Michigan Supreme Court Ruling Could Result in High Exposure Claims Against Employers

A recent decision by Michigan Supreme Court signals the continued erosion of the presumption of at-will employment, expansion of “Public Policy” catch-all claims against employers and potential increases in Whistleblowers’ Protection Act (WPA) claims.

The underlying case involved allegations by the plaintiff, an assistant prosecuting attorney, that her immediate supervisor, the chief assistant prosecuting attorney, brokered an allegedly unlawful plea deal with a criminal defendant by not consulting with the victim about the plea offer. The plaintiff reported a suspected violation of the law to the county’s prosecuting attorney, after which she claimed her supervisor became angry with her and her work environment became hostile. Ultimately, the plaintiff resigned and filed suit, alleging numerous intentional torts, violation of the WPA and discharge in violation of public policy.

The defendants moved for summary disposition, which the trial court granted in part as to certain claims and defendants. However, the WPA and public policy discharge claims survived against the employer, as well as the intentional tort claims against the individual supervisor for assault and battery and false imprisonment. 

The Michigan Court of Appeals reversed the trial court’s decision, concluding that the defendants should have been granted summary disposition on all claims. Finding error by the appellate court, the Michigan Supreme Court reversed and remanded the case to the appellate court for consideration of issues not addressed in its initial review of the appeal.

First, the Supreme Court found a question of fact as to whether the supervisor acted in good faith to entitle him to governmental immunity on plaintiff’s intentional tort claims. Noting the defendant held the burden to raise and prove governmental immunity as an affirmative defense, the Supreme Court found the defendant failed to conclusively rebut evidence that he treated the plaintiff differently than other attorneys in the office.

As to the employer, the Supreme Court found sufficient evidence that the plaintiff reported actual or suspected violations of the law, as required for WPA protection, when she reported her concerns regarding the plea deal to the county’s prosecuting attorney, a public body. Because there was a question of fact as to whether the plaintiff reported suspected violations of the law, the Supreme Court declined to address whether actual violations of the law occurred.  

What is significant about this portion of the opinion is the Supreme Court’s holding, “[w]hether there were actual violations of the law under these statutes is not dispositive, as the WPA also protects those who report suspected violations of the law.”

As Chief Justice Elizabeth Clement noted in her concurrence, the Supreme Court “has never held this before, and in fact, expressly declined to make such a holding in Debano-Griffin v Lake Co, 486 Mich 938 (2010).” Labeling the holding “misguided,” Clement raised concerns that the decision might expand the WPA’s protections to circumstances that were not intended or contemplated by the legislature (i.e. reporting of a suspected violation of a suspected law). Clement distinguished between factual uncertainty, accepted by the act, and legal uncertainty, stating: “for a plaintiff to make a report that qualifies for WPA protection, the plaintiff need not know with certainty that the activity reported actually occurred, but the plaintiff does need to demonstrate that if those facts actually occurred, they would definitely be a violation of the law.”   

Finally, the Supreme Court resurrected the plaintiff’s public-policy claim when it found the WPA was not the exclusive remedy. The Supreme Court’s rationale centered on the factual allegations supporting the WPA and public policy discharge claims. Whereas  plaintiff’s report of the suspected unlawful plea served as the basis for her WPA claim, the plaintiff’s public-policy claim was based on her alleged refusal to violate the law by attempting to set aside the plea and sentencing agreement. 

This aspect of the Supreme Court’s decision adds further momentum to the once narrowly-construed doctrine of public policy discharge. Last summer, the Supreme Court breathed life back into existing, but not often applied, public-policy exceptions recognized in a 1982 case, Suchodolski v Mich Consolidated Gas Co, 412 Mich 692 (1982).

In Stegall v Resource Technology Corp, the Michigan Supreme Court reversed and remanded the case to the Michigan Court of Appeals, which ruled that the plaintiff’s public-policy wrongful discharge claim failed because he only made an internal report of alleged asbestos contamination in the workplace. The Supreme Court found the plaintiff’s claim fell within two of the well-recognized exceptions, specifically, that he was discharged because he (1) exercised a right conferred by well-established legislative enactment, and/or (2) failed or refused to violate the law. In other words, we can look to Clement’s concurrence in resuscitating the plaintiff’s public policy discharge claim as an indication that Michigan courts may have difficulty dismissing WPA and public policy discharge claims concurrently, where she states that the basis for the public policy claim is “essentially the converse of the reasons that it cannot be the basis of a claim under the WPA.” 

Unlike the majority, Clement focused not on the plaintiff’s refusal to violate the law but on her attempt to bring the criminal prosecution into compliance with a statute – “a formal legislative expression of the state’s publicly policy, which it presumably prefers to see obeyed.”

For employers, this decision emphasizes the need for greater attention to these potential claims by employees related to employment decisions. While employment at-will remains the presumption in Michigan, the days of relying on that as a defense to wrongful termination claims without further scrutiny of employment decisions are long gone. 

Though the learning curve for employers continues to steepen, taking proactive steps now can help avoid or minimize liability in the future. Examples include adding steps to pre-termination checklists, updating policies and handbooks or investigating for complaints or reports made by employees identified for separation.

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