TIMOTHY TODD FARRELL v. AMERICAN RETIREMENT CORPORATION
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RENDERED:
SEPTEMBER 1, 2006; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2005-CA-001126-MR
TIMOTHY TODD FARRELL
APPELLANT
APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE SHEILA R. ISAAC, JUDGE
ACTION NO. 02-CI-02605
v.
AMERICAN RETIREMENT CORPORATION
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUIDULGI AND SCHRODER, JUDGES; MILLER,1 SPECIAL JUDGE.
GUIDUGLI, JUDGE:
Timothy Todd Farrell has appealed from the
Fayette Circuit Court’s summary judgment dismissing his wrongful
discharge claim against his former employer, American Retirement
Corporation.
The sole issue on appeal concerns whether Farrell
proved that ARC directed him to violate Kentucky’s alcohol and
child labor laws and subsequently violated public policy when it
discharged him when he refused to do so.
1
Because we agree that
Retired Judge John D. Miller, sitting as Special Judge by assignment of the
Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution.
Farrell did not meet his burden of proof to establish that ARC
requested him to violate the law, we affirm.
ARC is a Tennessee corporation that operates
retirement living facilities.
One of these facilities, Richmond
Place, is located in Lexington, Kentucky.
Richmond Place offers
dining services for its residents and their guests, and hosts
special events, including “social hours.”
In June 2001, former
Richmond Place Executive Director M.T. Meaney hired Farrell in
the position of Dining Services Director.
In this position,
Farrell was responsible for all aspects of the food service
operations for Richmond Place’s residents and employees.
Over
the course of his employment, Farrell grew concerned about
Richmond Place’s alcohol policies.
For many years and despite its lack of a liquor
license, Richmond Place hosted weekly open-bar “social hours”
and routinely served wine at the dinner meal three times per
week at no additional cost.
As director, Farrell would order
and purchase alcohol at a local Liquor Barn on an open account,
and his employees would serve the alcohol in the dining room.
Many of those employees were under the age of 21, and some were
under the age of 18.
By early April 2002, Farrell’s concerns regarding
Richmond Place’s continued violations of Kentucky’s alcohol and
child labor laws had grown to such an extent that he anonymously
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contacted the local office of the Kentucky Alcoholic Beverage
Commission and spoke to a detective.
He also contacted Richmond
Place’s deputy Executive Director, Terry Bishop, and ARC’s Human
Resources Director, Lisa Haley.
Haley contacted ARC’s Regional
Director for Human Resources, Barbara Schmidt Best, regarding
the company’s alcohol policies.
Best told Haley that if the law
required it, Richmond Place would have to apply for and obtain a
liquor license.
In addition to Bishop and Haley, Farrell also
contacted ARC’s Corporate Dining Services Director, Roger
McAleese, who in turn discussed the matter with Tambry Cundiff,
who had recently been hired as Richmond Place’s new Executive
Director.
Cundiff and McAleese met with Farrell to discuss the
alcohol issues, reviewed the statutes Farrell had provided them,
and sought legal advice from outside counsel to determine
whether Richmond Place was compliant with the applicable law.
In the meantime, Farrell again contacted the police in
late April, this time leaving his name.
By early May just prior
to a planned Richmond Place Derby Day party, he indicated to
Detective Taylor that the stress was getting to him, and was
assured that no charges would be brought against him.
Farrell
contacted Cundiff the morning of Derby Day to tell her he would
not continue to break the law.
Cundiff, in turn, contacted Fred
Ewing, ARC’s Vice President of Operations, who recommended that
the status quo be maintained until legal advice had been
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obtained.
When Cundiff reported this to Farrell, he requested
that he be permitted to take some time off, which Cundiff
approved.
A few days later, Farrell sent Cundiff an e-mail in
follow up to their conversation the preceding Saturday.
In the
e-mail, Farrell stated that despite Ewing’s request that the
status quo be maintained and that he was to continue serving
alcohol, he was refusing to do so, and was further instructing
his staff not to serve alcohol to Richmond Place’s residents.
Cundiff responded to Farrell’s e-mail the same day,
discussing in great detail the results of the investigation into
Richmond Place’s alcohol policies.
The body of the e-mail reads
as follows:
Tim,
I appreciate receiving your e-mail today
regarding our conversation on Saturday, May
4, 2002. As I’ve explained to you, the
delayed response to these items was
necessary in order to fully investigate
Kentucky state liquor law compliance as it
relates to Richmond Place. Today, we
received an independent evaluation from our
attorney, Mark Overstreet, that indicates we
are in fact, substantially compliant with
Kentucky state law. With this information
in hand, we are pleased to know that there
will be no compliance issues beginning May
7, 2002.
We have confirmed that our liquor orders,
purchase[d] by check at retail prices and
pick ups by our of age employee, and the
fact that we are not selling anything to
anyone, is compliant with Kentucky state
laws. For social hour, as long as a
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majority of the attendees are residents of
Richmond Place, we are compliant with
Kentucky state law. To our knowledge, this
has not been an issue at Richmond Place to
date. As for wine in the Dining Room,
effective May 7, 2002, we will NO LONGER
serve in the dining room. Wine will be
served in a closed environment before the
evening meal by staff that is age
appropriate. No alcoholic beverages will be
served or handled in any way by any employee
under the age of 18.
As a result of our investigation, we
consider Richmond Place to be fully
compliant with Kentucky state law beginning
on May 7, 2002. In addition, I have the
expectation that you will fully cooperate
and fulfill your role here at Richmond Place
as Food Service Director.
I look forward to meeting with you on
Wednesday.
Tamb[r]y
Farrell forwarded this e-mail to Detective Taylor, who then
contacted McAleese regarding several additional areas of noncompliance, including that employees must be 21 years old to
serve alcohol, that alcohol could not be served on Election Day,
and that alcohol could not be purchased on credit.
Cundiff sent
out memos to the Richmond Place residents on May 7 and May 9
detailing all of the changes.
On May 8, 2002, Farrell met with Cundiff and McAleese.
Farrell indicated that he was pleased with the outcome of the
alcohol compliance issue.
However, he did point out that no one
under the age of 21 was permitted by law to serve alcohol.
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Cundiff then presented Farrell with an “Action Plan for
Success”.
She and McAleese gave Farrell 24 hours to decide
whether he wanted to comply with their requests or resign his
employment.
Cundiff denied Farrell’s request that he be
permitted to go home to think about the situation, as he had
already been off work on his requested vacation days for the
past three days.
Farrell then left his employment.
He later
turned down ARC’s offer to rehire him in his same position,
citing Richmond Place’s hostile environment.
On June 24, 2002, Farrell filed a complaint in Fayette
Circuit Court, seeking damages for wrongful discharge, alleging
that he was terminated for his failure to agree to continue
violating Kentucky’s liquor and child labor laws.
ARC disputed
his claim, asserting in its answer that once it received an
opinion regarding Farrell’s concerns, Richmond Place changed its
practices, and that Farrell had not been terminated, but rather
had resigned.
After several years of discovery, ARC moved for
summary judgment, arguing that Farrell could not establish that
he had been discharged, in fact or constructively, or that he
had been asked to violate any laws.
In response, Farrell
contended that he was forced to resign and that he refused to
comply with the instruction that he maintain the status quo with
regard to Richmond Place’s alcohol policy.
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On April 12, 2005, the circuit court entered a summary
judgment, thereby dismissing Farrell’s claim.
For purposes of
its ruling, the circuit court assumed that Farrell had been
terminated, as opposed to having resigned.
The circuit court
then addressed whether Farrell’s termination was in violation of
public policy:
The court, in considering whether the
defendant is entitled to a summary judgment,
presumes the facts as set out by the
plaintiff. There is no dispute that the
plaintiff was an at-will employee of ARC,
the defendant. In Kentucky, “ordinarily an
employer may discharge his at-will employee
for good cause, for no cause, or for a cause
that some might view as morally
indefensible.[”] Firestone Tire and Rubber
Co. v. Meadows, 666 S.W.2d 730, 731 (Ky.
1983). Firestone goes on to state that the
narrow exception to the doctrine is that
employees discharged in violation of public
policy may bring claims for wrongful
termination. Using the reasoning in the
case of Grzyb, Maloney, Marks, and Ashland
Hospital Corp. v. Evans, 700 S.W.2d 399 (Ky.
1985), in order to prevail in light of
defendant’s motion for summary judgment,
this plaintiff must prove that he was
discharged for his failure or refusal to
violate a law in the course of employment.
Plaintiff relies on the case of
Northeast Health Management, Inc. v. Cotton,
56 S.W.3d 440 (Ky.App. 2001), to support his
position. However, in that case the
employees were asked to commit perjury,
clearly a violation of the law. In the case
sub judice, the situation is more like that
in Brock v. Britthaven, Inc., 1999 U.S.
Dist. LEXIS 12184 (E.D.Ky. Apr. 23, 1999),
where the fired employee believed that his
nursing home employer was not complying with
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legal requirements relating to patient care.
Like this case, there can be legitimate
legal issues about exactly what the law
requires. It is not at all clear about what
practices may violate the law. The
defendant took immediate and appropriate
steps to investigate the plaintiff’s
concerns. They sought advice of counsel.
All practices that may have violated
Kentucky liquor laws were immediately
addressed in such a way that even the
plaintiff was satisfied and comfortable with
the level of compliance. It is clear from
Brock that a wrongful discharge claim cannot
stand where the employee was never
instructed to violate the law. Plaintiff
has failed as a matter of law to prove that
his discharge violated public policy because
he fails to submit any proof that the
defendant instructed him to violate the law.
Farrell filed a motion to reconsider or set aside the summary
judgment, and the circuit court heard oral arguments solely on
whether Farrell was terminated for his refusal to violate the
law.
The circuit court recognized on the record that ARC took
quick steps to bring Richmond Place into compliance once the
research into the compliance issue was completed, and could
identify no proof that Farrell was terminated for his refusal to
violate the law.
The motion to reconsider was denied, and this
appeal followed.
The sole issue before us on appeal is whether the
circuit court properly concluded that Farrell failed to
establish any proof that he was terminated for his refusal to
violate Kentucky’s alcohol and child labor laws, and that ARC
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was entitled to a summary judgment as a matter of law.
Farrell
maintains that the proof of record he developed supports his
claim, while ARC disputes this assertion.
In addition, ARC
argues in the alternative that Farrell failed to establish that
his employment had been terminated.
We agree with ARC that
Farrell did not meet his burden of proof
Our standard of review in an appeal from the entry of
a summary judgment is well settled in this Commonwealth.
This
Court addressed the applicable standard in Lewis v. B&R Corp.2
and defined it as follows:
The standard of review on appeal when a
trial court grants a motion for summary
judgment is “whether the trial court
correctly found that there were no genuine
issues as to any material fact and that the
moving party was entitled to judgment as a
matter of law.” The trial court must view
the evidence in the light most favorable to
the nonmoving party, and summary judgment
should be granted only if it appears
impossible that the nonmoving party will be
able to produce evidence at trial warranting
a judgment in his favor. The moving party
bears the initial burden of showing that no
genuine issue of material fact exists, and
then the burden shifts to the party opposing
summary judgment to present “at least some
affirmative evidence showing that there is a
genuine issue of material fact for trial.”
The trial court “must examine the evidence,
not to decide any issue of fact, but to
discover if a real issue exists.” While the
Court in Steelvest[, Inc. v. Scansteel
Service Center, Inc., 807 S.W.2d 476, 480
(Ky. 1991),] used the word “impossible” in
2
56 S.W.3d 432, 436 (Ky.App. 2001).
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describing the strict standard for summary
judgment, the Supreme Court later stated
that that word was “used in a practical
sense, not in an absolute sense.” Because
summary judgment involves only legal
questions and the existence of any disputed
material issues of fact, an appellate court
need not defer to the trial court’s decision
and will review the issue de novo.
(Citations in footnotes omitted.)
With this standard in mind, we shall review the circuit court’s
judgment.
As evidenced in many cases, including Firestone
Textile Co. v. Meadows,3 our Supreme Court has recognized that
“ordinarily an employer may discharge his at-will employee for
good cause, for no cause, or for a cause that some might view as
morally indefensible.”4
The same court in Grzyb v. Evans,5
rendered two years later, identified this as “the ‘terminableat-will’ doctrine[.]”
In both Meadows and Grzyb, the Supreme
Court addressed exceptions to this doctrine, which must be both
“clearly defined and suitably controlled.”6
The Meadows court adopted the limitations on
exceptions to the employment-at-will doctrine as imposed by the
3
666 S.W.2d 730 (Ky. 1983).
4
Id. at 731.
5
700 S.W.2d 399 (Ky. 1985).
6
Meadows, 666 S.W.2d at 733.
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Wisconsin Supreme Court in Brockmeyer v. Dun & Bradstreet,7 which
the Grzyb court summarized as:
1) The discharge must be contrary to a
fundamental and well-defined public policy
as evidenced by existing law.
2) That policy must be evidenced by a
constitutional or statutory provision.
3) The decision of whether the public policy
asserted meets these criteria is a question
of law for the court to decide, not a
question of fact.8
In the present case, Farrell has not asserted that the policy
violation supporting his claim was evidenced by a constitutional
or statutory provision.
The inquiry, however, does not end
here.
For such situations, the Grzyb court adopted the
position the Michigan Supreme Court crafted in Suchodolski v.
Michigan Consolidated Gas Co.,9 which identified two situations
“where ‘grounds for discharging an employee are so contrary to
public policy as to be actionable’ absent ‘explicit legislative
statements prohibiting the discharge.’”10
Those two situations
are:
First, “where the alleged reason for the
discharge of the employee was the failure or
7
113 Wis.2d 561, 335 N.W.2d 834 (1983).
8
Grzyb, 700 S.W.2d at 401.
9
412 Mich. 692, 316 N.W.2d 710 (1982).
10
Grzyb, 700 S.W.2d at 402, citing Suchodolski, 316 N.W.2d at 711.
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refusal to violate a law in the course of
employment.” Second “when the reason for a
discharge was the employee’s exercise of a
right conferred by a well-established
legislative enactment.”11
The Grzyb court specifically noted that “the concept of an
employment-related nexus is critical to the creation of a
‘clearly defined’ and ‘suitably controlled’ cause of action for
wrongful discharge.”12
Farrell, obviously, relies upon the first prong of the
Grzyb/Suchodolski test (that the reason for his discharge was
his refusal to violate Kentucky’s alcohol and child labor laws
in the course of his employment) to support his claim of
wrongful discharge.
We disagree, and hold that the circuit
court properly held that Farrell introduced no proof to
establish that he was terminated for his refusal to violate the
law.
This Court recently addressed a similar situation
brought under the same prong of the Grzyb/Suchodolski test in
Northeast Health Management, Inc. v. Cotton.13
In Cotton, the
employees sought damages for wrongful discharge after they
refused to commit perjury and were later forced to resign.
The
Court found no merit in the hospital’s argument that the request
11
Id., citing Suchodolski, 316 N.W.2d at 711-12.
12
Id.
13
56 S.W.3d 440 (Ky.App. 2001).
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that they perjure themselves had no relation to their
employment:
Dennis called Cotton and Howell into her
office for two meetings while they were at
work to discuss their possible testimony at
her shoplifting trial. Later, when both
employees refused to perjure themselves,
Dennis made their working environment
difficult and uncomfortable to the point
that they were forced to resign. We believe
that it is insignificant that Dennis asked
Cotton and Howell to violate a law in a
matter that was personal to Dennis. The
request and retaliation by Dennis [were]
nonetheless [] abuse[s] of her authority as
Cotton’s and Howell’s supervisor.14
Turning to the facts of the present case, we again
look to the circuit court’s statements in its written order and
on the record during the ruling on Farrell’s motion to
reconsider.
While ARC investigated the compliance issue, a
legitimate question existed as to whether Richmond Place was
operating legally or illegally under the applicable alcohol
laws.
For this reason, Ewing’s statement to Cundiff, and
Cundiff’s request to Farrell, that the status quo be maintained
pending the result of the investigation was quite reasonable.
ARC certainly acted very quickly to investigate the matter,
which was resolved just over a month after Farrell first
contacted Bishop and Haley.
This investigation entailed much
corporate communication and the hiring of outside counsel to
14
Id. at 447.
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provide legal guidance.
Once ARC determined that Richmond Place
was partially non-compliant, it immediately acted to bring
Richmond Place into compliance.
By May 8, 2002, the date of
Farrell’s meeting with Cundiff and McAleese, Richmond Place was
certainly in compliance, and Farrell did not dispute this fact.
Based upon these facts of record, even when viewed in
a light most favorable to Farrell, there is nothing to tie his
discharge (if, indeed, he was discharged) to his refusal to
continue to violate the Kentucky’s alcohol law.
ARC acted
reasonably and swiftly to address Farrell’s concerns, and took
the necessary steps to bring Richmond Place into compliance once
it was determined to be partially non-compliant.
The circuit
court properly entered a summary judgment, as there were no
disputed issues of material fact to be decided and ARC was
entitled to a judgment as a matter of law.
Because we are affirming on the issue Farrell raised,
we need not address ARC’s alternative argument that Farrell was
not discharged, but that he resigned of his own volition.
For the foregoing reasons, the judgment of the Fayette
Circuit Court is affirmed.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
J. Stephen McDonald
Lexington, Kentucky
Timothy K. Garrett
Nashville, Tennessee
Bryan Beauman
Lexington, Kentucky
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