Summary
In Raible v. Essex Yacht Club, Inc., supra, 35 Conn. L. Rptr. 295, the court found that "speech made by an employee concerning an employer's potential tax evasion, implicates public policy."
Summary of this case from Horton v. Windham Community Memorial Hosp.Opinion
No. CV-03-0564783 S
August 19, 2003
MEMORANDUM OF DECISION RE DEFENDANTS' MOTION TO STRIKE (#101)
The defendants, Essex Yacht Club, Inc. and Leon Newberg, move to strike count one of the plaintiff's complaint on the grounds that the speech alleged by the plaintiff is not protected by General Statutes 31-51q and count two of the plaintiff's complaint on the grounds that the plaintiff has failed to allege conduct that violates public policy and because Newberg is not an "employer."
Facts
The following facts are alleged in the plaintiff's complaint. The Essex Yacht Club, Inc. ("the Yacht Club") is a "Social and Recreation Club" under 26 U.S.C. § 501 (c)(7), meaning, in part, that the club is tax exempt. To maintain its tax exempt status, the club is precluded from generating more than 15% of its gross receipts from non-membership sources.
The plaintiff, Susan Raible, was hired on May 1, 2001 by the Yacht Club as a Food and Beverage manager. The plaintiff had significant work experience in this field as well as related educational degrees. During her employment, member attendance at the Yacht Club increased by approximately 35% and the quality of the food and beverage service greatly improved.
In or about October 2001, the club facilities manager advised the plaintiff that she should refrain from booking private parties and social functions for non-members as the member to non-member income ratio had exceeded the legal limit. The manager advised the plaintiff that the Yacht Club's Treasurer had "spread out" the excess income to bring it within the standard but that she should watch the bookings for next year as the Club's fiscal year began in October 2001. The manager was not aware of any plan to correct the member to non-member income disparity.
In November 2001, the plaintiff began raising the income disparity issue and "offering solutions to her superiors and those in charge of the Club." The plaintiff also presented a solution to her supervisor, Newberg, but did not hear back from him. During the winter, spring and summer months of 2002, the plaintiff raised the income disparity issue and solutions to solve it. The plaintiff also expressed concerns regarding the inaccurate reporting to the IRS of the non-member income. The Yacht Club did not take any corrective action. In or about April 2002, in a discussion with Rear Commodore Ullstein, the plaintiff brought up the non-member income ratio problem again. He seemed irritated by the plaintiff's expressions of concern and stated, "I don't think the IRS has non-member income police so what does it matter."
In September 2002, the plaintiff was preparing to make a presentation to the House Committee Meeting regarding the non-member income problem. Prior to the meeting, on September 12, 2002, Newberg advised the plaintiff that her employment with the Yacht Club was terminated for "behavior unbecoming a manager" because an employee of the Yacht Club had accused the plaintiff of sexual harassment. There was no discussion of the charges, nor was there an investigation of the charges.
On January 27, 2003, the plaintiff filed a two-count complaint alleging in count one a violation of General Statutes § 31-51q by the Yacht Club and in count two a wrongful discharge claim against Newberg. In count one, the plaintiff alleges that her expressions of opinion regarding "the Club's false reporting to the Internal Revenue Service involve matters of public concern protected by the First Amendment to the United States Constitution and the Connecticut Constitution." The plaintiff also alleges that the Yacht Club retaliated against her for her public speech by firing her. In count two, the plaintiff alleges that "[i]t is against the public policy of the State of Connecticut for an employer to discharge an employee for voicing concerns regarding and taking action to stop an employer's illegal activities" and that her termination was a violation of said policy.
Discussion
"A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 771-72, 802 A.2d 44 (2000). "A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997). "The court must construe the facts in the complaint most favorably to the plaintiff." (Internal quotation marks omitted.) Id., 580. "A trial court in passing upon a motion to strike should not consider grounds other than those specified." (Citations omitted.) Meredith v. Police Commission, 182 Conn. 138, 140-41, 438 A.2d 27 (1980).
General Statutes 31-51q states:
Any Employer, including the state and any instrumentality or political subdivision thereof, who subjects any employee to discipline or discharge on account of the exercise by such employee of rights guaranteed by the first amendment to 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, including punitive damages, and for reasonable attorneys fees as part of the costs of any such action for damages. If the court determines that such action for damages was brought without substantial justification, the court may award costs and reasonable attorneys fees to the employer.
"Section 31-51q protects from retaliatory discharge an employee who invokes constitutionally guaranteed free speech rights that, in turn, protect statements that address a matter of public concern." Daley v. Aetna Life Casualty Co., 249 Conn. 766, 776, 734 A.2d 112 (1999). "[W]hether the subject matter addressed by a particular statement is of public concern involves a question of law for the court . . . [W]hether a particular statement addresses such a matter depends on its content, its form and the context in which it is made. The later inquiry necessarily involves a question of fact." Id.
"In order to plead a violation of Section 31-51q, the plaintiff must allege: (1) that [she] was exercising rights protected by the first Amendment to the United States Constitution or by an equivalent provision of the Connecticut Constitution; (2) that [she] was fired on account of [her] exercise of such rights; and (3) that [her] exercise of first amendment or equivalent state constitutional rights did not subsequently or materially interfere with [her] bona fide job performance or with [her] working relationship with [her] employer." (Internal quotation marks omitted.) Jeffress v. Yale University. Superior Court, judicial district of New Haven, Docket No. CV 96 0386866 (August 28, 1997, Sibert, J.). "In order to show that constitutionally protected rights are at issue under Sec. 31-51q, a plaintiff must allege that [she] was exercising [her] free speech rights as a citizen with respect to a matter of public concern . . . The issue to be addressed is not simply whether the subject matter of the employee's complaint touches on a matter of public concern generally; the issue is whether . . . an employee was acting as a citizen attempting to speak out on a public issue, or whether the employee was instead attempting to resolve a private dilemma relating to employment." Id.
In the present case, the plaintiff has sufficiently pled a cause of action under § 31-51q. The plaintiff has alleged (1) that she was exercising her first amendment rights under both the United States and Connecticut constitutions (Plaintiff's Complaint, count one, ¶ 22); (2) that she was fired on account of her exercising her first amendment rights (Plaintiff's Complaint, count one, ¶¶ 21 and 23); and (3) that her exercise of these rights did not substantially or materially interfere with her job performance (Plaintiff's Complaint, count one, ¶ 8). The plaintiff has also alleged that after the issue of proper compliance with the IRS tax code was brought to her attention, she raised the issue with club management several times, and, that because of her persistence on this matter, she was fired, despite increasing member attendance by approximately 35% and greatly improving food and beverage service.
In its motion to strike and accompanying memorandum of law, the defendants argue that the plaintiff's speech, was not on a topic of public policy. In support of their argument, the defendants cite Emerick v. Kuhn, 52 Conn. App. 724 (1999), and Cotto v. United Technologies Corp., 48 Conn. App. 618, 630 (1998).
The cases cited by the defendants are not analogous to the present case. Emerick involves a dispute between an employee and management over the best way to manage the company and the large bonuses paid the executives. Emerick v. Kuhn, supra, 52 Conn. App. 727. Cotto involves a dispute between an employee and management over the display of American flags in the office. Cotto v. United Techonologies Corp., supra, 48 Conn. App. 620-21.
In contrast, several other cases, with facts more analogous to the present case, have held that similar speech implicates public policy. See Brown v. The New London Day, Superior Court, judicial district of New London, Docket No. 551571 (July 27, 2001, Hurley, J.T.R.) (General Statutes 31-51q "is sufficient to protect an employee from retaliatory discharge" for assisting the police); Fisk v. MacAdams, Superior Court, Docket No. CV 97 339438 S (July 10, 1997, Thim, J.) (the "truthful reporting of taxable income to the state and federal governments" "contravenes" "public policy"); Sobcvak v. Meriden Board of Education, Superior Court, judicial district of New Haven, Docket No. 419547 (October 6, 2000, Levin, J.) (statements informing the defendant of a supervisor's wage and hour fraud and improper overtime procedures addressed a matter of public concern); Drucker v. Corporate Property Management, Inc., Superior Court, judicial district of Fairfield, Docket No. 295563 (January 6, 1997, Grogins, J.) (discharge for refusal to falsify tax records is a violation of public policy). Nor is the court convinced that the plaintiff was speaking exclusively about internal corporate policies that effect only employees and the corporation, and not the public at large. See Silva v. Caldor, Inc., Superior Court, judicial district of Hartford, Docket No. CV 92 449735 S (March 9, 1993, Jackaway, J.) ( 8 Conn.L.Rptr. 514) (speech pertaining to employee benefits "related exclusively to the company's employment policies" and did not implicate public policy); Buccini v. Eastern Equipment Sales, Superior Court, judicial district of New Haven, Docket No. CV 01 0451176 S (August 8, 2002, Fracasse, J.) ( 32 Conn.L.Rptr. 750) (employee's statements that management was not managing the company in a manner he believed fit did not implicate public policy).
Therefore, because the plaintiff has sufficiently pled a cause of action under General Statutes 31-51q, the defendants' motion to strike, as to count one, is denied.
The defendants also move to strike count two of the plaintiff's complaint on the grounds that Newberg is not an employer and because the plaintiff has failed to allege conduct that violates public policy.
The traditional rule in Connecticut governing employment-at-will contracts of permanent employment, or employment for an indefinite term, is that such contracts are terminable at the will of either party without regard to cause. See Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., 234 Conn. 1, 14, 662 A.2d 89 (1995); Coelho v. Posi-Seal International, Inc., 208 Conn. 106, 117-18, 544 A.2d 170 (1988); Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 562-63, 479 A.2d 781 (1984); Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 474, 427 A.2d 385 (1980). The doctrine of wrongful discharge is a narrow exception to this rule. See Parsons v. United Technologies Corp., 243 Conn. 66, 79, 700 A.2d 655 (1997); D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, 202 Conn. 206, 211 n. 1, 520 A.2d 217 (1987). The fight to recover in tort for wrongful discharge applies only to employees-at-will. Id., 211, n. 1.
In Morris v. Hartford Courant Co., 200 Conn. 676, 513 A.2d 66 (1986), the court acknowledged the "inherent vagueness of the concept of public policy and indicated that a violation could be based on a judicially conceived notion of public policy, as well as on an explicit statutory or constitutional provision. Id., 680. Regardless of the basis of the public policy violation, the court indicated that the employee has the burden of pleading and proving that his dismissal occurred for a reason violating public policy. Id., 679.
In Sheets, the supreme court carved out an exception to the traditional rule for cases in which "the former employee can prove a demonstrably improper reason for dismissal, a reason whose impropriety is derived from some important violation of public policy." (Emphasis in original.) Sheets v. Teddy's Frosted Foods, Inc., supra, 179 Conn. 475. Thus, the court recognized that an employer's discharge of an at will employee could be performed in a tortious manner, and that "public policy imposes some limits on the unbridled discretion to terminate the employment of someone hired at will." Id., 476.
As this court held in the context of General Statutes 31-51q above, speech made by an employee concerning an employer's potential tax evasion, implicates public policy. This court sees no reason to rule differently in the context of a wrongful discharge claim. The defendants' argument that the plaintiff has failed to meet the standard set forth in Sheets is without merit. While the court in Sheets did consider the fact that the plaintiff might be held criminally liable for the defendant's violation of the Connecticut Uniform Food, Drug and Cosmetic Act, the court was more concerned with the law's purpose to safeguard the public and that a violation of such a law implicated public policy. Sheets v. Teddy's Frosted Foods, Inc supra, 179 Conn. 478 ("The act was intended to `safeguard the public health and promote the public welfare by protecting the consuming public from injury by product use and the purchasing public from injury by merchandising deceit' "). Thus, speech concerning a violation of a law designed to protect the public implicated public policy.
In the present case the plaintiff's speech is concerning potential tax evasion. Tax evasion, and the failure of business to adhere to laws regulating their conduct, is a public concern. While this court is not prepared to hold that all violations of law implicate public policy, violation of the tax code robs the government of revenue, affecting its ability to deliver services to the public and places a greater tax burden on law abiding tax payers.
Finally, the defendants argue that Newberg cannot be held individually liable for the plaintiff's allegedly wrongful termination. This argument is without merit. It "is black letter law that an officer of a corporation who commits a tort is personally liable to the victim regardless of whether the corporation itself is liable." Kilduff v. Adams, Inc., 219 Conn. 314, 331 (1991). The plaintiff has alleged that the defendant, Newberg, has committed a tort in his capacity as an officer of the yacht club. The plaintiff need not allege anything more for liability to lie individually with Newberg.
Therefore, because the plaintiff has sufficiently pled a claim for wrongful discharge, the defendants' motion to strike, as to count two, is denied.
Conclusion
For the reasons stated above, the defendants' motion to strike counts one and two are denied.
D. Michael Hurley Judge Trial Referee