Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-06-60977/USCOURTS-ca5-06-60977-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 

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IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United scares court of appeals

Fifth Circuit

FILED

No

. 06-60977 December 21, 2007

Charles R . Fulbruge III

Clerk

LEWIS DECARLO,

Plaintiff-Appellant

vs.

BONUS STORES, INC . D/B/A BILL'S DOLLAR STORES, INC . ; JIMMY A.

SCHAFER; WILLIAM FIELDS;

Defendants-Appellees

Appeal from the United States District Court for

the Southern District of Mississippi

Before DEMOSS, DENNIS, and OWEN, Circuit Judges .

DENNIS, Circuit Judge :

This diversity case involves two important, determinative, and unresolved

questions of Mississippi state law . We therefore have determined that our

proper course, in this diversity jurisdiction case in which we are to apply the law

of the State of Mississippi, is to CERTIFY both issues to the Supreme Court of

Mississippi.

CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT TO THE SUPREME COURT OF MISSISSIPPI,

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PURSUANT TO MISSISSIPPI RULE OF APPELLATE PROCEDURE 20 . TO

THE SUPREME COURT OF MISSISSIPPI AND THE HONORABLE

JUSTICES THEREOF :

I. STYLE OF THE CASE

The style of the case in which this certificate is made is Lewis DeCarlo u .

Bonus Stores, Inc . dlb la Bill's Dollar Stores, Inc . ; Jimmy A. Schafer; William

Fields, Case No. 06-60977, in the United States Court of Appeals for the Fifth

Circuit, on appeal from the United States District Court for the Southern

District of Mississippi . Federal jurisdiction is based on diversity of citizenship . II. STATEMENT OF THE CASE

On January 10, 2002, Lewis DeCarlo filed a retaliatory discharge claim in

federal court, naming as defendants his former employer, Bonus Stores, Inc.

d/b/a Bill's Dollar Stores, Inc ., former supervisor Jimmy Schafer, the ex-CEO of

Bonus Stores, and William Fields, a member of the Board of Directors of Bonus

Stores . The plaintiff-appellant alleges that the defendants fired DeCarlo in

retaliation for notifying the company about Schafer's possible criminal fraud,

misappropriation and embezzlement of Bonus Stores' funds, which the plaintiffappellant argues is a retaliatory discharge tort recognized by Mississippi's

McArn exception to employment-at-will doctrine . See McArn v. Allied

Bruce-Terminix Co., Ltd., 626 So.2d 603, 607 (Miss . 1993). The district court

granted summary judgment for the defendants by concluding that McArn's

retaliatory discharge tort (1) does not protect employees who are fired for

reporting illegal acts by co-employees instead of the employer ; and (2) does not

hold liable individual defendants, i .e ., ca-employees that ratified the retaliatory

discharge . Subsequently, the plaintiff-appellant filed a Rule 59(e) motion to

alter or amend the judgment . The district court denied the motion, and DeCarlo

now appeals that denial . While we usually review a denial of a Rule 59(e)

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motion under an abuse of discretion standard, if the appellant is clearly

appealing the entire case solely with regards to questions of law, we construe the

appeal as concerning the merits of the summary judgment, which we review de

novo . Fletcher v . Ap fel, 210 F .3d 510, 512 (5th Cir . 2000). Accordingly, we

review de novo in this case . According to DeCarlo, the district court improperly construed the cause of

action under McArn too narrowly without any basis in Mississippi law and failed

to cite to the Mississippi Supreme Court's two Willard cases, which DeCarlo

alleges implicitly extend McArn to his situation . See Willard u . Paracelsus

Health Care Corp ., 681 So.2d 539, 541 (Miss . 1996) ("Willard I"); Paracelsus

Health Care Corp. v . Willard, 754 So.2d 437, 443 (Miss . 1999) ("Willard IT'). In

Willard I and Willard II, the Mississippi Supreme Court arguably 'extends

McArn to a factual situation very similar to this case : a suit against both the

company and the individual supervisor over the alleged retaliatory termination

for reporting illegal activities, i .e ., embezzlement, of a co-employee . Id.

Therefore, DeCarlo requests that issues (1) and (2) be certified as questions for

the Mississippi Supreme Court . We agree and certify both questions to the

Mississippi Supreme Court. The second issue would be moot if the Supreme

Court of Mississippi decides against the plaintiff-appellant on the first issue .

Both parties acknowledge the lack of any Mississippi Supreme Court

decision that directly resolves these issues . In McArn, the Mississippi Supreme

Court established a common-law tort of retaliatory discharge . "[A]n employee

who is discharged for reporting illegal acts of his employer to the employer or

anyone else is not barred by the employment at will doctrine from bringing

action in tort for damages against his employer ." McArn, 626 So . 2d at 607 . In

this case, while the reported illegal acts are not of the corporate employer, the

illegal acts, i .e ., possible embezzlement, do affect the employer's business and

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third-parties, such as the stockholders. Some Mississippi cases indicate a

willingness to extend the McArn exception to reports of illegal activities that

relate to the business even if those activities are not corporate actions . See, e .g.,

Jones v . Fluor Daniel Servs . Corp., 959 So.2d 1044, 1047 (Miss. 2007) ("As in

McArn, the `reporting of illegal acts' exception to the at-will employment doctrine

has been applied only when the illegal act actually had something to do with the

business itself.") (emphasis added) ; Willard II, 754 So . 2d at 444 ("The prevention

of terminations such as that of [plaintiffs] is necessary to promote and encourage

employees like Willard and Sumner, who take an active interest in the

well-being of the companies that employ them.") (emphasis added); Senseney v.

Mississippi Power Co ., 914 So.2d 1225, 1228 (Miss . Ct. App. 2005) ("In [McArn],

the court established a public policy exception to the doctrine, allowing an

employee fired for refusing to follow the employer's directive to do illegal activity

or for exposing illegal activity in the workplace to bring a wrongful termination

action .") (emphasis added) ; Brandon v. Claiborne County, 828 So.2d 202, 207

(Miss . Ct. App . 2001) (acknowledging that reporting illegal acts by several

supervisors "would qualify as [an] exception[] to an at-will employee status .") ;

McCrory v . Wal Mart Stores, Inc ., 755 So .2d 1141, 1143 (Miss . Ct. App. 1999)

("Thus, in the case of [McArn], the court held that an at will employee who is

terminated for refusing to obey a directive to do an illegal act, or who is

terminated for exposing illegal activity at the workplace, may, on grounds of

public policy, bring a wrongful termination action as a sort of private reward

system for resisting unlawful activity that might otherwise go undiscovered.")

(emphasis added). Moreover, such an extension of McArn arguably fits within

the broader public policy purposes underlying McArn's recognition of this tort,

since co-employees' illegal activities at the workplace do affect the company and

related public third-parties, such as stockholders . McArn, 626 So.2d at 607

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("[The] [McArn exception applies] where the illegal activity either declined by

the employee or reported by him affects third parties among the general public .

. . .") . Since the Mississippi authorities have not directly ruled on whether

McArn should be so extended, we decide to certify this question .

For the second issue regarding individual liability for retaliatory discharge

torts, in McArn, the Mississippi Supreme Court stated that an employee who

asserts a retaliatory discharge claim is "not barred by the employment at will

doctrine from bringing action in tort for damages against his employer ." 626 So.

2d at 607 (emphasis added) . No Mississippi court has directly addressed

whether the at-will doctrine bars action against individual defendants who

participate in the retaliatory decision to terminate an employee within the

course and scope of their employment .' Other state court decisions are split on

this exact issue of individual liability for retaliatory discharge torts .

At least three states, West Virginia, New Jersey, and Pennsylvania,

permit individual liability for the tort of wrongful retaliatory discharge for

individuals who personally participate in the discharge "as the principal

protagonist" even if the individual was acting within the scope of his

employment. See Ballinger v . Delaware River Port Auth ., 800 A.2d 97, 1 10 (N.J .

2002) (describing rule in New Jersey and Pennsylvania) ; Harless V. First Nat'l

Bank, 289 S .E .2d 692, 698-99 (W . Va . 1982) ("The discharge serves to fix

responsibility on the employer but this does not mean that another employee

who has been the principal protagonist in obtaining the employee's discharge

would not also be liable .") . This individual liability even extends to persons who

' DeCarlo concedes the main individual defendant who discharged him was acting

within the scope and course of his employment . See Appellant's Brief, at 22 ("There can be

no dispute that Schafer was acting within the scope and course of his employment as CEO

of Bonus Stores when he fired DeCarlo .") .

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participate in the decision, but did not actually fire the plaintiff . Id.

On the other hand, other state courts would deny individual liability in

this case, because (1) individual liability could be imposed only if the employee

acted outside of the scope of his employment and in his own interest, see

Bourgeous v. Horizon Healthcare Corp ., 872 P.2d 852,855-56 (N . M . 1994), which

is not the case here ; or (2) the tort of retaliatory discharge was intended only to

impose liability on the corporate entity itself and not individual defendants, see

Rebarchek U. Farmers Co-Op . Elevator, 35 P.3d 892, 903 (Kan . 2001) ; Reno v .

Baird, 957 P.2d 1333, 1347 (Cal. 1998); Buckner v. Atl. Plant Maint., Inc., 694

N.E .2d 565, 569 (111. 1998) ("[T]he power to hire and fire employees is ultimately

possessed only by the employer. Consequently, the tort of retaliatory discharge

may be committed only by the employer . The agent or employee who carries out

the employer's decision to fire will not be subject to personal liability for

retaliatory discharge .") .2 As a split in state court authority exists, and no

Mississippi Supreme Court opinion has directly addressed this issue, we also

decide to certify this issue . III. QUESTIONS CERTIFIED

Whether the laws of Mississippi permit a retaliatory discharge claim for

discharge in retaliation for reporting a co-employee's illegal acts that relate to

the employer's business?

If the previous question is resolved in favor of the plaintiff-appellant :

whether the laws of Mississippi allow for individual liability for the tort of

retaliatory discharge even if the individual defendant's participation in the

discharge was in the course and scope of his employment?

2 The Buckner case resolved the contrary positions on this issue taken by two

previous conflicting state intermediate appellate decisions in Illinois . 694 N.E . 2d at 570 .

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We disclaim any intention or desire that the Supreme Court of Mississippi

confine its reply to the precise form or scope of the question certified . The

answer provided by the Supreme Court of Mississippi will determine the issues

on appeal in this case . The record in this case, together with the copies of the

parties' briefs, is transmitted herewith .

The panel retains cognizance of the appeal in this case pending response

from the Supreme Court of Mississippi, and the Court hereby certifies to the

Supreme Court of Mississippi the above questions of law .

QUESTIONS CERTIFIED TO THE SUPREME COURT OF MISSISSIPPI .

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