Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 1:06-CV-23-Theresa L. Springmann, Judge.
The opinion of the court was delivered by: Evans, Circuit Judge.
ARGUED SEPTEMBER 25, 2008
Before POSNER, FLAUM, and EVANS, Circuit Judges.
After Donald A. Bregin was discharged from his employment at Liquidebt Systems, Inc. (LSI) he filed this lawsuit, contending that his discharge was in retaliation for his refusal to participate in illegal accounting practices or, alternatively, for being a whistle-blower, and that SIRVA, Inc. (in conspiracy with LSI) tortiously interfered with his employment. The district court granted summary judgment for both companies, and Bregin appeals. Our review is de novo. Alexander v. Wis. Dep't of Health and Family Servs., 263 F.3d 673 (7th Cir. 2001).
SIRVA provides relocation and moving services; North American Van Lines, Inc. (NAVL) is its subsidiary. Until the late 1990s Bregin worked at NAVL doing, primarily, the collecting of accounts receivable. He than was a subcontractor for LSI and, later, he worked as a consultant for SIRVA. At SIRVA his job was to identify ways SIRVA could improve its collections procedures. Near the end of his time as a consultant, he provided a "To-Do List" for SIRVA. In preparing the list he reported that internal financial documents were incorrect in that SIRVA included, in accounts receivable, money that should have been refunded to customers.
Also during this period NAVL decided to outsource its collection efforts. At this point LSI entered the picture. It negotiated with NAVL to provide collection services. As a consultant to NAVL's parent, SIRVA, Bregin was involved in the negotiations that resulted in a contract between NAVL and LSI, which the parties refer to as the LSI/SIRVA contract. Bregin was also involved in determining the benchmark for evaluating LSI's performance under the contract.
LSI expressed an interest in hiring Bregin to oversee the SIRVA account. SIRVA liked the idea because of Bregin's familiarity with SIRVA and its employees. So it happened that Bregin became LSI's vice-president of operations and was considered the project manager on the SIRVA account. He no longer had an employment relationship of any kind with SIRVA or NAVL.
As part of LSI's responsibility for collecting SIRVA's outstanding customer accounts, LSI employees were to contact SIRVA's customers as soon as an invoice was past due. Payments were made directly to SIRVA. LSI was not involved in either calculating SIRVA's accounts or handling refunds and credits.
To evaluate LSI's performance, SIRVA measured how quickly receivables were collected, referred to as the days sales billed (DSB). Under the contract, LSI's performance goal-or "benchmark"-was to improve collection of SIRVA's accounts receivable by 10 percent during 2003. The 2003 DSB would be compared to the 2002 DSB to see whether LSI met the benchmark. The maximum incentive for LSI to exceed the benchmark was a payment of $150,000; the maximum penalty for failing to meet it was also $150,000.
SIRVA regularly reviewed LSI's performance. During the spring and summer of 2003, LSI failed to lower the DSB, causing officials at SIRVA to express concern about the job LSI was doing. Bregin believed that because of certain accounting practices (for instance, including customer overpayments in accounts receivable), the DSB did not accurately reflect LSI's performance. Bregin did not think the numbers for the two years-2002 and 2003-were comparable and believed that the manner in which the 2003 figures were calculated made it impossible for LSI to improve its performance. He repeatedly discussed his concerns with James Drolshagen, the president and sole shareholder of LSI, and with Tom McKenna, LSI's director of client relations. Bregin requested that SIRVA recalculate the DSB. Throughout this time period, SIRVA continued to doubt whether LSI could meet the contract goals, and Bregin continued to believe that it was SIRVA's accounting that created a perception that LSI was not performing adequately.
In the fall, it became clear to Drolshagen that LSI was not meeting its performance goals under Bregin's leadership. He called it a "monumental failure." But because Bregin continued to blame the problem on SIRVA's treatment of its accounts receivable, Drolshagen asked McKenna to independently evaluate Bregin's complaints. If McKenna found that the complaints were well-founded, Drolshagen intended to demand relief from the penalty provisions in the contract. But, instead, what McKenna concluded was that LSI's performance was so poor that the company would be subject to a penalty even if SIRVA made the changes Bregin requested.
In November 2003, Drolshagen removed Bregin from the SIRVA account but kept him on the payroll at $110,000 per year. Drolshagen told Bregin that if "he could bring in some customers for us, that would be a way of him maintaining his position." Bregin failed to draw in new clients, and in December his employment was terminated. LSI did not meet the benchmark in 2003 and was assessed the $150,000 penalty.
Bregin filed this lawsuit under Indiana law, contending, in part, that LSI terminated his employment in retaliation for his reporting SIRVA's illegal financial practices, for refusing to engage in those practices, or for being a whistle-blower. Given the undisputed facts, the claim must fail.
Recently, the Indiana Supreme Court reaffirmed the Indiana employment-at-will doctrine which "permits both the employer and the employee to terminate the employment at any time for a 'good reason, bad reason, or no reason at all.'" Meyers v. Meyers, 861 N.E.2d 704, 706 (Ind. 2007), quoting Montgomery v. Bd. of Trustees of Purdue Univ., 849 N.E.2d 1120, 1128 (Ind. 2006). The court stated that on "rare occasions, narrow exceptions have been recognized." Meyers, at 706. On one "rare" occasion a "narrow" exception was found in McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390 (Ind. 1988). McClanahan was a truck driver who was permitted to pursue a cause of action against an employer who fired him for refusing to haul a load that exceeded the weight limits on Illinois highways. He could have been personally liable for a violation. A narrow exception to at-will employment was recognized in that case to avoid encouraging criminal conduct. A second exception is set out in Frampton v. Central Indiana Gas Co., 297 N.E.2d 425 (Ind. 1973). The court found a cause of action for retaliatory discharge based on explicit language in a statute-the Indiana Worker's Compensation Act. The court said that "under ordinary circumstances, an employee at will may be discharged without cause. However, when an employee is discharged solely for exercising a statutorily conferred right an exception to ...