Court Opinion

ID: 2966820
Source: CourtListenerOpinion
Date Created: 2015-09-22 01:14:22.450347+00
Date Added: 2024-06-11T11:43:11.115730
License: Public Domain

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.

_________________________________________________________________

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, VEN-
ABLE, 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., Balti-
more, 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 ten-
ure at IITRI, Milton's office was located at the IITRI facility in Lan-
ham, 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 manage-
ment, 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 busi-
ness 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. How-
ever, 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 princi-
ples, 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 Mil-
ton'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 dis-
charge 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 formula-
tions 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 emo-
tional 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

                     4
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 unavail-
ing. 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 effec-
tively 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 termi-
nation. This injury unquestionably occurred in Maryland, where Mil-
ton had his office and where his dismissal was communicated to him.
To select anything but Maryland law to govern this case would disre-
gard 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. Penin-
sula 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
_________________________________________________________________
*For the same reasons, Milton's alternative suggestion that Illinois law
should govern his claim is also without merit.

                    5
A.2d 463 (Md. App. 1993)). Because Milton does not fit in either cat-
egory, 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 responsi-
bility for their content. Instead, Milton claims he was fired for fulfill-
ing 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 "statu-
torily 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 hospi-
tal'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

                     6
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 sup-
port 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 busi-
ness 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 pol-
icy" 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 circum-
stances 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 ful-
filling a recognized fiduciary duty, his claim falls one critical analyti-
cal step short of the goal -- he has not linked his duty to any explicit
policy or "clear mandate" that was violated by his discharge. Mary-
land courts have been loath to create Maryland public policy without
a clear legislative signal. It would be even less appropriate for a fed-
eral 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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