Pfeifer v. Fed. Express Corp.

297 Kan. 547

304 P.3d 1226

Cynthia PFEIFER, Plaintiff,

v.FEDERAL EXPRESS CORPORATION, Defendant.

No. 107,133.

Supreme Court of Kansas.

June 7, 2013.

Syllabus by the Court

1. The Uniform Certification of Questions of Law Act, K.S.A. 60–3201 et seq., authorizes the Kansas Supreme Court to answer questions from courts of other jurisdictions when a response may be determinative of a case pending in that jurisdiction and there is no controlling Kansas precedent.

2. Kansas has long adhered to the employment-at-will doctrine, which means employment is terminable at the will of either the employer or the employee. But there are exceptions to that doctrine when an employee is terminated in violation of public policy.

3. One exception to the employment-at-will doctrine exists when an employer retaliates against an injured worker for exercising the employee's rights under the Kansas Workers Compensation Act, K.S.A. 44–501 et seq. In such cases, a common-law tort for retaliatory discharge is recognized to protect the employee's exercise of those statutory rights and the public policy underlying them.

4. The 2–year statute of limitations stated in K.S.A. 60–513(a)(4) applies to a common-law retaliatory discharge claim.

5. A contractual provision in an employment agreement that shortens the 2–year statute of limitations for filing a common-law retaliatory discharge claim based on the employee's exercise of statutory rights under the Workers Compensation Act is void as against public policy.

George A. Barton, of Law Offices of George A. Barton, P.C., of Kansas City, Missouri, argued the cause, and Robert G. Harken, of the same firm, was on the brief for plaintiff.

Terrence O. Reed, of Memphis, Tennessee, argued the cause, and Richard A. Olmstead, of Kutak Rock LLP, of Wichita, was on the brief for defendant.

The opinion of the court was delivered by BILES, J.:

The issue presented is lodged squarely between two long-standing public policy interests that are at odds in this case. One concerns the protections afforded injured workers against retaliatory discharge when exercising statutory workers compensation rights. The other is the freedom to contract. This controversy comes to us from the United States Court of Appeals for the Tenth Circuit under the Uniform Certification of Questions of Law Act, K.S.A. 60–3201 et seq., which authorizes this court to answer questions from other courts when that response may be determinative of a pending case and there is no controlling Kansas precedent.

The Tenth Circuit is considering a retaliatory discharge claim brought by Cynthia Pfeifer against her former employer, Federal Express Corporation (FedEx). She filed her lawsuit 15 months after she was fired, alleging she was terminated for exercising her rights as an injured worker under the Kansas Workers Compensation Act, K.S.A. 44–501 et seq. Kansas law provides a 2–year statute of limitations for such claims. K.S.A. 60–513(a)(4) (action for injury to rights of another); Burnett v. Southwestern Bell Telephone, 283 Kan. 134, 144, 151 P.3d 837 (2007) (recognizing a 2–year limitations period for retaliatory discharge).

But FedEx argues Pfeifer's employment contract required her to file suit within 6 months of her termination. The federal district court agreed with FedEx and granted summary judgment. Pfeifer v. Federal Exp. Corp., 818 F.Supp.2d 1287 (D.Kan.2011). Pfeifer appealed. The certified questions and our responses are:

1. Does Kansas law, specifically K.S.A. 60–501 and/or public policy, prohibit private parties from contractually shortening the generally applicable statute of limitations for an action?

Our answer: K.S.A. 60–501 contains no express or implied prohibition against contractual agreements limiting the time in which to sue. But the public policy recognizing that injured workers should be protected from retaliation when exercising rights under the Workers Compensation Act, K.S.A. 44–501 et seq.,invalidates the contractual provision at issue because it impairs enforcement of that protection.

2. If no such prohibition exists, is the 6–month limitations period agreed to by the private parties in this action unreasonable?

Our answer: Because we hold the contract provision at issue is void, it is unnecessary to consider whether its 6–month term is reasonable.

Factual and Procedural Background

The facts are set forth in the Tenth Circuit's certification order:

“Plaintiff Cynthia Pfeifer filed this diversity action against Defendant Federal Express Corporation in the District of Kansas. Plaintiff alleged that Defendant retaliated against her for receiving workerscompensation benefits by terminating her employment. Plaintiff's employment agreement contained a provision requiring all claims against Defendant to be brought within ‘the time prescribed by law or 6 months from the date of the event forming the basis of [Plaintiff's] lawsuit, whichever expires first.’ Defendant terminated Plaintiff's employment on May 2, 2008. Plaintiff filed this suit 15 months later, within the applicable statutory statute of limitations of 24 months, but outside her employment agreement's six month limitation.”

Notably, Pfeifer does not allege the contractual provision at issue is unconscionable, the product of unequal bargaining power, or that the agreement was an adhesion contract. We do not address what impact, if any, such allegations might play in another case of this type.

Discussion

We are asked to determine whether Kansas law prohibits private parties from contractually shortening the statute of limitations for retaliatory discharge when the employee claims she was fired for exercising her rights under the Kansas Workers Compensation Act. This question requires interpretation of the parties' contract, as well as interpretation of the statutory language in K.S.A. 60–501. Both issues are subject to unlimited review by this court. See Shamberg, Johnson & Bergman, Chtd. v. Oliver, 289 Kan. 891, 900, 220 P.3d 333 (2009) (interpretation and legal effect of a written contract are matters of law over which an appellate court has unlimited review); Unruh v. Purina Mills, 289 Kan. 1185, 1193, 221 P.3d 1130 (2009) (Statutory interpretation is a question of law over which this court has unlimited review.). We begin with the language used in Pfeifer's employment contract, assigning the words used their plain and ordinary meaning. See First Financial Ins. Co. v. Bugg, 265 Kan. 690, 694, 962 P.2d 515 (1998) (contract considered in the sense and meaning of the terms used).

The relevant portion of Pfeifer's contract states that “to the extent law allows an employee to bring legal action against Federal Express, I agree to bring that complaint within the time prescribed by law or 6 months from the date of the event forming the basis of my lawsuit, whichever expires first.” (Emphasis added.) There is no dispute the plain language of this provision obligated Pfeifer to bring her lawsuit for retaliatory discharge within 6 months of her termination—the shorter period between the 2–year statute of limitations allowed by K.S.A. 60–513(a)(4) and the contract.

We are certainly not the first forum to consider disputes regarding the FedEx 6–month limitation in its employment contracts. And there is a split of authority on whether to uphold the provision. See, e.g., Boaz v. Federal Exp. Corp., 742 F.Supp.2d 925, 932–33 (W.D.Tenn.2010) (Fair Labor Standards Act can be abridged by contractual limitations; 6–month limitation reasonable); Ray v. FedEx Corporate Services, Inc., 668 F.Supp.2d 1063, 1067–68 (W.D.Tenn.2009) (statutes of limitations are procedural, and nothing in the Older Workers Benefit Protection Act applies to preclude procedural contractual modifications to the limitations period); Grosso v. Federal Exp. Corp., 467 F.Supp.2d 449, 455–57 (E.D.Pa.2006) (6–month contractual agreement unreasonable and unenforceable with regard to FMLA retaliation claims); Badgett v. Federal Express Corp., 378 F.Supp.2d 613, 622–26 (M.D.N.C.2005) (retaliation for exercising FMLA rights claim barred under contractually shortened limitations period of 6 months); Reynolds v. Federal Exp. Corp., No. 09–2692–STA–cgc, 2012 WL 1107834, at *12 (W.D.Tenn.2012) (unpublished opinion) (agreement “smacks of oppression,” but because plaintiff failed to establish it was an adhesion contract, court held it was not one and that its limitations period was reasonable); Plitsas v. Federal Exp., Inc., No. 07–5439, 2010 WL 1644056, at *3–6 (D.N.J.2010) (unpublished opinion) (Family and Medical Leave Act [FMLA] regulations prevent employers from interfering with employees' rights; contractual limitation is restraint on access to employees' rights); Allen v. Federal Express Corp., No. 1:09 cv 17, 2009 WL 3234699, at *4–5 (M.D.N.C.2009) (unpublished opinion) (6–month contractual modification to the limitationsperiod did not violate state or federal law and was reasonable).

Pfeifer argues she should not be held to the shorter 6–month contractual period because it violates public policy. This is an issue of first impression in Kansas implicating both the statute setting the ground rules for statutes of limitations, as well as the public policy underlying our caselaw recognizing a common-law cause of action for retaliatory discharge when exercising workers compensation rights. It also rests temptingly alongside our caselaw extolling the paramount importance of the freedom to contract—a freedom not to be interfered with lightly. Idbeis v. Wichita Surgical Specialists, P.A., 279 Kan. 755, 770, 112 P.3d 81 (2005). We address the statute first.

K.S.A. 60–501

K.S.A. 60–501 states: “The provisions of this article govern the limitation of time for commencing civil actions, except where a different limitation is specifically provided by statute.” (Emphasis added.) The remainder of Article 5 sets various statutes of limitations for actions brought under Chapter 60. See, e.g.,K.S.A. 60–506 (actions...