FILED

June 2, 1999

Cecil Crowson, Jr.

Appellate Court Clerk

MITCHELL L. DARNALL, )

)

Plaintiff/Appellant, ) Appeal No.

) 01-A-01-9807-CV-00347

v. )

) Williamson Circuit

A% HOMECARE, INC. and ) No. I-95381

JAMES D. SMITH, )

)

Defendants/Appellees. )

)

COURT OF APPEALS OF TENNESSEE

APPEAL FROM THE CIRCUIT COURT FOR 

WILLIAMSON COUNTY

AT FRANKLIN, TENNESSEE

THE HONORABLE CORNELIA A. CLARK, JUDGE

STANLEY M. CHERNAU

Suntrust Center, Suite 1750

424 Church Street

Nashville, Tennessee 37219

ATTORNEY FOR PLAINTIFF/APPELLANT

ROBERT E. BOSTON

511 Union Street, Suite 2100

Nashville, Tennessee 37219

ATTORNEY FOR DEFENDANTS/APPELLEES

AFFIRMED AND REMANDED

WILLIAM B. CAIN, JUDGE
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OPINION

This is an appeal by the plaintiff from summary judgment granted to the

Defendants in a complaint asserting retaliatory discharge with the action based

solely upon Tennessee Code Annotated section 50-1-304.

I. THE FACTS OF THE CASE

Plaintiff was employed by A+ Homecare, Inc. on September 6, 1994

to be its Director of Finance. He was hired as an "at will" employee. A+

Homecare, Inc., through its agencies, provides home health services to

individuals throughout the Middle Tennessee area. A+ Homecare, Inc. had a

written policy prohibiting sexual harassment in the work place which policy was

known to Mitchell Darnall. In late October 1994, one of Darnall's female coworkers complained to A+ supervisory personnel that Darnall had made

inappropriate, unwelcome,sexually graphic comments to her of a personal nature

that made her very uncomfortable. This employee, Diana Rollinson, made her

complaints to Cindi Smith, Vice President of Human Resources at A+. After

reporting the problem to Rhea Garrett, General Counsel for A+, Cindi Smith

informed Darnall of the complaint asserted by Ms. Rollinson.

Darnall's response to A+'s motion for summary judgment reads in

pertinent part, as follows:

DEFENDANT'S ALLEGED UNDISPUTED FACT - NUMBER 3

In late October, 1994, one of Darnall's female coworkers complained to A+'s supervisory personnel that

Darnall had engaged in inappropriate behavior which,

apparently to the employee and certainly to A+, was deemed

to constitute sexual harassment. Garrett aff. at ¶ ¶ 2-3. That

employee, Diana Rollinson, complained that Darnall had

made inappropriate, unwelcome sexually graphic comments

to her, of a very personal nature, that made her very

uncomfortable.2 ...

 

2

 Specifically, Ms. Rollinson reported that, while the

two were alone at A+'s offices one evening, Darnall told her

that he had learned at Lamaze class that his pregnant wife's

labor could be quickened with ejaculation of semen and

massaging of the breasts. Garrett Aff at ¶ 2. 
-3-

* * *

PLAINTIFF'S RESPONSE

The only true reproach by anyone at Defendant A+,

until the date of termination, was a statement by Ms. Cindi

Smith, Vice President of Human Resources, that Plaintiff

had possiblyoffended Ms. Dianna Rollinson with a comment

regarding his wife's pregnancy in late October 1994. At that

time, Plaintiff could not recall any questionable statements

made, and Ms. Smith did not know the specifics. Plaintiff

later realized it occurred at a staff meeting on a Monday

following a Lamaze class he attended with his pregnant wife.

During the staff meeting, he was asked many questions by

his staff. Plaintiff answered their questions concerning the

class because the staff members appeared to be genuinely

interested. Apparently, the statement was made by Plaintiff

while answering their questions. At no point did Plaintiff

acknowledge that any conversation had gotten out of hand.

Ms. Smith maintained that the statement was simply an

unintentional misunderstanding and definitely was not a

problem. Further, it would not be reported in his personnel

file. He apologized to Ms. Rollinson. No further complaints

were made known to Plaintiff until termination. ...

Shortly after he began his employment with A+, Darnall became

concerned about the accounting practices of the corporation. Particularly he

found that a check in the amount of $30,000 had been drawn on the general

operating account of A+ on June 1, 1993, payable to the Defendant James

Bradley Smith, with no supporting documentation. Darnall questioned Brad

Smith and received four differing explanations for the $30,000 check. First, that

it was a part of the proceeds of the sale of a previous company to A+; second, it

was a loan payback for money previously loaned by Smith to A+; third, that it

was compensation to him over and above what Medicare would allow and that

he did not want to report it to Medicare or the IRS, and fourthly, that it was a

loan to him by A+ for which he had documentation at home. Not being satisfied

with these explanations, Darnall went to the outside auditors of the company to

discuss the problem with them. On January 20, 1995, one day after his meeting

with the auditors, Darnall was terminated.
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II. TENNESSEE CODE ANNOTATED SECTION 50-1-304 

(Public Protection Act)

At common law Tennessee recognized the "employee-at-will" rule which

provides that employment for an indefinite term is a contract at will and can be

terminated by either party at any time without cause. Combs v. Standard Oil Co.,

166 Tenn. 88, 59 S.W.2d 525 (1933).

In sustaining the common law rule this court has said:

The rule has been well established in this state that a

contract of employment for an indefinite term is a contract at

will and can be terminated by either party at any time without

cause. Graves v. Anchor Wire Corp. of Tennessee, 692

S.W.2d 420 (Tenn.App.1985). In Payne v. Western &

Atlantic Railroad Co., 81 Tenn. 507 (1884), the Supreme

Court said:

All may dismiss their employees at will, be they

many or few, for good cause, for no cause or even

for cause morally wrong without being thereby

guilty of legal wrong.

Randolph v. Dominion Bank, 826 S.W.2d 477, 478 (Tenn. App. 1991). 

This principle is still viable in Tennessee except where modified by

statute. Whitaker v. Care-Moore, Inc., 621 S.W.2d 395 (Tenn. App. 1981).

Tennessee Code Annotated section 50-1-304 is a narrowly crafted

statutory exception to the common law "employee-at-will" rule. 

Tennessee Code Annotated section 50-1-304 providesin pertinentpart:

(a) No employee shall be discharged or terminated solely for

refusing to participate in, or for refusing to remain silent

about, illegal activities.

 * * *

(c) As used in this section, "illegal activities" means

activities which are in violation of the criminal or civil code

of this state or the United States or any regulation intended

to protect the public health, safety or welfare.

(d) any employee terminated in violation of subsection (a)

shall have a cause of action against the employer for
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retaliatory discharge and any other damages to which the

employee may be entitled.

The historical background for this statute and our limited experience

under it has been addressed by the United States District Court for the Eastern

District of Tennessee:

This statutory cause of action, enacted in 1990, embodies a

common law cause of action previously considered by the

Tennessee Supreme Court in Watson v. Cleveland Chair Co.,

789 S.W.2d 538, 544 (Tenn.1989) (recognizing "a cause of

action for retaliatory discharge . . . when an at-will employee

is terminated solely for refusing to participate, or remain

silent about illegal activities") and in Chism v. Mid-South

Milling Co., Inc., 762 S.W.2d 552, 555-57 (Tenn.1988)

(recognizing the cause of action, though not on the facts of

the case).

However, both cases hesitated to fully validate the cause

of action. The Watson court expressed its reluctance "to

establish public policy or adopt an exception to the common

law by placing [its] imprimatur thereon in the absence of

some constitutional or legislative precedent." Watson, 789

S.W.2d at 544. The Chism court emphasized resting the

cause of action upon public policy clearly "evidenced by an

unambiguous constitutional, statutory or regulatory

provision." Chism, 762 S.W.2d at 556. Public policy

guidance is necessary because at the heart of the law of

retaliatory discharge is the balance between the employer's

undeniable right to terminate an at-will employee over

management and policy decisions and the employee's right to

protection from unlawful discharge. Id. at 555; Watson, 789

S.W.2d at 540; Clanton v. Cain-SloanCo., 677 S.W.2d 441,

445 (Tenn.1984). 

As noted above, the Tennessee General Assembly

enacted the Act in 1990, thereby satisfying the Tennessee

Supreme Court's concern for clear public policy guidance.

The statute's language nearly adopts verbatim the language

found in the earlier cases. Recent cases specifically

addressingTenn. Code Ann. § 50-1-304, though, are very few

in number.

Griggs v. Coca-Cola Employees' Credit Union, 909 F.Supp. 1059, 1063 (E.D.

Tenn. 1995).

In order to get to the heart of the issue in this case, it is necessary to

clearly establish the distinction between retaliatory discharge under other
-6-

statutory and common law exceptions to the employee-at-will doctrine and the

very limited statutory exception thereto established by Tennessee Code

Annotated section 50-1-304. In Johnson v. St. Francis Hosp., Inc., 759 S.W.2d

925 (Tenn. App. 1998), the Western Section of the Court of Appeals was dealing

with a retaliatory discharge for filing a workers compensation claim. Relying on

Hansome v. North Western Cooperage Co., 679 S.W.2d 273 (Mo. 1984), the

court asserted four elements to establish a prima facie case of retaliatory

discharge, to-wit:

1. Plaintiff's status as an employee of the defendant before injury.

2. Plaintiff's exercise of his right to seek workers compensation.

3. Employer's discharge of or discrimination against Plaintiff.

4. An exclusive causal relationship between Plaintiff's actions and

Defendant's actions. 

In the context of a retaliatory discharge for workers compensation

related activities, this court questioned the correctness of the fourth factor set

forth in Johnson and the Supreme Court granted an appeal to reconcile the

factors needed for a prima facie case of retaliatory discharge in a workers'

compensation context. The Supreme Court held:

Based on the principles stated inClanton v. Cain-Sloan

Co., Chism v. Mid-South Milling Co., Inc. and Johnson v.

Saint Francis Hosp., Inc., the following elements are found

to establish a cause of action for discharge in retaliation for

asserting a workers' compensation claim: (1) The plaintiff

was an employee of the defendant at the time of the injury;

(2) the plaintiff made a claim against the defendant for

workers' compensation benefits;(3)the defendant terminated

the plaintiff's employment; and (4) the claim for workers'

compensation benefits was a substantial factor in the

employer's motivation to terminate the employee's

employment.

Anderson v. Standard Register Co., 857 S.W.2d 555, 558 (Tenn. 1993).

Johnson v. St. Francis Hosp., Inc., 759 S.W.2d 925 (Tenn. App. 1988)

dealt with workers' compensation retaliatory discharge and was decided two

years before the enactment of Tennessee Code Annotated section 50-1-304. The

first case dealing specifically with this "whistle blower" statute was Merryman
-7-

v. Central Parking System, Inc., et al, No. 01A01-9203-CH-00076, 1992 WL

330404, (Tenn. App. Nov. 13, 1992). It was decided after the decision of this

court in Anderson v. Standard Register Co., 1992 WL 63421 (Tenn. Ct. App.

April 1, 1992), but before the Supreme Court issued its opinion on appeal.

Anderson v. Standard Register Co., 857 S.W.2d 555 (Tenn. June 28, 1993).

Merryman adopted the four factors of Johnson v. St. Francis Hosp., Inc.,

includingthe "exclusive causal relationship" factor without making clear that this

"exclusive causal relationship" factor is mandated by the particular language of

Tennessee Code Annotated section 50-1-304, rather than by Johnson v. St.

Francis Hosp., Inc. This fourth factor of Johnson did not survive Anderson v.

Standard Register Co., but was rather converted therein to a "substantial factor"

test in worker compensation related retaliatory discharge.

It results that the four factor test set forth in Johnson v. St. Francis

Hosp., Inc., 759 S.W.2d 925, 928 (Tenn. App. 1988) is the correct test only

because Tennessee Code Annotated section 50-1-304(a) provides that "no

employee shall be discharged or terminated solely for refusing to participate in,

or for refusing to remain silent, about illegal activities." (emphasis added)

Thus considering this case in the limited context of Tennessee Code

Annotated section 50-1-304 and not in the context of retaliatory discharge in

general, the four factor Johnson test is valid.

The limited number of cases actually addressing Tennessee Code

Annotated section 50-1-304 indicate that the plaintiff has indeed a formidable

burden in establishing elements number two and four of the cause of action.

Griggs v. Coca-Cola Employees' Credit Union, 909 F.Supp. 1059, 1063;

Merryman v. Central Parking System, Inc., No. 01A01-9203-CH-00076 1992

WL 330404 and Leeman v. Edwards, No. 01A01-9401-CV-00050 1994 WL

560889 (Tenn. App. Oct. 14, 1994) (both overruled on other grounds).

III. SUMMARY JUDGMENT

The often repeated rules governing summary judgment are outlined in

Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993). The evidence must be taken by the
-8-

trial court and by this court in the light most favorable to the plaintiff as the

nonmoving party and all reasonable inferences from the facts of the case must be

construed in favor of Darnall.

The four elements of a cause of action under Tennessee Code

Annotated section 50-1-304 are:

(1) The plaintiff's status as an employee of the Defendant;

(2) The plaintiff's refusal to participate in, or to remain silent about,

illegal activities;

(3) The employer's discharge of the employee; and

(4) An exclusive causal relationship between the plaintiff's refusal to

participate in or remain silent about illegal activities and the employer's

termination of the employee. Griggs v. Coca-Cola Employees' Credit Union,

909 F.Supp. 1059, 1063 (E.D. Tenn. 1995).

Elements (1) and (3) are clearly met in this case. There is enough

evidence in the record as held by the trial judge to preclude summary judgment

as to element number (2).

It is the inability of the plaintiff to establish the "exclusive causal

relationship" between his alleged "whistle blower" activities and his termination

by A+ that dooms his case. The persistent inquiries by Darnall into activities

predating his employment with A+ and his conference with the outside auditors

the day before his termination may have been the main reason for his discharge

and probably were at least a substantial part of the reason for his discharge.

However, this substantial factor rationale will not avoid summary judgment.

In analyzing the causation element necessary to sustain an action under

Tennessee Code Annotated section 50-1-304, theUnited States District Court for

the Eastern District of Tennessee held:

The fourth element requires Griggs to demonstrate "an

exclusive causal relationship between the plaintiff's refusal to

participate in or to remain silent about illegal activities and the

employer's termination of the employee." Merryman, 1992 WL
-9-

330404, at p. *6; Leeman, 1994 WL 560889, at p. *2. The

pertinent language of Tenn.Code Ann. § 50-1-304(a) (emphasis

added) reads: "No employee shall be discharged or terminated

solely for refusing to participate in, or for refusing to remain

silent about, illegal activities." Griggs invites the Court to read

the statute and the language from Merryman as intending the

employer's unlawful behavior to only have been a "substantial"

factor in the discharge (Court File No. 11, pp. 10-14). The Court

declines to do so.

The rule of statutory construction requires the Court to

yield to the legislature's intention. Business Brokerage Centre v.

Dixon, 874 S.W.2d 1, 5 (Tenn.1994); City of Blaine v. John

Coleman Hayes, 818 S.W.2d 33, 37 (Tenn.App.1991) (citations

omitted); Lockhart v. Jackson-Madison Cty. Gnl. Hosp., 793

S.W.2d 943, 945 (Tenn.App.1990) (citations omitted); see also

First Am. Nat. Bank-Eastern v. F.D.I.C., 782 F.2d 633, 636-37

(6th Cir.1986). In order to give effect to the legislature's intent,

courts look primarily to "the natural and ordinary meaning of the

language used, when read in the context of the entire statute, and

without any forced or subtle construction to limit or extend the

import of the language." City of Blaine, 818 S.W.2d at 37

(citations omitted).

Here, the language is clear. An employer may not

discharge an employee "solely for refusing to participate in, or for

refusing to remain silent about, illegal activities." Tenn. Code

Ann. § 50-1-304(a). Nothing in the remainder of the section

indicates the Court should read the statute differently. Nothing

in Merryman and Leeman, the only two cases directly addressing

the statute, indicate the Court should read the statute differently.

Griggs v. Coca-Cola Employees' Credit Union, 909 F.Supp. 1059, 1065 (E.D.

Tenn. 1995).

This court, in discussing Tennessee Code Annotated section 50-1-304,

has stated:

Prior to the passage of T.C.A. § 50-1-304, the appellate

courts had not clearly settled on whether a plaintiff was required

to show that protected activity was either a substantial factor or

the sole cause of termination. But the statute supplied the

answer; it clearly requires the employee to show that the sole

cause of his termination was his refusal to remain silent about

illegal activities in the workplace.

Hubrig v. Lockheed Martin Energy Systems, Inc., No. 03A01-9711-CV-00525

1998 WL 240128, * 11 (Tenn. App. May 4, 1998) perm. to app. denied,

concurring in results only (Tenn. Oct. 12, 1998).
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The legislature chose the language used in Tennessee Code Annotated

50-1-304 and provided a very limited exception to the common law rule

governing "at will" employment. There is substantial evidence in the record at

bar to establish a causal relationship between Darnall's sexually explicit

comments to Ms. Rollinson and his subsequent discharge by his employer for

alleged sexual harassment. The necessary "exclusive" causal relationship

between the statutorily protected activities and the discharge of Darnall cannot

be established, and the action of the trial court in sustaining the motion for

summary judgment of A% Homecare, Inc. is affirmed.

Plaintiff further asserts that the president and sole stockholder of A%

Homecare, Inc., James D. Smith, is liable under Tennessee Code Annotated

section 50-1-304. Smith is not an "employer" under Tennessee Code Annotated

section 50-1-304 and cannot be liable to the plaintiff under the statute. Carr v.

United Parcel Service, 955 S.W.2d 832 (Tenn. 1997) and Williams v. Williamson

County Board of Education, 890 S.W.2d 788, 790 (Tenn. App. 1994). 

The judgment of the trial court is affirmed and costs are assessed against

the Appellant.

_______________________________________

WILLIAM B. CAIN, JUDGE

CONCUR:

_____________________________________

BEN H. CANTRELL, P.J., M.S.

CONCURRING IN SEPARATE OPINION

WILLIAM C. KOCH, JR., JUDGE