Not the Employer? You May Still be Liable!

I don’t know about you, but I am on coronavirus overload. I know we all need to keep up with the ever-changing executive orders, newest federal laws, updated guidance, etc., but I need a break. So, I thought I would share with you a story that is not often told - how a company can get sued when another company fires its employee. 

Today’s featured case is Haywood v General Motors LLC. It involves plaintiff Michael Haygood a 40-year skill trades’ helper who retired in 2009. Apparently missing GM, he began working for Aramark as a custodian assigned to GM’s Technical Center in Warren.

Unfortunately, he leased vehicle from GM in 2015 that had ongoing extensive problems. This “lemon.” which is at the heart of our story, may turn into lemonade before this story ends.

Haywood began to complain to GM employees about his vehicle, including to a vice-president who suggested that Haywood send an email explaining the problem. During a phone conference that Haywood and his wife had with GM’s customer service department on Oct. 11, 2016, Ms. Haywood stated that if the problems weren’t addressed, “she would raise the problems with GM’s chief executive officer in a public forum scheduled for that week,” and she would hire a lawyer. 

One thing I have learned is that you should always try honey before you get nasty, because there is no return and, threatening to hire a lawyer, well, that pretty much kills any cooperative, warm fuzzy feelings the opponent may have had.

Three days later, Haywood was told to gather up his belongings, turn in his badge and gate pass, and he was escorted from GM’s property. Haywood was banned from all GM facilities. By the Oct. 18, Haywood was interviewed by Aramark’s human resources manager and, two days later, he was fired. Now Haywood was out of a job and still apparently driving a lemon.

Haywood filed a union grievance, contesting his discharge from Aramark. GM refused to cooperate or to provide any of the information requested by the union. However, it did learn on Feb. 1, 2017 that the reason Haywood was fired was because (1) GM employees told a GM security investigator that Haywood had threatened a team lead in the Executive Care Center and an administrative assistant, and (2) he refused to leave the area when asked to do so. It had also been reported that Haywood told GM’s customer care center that he would continue to harass leadership until his vehicle problems were fixed. 

Haywood’s grievance was settled, in part, by Aramark admitting that it terminated him solely because of GM’s decision to ban him from all of its facilities and its agreement to reinstate Haywood if, within 18 months, GM rescinded its decision.

Clearly, GM had a target on its back. What’s that saying? “Hell knoweth no fury” like the scorned owner of a lemon… or something like that.

Haywood sued GM in federal court, claiming race discrimination, defamation and tortious interference. The federal court dismissed the discrimination claims and then declined to exercise jurisdiction over the state law tort claims. Incidentally, that jurisdiction decision by the federal courts is becoming more common.

So, Haywood brought the state law claims in Macomb County Circuit Court. Rather than answering the complaint, GM immediately moved for dismissal, arguing the statute of limitations defeated the defamation claim (which is one year for anyone who is curious) and that the claim had not been pleaded with sufficient specificity.

As to the tortious interference claim, GM argued that it was preempted by Section 301 of the Labor Management Relations Act and, therefore, it was also time barred by that law’s six-month limitations period. The circuit court granted GM’s motion. Haywood appealed.

The Michigan Court of Appeals reversed the circuit court’s dismissal. While the analysis concerning the defamation claim is just riveting for a legal geek like me, I won’t bore you with the details of the fraudulent-concealment discussion. I want to focus on the court’s ruling as to the intentional interference claim because this is a more interesting possibility for your company.  

Tortious interference with a business relationship requires proof of: (1) a valid business relationship or expectancy, (2) knowledge of the relationship or expectancy on the part of the defendant, (3) an intentional interference by the defendant inducing or causing a breach or termination of the relationship or expectancy, and (4) damages.

I have threatened to bring these claims on behalf of clients who have a non-competition agreement when a former employee begins working for a competitor. In such cases I write the former employee and the new employer, include a copy of the non-competition agreement and demand that the relationship end. This provides the new employer with knowledge of my client’s contractual right with its former employee and a warning that, by employing that individual, the competitor is interfering with that contract. 

But in this case, the claim arose in a different context. Here, Aramark provided custodian services to GM. When GM banned Haywood from all of its facilities, the circuit court reasoned that Aramark could have transferred Haywood to a different client.

But the appellate court found fault in this analysis stating it is irrelevant whether GM’s ban required Aramark to fire Haywood. The settlement agreement with the union acknowledged that this was the reason for his discharge and that Haywood would be reinstated if GM lifted the ban. The circuit court’s decision erred by focusing on causation.

GM argued that it had the right to ban anyone it wanted from its property. But this wasn’t the point either. To succeed on this claim, Haywood had to allege that GM did something that was illegal, unethical or fraudulent. Haywood could either show that: (1) GM intentionally did something that was per se wrongful, or (2) (and this is the key here) GM did something that was lawful but did so with malice that was “unjustified in law for the purpose of invading the contractual rights or business relationship of another.”

So, yes, GM can ban anyone it wants from its facilities. That is lawful. But Haywood was alleging that the ban resulted from false statements made about him by GM employees. If he can prove those statements were defamatory, he will have demonstrated the wrongful act. OK, so I circled back to the defamation claim.

I won’t bore you with the preemption argument that applied to the tortious interference claim, but will just say that the appellate court did not find that the tortious interference claim against GM required an analysis of the collective bargaining agreement between the union and Aramark. Therefore, GM’s preemption argument (that would have found the claim time barred), failed.

But isn’t this case interesting. In your workplace, you may use temporary workers from a temporary staffing company. If one of your employees lies about the temporary worker in order to get the worker banned and, as a result, the temporary agency terminates its relationship with the worker, your company may be held liable. So, just because it’s a temp employee that is being accused of wrong doing does not mean you shouldn’t conduct an investigation to determine whether there is any truth to the accusations of wrongdoing. Failure to do so may land your company in the same place as GM.

The use of third party employees at your workplace creates significant risks and potential liabilities that you may not have considered in addition to the creation of a joint employer relationship. Before you act, it may be best to consult with an employment attorney.

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