PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

DONN MILTON, Dr.,

Plaintiff-Appellant,

v. No. 97-2069

IIT RESEARCH INSTITUTE,

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Albert V. Bryan, Jr., Senior District Judge.

(CA-97-761-A)

Argued: January 26, 1998

Decided: March 6, 1998

Before WILKINSON, Chief Judge, and HAMILTON and

MICHAEL, Circuit Judges.

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Affirmed by published opinion. Chief Judge Wilkinson wrote the

opinion, in which Judge Hamilton and Judge Michael joined.

_________________________________________________________________

COUNSEL

ARGUED: Linda Marie Jackson, CHARLSON & BREDEHOFT,

P.C., Reston, Virginia, for Appellant. Jana Howard Carey, VENABLE, BAETJER & HOWARD, L.L.P., Baltimore, Maryland, for

Appellee. ON BRIEF: John M. Bredehoft, Elaine C. Bredehoft,

CHARLSON & BREDEHOFT, P.C., Reston, Virginia, for Appellant.

Todd J. Horn, VENABLE, BAETJER & HOWARD, L.L.P., Baltimore, Maryland, for Appellee.
OPINION

WILKINSON, Chief Judge:

Donn Milton's wrongful discharge action against his former

employer, IIT Research Institute (IITRI), raises two legal issues: the

choice of law to govern Milton's claim and the viability of his claim

under that law. Under the applicable choice of law rule, Maryland law

applies. And Maryland's cause of action for wrongful discharge is not

available on these facts. We thus affirm the judgment of the district

court dismissing Milton's claim.

I.

As the district court granted defendant's Fed. R. Civ. P. 12(b)(6)

motion, we shall treat the allegations in the complaint as true. Martin

Marietta Corp. v. International Telecomms. Satellite Org., 991 F.2d

94, 97 (4th Cir. 1993).

IITRI is a not-for-profit scientific research organization that enjoys

tax-exempt status under Section 501(c)(3) of the Internal Revenue

Code. In 1993, IITRI hired Milton to supervise administration of a

contract between the company and the federal government called the

Tax Systems Modernization Institute (TSMI). In 1995, Milton

became Vice President of IITRI's Advanced Technology Group,

which included TSMI and several other projects. Throughout his tenure at IITRI, Milton's office was located at the IITRI facility in Lanham, Maryland.

During the course of his employment, Milton became convinced

that IITRI was abusing its tax-exempt status by failing to report to the

Internal Revenue Service taxable income generated by the substantial

portion of IITRI's business that did not constitute scientific research

in the public interest. Milton voiced his concerns to IITRI management, to no avail. In 1995, after similar allegations by a competitor,

IITRI initiated an internal examination of the issue. In connection

with this inquiry, IITRI received an outside opinion letter concluding

that the IRS could well deem some of IITRI's projects unrelated business activities and that the income from these activities was likely

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taxable. Milton urged the President of IITRI, John Scott, to take

action in response to the letter, but Scott refused. Milton raised the

issue with IITRI's Treasurer, who agreed that IITRI was improperly

claiming unrelated business income as exempt income and promised

to remedy the problem after Scott's then-imminent retirement. However, this retirement did not come to pass. Finally, in November 1996,

when Scott falsely indicated to IITRI's board of governors that IITRI

had no problem with unrelated business income, Milton reported the

falsity of these statements to Lew Collens, Chairman of the Board of

IITRI, and informed Collens of the opinion letter.

On January 1, 1997, Scott called Milton at home and informed him

that he had been relieved of his Group Vice President title and

demoted to his previous position as supervisor of TSMI. On February

12, 1997, Milton's attorney contacted IITRI about the demotion,

alleging that it was unlawful retaliation for informing management of

IITRI's unlawful practices. Two days later, at his office in Lanham,

Maryland, Milton received a letter from Collens terminating his

employment with IITRI.

Milton filed suit against IITRI in Virginia state court for wrongful

discharge and breach of contract. IITRI removed the case to federal

court and successfully moved to dismiss pursuant to Fed. R. Civ. P.

12(b)(6). The district court, applying Virginia choice of law principles, selected Maryland law to govern this dispute. The court found

that Maryland law did not recognize a wrongful discharge claim on

these facts, as Milton did not allege he was fired for refusing to

engage in unlawful activities, and he could point to no statutory duty

to disclose IITRI's wrongdoing. The district court also dismissed Milton's breach of contract action. Milton now appeals the dismissal of

his wrongful discharge claim.

II.

First, we must decide what law governs Milton's wrongful discharge action. The district court, located in Virginia, properly applied

Virginia's choice of law rule to decide this issue. See Klaxon Co. v.

Stentor Elec. Mfg. Co., 313 U.S. 487 (1941). Virginia applies the lex

loci delicti, the law of the place of the wrong, to tort actions like this

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one. See, e.g., Jones v. R.S. Jones and Assoc., Inc., 431 S.E.2d 33, 34

(Va. 1993); Buchanan v. Doe, 431 S.E.2d 289, 291 (Va. 1993).

While appearing to accept these basic principles, Milton contends

for a result that is directly contrary to them. He disputes the district

court's determination that Maryland is the "place of the wrong,"

claiming instead that Virginia is that locale. Milton relies on formulations of Virginia's choice of law rule like that in Vicente v. Obenauer:

"The rule of lex loci delicti is well-settled in Virginia; the place of the

injury supplies the governing law in tort actions." 736 F. Supp. 679,

690 (E.D. Va. 1990) (emphasis added). From this proposition, Milton

derives the novel conclusion that because he resides in Virginia the

effects of the damages he alleges, including lost income and emotional distress, actually occur in Virginia, making that state the loci

delicti, or place of the injury.

We disagree. "The word `tort' has a settled meaning in Virginia.

A tort is any civil wrong or injury; a wrongful act." Buchanan, 431

S.E.2d at 291 (citations omitted); see also Prosser and Keeton on

Torts 2 (5th ed. 1984). Thus Virginia's choice of law rule selects the

law of the state in which the wrongful act took place, wherever the

effects of that act are felt. Vicente itself illustrates this point. The

plaintiffs in that case were citizens and residents of Mexico. They

sued a former resident of Virginia for fraud arising out of a failed real

estate investment in Virginia. Each of the plaintiffs lost a substantial

amount of money, an impact presumably felt at home in Mexico.

However the Vicente court, applying Virginia choice of law, held that

Virginia law governed their tort actions for fraud, as Virginia was the

place where the tortious conduct -- the legal injury -- occurred. 736

F. Supp. at 690.

Likewise, when Virginia residents are victims of out-of-state torts,

the Virginia courts routinely apply the law of other states, even

though the physical pain or economic impact caused by the tort injury

may be experienced by the Virginia plaintiffs within the boundaries

of the Commonwealth. For example, in McMillan v. McMillan, a wife

sued her husband for injuries she sustained when the couple was

involved in a car accident that occurred in Tennessee. 253 S.E.2d 662

(Va. 1979). Even though the parties were domiciled in Virginia at the

time of the accident and at the time of the suit, and presumably at

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least some of the ill effects of her injuries were experienced by Mrs.

McMillan at home in Virginia, the Virginia Supreme Court readily

applied Tennessee law to the suit, deeming Tennessee the place of the

injury. Id. at 663-64.

Milton's challenge to the choice of Maryland law is thus unavailing. Virginia clearly selects the law of the place where the wrongful

act occurred, even when that place differs from the place where the

effects of injury are felt. The approach Milton advocates would effectively replace Virginia's traditional rule for tort cases with default

application of the law of plaintiff's domicile. But the Virginia

Supreme Court has declined the invitation to adopt"the so-called

`modern trend'" that focuses on the parties' domicile, choosing

instead to "reaffirm `the place of the wrong' rule." Id. at 663. The

wrong in this case, the injury of which Milton complains, is his termination. This injury unquestionably occurred in Maryland, where Milton had his office and where his dismissal was communicated to him.

To select anything but Maryland law to govern this case would disregard the directive of Virginia law, which we are bound to apply in this

diversity action.*

III.

We now turn to the merits. Maryland has recognized a"narrow

exception" to the general rule of at-will employment: "discharge may

not contravene a clear mandate of public policy." Bagwell v. Peninsula Regional Med. Ctr., 665 A.2d 297, 309 (Md. App. 1995), cert.

denied, 669 A.2d 1360 (Md. 1996). Maryland courts have found such

a mandate only in limited circumstances: (1) "where an employee has

been fired for refusing to violate the law or the legal rights of a third

party," Thompson v. Memorial Hosp. at Easton , 925 F. Supp. 400,

406 (D. Md. 1996) (citing Kessler v. Equity Management, Inc., 572

A.2d 1144 (Md. App. 1990)), and (2) "where [an] employee has been

terminated for exercising a specific legal right or duty," Thompson,

925 F. Supp. at 406 (citing, e.g., Watson v. Peoples Sec. Life Ins. Co.,

588 A.2d 760 (Md. 1991); Bleich v. Florence Crittenton Servs., 632

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*For the same reasons, Milton's alternative suggestion that Illinois law

should govern his claim is also without merit.

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A.2d 463 (Md. App. 1993)). Because Milton does not fit in either category, his suit for wrongful discharge was properly dismissed.

Milton makes no claim that he was asked to break the law. He had

no role in preparing IITRI's submissions to the IRS and no responsibility for their content. Instead, Milton claims he was fired for fulfilling his fiduciary duty as a corporate officer to inform IITRI's Board

of activities injurious to the corporation's long-term interests. While

we must accept this allegation as true, it does not support Milton's

wrongful discharge claim.

Maryland law does provide a wrongful discharge cause of action

for employees who are terminated because they perform their "statutorily prescribed duty." Adler v. American Standard Corp., 830 F.2d

1303, 1307 (4th Cir. 1987). However, this exception to the norm of

at-will employment has been construed narrowly by the Maryland

courts and is not available in Milton's case. In Shapiro v. Massengill,

the Maryland Court of Special Appeals refused to consider a claim of

wrongful discharge "[a]bsent some clear mandate" or duty which the

plaintiff himself "actually could be held responsible" for breaching.

661 A.2d 202, 215, cert. denied, 668 A.2d 202 (Md. App. 1995).

Likewise, in Thompson the district court applying Maryland law held

that, because a hospital employee was not chargeable with the hospital's regulatory duty to report misadministration of radiation, he did

not state a claim for wrongful discharge when he was fired for making

such a report. 925 F. Supp. at 407-08. By contrast, the Bleich court

recognized that an educator terminated for filing a report of child

abuse and neglect, as she was explicitly required to do by Maryland

law, did state a claim for wrongful discharge. 632 A.2d at 469-70.

These cases indicate that, for Milton to recover, it is not enough that

someone at IITRI was responsible for correcting its tax filings or that

the corporation may have been liable for tax fraud. This responsibility

was never Milton's, nor did he face any potential liability for failing

to discharge it, so his claim fails.

Milton argues that his fiduciary obligations as an officer of IITRI

supply the legal duty that was missing in Shapiro and Thompson and

that supported the cause of action in Bleich. But in fact Milton

labored under no "specific legal duty," see Thompson, 925 F. Supp.

at 406, to report IITRI's tax fraud to the Board. He points to no statute

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or other legal source that imposes on him a specific duty to report,

and the broad fiduciary obligations of "care and loyalty" he alleges

are simply too general to qualify as a specific legal duty that will support the claim that his discharge violates a "clear mandate of public

policy." Recognizing whistle-blower protection for every corporate

officer fired in the wake of a disagreement over an employer's business practices would transform this "narrow exception" into a broad

one indeed.

This search for a specific legal duty is no mere formality. Rather

it limits judicial forays into the wilderness of discerning "public policy" without clear direction from a legislative or regulatory source.

"The truth is that the theory of public policy embodies a doctrine of

vague and variable quality, and, unless deducible in the given circumstances from constitutional or statutory provisions, should be accepted

as the basis of a judicial determination, if at all, only with the utmost

circumspection." Townsend v. L.W.M. Management, Inc., 494 A.2d

239, 243, cert. denied, 498 A.2d 1186 (Md. 1985) (quoting Patton v.

United States, 281 U.S. 276, 306 (1930)). Thus, in a recent case the

Maryland Court of Special Appeals found that even a plaintiff who

was subject to a statutorily prescribed duty nonetheless stated no

cause of action for wrongful discharge because he could not "point to

any declaration of policy in the statute on which he can rely."

Bagwell, 665 A.2d at 310. In light of Bagwell, even if Milton was fulfilling a recognized fiduciary duty, his claim falls one critical analytical step short of the goal -- he has not linked his duty to any explicit

policy or "clear mandate" that was violated by his discharge. Maryland courts have been loath to create Maryland public policy without

a clear legislative signal. It would be even less appropriate for a federal court to undertake this delicate task with no more guidance than

we have here.

IV.

For the foregoing reasons, we affirm the judgment of the district

court.

AFFIRMED

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