of Illinois. Involuntary unemployment is, therefore, a subject of general interest and concern which requires appropriate action by the legislature to prevent its spread and to lighten its burden which now so often falls with crushing force upon the unemployed worker and his family. Poverty, distress and suffering have prevailed throughout the State because funds have not been accumulated in times of plentiful opportunities for employment for the support of unemployed workers and their families during periods of unemployment, and the taxpayers have been unfairly burdened with the cost of supporting able-bodied workers who are unable to secure employment. Farmers and rural communities particularly are unjustly burdened with increased taxation for the support of industrial workers at the very time when agricultural incomes are reduced by lack of purchasing power in the urban markets. It is the considered judgment of the General Assembly that in order to lessen the menace to the health, safety and morals of the people of Illinois, and to encourage stabilization of employment, compulsory unemployment insurance *** is necessary." 820 ILCS 405/100 (West 1996).

Thus, the plain language of the Unemployment Act indicates that its purpose is to lessen the burden of unemployment upon unemployed workers. See Chicago Transit Authority v. Didrickson, 276 Ill. App. 3d 773, 777 (1995); Jones v. Department of Employment Security, 276 Ill. App. 3d 281, 284 (1995). It is well established that the Unemployment Act is remedial in nature. See, e.g., Bailey & Associates, Inc. v. Department of Employment Security, 289 Ill. App. 3d 310, 318 (1997); Howard v. Forbes, 185 Ill. App. 3d 148, 151 (1989). As a remedial act, it must be liberally construed. Bridgestone/Firestone, Inc. v. Aldridge, 179 Ill. 2d 141, 155 (1997); Bethania Ass'n v. Jackson, 262 Ill. App. 3d 773, 777 (1994).

The Unemployment Act, however, does not expressly grant a private right of action for individuals discharged in retaliation for seeking unemployment benefits. 820 ILCS 405/100 et seq. (West 1996). This omission does not necessarily resolve this issue against plaintiff. Fisher v. Lexington Health Care, Inc., 188 Ill. 2d 455, 460 (1999). In appropriate circumstances, a private right of action may be implied from a statute. Rodgers v. St. Mary's Hospital, 149 Ill. 2d 302, 308 (1992). The existence of such a right of action may be implied if "(1) the plaintiff is a member of the class for whose benefit the statute was enacted; (2) the plaintiff's injury is one the statute was designed to prevent; (3) a private right of action is consistent with the underlying purpose of the statute; and (4) implying a private right of action is necessary to provide an adequate remedy for violations of the statute." Fisher, 188 Ill. 2d at 460.

In Fisher, the supreme court emphasized that employment-at-will is the general rule in Illinois and that the tort of retaliatory discharge provides only a narrow exception. Fisher, 188 Ill. 2d at 467. The court noted that it has "consistently sought to restrict" this tort. Fisher, 188 Ill. 2d at 467. In the absence of explicit legislative authority, courts must hesitate to imply these actions. Fisher, 188 Ill. 2d at 468. However, the Fisher court also reaffirmed that private rights of action could be implied in appropriate circumstances. Fisher, 188 Ill. 2d at 460. Indeed, our supreme court recently pronounced that "[i]mplied private rights of action are an established feature of our jurisprudence." Noyola v. Board of Education, 179 Ill. 2d 121, 128 (1997). Thus, while a court should not lightly conclude that a private right of action is implied by a statute, if the four-prong test set forth in Fisher, 188 Ill. 2d at 460, is satisfied, such a right exists under Illinois law.

Under the first prong of this test, plaintiffs must be members of the class that the statute was intended to benefit. Fisher, 188 Ill. 2d at 460. The purpose of the Unemployment Act must be considered as a whole. Fisher, 188 Ill. 2d at 462-63. The primary purpose of the Unemployment Act is to lessen the burden of unemployment upon unemployed workers. Wadlington v. Mindes, 45 Ill. 2d 447, 452 (1970), quoting Illinois Bell Telephone Co. v. Board of Review of the Department of Labor, 413 Ill. 37, 43 (1952) ("The primary purpose of the Illinois Unemployment [Insurance] Act is to relieve 'economic distress caused by involuntary unemployment' "). Plaintiff, as an unemployed person, is clearly a member of the class for whose benefit the statute was enacted.

Defendants argue that plaintiff is not a member of this class because she has not filed this action as a person seeking interim monetary relief to alleviate the burden of being unemployed. Additionally, according to defendants, plaintiff has already availed herself of the proper remedy by seeking benefits under the Unemployment Act (820 ILCS 405/100 (West 1996)). Defendants read this prong too narrowly and ignore the fact that, at the time of her discharge, plaintiff was an unemployed person seeking unemployment insurance. Whether she filed the present action as a person seeking interim benefits or as a person seeking compensation for a retaliatory discharge sheds no additional light upon whether plaintiff is a member of the class protected by the Unemployment Act. See Midgett v. Sackett- Chicago, Inc., 105 Ill. 2d 143, 146 (1984) (where the plaintiff, alleging he was discharged for filing a workers' compensation claim, filed an action for retaliatory discharge after the workers' compensation claim had been settled). The mere fact that plaintiff was an unemployed person places her squarely within the class the statute was intended to benefit.

The second prong of the test requires that the injury suffered by the plaintiff be one that the statute is designed to protect. Fisher, 188 Ill. 2d at 460. Here, we note that the Unemployment Act is intended to provide interim economic relief to persons who become unemployed. Wadlington, 45 Ill. 2d at 452. Plaintiff alleged that she had been earning $18.25 per hour. Thus, plaintiff's unemployment caused her to suffer a significant reduction in income. Alleviating the burden caused by such a reduction is the evil the Unemployment Act seeks to remedy. See 820 ILCS 405/100 (West 1996). Being discharged for seeking benefits obviously compounds this problem. In particular, it turns a temporary period of unemployment into a permanent one, subjecting the employee to continued economic distress. Furthermore, if an employer is allowed to threaten an employee with termination, the employee might be dissuaded from seeking benefits. Terminating one employee might cause other employees to refrain from seeking benefits during periods of unemployment. Thus, the defendants' conduct, as alleged, would serve to perpetuate the injury that the Unemployment Act seeks to cure. Cf. Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 184 (1978) ("[W]e cannot accept a construction of section 11 which would allow ...


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