Title: Jacobson v. Knepper & Moga

State: illinois

Issuer: Illinois Supreme Court

Document:

Jacobson v. 
Knepper & Moga, No. 84740 (Ill. S.Ct.) 
Docket No. 84740-Agenda 27-September 
1998.
Opinion filed December 31, 1998.
JUSTICE NICKELS delivered the opinion of the 
court:
We are asked here to consider the issue of whether an 
attorney who has been discharged by his law firm employer should be allowed the 
remedy of an action for retaliatory discharge. We hold that an attorney may not 
maintain such an action.
BACKGROUND
Plaintiff, Alan P. Jacobson, filed a one-count complaint in 
the circuit court of Cook County against the law firm of Knepper & Moga, 
P.C. (hereinafter, the firm), alleging that he had been wrongfully discharged in 
retaliation for reporting the firm's illegal practices to a principal partner of 
the firm. In his complaint, plaintiff made the following factual allegations. In 
July 1994, plaintiff was hired as an associate attorney of the firm. Shortly 
thereafter, plaintiff discovered that the firm was filing consumer debt 
collection actions in violation of the venue provisions of the Fair Debt 
Collection Practices Act (15 U.S.C. §1692i(a)(2)(B) (1988)) and the Illinois 
Collection Agency Act (225 ILCS 425/9(20) (West 1994)). Plaintiff spoke with 
James Knepper, one of the firm's principal partners, regarding the filing 
practice and was advised that the matter would be remedied.
In April 1995, plaintiff was given the responsibility of 
reviewing and signing all complaints filed by the firm in consumer debt 
collection cases. In this role, plaintiff learned that the firm continued to 
file actions in violation of the venue provisions of the above-referenced acts. 
Plaintiff reiterated his complaint to Knepper, who again assured plaintiff that 
the practice would be corrected. Shortly thereafter, plaintiff was relieved of 
the responsibility to review and sign complaints in consumer debt collection 
cases. Less than three months later, plaintiff discovered that the firm had not 
ceased the practice of filing complaints in the improper venue. Plaintiff 
approached Knepper regarding the matter for a third time. Approximately two 
weeks later, plaintiff was terminated.
Plaintiff's complaint alleged that he had been discharged in 
retaliation for his insistence that the firm cease its practice of filing 
consumer debt collection actions in the wrong venue. The firm filed a motion to 
dismiss the action pursuant to section 2-615(a) of the Code of Civil Procedure 
(735 ILCS 5/2-615(a) (West 1994)). Citing Balla v. Gambro, Inc., 145 Ill. 2d 492 (1991), and Herbster v. North American Co. for Life & Health 
Insurance, 150 Ill. App. 3d 21 (1986), in support of its motion, the firm 
argued that Illinois courts have refused to extend the tort of retaliatory 
discharge to employees who are licensed attorneys.
The circuit court denied defendant's motion to dismiss. 
However, the circuit court certified the following question of law for 
interlocutory appeal, pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 
308):
The appellate court denied the firm's Rule 
308 application for leave to appeal. The firm then filed a petition for leave to 
appeal to this court (166 Ill. 2d R. 315), which was denied. However, this court 
issued a supervisory order directing the appellate court to consider defendant's 
appeal on its merits (155 Ill. 2d R. 383). Subsequently, the appellate court 
held that plaintiff was not precluded from maintaining an action for retaliatory 
discharge against his employing firm. 293 Ill. App. 3d 565. We granted the 
firm's petition for leave to appeal. 166 Ill. 2d R. 315. We 
reverse.
ANALYSIS
Generally, an employer may fire an employee-at-will for any 
reason or no reason at all. Fellhauer v. City of Geneva, 142 Ill. 2d 495, 505 (1991); Barr v. Kelso-Burnett Co., 106 Ill. 2d 520, 525 
(1985). Nevertheless, this court has recognized the limited and narrow tort of 
retaliatory discharge as an exception to the general rule of at-will employment. 
Balla v. Gambro, Inc., 145 Ill. 2d 492, 498-99 (1991), citing 
Kelsay v. Motorola, Inc., 74 Ill. 2d 172 (1978). To establish a cause 
of action for retaliatory discharge, a plaintiff must demonstrate that (1) he 
was discharged in retaliation for his activities; and (2) the discharge is in 
contravention of a clearly mandated public policy. Zimmerman v. Buchheit of 
Sparta, Inc., 164 Ill. 2d 29, 35 (1994).
While there is no precise definition of what constitutes 
clearly mandated public policy, a review of Illinois case law reveals that 
retaliatory discharge actions are allowed in two settings. The first situation 
is when an employee is discharged for filing, or in anticipation of the filing 
of, a claim under the Workers' Compensation Act (820 ILCS 305/1 et seq. 
(West 1992)). See Hinthorn v. Roland's of Bloomington, Inc., 119 Ill. 2d 526 (1988); Kelsay, 74 Ill. 2d 172. The second situation is when an 
employee is discharged in retaliation for the reporting of illegal or improper 
conduct, otherwise known as "whistle blowing." See, e.g., Palmateer 
v. International Harvester Co., 85 Ill. 2d 124 (1981). Here, it is 
plaintiff's contention that the enactment of the provisions of the Fair Debt 
Collection Practice Act and the Illinois Collection Agency Act, violations of 
which are alleged in the complaint, articulate a clearly mandated public policy. 
Plaintiff argues that, because he alleged that he was terminated in retaliation 
for his reporting of the firm's violations of these acts, his complaint states a 
cause of action.
The tort of retaliatory discharge is a limited cause of 
action which "seeks to achieve ` "a proper balance *** among the employer's 
interest in operating a business efficiently and profitably, the employee's 
interest in earning a livelihood, and society's interest in seeing its public 
policies carried out." ' " Balla, 145 Ill. 2d  at 501, quoting 
Fellhauer, 142 Ill. 2d  at 507, quoting Palmateer, 85 Ill. 2d  
at 129. In this case, the public policy to be protected, that of protecting the 
debtor defendants' property and ensuring them due process, is adequately 
safeguarded without extending the tort of retaliatory discharge to employee 
attorneys.
Plaintiff was a licensed attorney at all times throughout 
this controversy and, as such, he was subject to the Illinois Rules of 
Professional Conduct (134 Ill. 2d Rs. 1.1 through 8.5). The firm's conduct of 
intentionally filing collection actions against debtors in a county which it 
knows venue is improper clearly violates Rule 3.3 of the Rules of Professional 
Conduct. See 134 Ill. 2d R. 3.3(a)(1) (lawyer shall not make a statement of 
material fact or law to a tribunal which the lawyer knows or reasonably should 
know is false); see also ISBA Op. No. 86-10 (March 27, 1987) (clear violation of 
rules of conduct for lawyer to file a complaint which pleads that venue is 
proper when lawyer knows is not appropriate under the statute). Further, the 
Rules of Professional Conduct prohibit a lawyer from engaging in conduct 
involving dishonesty, fraud, deceit, or misrepresentation. 155 Ill. 2d R. 
8.4(a)(4). Because plaintiff possessed unprivileged knowledge that the firm 
engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation, he 
was required to report such knowledge to a tribunal or other authority empowered 
to investigate or act upon such violation. See 134 Ill. 2d R. 8.3(a); In re 
Himmel, 125 Ill. 2d 531, 541 (1988); ISBA Op. No. 89-9 (November 28, 
1989).
Therefore, the attorney's ethical obligations serve to 
adequately protect the public policy established by the collection statutes. 
Because sufficient safeguards exist in this situation, it is unnecessary to 
expand the limited and narrow tort of retaliatory discharge to the employee 
attorney. As this court has previously observed, "[a]n attorney's obligation to 
follow these Rules of Professional Conduct should not be the foundation for a 
claim of retaliatory discharge." Balla, 145 Ill. 2d  at 505. Although 
plaintiff attempts to limit the application of Balla to in-house 
counsel, the Balla court based its decision "as much on the nature and 
purpose of the tort of retaliatory discharge, as on the effect on the 
attorney-client relationship that extending the tort would have." 
Balla, 145 Ill. 2d  at 501. Attorneys employed by law firms have the 
same ethical obligations as those imposed upon in-house counsel.
Thus, we hold that plaintiff, as a licensed attorney 
employed as such by the defendant law firm, cannot maintain a cause of action 
for retaliatory discharge because the ethical obligations imposed by the Rules 
of Professional Conduct provide adequate safeguards to the public policy 
implicated in this case. The circuit court certified the question of whether an 
attorney licensed to practice in the State of Illinois is prevented from 
maintaining a cause of action for the tort of retaliatory discharge against his 
nonclient law firm employer due to the preeminence of the Rules of Professional 
Conduct. For the foregoing reasons, we answer the certified question in the 
affirmative. Accordingly, we reverse the judgments of the appellate and circuit 
courts and remand this cause with directions that defendant's motion to dismiss 
be granted.
Certified question answered;
appellate court reversed;
circuit court reversed;
cause remanded with 
directions.
JUSTICE HARRISON took no part in the consideration or 
decision of this case.
CHIEF JUSTICE FREEMAN, dissenting:
I respectfully dissent.
The majority concludes that an attorney's obligation to 
follow the Rules of Professional Responsibility should not be the foundation for 
a claim of retaliatory discharge. I note that, in resolving this issue, the 
majority relies primarily on our 1991 decision in Balla v. Gambro, 
Inc., 145 Ill. 2d 492 (1991), which involved an in-house attorney's attempt 
to sue his corporate employer for retaliatory discharge after the attorney 
advised his employer that it failed to comply with certain federal regulations 
promulgated by the Federal Food and Drug Administration. I dissented in 
Balla, arguing, inter alia, that the court's confidence in the 
Rules' existence as a shield from an employer's illegal acts was unwise and 
misplaced. I warned then that the court's decision did "nothing to encourage 
respect for the law by corporate employers nor [did it] encourage respect by 
attorneys for their ethical obligations." Balla, 145 Ill. 2d  at 516 
(Freeman, J., dissenting). Seven years later, these concerns unfortunately still 
ring true, as the facts in this case sadly demonstrate. Nevertheless, my 
colleagues today now extend the Balla holding to law firms and their 
employee attorneys. Thus, one class of employees in this state, attorneys, has 
been stripped of a remedy which Illinois clearly affords to all other employees 
in such "whistle-blowing" situations. Today's opinion serves as yet another 
reminder to the attorneys in this state that, in certain circumstances, it is 
economically more advantageous to keep quiet than to follow the dictates of the 
Rules of Professional Responsibility. For this reason, and the reasons expressed 
in my dissent in Balla, I would answer the certified question in the 
negative and would affirm the judgments of both the appellate and circuit 
courts.