Title: BARKER v. STATE INS. FUND
Citation: 2001 OK 94, 40 P.3d 463, 72OBJ3283
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: November 6, 2001

BARKER v. STATE INS. FUND Annotate this Case BARKER v. STATE INS. FUND 2001 OK 94 40 P.3d 463 72 OBJ 3283 Case Number: 93154 Decided: 11/06/2001 Mandate Issued: 11/28/2001 THE SUPREME COURT OF THE STATE OF OKLAHOMA ARTHUR BARKER; GARY BOVA; LINDA FOREMAN; JAMES GASTON; ANNE LIVINGSTON; CARLA SNIPES and GREG VALLEY, Plaintiffs/Appellants and KATHY AULT; EUGENIA BEAL; JANICE CARTER; LINDA CHILDERS; MICHELIN DELIER; JERRY HATLEY; ANNE PITTMAN; GARY SLEEPER and SHERRY WALKER, Plaintiffs v. STATE INSURANCE FUND, Defendant/Appellee [ 40 P.3d 465 ] ON CERTIORARI TO THE COURT OF CIVIL APPEALS, DIVISION 2 ¶0 Appellants are former State Insurance Fund employees whose employment was terminated in 1996. They (and other plaintiffs who are not appellants) sued, asserting claims for age discrimination, wrongful discharge in violation of public policy, and blacklisting. The federal district court entered summary judgment against them on the age discrimination claims, dismissed the blacklisting claims and remanded the wrongful discharge claims to state court. Plaintiffs did not appeal from the federal district court's judgment. After remand, the state trial court entered summary judgment against plaintiffs on the wrongful discharge claims. Plaintiffs appealed. The Court of Civil Appeals affirmed in part, reversed in part and remanded. CERTIORARI PREVIOUSLY GRANTED; OPINION OF THE COURT OF CIVIL APPEALS VACATED IN PART; COURT OF CIVIL APPEALS OPINION WITHDRAWN FROM PUBLICATION; TRIAL COURT'S SUMMARY JUDGMENT AFFIRMED IN PART AND REVERSED IN PART. E. W. Keller, Oklahoma City, Oklahoma, for Appellants. Mark S. Edmondson, Oklahoma City, Oklahoma, for Appellant Linda Foreman. Thomas E. Prince and Aaron D. Gwartney, Edmond, Oklahoma; and Lee Slater, Oklahoma City, for Appellee. BOUDREAU, Justice: ¶1 The State Insurance Fund (SIF) is an entity created by statute to, among other things, provide workers' compensation insurance to employers, state agencies and other state political subdivisions. ¶2 In early 1996, SIF commissioned Alexander & Alexander (A&A), a consulting firm, to recommend a plan that would allow SIF to provide state of the art services and keep pace with contemporary industry standards. One of SIF's objectives was to expand its practice of outsourcing claim files - that is, to refer more of its claim files to outside claims administrators (third party administrators, or TPAs) for handling and case resolution. In April of 1996, A&A made its recommendations. A&A recommended a plan for outsourcing claim files, recommended that SIF reorganize its claims and legal divisions and recommended that SIF conduct a reduction in force (RIF). The Board of Managers approved the recommendations. ¶3 John Yoder (Yoder), an A&A employee, was instrumental in assisting Tyree in the implementation of A&A's recommended changes during the spring of 1996. Ulti- [ 40 P.3d 466 ] -mately, in June of 1996, SIF completed the implementation by conducting two RIFs affecting a total of 145 positions: 89 in the claims division, 54 in the legal division and two in the policyholders division. ¶4 Appellants Gary Bova, Linda Foreman, Carla Snipes and Greg Valley were among the employees who lost their jobs in the RIFs. They are the only appellants who sought certiorari review concerning the entry of summary judgment in favor of SIF on their wrongful discharge claims. These four, along with appellants Arthur Barker, James Gaston and Anne Livingston, also sought certiorari review concerning the federal district court's dismissal of their blacklisting claims. I. STANDARD OF REVIEW ¶6 Whether the doctrine of claim preclusion prevents appellants from re-litigating their state claims is usually a mixed question of law and fact. "[A] deferential standard of review applies to resolutions of disputed facts when supported by reasonable evidence; an independent judgment standard of review applies to the ultimate conclusion that these facts do or do not trigger preclusion." AJ Bayless v. Industrial Commission of Arizona ¶7 Whether summary judgment was properly entered is question of law which we review de novo. Manley v. Brown, II. DISCUSSION A. Blacklisting Claims ¶8 All seven appellants testified that after they were discharged, SIF blacklisted them, preventing them from obtaining employment with anyone that received claim files through SIF's outsourcing program. Before we address the merits of the blacklisting claims, however, we must determine whether appellants may re-litigate these claims in state court after litigating them in federal court. ¶9 The procedural history of this case is unusual. It began in state court. Appellants asserted two state law claims (wrongful discharge and blacklisting) and one federal law claim (age discrimination). SIF [ 40 P.3d 467 ] removed the action to federal court. The federal district court dismissed the blacklisting claims on the merits. ¶10 We apply federal law to determine the finality of the federal district court's orders. As a matter of right, an aggrieved party can appeal a "final decision" of a federal district court. 28 U.S.C. § 1291. This statute forms the basis for the so-called "final order" rule. Under Rule 54(b) of the Federal Rules of Civil Procedure, a "final order" is an order disposing of all claims involving all parties. An order disposing of some claims, or even one disposing of all claims involving fewer than all the parties, is not a final order. Id. ¶11 Since the age discrimination claims and wrongful discharge claims were still pending when the federal district court dismissed the blacklisting claims, the order dismissing the blacklisting claims was a non-appealable interlocutory order when it was entered on December 8, 1997. However, the federal district court's March 15, 1999, order resolving the age discrimination claims and remanding the wrongful discharge claims to state court ended the litigation before the federal court.3 Upon the entry of the remand order, the previously entered interlocutory order dismissing the blacklisting claims became an appealable final order. Carr v. American Red Cross, 17 F.3d 671, 678 (3d Cir. 1994). Plaintiffs did not appeal. ¶12 In its summary judgment motion after remand, SIF argued that the federal district court's dismissal of the blacklisting claims precludes plaintiffs from re-litigating those claims. We agree. ¶13 The doctrine of claim preclusion operates to bar re-litigation of issues that were litigated in a court of competent jurisdiction to a final judgment on the merits. Erwin v. Frazier, 1989 OK 95, 786 P.2d 61 . The doctrine requires an identity of subject matter, of the parties or their privies, of the capacity of the parties and of the cause of action. Carris v. John R. Thomas & Assoc., P.C., 1995 OK 33, 896 P.2d 522 , 527. Here, because all the elements are met with respect to plaintiffs' blacklisting claims, the doctrine of claim preclusion prevents appellants from re-litigating their blacklisting claims in state court.4 B. Wrongful Discharge Claims ¶14 We now consider appellants' wrongful discharge claims. The doctrine of [ 40 P.3d 468 ] employment-at-will is firmly embedded in the common law of Oklahoma. Collier v. Insignia Financial Group, 1999 OK 49, 981 P.2d 321 , 323. In 1989 we created a narrow exception to the employment-at-will doctrine -- the public policy exception. Burk v. K-Mart, 1989 OK 22, 770 P.2d 24 . We held that an employee who is discharged for refusing to act in violation of an established and well-defined public policy or for performing an act consistent with a clear and compelling public policy may bring a tort claim for wrongful discharge. Id. We cautioned, however, that the Burk tort is unique: it applies to only a narrow class of cases and it must be tightly circumscribed. Id.; Clinton, 2001 OK 52, 29 P.3d 543 , 545. To prevail on a claim of wrongful discharge in violation of Oklahoma's public policy, a plaintiff must first identify an Oklahoma public policy goal that is well established, clear and compelling and articulated in existing constitutional, statutory or jurisprudential law. Clinton, 29 P.3d at 546. In addition, plaintiff must prove he or she was an at-will employee, that he or she was actually or constructively discharged from employment and that the employer's discharge decision violated the articulated public policy. Id. The identified public policy "must truly be public, rather than merely private or proprietary." Hays v. Eateries, Inc., 1995 OK 108, 905 P.2d 778 , 786. 1. Oklahoma law protects both internal and external whistle-blowers who establish a sufficient public policy violation from retaliatory discharge. ¶15 In this case, appellants allege they were wrongfully discharged in retaliation for whistle-blowing. Two of our leading cases dealing with whistle-blowing are Vannerson v. Board of Regents of the University of Oklahoma, 1989 OK 125, 784 P.2d 1053 , which we decided shortly after we created the Burk tort, and Hayes v. Eateries, Inc., 1995 OK 108, 905 P.2d 778 . In Vannerson, plaintiff was fired after reporting discrepancies in the university warehouse inventory records. Months earlier he had reported seeing a university employee transfer two boxes of floor tiles to a non-employee. We held that a university policy in favor of keeping accurate inventory records did not rise to the level of an established and well-defined state public policy. With respect to the floor tiles incident, however, we held that "if [plaintiff] was in fact discharged for going over his supervisor's head in complaint of an illegal disposition of state property then public policy is invoked." Vannerson, 784 P.2d at 1055. Five years later, in Hayes, plaintiff was fired shortly after accusing his manager of embezzling from their employer. We held that Mr. Hayes was not protected from retaliatory discharge for whistle-blowing regardless whether he reported the alleged wrongdoing internally or externally, because the alleged wrongdoing did not rise to the level of clear and compelling public policy. Some have interpreted our language in Vannerson and Hayes as creating a distinction between whistle-blowers who complain within the employing organization (internal reporting) and those who complain outside the organization (external reporting). ¶16 Today we take the opportunity to address the issue. First, one of the primary goals of protecting whistle-blowers from retaliatory discharge is to reduce wrongdoing in a speedy, efficacious manner. In that respect, it makes sense to recognize claims of whistle-blowers who report wrongdoing within the employing organization to a person in a position to investigate and remedy the wrongdoing. Second, internal disclosures are much less disruptive to the company than external disclosures. "[L]oyal employees, who do not go outside their organizations, should not have less protection than employees who could be considered more disruptive by complaining outside their organizations." Daniel P. Westman, Whistleblowing: The Law of Retaliatory Discharge, at 114 (1991). Oklahoma law protects both internal and external reporting of whistle-blowers who establish a sufficient public policy violation from retaliatory discharge. 2. Appellants failed to articulate an established and well-defined public policy that SIF violated by discharging them. ¶17 The fundamental problem in all public policy cases is defining what is a specific, [ 40 P.3d 469 ] well-established, clear and compelling public policy. In whistle-blower cases, the answer to this question determines the subjects about which a whistle-blower may or may not legitimately complain. The nature of this problem was aptly described by the Connecticut Supreme Court when it said "[t]he issue then becomes the familiar common law problem of deciding where and how to draw the line between claims that genuinely involve the mandates of public policy that are actionable and ordinary disputes between employee and employer that are not." Sheets v. Teddy's Frosted Foods, 427 A.2d 385, 387-88 (Conn. 1980). ¶18 In this case, the subjects about which appellants Bova, Foreman, Snipes and Valley complained related to SIF's implementation of the changes recommended by A&A. When they learned about the upcoming changes, they and others who are not appellants began to express concerns among their co-workers and to management. They continued to express their concerns throughout the implementation of the changes at SIF. ¶19 Specifically, Bova, an attorney who had a close working relationship with Tyree and considered him a friend, testified that he spoke informally with Tyree several times -- once for two hours in Tyree's office after work. Bova told Tyree about his concerns about job security in light of the upcoming reorganization, about heavy caseloads, about using outside counsel to handle some of the caseload and about Yoder's role at SIF. He had heard that Yoder might be taking, or planning to take, kickbacks from some of the TPAs, but he did not talk to Tyree about it because he assumed Tyree already knew. ¶20 Foreman, an attorney, testified she "became the memo queen" when she saw the changes occurring at SIF. In her memos she complained about the removal of personal effects from her office, about her legal assistant using her signature stamp without her knowledge, about an outside counsel retained by SIF who had offered to settle a case for less than she had offered earlier, about SIF's private investigators who contacted a claimant even though they knew the claimant was represented by counsel, and about her request to attend continuing legal education not being promptly acted upon. She told her supervisor (and believes she also told Tyree) that she thought political favors were involved in the outsourcing of files. ¶21 Snipes, an attorney, testified she was suspicious about what was going on at SIF. She wanted to voice complaints to the Board and to "people that could take action and do something" but felt she could not. She testified that she voiced "whines and complaints" to her co-workers, family and friends. ¶22 Valley, a medical analyst, testified he told Tyree that a vendor had told him that Yoder was soliciting kickbacks from the TPAs and was asking for money "up front." Shortly after that, Valley's job duties were severely cut back. Valley also told his supervisor that he did not believe outsourcing of files was cost effective. ¶23 Courts have not recognized tort claims for whistle-blowers whose complaints are based upon personal opinions about the way an organization is managed. See, e.g. Rossi v. The Pennsylvania State Univ., 489 A.2d 828 (Pa. Super. Ct. 1985) (plaintiff reported mismanagement); Dicomes v. Washington, 782 P.2d 1002 (Wash. 1989) (en banc) (plaintiff reported that her superiors failed to include surplus funds in the budget presented to management); Smith-Pfeffer v. Superintendent, Fernald School, 533 N.E.2d 1368 (Mass. 1989) (plaintiff complained about organizational changes and policies developed by superintendent); Bourque v. Town of Bow, 736 F. Supp. 398 (D.N.H. 1990) (plaintiff complained to the town selectmen about his supervisor). The Smith-Pfeffer court succinctly stated the rationale for not recognizing tort claims for whistle-blowers who complain about the way an organization is managed: "How [the state institution] should be organized is a matter of opinion and of internal policy. Internal policy decisions are a matter of judgment for those entrusted with decision-making within the institution." Smith-Pfeffer, 533 N.E.2d at 1371. Like other jurisdictions, Oklahoma does not recognize a Burk tort for public employees who complain about the way an organization is managed when the complaints merely exhibit differences of opinion or dissatisfaction with [ 40 P.3d 470 ] discretionary management decisions and the like. Something more is required such as reporting fraudulent activity or criminal misuse of funds. ¶24 Burk, which holds that termination of an at-will employee in contravention of a clear mandate of public policy is a common law tort, fashions the parameters of an exception to the general at-will-employment doctrine. Gunn v. Consolidated Rural Water & Sewer District, 1992 OK 131, 839 P.2d 1345 . Although the Burk tort is firmly rooted in the common law, our cases recognize that the clear mandate of public policy may be articulated by a state statute. Burk, 770 P.2d at 28. However, not every statute sets forth a mandate of public policy upon which a Burk tort may be based. See, e.g., Griffin v. Millinix, 1997 OK 120, 947 P.2d 177 (Oklahoma's Occupational and Safety Standards Act, 40 O.S. 1991, §§401 et seq., does not support a common law Burk tort). Unless a statute specifically articulates an established and well-defined Oklahoma public policy, the statute may not be relied upon to support a common law Burk tort. Burk, 770 P.2d at 29. ¶25 We reject appellants' claim that an established and well-defined public policy against discharging an employee for reporting mismanagement can be found in our whistle-blower statute, 74 O.S. Supp. 1995, § 840-2.5. That statute provides that a public employee who has been disciplined for, among other things, "reporting . . . mismanagement," may file an appeal with the Oklahoma Merit Protection Commission within 60 days of the alleged disciplinary action. Id. at § 840-2.5(A)(2), (E). If, after investigation and hearing, it is determined that a violation of section 840-2.5 has occurred, the Commissioner or hearing examiner shall order corrective action pursuant to 74 O.S. Supp. 1995, § 840-6.6. While this statute provides limited protection for public employees who are disciplined for reporting mismanagement, it does not define the term "mismanagement." Because the statute leaves the parameters of mismanagement undefined, mismanagement is an amorphous term that includes essentially any decision of an employer that is challenged by an employee with a different opinion about the way an organization should be managed. The term falls short of being sufficiently specific and clear for purposes of articulating an established and well-defined public policy against discharging employees for reporting mismanagement. The statute cannot support a Burk tort.5 ¶27 The summary judgment evidentiary materials in this case shows that Bova, Foreman, Snipes and Valley seriously disagreed with SIF's management. They disagreed with the manner in which Tyree and Yoder conducted the outsourcing of SIF claim files, the reorganization of SIF's claims and legal divisions and the two RIFs. They expressed concerns about whether the outsourcing program would be cost effective and they questioned Yoder's role in the implementation of the recommendations. At least one, Foreman, reported that she believed the outsourcing program involved political favors. However, even when viewing the summary judgment evidentiary materials in the light most favorable to appellants, we find they have failed to tie their expressions of concern to a specific, well established, clear and compelling Oklahoma public policy that appellants sought to correct by their actions and that SIF violated by discharging appellants in the RIFs. Vannerson, 784 P.2d at 1055. Instead, we find that their expressions of concern are similar to the complaints voiced by the plaintiffs in Rossi, Dicomes, Smith-Pfeffer and Bourque (with one exception we address below). ¶28 The one incident that comes closer to satisfying the Vannerson test is Valley's report to Tyree that he, Valley, had been told by a vendor that Yoder was soliciting kickbacks from the TPAs. However, it is unnecessary for us to determine whether the subject matter of Valley's report implicates a sufficient state public policy because we find Valley's report insufficient for a different reason. ¶29 Valley described his report to Tyree as follows: I had told him that I got a call from a vendor that informed me that Mr. Yoder was soliciting kickbacks. He says when did this happen, and I said it just happened yesterday, because I just got the call the day before. And I had called that day, but I couldn't get in to see him, so then I saw him the next day, because I was working half days. And I told him, I says, you know, I don't know if there's truth to it or not, but I thought I should let you know just to make sure. And he says I'll look into it. And that was pretty much the extent of the conversation. Mr. Tyree didn't talk to me a whole lot. (emphasis added). ¶30 Our research has not revealed a single jurisdiction that recognizes a tort claim for whistle-blowers who report a rumor of wrongdoing when they have no idea if the rumor is true. There is no "rumor spreader exception" to the employment-at-will doctrine. See Lawson v. AK Steel Corp., 703 N.E.2d 371, 373 (Ohio Com. Pl. 1998). ¶31 Without deciding whether a whistle-blower must have direct personal knowledge of the reported wrongdoing or instead must have only an objectively good faith belief that the reported wrongdoing has occurred, we reject any notion that Valley's report of the rumor he heard is the type of report protected by the whistle-blower strand of the Burk tort. See, e.g., Read v. City of Lynwood, 173 Cal. App. 3d 437 , 219 Cal. Rptr. 26 (1985) (plaintiff reported rumor that a city contractor had attempted to bribe a city employee -- insufficient to support whistle-blower claim); Foley v. Interactive Data Corp., III. CONCLUSION ¶32 Under the doctrine of claim preclusion, the blacklisting claims of appellants Barker, Bova, Foreman, Gaston, Livingston, Snipes and Valley cannot be re-litigated in state court because those claims were litigated to finality in the federal district court. The wrongful discharge claims of appellants Bova, Foreman, Snipes and Valley cannot survive summary judgment because appellants' summary judgment evidentiary materials are not sufficient to create a genuine issue of material fact as to whether their complaints and other expressions of concern rise to the level of any specific, well established, clear and compelling state public poli- [ 40 P.3d 472 ] -cy which the employee sought to correct by his or her actions. CERTIORARI PREVIOUSLY GRANTED; OPINION OF THE COURT OF CIVIL APPEALS VACATED IN PART; COURT OF CIVIL APPEALS OPINION WITHDRAWN FROM PUBLICATION; TRIAL COURT'S SUMMARY JUDGMENT AFFIRMED IN PART AND REVERSED IN PART. ¶33 Hargrave, C.J., Hodges, Lavender, Summers, Boudreau, Winchester, JJ., concur. ¶34 Opala, J., concurs in part II(A); dissents from part II(B). ¶35 Kauger, J., concurs in part and dissents in part. ¶36 Watt, J., disqualified. FOOT