Case Title: Lamson v. Crater Lake Motors, Inc.

Citation: 

Docket Number: S055625

State: oregon

Court: Oregon Supreme Court

Date: 2009-08-20T00:00:00Z

Document:
FILED: August 20, 2009
IN THE SUPREME COURT OF THE STATE OF OREGON
KEVIN L. LAMSON,
Petitioner on Review,
v.
CRATER LAKE MOTORS, INC.,
an Oregon Corporation,
Respondent on Review.
(CC 04-2609-L3; CA A130759; SC S055625)
En Banc
On review from the Court of Appeals.*
Argued and submitted September 17, 2008.
Edward H. Talmadge, of
Frohnmayer, Deatherage, Jamieson, Moore, Armosino and McGovern, P.C., Medford,
argued the cause and filed the brief for petitioner on review.
Timothy C. Gerking, of
Brophy, Mills, Schmor, Gerking, Brophy and Paradis, LLP, Medford, argued the
cause and filed the brief for respondent on review.  With him on the brief was
Mark R. Weaver.
Dana L. Sullivan, of McKanna
Bishop Joffe and Sullivan, LLP, Portland, filed the brief for amicus curiae
Oregon Trial Lawyers Association.
Lindsey H. Hughes and
Susan J. Mahoney, of Keating Jones Hughes, P.C., Portland, filed the brief for amicus
curiae Oregon Association of Defense Counsel.
GILLETTE, J.
The decision of the
Court of Appeals is affirmed.  The judgment of the circuit court is reversed,
and the case is remanded to the circuit court for further proceedings. 
*Appeal from Jackson County Circuit Court, Daniel L. Harris, Judge. 216 Or App 366, 173
P3d 1242 (2007).
GILLETTE, J.
In this wrongful discharge action,
plaintiff seeks review of a Court of Appeals decision overturning a jury
verdict in his favor.  Plaintiff argues that, contrary to the Court of Appeals'
view, his discharge was tortious, because he was fired for engaging in conduct
that fulfilled an important societal obligation.  For the reasons set out
below, we reject that argument and affirm the decision of the Court of Appeals.
When this court reviews a grant of a
directed verdict, which, according to the Court of Appeals, the trial court
should have entered in this case, we view the facts in the light most favorable
to the party opposing that motion -- in this case, plaintiff.  See Boothby
v. D.R. Johnson Lumber Co., 341 Or 35, 38, 137 P3d 699 (2006) (using that
standard).  Plaintiff worked as a sales manager for defendant, a car
dealership, for some 15 years before he was fired in 2004.  Plaintiff liked
working for defendant; he particularly appreciated the dealership's low
pressure approach to selling cars and, in his own words, its "high degree
of ethics and integrity."  Plaintiff generally was a good employee and had
no negative reviews or comments in his employment file.
In September 2003, the dealership hired
an outside sales firm, Real Performance Marketing (RPM), to conduct a five-day
special event, the focus of which would be selling used cars.  Under the
contract between defendant and RPM, RPM would promote and manage the event and
provide its own manager and sales force.   Defendant's employees were not
required to participate in the event but, if they did participate, RPM's
manager would process their sales.  The agreement between RPM and Crater Lake
contained, inter alia, provisions that (1) asserted that RPM had
"developed certain professional methods to successfully manage sales
events"; (2) promised to put on a sale and "coordinate[ ] every
aspect of the sale"; (3) promised to provide an "Event Sales and
Management Team," including a "sales closer"; (4) stated that
the relationship of the "team" to Crater Lake "will be that of
independent contractor"; (5) promised that RPM would furnish "up to
10 salespeople to supplement [Crater Lake's] sales staff"; and specified
(6) that "the parties agree that their relationship will, at all times, be
that of independent contractor and client."  Crater Lake did not retain
any right to control the actions of RPM or its employees at the sales event.
When plaintiff learned about the RPM
event, he was apprehensive about "somebody taking over our sales office
and dictating to our sales people and * * * customers."  Plaintiff also
was concerned because he had heard that RPM was prone to use questionable sales
practices.  Still, plaintiff told the dealership's upper management that he
would attend the event and keep an open mind.  
Plaintiff attended the first three
days of the event.  During that time, he observed RPM staff engaging in sales
tactics that in his view were unethical and/or illegal, including
misrepresenting the event as a "bank sale," marking cars with
inadequate and potentially misleading pricing information, "packing"
monthly payments with various insurance and service contracts without the
customers' knowledge, and tricking customers into signing forms that authorized
RPM to run credit checks.(1) 
On the third day of the event, plaintiff complained to the dealership's general
manager, Shevlin, about the unethical conduct that he had been observing;
Shevlin told him to "just go home."  The next week, at a meeting of
the dealership's managers, plaintiff again voiced his concerns about RPM's
tactics and methods, and he specifically mentioned some of the conduct that he
had observed during the first three days of the sales event.  Plaintiff told
the other managers, including Shevlin, that "if I had to do business that
way, how RPM did it, I'd get out of the car business."
Several weeks later, Shevlin called
plaintiff into his office after a regular managers' meeting.  Shevlin
complained to plaintiff that he had changed, that he "didn't say thank you
anymore," that he was being outsold by as much as $600 per vehicle by
another sales manager, and that he "just wasn't getting the job
done."  He then told plaintiff that the dealership would be having another
RPM sales event in March 2004, and that he wanted to know if plaintiff intended
to quit.  Plaintiff told Shevlin that he needed his job and was not going to
quit, and then added, "It sounds like you don't want me here
anymore."  Shevlin then responded, "You're right, I don't.  I don't
want the [plaintiff] that's been here the last two years."  Shevlin then
insisted that he needed to know by the following Monday if plaintiff intended
to attend the RPM sale or to quit.
Plaintiff thereafter wrote and
delivered a letter to the dealership's owner, Coleman.  In the letter,
plaintiff attempted to explain why plaintiff had decided not to participate in
the RPM sales event, in spite of Shevlin's ultimatum.  The letter first quoted
portions of the dealership's policies and procedures manual, generally to the
effect that employees were expected to deal fairly and honorably with customers
and to avoid unethical and illegal conduct.  It then stated that plaintiff had
observed "consistent misrepresentation, fraudulent action, deceit, lying,
immoral conduct, unethical conduct and illegal actions" during the first RPM
event and that plaintiff was discouraged that defendant would consider adopting
such sales tactics.  The letter ended by encouraging Coleman to "rethink
this profit at any cost mentality, and reaffirm the policies that [defendant]
has adhered to in the past."
A week later, Coleman met with
plaintiff and the two men talked about plaintiff's concerns about the RPM event. 
At the end of that meeting, Coleman handed plaintiff a letter that stated that
the dealership "intend[ed] to continue its objective of treating customers
with the highest ethical standards," stated that plaintiff's participation
in the upcoming RPM event was mandatory, and warned that if plaintiff failed to
participate, "[we] will have no choice but to take appropriate
disciplinary action, including, but not limited to, discharge."
Plaintiff responded to Coleman in yet
another letter, which he personally delivered to Coleman on February 2 -- a few
weeks before the scheduled RPM sale.  In the letter, plaintiff stated his
intention to continue to deal honestly and fairly with the dealership's
customers and concluded:  "It is with this conviction I am basing my
decision not to participate in the upcoming RPM sale or any other RPM sale in
the future."  Coleman tried to talk plaintiff out of that decision:  He
told plaintiff that the dealership's contract with RPM had been amended to
provide that RPM would not engage in misrepresentations(2) and that Coleman would
like plaintiff to be at the sale to make sure that unethical conduct did not
occur.  Plaintiff could not be persuaded.  He believed that, if he worked at
the second sale, he would be condoning what occurred at the first sale and
would "lose [his] integrity as a salesman."  In the end, Coleman told
plaintiff that he would talk to Shevlin and that either he or Shevlin would get
back to him.  It appears, however, that plaintiff had no further discussions
with Shevlin or Coleman about the matter until after the RPM sales event
occurred.
The RPM sales event occurred as
scheduled on Wednesday, March 3 through Sunday, March 7, 2004.  Plaintiff did
not come to work during the RPM sales event and did not call into the office. 
On March 8, 2004, the day after the event ended, plaintiff arrived at the
dealership at his regular time.  Shevlin called him to his office and informed
him that he was being terminated for failure to report to work on the preceding
days. 
Plaintiff then filed the present
action for wrongful discharge.(3) 
In his complaint, plaintiff alleged that he had been discharged for refusing to
participate in the March 2004 RPM event and for reporting RPM's unethical and
illegal sales tactics at the October 2003 event to Coleman and Shevlin. 
Plaintiff further alleged that both his refusal to participate and his reports
to upper management fulfilled an important public purpose -- specifically, that
"by reporting these violations, plaintiff was * * * attempting to stop the
unethical and unlawful trade practices which RPM was utilizing," and that "by
refusing to participate in RPM's March 2004 sale * * *, plaintiff [was]
refusing to aid RPM in committing unlawful trade practices in violation of
Oregon law."
The case proceeded to trial.  The
jury heard testimony from plaintiff, Shevlin, Coleman, and other employees of
the dealership.  At the close of evidence, defendant moved for a directed
verdict on plaintiff's wrongful discharge claim.  In the motion, defendant
observed that there was no evidence or allegation that defendant had ordered
plaintiff to himself violate the company's code of ethics, the Uniform Trade
Practices Act, or any other legal standard.  Defendant then argued that there
must be threats or coercion or orders or instructions for the employee to
engage in wrongful, illegal conduct in order for there to be a claim under
these circumstances for wrongful discharge.  The trial court denied the motion,
ruling that an employee may have a wrongful discharge claim if he or she is
discharged for fulfilling an important societal obligation and that, in the
present case, there was a jury question as to whether the evidence supported a
wrongful discharge claim on that theory.  The jury ultimately returned a
verdict for plaintiff and the trial court entered judgment in accordance with
that verdict.
On defendant's appeal, the Court of
Appeals reversed.  Lamson v. Crater Lake Motors, Inc., 216 Or App 366,
173 P3d 1242 (2007).  After considering this court's and its own wrongful
discharge cases, the Court of Appeals concluded that the conduct for which
plaintiff purportedly had been discharged did not involve interests of
sufficient public importance to support a claim that plaintiff was discharged
for fulfilling an important societal obligation.  Id. at 383.  The court
acknowledged that employers may be held liable in tort for discharging an
employee for fulfilling a public duty, and that an employee's
"whistleblowing" about activities in the workplace sometimes serves a
sufficiently important public interest that discharging the employee for such
conduct would be wrongful.  The court suggested, however, that that principle
would not apply when -- as in the present case -- the whistleblower's report is
internal and does not involve a matter of public health or safety.  Id.
at 380-81.  The court also acknowledged that, under its own cases, an important
public duty may be served by an employee's refusal to obey an employer's order
to engage in unlawful or tortious conduct, and that a discharge in those
circumstances could be wrongful.  The court concluded, however, that
plaintiff's refusal to participate in the RPM sale did not implicate that
principle because, by his own admission, plaintiff had not been ordered by
defendant to do anything unethical, unlawful, or tortious.  Id. at 382. 
Finally, the court held that, although preventing unlawful trade practices
clearly is a matter of general public concern, there is nothing in the
record that suggests that plaintiff's particular act -- refusing to
report to work because unlawful trade practices might occur there -- enjoys
high social value.  Id. at 382-83.
Before this court, plaintiff contends
that, when a plaintiff's wrongful discharge claim alleges that the plaintiff
was discharged for fulfilling some important public obligation, the proper
focus is on whether Oregon law expresses a general public policy and on
whether, in the circumstances of the particular case, that public policy would
be thwarted to some degree if the plaintiff's employer could discharge him or
her with impunity.  Plaintiff argues that the Court of Appeals erred in
focusing, instead, on the particular acts that triggered plaintiff's
dismissal and on whether the laws of this state require such acts or
specifically identify them as having public importance.  Plaintiff also
argues that the Court of Appeals erred to the extent that it suggested that
only public policies pertaining to health and safety are sufficiently weighty
to give rise to a claim of wrongful discharge.  He asserts that there is no
support for that particular distinction (or, indeed, for the entire notion of
weighing public policies) in this court's principal wrongful discharge cases --
Nees v. Hocks, 272 Or 210, 536 P2d 512 (1975), Delaney v. Taco Time
Int'l, 297 Or 10, 681 P2d 114 (1984), and Babick v. Oregon Arena Corp.,
333 Or 401, 40 P3d 1059 (2002).
Plaintiff correctly identifies the
cases from this court that are most relevant to his wrongful discharge claim. 
Reviewing them at this point facilitates our analysis.  In Nees, this
court recognized, for the first time, that, in spite of a general and
longstanding rule that private employment continues at the will of the parties
and can be terminated by either party at any time and for any reason, there are
"circumstances in which an employer discharges an employee for such a
socially undesirable motive that the employer must respond in damages for any
injury done."  272 Or at 218.  The plaintiff in that case was terminated
for accepting, over her employer's objection, a call to jury duty.  This court
examined various Oregon cases, statutes, and constitutional provisions pertaining
to jury duty and the right to trial by jury, and determined that those sources
"clearly indicate[d] that the jury system and jury duty are regarded as
high on the scale of American institutions and citizen obligations."  Id.
at 219.  Having established that point, the court concluded that plaintiff had
stated a claim for wrongful discharge because, "[i]f an employer were
permitted with impunity to discharge an employee for fulfilling her obligation
of jury duty, the jury system would be adversely affected [and t]he will of the
community would be thwarted."  Id. 
In Delaney, the court further
described the "wrongful discharge" action that it first had
recognized in Nees.  It began by explaining the court's various wrongful
discharge cases in terms of several categories, only two of which were
recognized as a proper basis for a wrongful discharge claim -- cases in which
the plaintiff was discharged for "fulfilling a societal
obligation," 297 Or at 15 (emphasis added) and cases in which the
plaintiff was discharged for "pursuing a right related to his role as an
employee and the right is one of important public interest indicated by
constitutional and statutory provisions and caselaw."  Id. at 16. 
The court then held that the discharge at issue in that case -- a discharge for
refusing to sign a false and defamatory statement about another employee's
conduct -- fell into the first category.  That was so, because evidence of a
societal obligation to refrain from defaming others could be found in the
common law and in two sections of the Oregon Constitution -- Article I, section
8, which prohibits the passage of laws restraining free speech and expression
but warns that "every person shall be responsible for the abuse of this
right," and Article I, section 10, which provides that "every man
shall have remedy by due course of law for injury done him in his * * *
reputation."  Id. at 17. 
Finally, in Babick, this court
concluded that the Court of Appeals erred in overturning a trial court's
dismissal of wrongful discharge claims brought by security guards whose
employer discharged them for arresting customers at a public event for unlawful
possession of drugs and alcohol and other criminal conduct.  The Court of
Appeals had concluded that the plaintiffs had stated a claim under the
"discharge for fulfilling a public duty" branch of the wrongful
discharge tree.  Babick v. Oregon Arena Corp., 160 Or App 140, 149, 980
P2d 1147 (1999).  It perceived evidence, in various statutes, that Oregonians
value both a safe and orderly community and reliable and effective law
enforcement by citizen officers, and it held that those "policies"
would be "thwarted" if the defendant was permitted to discharge its
employees with impunity for arresting lawbreakers.  Id. at 146.
On review, this court stressed that
the Court of Appeals was correct in holding that courts reviewing wrongful
discharge claims cannot simply create a relevant public duty to suit the
occasion, but must actually "find" one in the state's constitutional
and statutory provisions and case law.  Babick, 333 Or at 409.  But we
also held that the statutes that the Court of Appeals had identified as
relevant to the question -- general public safety statutes and statutes
authorizing and regulating private law enforcement -- were "far too
general" to support a claim of wrongful discharge on a public duty
theory.  We observed that "[w]e are concerned here with a duty to perform
a specific act (the arrest of lawbreakers by private citizens or private
security personnel), and the statutes cited have nothing to say about that kind
of act."  Id.  We then concluded that,
"even accepting the view of the Court of Appeals that a
'public duty' may arise out of some expression of a 'substantial public policy'
that would be thwarted by the discharge at issue (as opposed to a law that
specifically obligates an employee to act in a certain way), plaintiffs have
failed to establish that predicate here."
Id. at 410.
The foregoing passage from Babick
clearly speaks to plaintiff's present contentions regarding the proper focus
when a "public duty" wrongful discharge claim is under review. 
Notably, however, the passage does not adopt the formulation that plaintiff
contends for (i.e., that a "public duty" wrongful discharge
claim exists when some general public policy expressed in statute,
constitution, or case law would be "thwarted" by the discharge at
issue).  Rather, it holds that, even if a "public duty"
wrongful discharge claim theoretically could arise in the absence of a law imposing
a specific legal obligation to perform the act or acts that trigger the
discharge, the sources of law that express the asserted "public
policy" must in some sense speak directly to those acts.  And
because, in Babick, the statutes that the plaintiffs identified had nothing
to say about the law enforcement activities that triggered the plaintiffs'
discharge in that case, this court could not accept the plaintiffs' contention
that those plaintiffs were wrongfully discharged for acting in accordance with
a public duty.  Id.
With those principles in mind, we
turn to the issue in controversy.  We begin by examining the legal sources that
plaintiff identifies as pertinent to determine if they reflect a public policy
that is relevant to the plaintiff's claim.  Plaintiff relies primarily on the
Oregon statute that identifies unlawful business and trade practices, ORS
646.608, and on certain of the accompanying regulations, OAR 137-020-0020 and
OAR 137-020-0050.  He argues that those sources reflect a strong public
interest in preventing the kinds of sales tactics that purportedly were used
during the RPM sales event.  
We do not disagree with that
proposition, as far as it goes.  ORS 646.608 expressly defines as unlawful
trade practices, inter alia, making false and misleading representations
about the sources of goods for sale, any price reductions on those goods, or
the nature of the obligations that will be incurred in a sales transaction.  OAR
137-020-0020(3)(m), also cited by plaintiff, specifically defines as unfair and
deceptive the practice of "packing" car payments with charges for
additional services that are not disclosed to the buyer.  And OAR 136-020-0050(2)(g)(C)
classifies as deceptive conduct the practice of headlining an advertisement
with an offer that only applies to a few of the vehicles covered by the
advertisement.  In short, we agree with plaintiff that the laws of Oregon
reflect a public policy that generally prohibits and seeks to prevent the kinds
of deceptive conduct that plaintiff reasonably believes had occurred at the first
RPM sales event, and could occur again.
But how does that point relate to
plaintiff's specific theories of wrongful discharge?  Plaintiff first contends
that he was wrongfully discharged for refusing to engage in unlawful and
unethical practices.  The public policy we have discussed might be thwarted by
such a discharge, and, if the evidence presented at trial supported plaintiff's
claim that he was fired for refusing a directive to violate state law, a
wrongful discharge claim might lie.  But the evidence does not support plaintiff's
contention.  In fact, plaintiff acknowledged in his own testimony that his
superiors never asked him to do anything unlawful or unethical.
Plaintiff also alleged that he was
wrongfully discharged for complaining to management about what he
reasonably believed to be RPM's illegal and unethical sales tactics.  Inherent
in that claim is the notion that defendant's proffered reason for terminating
plaintiff -- that plaintiff skipped four days of work -- was pretextual. 
Plaintiff suggests that the Court of Appeals ignored evidence that would
support a conclusion that the proffered reason was a pretext and rejected his
claim on that ground.  Plaintiff's suggestion is incorrect.  In fact, the Court
of Appeals assumed that the evidence was sufficient to support plaintiff's'
theory about the real reason for his termination, but concluded that plaintiff's
claim still fell short, because he had failed to establish that his internal
complaints fulfilled an important public duty or served an important public
interest.  Lamson, 216 Or App at 380.  And, we also assume that the jury
was entitled to conclude that the defendant's stated excuse for plaintiff's
dismissal was pretextual.
Having accepted plaintiff's version
of the pivotal facts, we are left to determine whether plaintiff's internal complaints
to Crater Lake management about RPM's unlawful and unethical sales practices
served a public duty or interest that is sufficiently important to warrant a
departure from the ordinary rules of law respecting discharge from at-will
employment.  
As we have already stated, the laws
of Oregon impose a duty on all persons  not to engage in unlawful trade
practices.  As we recognized in Delaney, an employer that discharges an
employee for refusing to engage in practices that the UTPA prohibits violates
that public policy, and we would have no difficulty recognizing a wrongful
discharge action under those circumstances.  It also is arguable that an
employer that discharges an employee for reporting to management that employees
were being required by their supervisors to engage in such unlawful practices
also would violate that public policy.  In both situations the employee would,
at least arguably, be fulfilling his or her own duty not to engage in deceptive
practices.  For the sake of argument, the same could be true if, by virtue of
his or her position in the corporation, the employee was responsible for ensuring
that the corporation's acts were lawful and ethical and, in an exercise of that
responsibility, reported to management that the corporation itself was engaging
in unlawful practices.  However, we need not decide any of those issues in this
case, because none of the foregoing hypotheticals occurred here.  
In this case, defendant did not
report to defendant's management that he  had been required to engage in
unlawful trade practices or, in the exercise of his job responsibilities, that
defendant corporation was itself engaged in such practices.  Instead, plaintiff
reported to defendant's management that an outside sales firm with which
defendant had contracted -- RPM -- had engaged in unlawful practices and that
plaintiff did not think defendant corporation should be associated with an
outside firm of that ilk.  Certainly, that was a defensible point of view, but,
in light of the scope of authority that RPM had over the sales event, it was
misdirected.  At that juncture, the Attorney General and the various district
attorneys were the ones who had authority to act immediately.  See ORS
646.632(1) (authorizing enforcement action by "prosecuting attorney");
ORS 646.605(5) (defining "prosecuting attorney" to include Attorney
General, district attorney).
There are instances in which
employees may be protected when they report unlawful actions of others by means
of civil or criminal channels recognized by law, see, e.g., ORS
659A.230(1) (prohibiting employers from discriminating against employee for
reporting criminal activity, cooperating with criminal investigation, and
providing remedies), but again, that is not what happened in this case. 
Plaintiff did not report the unlawful trade practices of RPM to any entity with
authority to take action to enforce the UTPA against RPM.
Plaintiff has proceeded in this
wrongful discharge action on two theories:  first, that he was terminated for refusing
to engage in unlawful practices, and, second, that he was terminated for complaining
to upper management about RPM's sales tactics.  The evidence would not permit a
jury to find in accordance with the first of those allegations but would permit
a jury to find in accordance with the second.  However, with respect to that
second allegation, for the reasons discussed, we cannot find that plaintiff's
actions fulfilled the kind of duty that is protected by actions for wrongful
discharge.
The decision of the Court of Appeals
is affirmed.  The judgment of the circuit court is reversed, and the case is
remanded to the circuit court for further proceedings.
1. Plaintiff
also learned that, prior to the sale, RPM had sent a video to certain potential
customers that misrepresented the price reductions that applied during the
sales event.  
2. In
fact, the contract between defendant and RPM was amended to prohibit misrepresentations
and illegal statements.
3. Plaintiff's
original complaint contained additional claims, which are no longer part of the
case.