Cummins v. Mold-in Graphic Systems

26 P.3d 518

200 Ariz. 335

Sean CUMMINS and Deirdre Cummins, husband and wife, Plaintiffs-Appellees, Cross Appellants, v. MOLD-IN GRAPHIC SYSTEMS, an Arizona business; Michael J. Stevenson and Kathleen Stevenson, husband and wife, Defendants-Appellants, Cross Appellees.

No. -0559.

Court of Appeals of Arizona, Division 1, Department E.

June 5, 2001.

The Langerman Law Offices, P.A., By Amy G. Langerman, and Adrienne K. Wilson, Phoenix, Attorneys for Plaintiffs-Appellees/Cross Appellants.

Snell & Wilmer L.L.P., By Lonnie J. Williams, and Martha E. Gibbs, and Michelle L. Ray, Phoenix, Attorneys for Defendants-Appellants/Cross Appellees.

OPINION

GARBARINO, Presiding Judge.

¶ 1 Mold-In Graphic Systems (MIGS) and Michael and Kathleen Stevenson, collectively referred to as the defendants, appeal from the trial court's denial of the defendants' motion for judgment as a matter of law¹ on Sean and Deirdre Cummins' claim for wrongful discharge under the public policy exception to the at-will employment doctrine. The plaintiffs cross appeal from the trial court's dismissal of their claims for intentional infliction of emotional distress and punitive damages. For the reasons that follow, we reverse the trial court's denial of the defendants' motion for judgment as a matter of law on the wrongful discharge claim, and we affirm its dismissal of the plaintiffs' claim for intentional infliction of emotional distress. Our resolution of these issues eliminates the need to address the plaintiffs' argument regarding their punitive damages claim.

FACTUAL AND PROCEDURAL HISTORY

¶ 2 MIGS is a plastic products manufacturing company located in Clarkdale, Arizona. The Stevensons are the sole stockholders of MIGS, and Mike Stevenson is the CEO of the company. Mr. Cummins, who is blind, was hired by MIGS in September 1994. After a brief stint in the Art Department, Mr. Cummins was transferred to the Management Information Systems (MIS) Department, where he input data and performed network maintenance.

¶ 3 The plaintiffs contend that in the fall of 1995, Arthur Brault, a MIGS employee, told Mr. Cummins that Mike Stevenson wanted him to copy Bible study software onto Brault's computer system. Mr. Cummins refused to do so on the basis that it may constitute an illegal copying of software. Mr. Cummins advised his supervisor, Mel Smart, of the incident, and, according to Mr. Cummins, Mr. Smart agreed that it was an inappropriate request and advised him not to copy the software.

¶ 4 Shortly thereafter, Chris Eymann, a MIGS employee and the Stevensons' son-in-law, requested Mr. Cummins' assistance in copying Stevenson's Bible study software onto Brault's computer. Again, Mr. Cummins refused, explaining he did not believe such copying was appropriate under the copyright laws. The parties never addressed whether any licenses existed that would permit the software to be copied.

¶ 5 The plaintiffs assert that, over the course of the six to seven months following these two incidents, MIGS' employees and Mike Stevenson engaged in a course of conduct that amounted to intentional infliction of emotional distress and wrongful termination of Mr. Cummins. The plaintiffs complain, inter alia, that employees at MIGS began to shun Mr. Cummins, that management approved vacation time and then reversed its position, that Mr. Cummins' position was changed from that of a salaried employee to an hourly employee, that he was no longer allowed to accrue overtime, that Mike Stevenson openly chastised and rebuked him in an off-site Bible study, that his network security access was revoked, that his job description was changed to include activities that he could not perform, that management instituted a policy that Mr. Cummins perceived applied only to him, that he was given no meaningful work, that his hours were reduced, and that he was eventually terminated. By contrast, MIGS claimed that Mr. Cummins' termination was due to company downsizing.

¶ 6 The plaintiffs filed this lawsuit against the defendants, alleging claims for breach of contract, breach of the covenant of good faith and fair dealing, wrongful discharge in violation of public policy against handicap and religious discrimination, intentional infliction of emotional distress, and violation of the Arizona Civil Rights Act, Ariz.Rev.Stat. (A.R.S.) §§ 41-1461 to -1465.² ¶ 7 The Stevensons and MIGS each moved for summary judgment. The trial court granted both the Stevensons and MIGS summary judgment on all of the plaintiffs' claims except for the intentional infliction of emotional distress claim, and entered judgment in accordance with these rulings.

¶ 8 Shortly before trial was set to begin, the plaintiffs asserted a claim against MIGS that Mr. Cummins had been wrongfully discharged in violation of public policy in retaliation for refusing to engage in what Mr. Cummins believed was an illegal activity— copying Bible study software. The day before trial, the trial court ruled that the plaintiffs could proceed upon both the intentional infliction of emotional distress and wrongful discharge claims. The defendants declined a continuance, and the case proceeded to a jury trial.

¶ 9 At the end of the plaintiffs' case-in-chief, the trial court granted the defendants' motion for judgment as a matter of law on the claim of intentional infliction of emotional distress. As to the wrongful termination claim, MIGS argued that the plaintiffs were required to show that copying the Bible study software was actually illegal, rather than demonstrating that Mr. Cummins harbored a good faith belief that it was illegal, and that the plaintiffs had not presented any evidence to demonstrate that copying the software would have been illegal. The trial court denied MIGS' motion for judgment as a matter of law on the wrongful discharge claim. MIGS renewed the motion at the close of all the evidence and it was again denied. The court did, however, grant MIGS' motion for judgment as a matter of law on the plaintiffs' claim for punitive damages.

¶ 10 The jury returned a verdict for the plaintiffs on the wrongful discharge claim and awarded them $185,000 in damages. The trial court entered judgment in accordance with the verdict. MIGS renewed its motion for judgment as a matter of law on the wrongful discharge claim, and the plaintiffs moved for a new trial on the intentional infliction of emotional distress and punitive damages claims. The trial court denied both motions. MIGS timely filed a notice of appeal, and the plaintiffs timely filed a notice of cross appeal. We have jurisdiction over the appeal and cross appeal pursuant to A.R.S. sections 12-2101(B) and (F)(1) (1994).

ISSUES

¶ 11 MIGS raises the following issues on appeal:

1. Must a plaintiff prove an act is actually illegal when establishing the prima facie elements of wrongful termination for refusing to engage in an unlawful act?

2. Can tort liability be imposed on an employer for wrongful termination of an at-will employee who refuses to engage in conduct proscribed by federal law?

¶ 12 The plaintiffs raise the following issues on cross appeal:

1. Did the trial court err by granting the defendants' request for judgment as a matter of law on the plaintiffs' claim for intentional infliction of emotional distress?

2. Did the trial court err by dismissing the plaintiffs' claim for punitive damages?

DISCUSSION

I. A Plaintiff May Assert a Wrongful Discharge Claim for Refusing to Engage in Unlawful Conduct When the Conduct is Proscribed by Federal Law.

¶ 13 We begin by addressing MIGS' contention that the plaintiffs' claim for wrongful discharge must fail because they failed to establish that Mr. Cummins had been requested to do anything that violates the laws of the State of Arizona. That is, if Mr. Cummins had been requested to engage in conduct that would have resulted in the violation of any law, it would have been a violation of federal law, which MIGS argues does not support a cause of action for wrongful termination in violation of Arizona's public policy. Therefore, MIGS argues, the plaintiffs' claim is not covered by Arizona's common law tort of wrongful discharge. If we determine that a violation of a federal law cannot supply a basis for recovery under the public policy/illegal act exception to the at-will employment doctrine, the plaintiffs would have failed to state a legally cognizable claim. We review this issue de novo because this is purely a legal question. State ex rel. Miller v. Superior Court, 189 Ariz. 228, 230, 941 P.2d 240, 242 (App.1997).

¶ 14 In Wagenseller v. Scottsdale Memorial Hospital, 147 Ariz. 370, 710 P.2d 1025 (1985), the Arizona Supreme Court recognized that Arizona has adopted the American common law employment-at-will doctrine that initially gave employers unfettered discretion to terminate employees for any reason. Id. at 375-76, 710 P.2d at 1030-31 (citing Dover Copper Mining Co. v. Doenges, 40 Ariz. 349, 357, 12 P.2d 288, 291-92 (1932)). Recognizing the trend of other jurisdictions in moving away from the rigid application of the at-will doctrine, Arizona courts have adopted a public policy exception to the at-will doctrine. Id. at 378, 710 P.2d at 1033. The public policy of Arizona is that an at-will employee can be discharged for good cause or for no cause, but he or she cannot be discharged for bad cause. Id. An at-will employee who is discharged in violation of public policy is discharged for bad cause and therefore can recover damages.

¶ 15 Arizona recognizes four distinct categories of the public policy exception under which discharge from employment is actionable in tort: 1) refusing to engage in illegal conduct; 2) engaging in an important public obligation; 3) exercising a legal right or privilege; and 4) whistleblowing. Wagner v. City of Globe, 150 Ariz. 82, 88, 722 P.2d 250, 256 (1986). If MIGS' actions violate the public policy exception, its conduct falls under the first category, which...