Opinion
CIVIL CASE NO. H 85-295 (JAC).
Filed November 7, 1985 Ruling on Motion to Dismiss
Peter Ennis, (Robinson Cole),
Robert Hirtle, Rogin, Nassau, Caplan, Lassman Hirtle, Robert E. Fast, Hale Dorr, for defendant.
Plaintiff Rolf Andersen filed on April 3, 1985 a complaint against defendant E J Gallo Winery. In that complaint the plaintiff alleges that Gallo, his former employer, fired him from his job because he had reported to his supervisors that certain of the defendant's business practices were "unfair or in violation of various federal and state statutes" including laws against price fixing, and because he refused to accept or engage in the furtherance of these practices. Complaint (filed April 3, 1985) ("Complaint"), 8-10. The plaintiff claims that Gallo unjustly terminated his employment, id., Count 1, breached its implied duty of good faith and fair dealing to the plaintiff, id., Count 3, and violated Connecticut's "Free Speech" Act, Conn. Gen. Stat. § 31-51q, Complaint, Count 2, and the Connecticut Unfair Trade Practices Act ("CUTPA") Conn. Gen. Stat. § 42-110(b), Complaint, Count 4. In addition, the plaintiff alleges that the defendant breached an agreement entered into by the parties which provided for severance pay and additional employment benefits for a period of time, or until the plaintiff found a new position. Id., Count 5.
In a motion filed June 20, 1985, the defendant seeks to dismiss the first four counts of the Complaint for failure to state a claim upon which relief can be granted. Rule 12(b)(6) Fed R. Civ. P.
I. Wrongful Termination
It is not disputed that the plaintiff in this action was an employee at will. As a general rule, in Connecticut contracts for employment at will are terminable by either party, and an employee at will may be dismissed even without just cause. See Somers v. Cooley Chevrolet Co., 146 Conn. 627, 629 (1959); Fisher v. Jackson, 142 Conn. 734, 736 (1955); Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 474 (1980). The Connecticut Supreme Court has recognized an exception to this general rule, when the reason for dismissing the employee is in violation of an important public policy. See Sheets, supra, 179 Conn. at 481; see also Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 572 (1984).
A.
The defendant acknowledges that a claim for wrongful discharge will be recognized if the "discharge ... violated some important public policy." Memorandum in Support of Motion to Dismiss ("Defendant's Brief") at 4. Furthermore, at oral argument the defendant conceded that if the plaintiff were alleging that he was fired for refusing to engage in illegal activity he would have stated a cause of action for wrongful termination. Certified Official Transcript of Hearing Held Sept. 24, 1985 (filed Oct. 1, 1985) ("Tr.") at 17. However, the defendant states flatly that the plaintiff "makes no such claim," Defendant's Brief at 4; Tr. at 17, and that the plaintiff's complaint is fatally ambiguous. Defendant's Brief at 2. Nevertheless, the plaintiff unambiguously alleges that he was terminated by the defendant because "he reported the [allegedly illegal] practices and because of his refusal to ac- cept or engage in the furtherance of the foregoing unfair and illegal acts." Complaint 10.
For the purposes of a motion to dismiss for failure to state a claim upon which relief can be granted, the court must take the well-pleaded material allegations of the complaint as admitted. Walker Process Equipment, Inc. v. Food Machinery Chemical Corp. 382 U.S. 172, 173-175 (1965); George C. Frey Ready-Mixed Concrete, Inc., v. Pine Hill Concrete Mix Corp. 554 F.2d 551, 553 (2d Cir. 1977). The court must construe the complaint liberally in the plaintiff's favor, Scheuer v. Rhodes, 416 U.S. 232, 236minus237 (1974), and may grant a motion to dismiss only if it is beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); McLain v. Real Estate Board of New Orleans, Inc. 444 U.S. 232, 246 (1980). The plaintiff's complaint clearly asserts that he was fired in part for his refusal to accept or engage in the furtherance of the defendant's alleged illegal activity. If the plaintiff is able to prove that this was in fact the reason for his discharge, he would be entitled to relief for wrongful discharge under Connecticut law. The defendant has itself admitted as much. Accordingly, the plaintiff has stated a claim upon which relief can be granted, and the court may not grant a motion to dismiss the plaintiff's claim for wrongful discharge.
B.
The defendant also argues that to the extent that the plaintiff has stated a claim for wrongful discharge, the first and third counts of his complaint are duplicative, and one should be dismissed as superfluous. Reply Memorandum in Support of Defendant's Motion to Dismiss (filed Aug. 9, 1985) ("Defendant's Reply Brief") at 2. The first count of the plaintiff's complaint alleges that he was unjustly terminated as a result of his reporting to the defendant, through his supervisors, the defendant's allegedly illegal activities, and for refusing to engage in the furtherance of these activities. The third count of his complaint alleges that for the same reasons his termination constituted a violation of the defendant's implied duty of good faith and fair dealing. The plaintiff asserts that each of these counts constitutes a separate claim, one sounding in tort and the other in contract, and that both are recognized under Connecticut law.
The plaintiff relies on Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 475 (1980), as support for its claim that the defendant is liable in tort for its dismissal of the plaintiff because that dismissal violated an important public policy. Plaintiff's Reply Memorandum of Law in Opposition to Motion to Dismiss (filed Sept. 11, 1985) ("Plaintiff's Reply Brief") at 2-3. In support of his contract claim for breach of the implied covenant of good faith and fair dealing, the plaintiff relies on Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 568-69 (1984). The covenant of good faith and fair dealing, as defined by the Magnan court, is "essentially a rule of construction designed to fulfill the reasonable expectations of the contracting parties as they presumably intended." Id. at 567. Although the Magnan court declined to find a breach of the covenant of good faith and fair dealing based on the facts before it in that case, it did hold that "[l]ike other contract provisions which are unenforceable when violative of public policy, the right to discharge at will is subject to the same restriction." Id. at 572. The plaintiff argues that under this analysis the defendant is liable under a breach of contract theory because his termination was in contravention of public policy and it violated the reasonable expectations of the parties. Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Dismiss (filed July 11, 1985) ("Plaintiff's Brief") at 3. The defendant argues that because both of these claims are based on the same allegation--breach of an important public policy--they must be treated as one, and not two, claims, and one must be dismissed. Defendant's Reply Brief at 2.
The Connecticut Supreme Court recognizes that wrongful discharge in violation of public policy may give rise to actions under both tort and con- tract law. In Magnan, supra, the court discussed a number of instances in which an employment contract would not be terminable at will, including a "common law cause of action in tort for discharges where the discharge contravenes a clear mandate of public policy.§" Id. at 565, quoting Sheets, supra, 179 Conn. at 471. In Magnan, the court went on to state that it was there called upon "to adopt another emerging theory that limits the employer's right to discharge an at-will employee: the covenant of good faith and fair dealing." Magnan, supra, 193 Conn. at 565 (emphasis added). In fact, the Connecticut Supreme Court has expressly recognized that both theories of relief should be available to the wrongfully discharged plaintiff, stating that "[w]hether a claim resulting from such discharge is framed in tort or in contract should make no difference with respect to the issue of liability." Id. at 572. See also Cook v. Alexander and Alexander, 40 Conn. Supp. 246, 247-49 (Conn. Super. Ct. 1985). The plaintiff has thus pleaded two distinct statements of his claim for wrongful discharge. Which of these two alternative theories will form the basis of recovery must await the proof at trial, See Sadowy v. Sony Corp. of America, 496 F. Supp. 1071, 1077 (S. D. N. Y. 1980), but the defendant cannot force the plaintiff to choose between these two theories at this stage of the lawsuit.
II. The Connecticut Free Speech Act
The defendant also seeks to have the court dismiss the second count of the plaintiff's complaint, which alleges that the plaintiff's termination was in violation of Connecticut General Statutes § 31-51q, the so-called Connecticut "Free Speech" Act (the "Act"). The Act, adopted by the General Assembly in 1984, apparently has not yet been interpreted by any court, presenting this court with a question of first impression. It provides in part that
any employer ... who subjects any employee to discipline or discharge on account of the exercise by such employee of rights guaranteed by the first amendment of the United States Constitution or section 3, 4 or 14 of article first of the constitution of the state, provided such activity does not substantially or materially interfere with the employee's bona fide job performance or the working relationship between the employee and the employer, shall be liable to such employee for damages caused by such discipline or discharge....
Conn. Gen. Stat. § 31-51q.
The provisions of the Connecticut Constitution incorporated by reference in the Connecticut Free Speech Act are set out here in full.
Article 1 § 3 provides that: "The exercise and enjoyment of religious profession and worship, without discrimination, shall forever be free to all persons in the state; provided, that the right hereby declared and established, shall not be so construed as to excuse acts of licentiousness, or to justify practices inconsistent with the peace and safety of the state."
Article 1 § 4 provides that: "Every citizen may speak, write and publish his sentiments on all subjects, being responsible for the abuse of that liberty."
Article 1 § 14 provides that: "The citizens have a right, in a peaceable manner, to assemble for their common good, and to apply to those invested with the powers of government, for redress of grievances, or other proper purposes, by petition, address or remonstrance."
The question which must be resolved in deciding this part of the defendant's motion to dismiss is whether the plaintiff's efforts to inform his supervisors about the defendant's alleged unfair and illegal business activities were the type of expression that the Act was designed to protect. The defendant argues that the Act does not, on its face, provide an answer to this question, Defendant's Reply Memorandum at 3. The defendant argues further, that quite apart from any argument based on the scope of the First Amendment or the parallel provision in the Connecticut Constitution, in order to avoid a conflict with Connecticut's so-called "Whistleblowing Statute," Conn. Gen. Stat. § 31-51m, canons of statutory construction require that the Free Speech Act be interpreted so as not to cover the plaintiff's claim in this situation. This is so, according to the defendant, because under the Connecticut Whistleblowing Statute, an employee must report an illegal practice to some authority other than the employer, and must exhaust all administrative remedies before seeking relief under the statute. Once an aggrieved employee has complied with these requirements and is able to sue under the Whistleblowing Statute, his relief is limited to reinstatement, back pay and benefits. The Act, on the other hand, does not require the employee to have reported any activity to an outside authority, or to have exhausted administrative remedies before he can sue. Moreover, the employee who sues under the Act is entitled to damages, including punitive damages. The defendant reasons that "whistleblowing activity within the general purview of 31-51m [the Whistleblowing Statute] but which does not meet its requirements would fall within the terms of 31-51q [the Free Speech Act] and entitle the em- ployee to significantly more expansive relief than under 31-51m." Defendant's Reply Brief at 4. The defendant concludes that such a reading of the Act creates a "substantial conflict" with the Whistleblowing Statute, because "[u]nder the circumstances, no employee would seek relief under [the Whistleblowing Statute] because even if he could meet its requirements, he could get broader relief under [the Free Speech Act]." Id. To avoid this result, the defendant urges the court to construe the two statutes "to lead to reasonable and workable results and not in such as a way that effectively repeals or reads one out of existence." Id.
The Connecticut Whistleblowing Statute, § 31-51m (b), provides in part that: "No employer shall discharge, discipline or otherwise penalize any employee because the employee ... reports ... a violation or suspected violation of any state or federal law or regulation or any municipal ordinance or regulation to a public body, or because an employee is requested by a public body to participate in an investigation, hearing or inquiry held by that public body, or a court action...."
§ 31-51m(c) sets out the remedies available to an employee who is discharged, disciplined or penalized in violation of § 31-51m(b). Such employees may "after ex- hausting all administrative remedies, bring a civil action ... for reinstatement of his previous job, payment of back wages and reestablishment of employee benefits to which he would have otherwise been entitled had such violation not occurred. An employee's recovery from any such action shall be limited to such items...."
The plaintiff responds by arguing that the defendant's proposed limitation on the scope of the Act would rob that statute of any vitality. The plaintiff suggests that the Act was designed to protect an entirely different form of activity than was the Whistleblowing Statute. Specifically, the plaintiff contends that the legislature, in enacting the Act, intended to provide a remedy for those employees who chose to confront illegal employer activity within the confines of the employment situation, rather than reporting such activity to public officials. Plaintiff's Reply Brief at 5.
While it may be true that the legislature specifically intended to provide relief to the employee who elects to handle complaints of illegal business practices internally, there is nothing in the language of the Act or its legislative history that supports a finding of such a narrowly focused legislative intent. Moreover, the plaintiff's proferred explanation does not provide a satisfactory response to the defendant's assertion that to construe the Act to cover an employee's communications with his employer about allegedly illegal business practices would effectively repeal the Whistleblowing Statute. Nonetheless, the court concludes that the plaintiff's claim under the Act must survive this motion to dismiss.
In reaching the conclusion that the plaintiff's conduct cannot be covered by the Act without undermining the Whistleblowing Statute, the defendant too readily perceives a conflict between these two statutes. The defendant's argument rests on the assumption that the Whistleblowing Statute provides for a more limited form of relief than does the Act. It is true that the relief available under the two statutes is different, but that provided by the Whistleblowing Statute is not, as a matter of law, more limited than that available under the Act. Indeed, the Act, which does not allow for reinstatement of the wrongfully discharged employee but which does provide for monetary damages (including punitive damages), may in some instances complement or supplement the Whistleblowing Statute, which provides for reinstatement but not for damages of the sort authorized by the Act. Rather than eroding the strength of the Whistleblowing Statute, the Act may in some circumstances complement that statute. "[W]hen two statutes relate to the same subject matter every effort should be made to find a reasonable field for the operation of both statutes." Blue Cross and Blue Shield of Connecticut, Inc. v. Mike, 439 A. 2d 1026, 1032 (Conn. 1981), citing State v. Carbone, 172 Conn. 242, 256 (1977). To the extent that the Act can be read in harmony with the Whistleblowing Statute, the court declines to read a limitation into the scope of the Act. Accordingly, if the plaintiff was discharged for exercising rights protected under the First Amendment of the United States Constitution, or under Section 3, 4, or 13 of Article One of the Connecticut Constitution, he has stated a claim upon which relief can be granted.
In determining whether the plaintiff's effort to inform his supervisors of the defendant's alleged illegal business practices is speech which would be protected under the First Amendment, the court turns for guidance to cases involving claims brought by public employees alleging termination of employment in violation of their First Amendment Rights. In Connick v. Meyers, 461 U. S. 138 (1983), the Supreme Court drew a distinction between the protection that would be accorded a public employee who spoke out on matters of public concern, and one who voiced what were essentially personal grievances. Id. at 147. Among the factors considered by the Court in determining whether an employee's speech should be accorded full First Amendment protection are "(1) [w]hether the employee's expressions ... impeded his ability to perform his duties ...; (2) the degree to which the employee's expressions involved matters of public concern and the gravity of that concern; (3) the time, place, and manner of the expressions; and (4) the employee's motives in voicing the expressions...." McBee v. Jim Hogg County, 730 F. 2d 1009, 1013 (5th Cir. 1984); see Connick, supra, 461 U. S. at 147-48.
An analysis based on the factors outlined above would be as appropriate in the private employment context as it is in the context of public employment. Any such analysis, however, necessarily involves resolution of questions of fact, and cannot be decided on a motion to dismiss. See Krodel v. Young, 748 F. 2d 701, 712 (D. C. Cir. 1984), (citing Conley v. Gibson, 355 U. S. 41, 45-46 (1957)), cert. denied, 106 S. Ct. 62 (1985).
The plaintiff alleges that he was fired for speaking to his supervisor about his employer's allegedly illegal business practices. This is clearly not the type of expression which can be characterized as purely private in nature. The public has a legitimate and substantial concern in insuring that the laws governing the regulation of business practices are obeyed. Whether the plaintiff's expression interfered with his legitimate job performance, or was done in an inappropriate manner or for improper motives, are all questions of fact. If the plaintiff can prove facts which demonstrate that he was fired simply because he spoke out against his employer's allegedly illegal business practices, the plaintiff would be entitled to relief under the Act. Taking the plaintiff's claims as true, the plaintiff has stated a claim upon which relief can be granted. The defendant's motion to dismiss Count 2 must be denied.
III. The Connecticut Unfair Trade Practices Act
The plaintiff's claim for relief under CUTPA apparently present another question of first impression to this court, in that the plaintiff is asserting a claim under CUTPA against his former employer. The defendant argues that CUTPA is inapplicable to a suit between employer and employee. Defendant's Brief at 8. Characterizing this lawsuit as a suit brought by a disgruntled employee to redress a private dispute, id. at 1, 10, the defendant contends that CUTPA is a statute designed to "govern only those marketplace disputes which affect the public interest or could cause a public injury." Id. at 8, citing Sportsmen's Boating Corp. v. Edward Hensley, 192 Conn. 747, 755 (1984).
As discussed in Part I above, the plaintiff's complaint contains allegations of public harm which expand the scope of this dispute beyond the confines of a private employer-employee relationship. Moreover, in adopting Public Act 84-468, the Connecticut legislature eliminated any public injury requirement. Id. § 2 ("[p]roof of public interest shall not be required under [CUTPA].") Nevertheless, the court finds that the plaintiff has failed to state a claim under CUTPA.
The defendant argues that in adopting Public Act 84-468, the legislature merely intended to eliminate an element of proof under the Act, rather than actually altering the scope of the Act. Defendant's Reply Brief at 5. Courts that have interpreted this amendment to CUTPA have consistently held that the amendment overrules those cases which previously held that CUTPA was inapplicable to purely private disputes. See, e. g., Fortini v. New England Log Homes, Inc. 4 Conn. App. 132, 137 n. 1 (1985); Carpentino v. Transport Insurance Co., 609 F. Supp. 556, 563 (D. Conn. 1985) (Zampano, J.); Wilson v. Fireman's Fund Insurance Co., 11 Conn. L. Trib. No. 36 at 10 (Conn. Super. Ct. April 1, 1985); Hydro Air of Connecticut v. Versa Technologies, Inc., 559 F. Supp. 1119, 1123 (D. Conn. 1984) (Eginton, J.).
Section 42-110b sets out the activities prohibited under CUTPA. Specifically, that section provides that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce." Taking the plaintiff's allegations as true, the defendant violated § 42-110b by engaging in various price fixing activities. However, the plaintiff does not allege that he was injured by the defendant's alleged price fixing or other illegal activities; the plaintiff claims, rather, that the defendant's termination of the plaintiff in and of itself constitutes an unfair or deceptive practice in violation of the Act.
Assuming arguendo that the defendant's termination of the plaintiff could and did constitute a deceptive act as contemplated by CUTPA, the plaintiff must also establish that the challenged deceptive practice took place in the conduct of the defendant's "trade or commerce" in order for the de- fendant's actions to constitute a violation of the Act. See Conn. Gen. Stat. Section § 42-110b(a). The court must thus resolve the question of whether the personnel decisions of an employer fall within the ambit of "trade or commerce."
"Trade or commerce" is defined in Section 42-110a as "the advertising, the sale or rent or lease, the offering for sale or rent or lease, or the distribution of any services, and any property ... and any other article, commodity or thing of value in this state." While no Connecticut court has construed CUTPA's "trade or commerce" requirement as applicable to the employment relationship, the Supreme Judicial Court of Massachusetts has held, under a similar statute, that an employer and an employee are not engaged in trade or commerce with one another, and that their employment disputes thus fall outside the scope of this type of unfair trade practices act. See Manning v. Zuckerman, 388 Mass. 8, 13, 444 N. E. 2d 1262, 1265 (1983) (Construing Mass. G.L. c. 93A, § 11). This court is persuaded by the reasoning of the Massachusetts court. Although an employer may engage employees for the purpose of promoting trade or commerce, the actual employment relationship is not itself trade or commerce for the purposes of CUTPA.
Because the plaintiff's employment relationship with the defendant does not fall within the definition of "trade or commerce" under Section 42-110a, the plaintiff has failed to state a claim under CUTPA and the defendant's motion to dismiss Count 4 is granted.
Conclusion
For the reasons stated above, the defendant's motion to dismiss Counts 1, 2 and 3 of the plaintiff's complaint is denied. The defendant's motion to dismiss Count 4 of the plaintiff's complaint is granted.
It is so ordered.