Tuesday, June 27, 2017

Newsome v. Kansas City Missouri Scool District

            It is important for the courts to recognize the public policy exception to at-will employment because it prevents employers from firing employees for following statutes and other rules.  The Supreme Court of Missouri first recognized a cause of action for wrongful discharge in violation of public policy in 2010.[1]  In Newsome, the Supreme Court of Missouri expanded the public policy exception to at-will employment.[2]  The court upheld an employee’s claim against a school district for wrongful discharge in violation of public policy when the employee refused to alter the school district’s contract in violation of the policy behind a statute.
I.        Facts and Holding
Cary Newsome worked for the Kansas City School District (the District) as the purchasing manager.[3]  He was responsible for administering the District’s purchasing and contracting in compliance with state law and the District’s policies.[4]  He sued the District for wrongful discharge in violation of public policy.[5] 
Two separate incidents are the subject of the case.[6]  First, in June of 2011, the District’s Superintendent asked Newsome to change the purchase order so that Ron Epps, an independent consultant, could receive payment for more visits than were specified in the original contract.[7]  Newsome refused to alter the contract because he believed it was illegal to alter the District’s contract after the fact and reported the incident to his supervisor.[8] 
Later that week, the District approved the purchase of three Ford Explorers, but the dealership was only able to provide Escapes by the desired purchase date.[9]  The District wanted to continue with the purchase for substantially the same price even though the Escapes were less expensive vehicles.[10]  Newsome reported this to his supervisor because he believed it violated state law and the District’s policies.[11]  Newsome’s supervisor initially agreed but later changed her mind.[12]  When Newsome objected, his supervisor told him that she “didn’t want to hear anything else about it” and that he “needed to take care of it.”[13]  Three days after the second incident, the District told Newsome he could resign or be terminated.[14]
II.     Legal Background
Missouri adheres to the at-will doctrine, meaning that an employer can discharge an employee for any reason or no reason at all.[15]  Wrongful discharge in violation of public policy is an exception to the at-will employment doctrine.[16]  The cause of action may arise when the employee “refus[es] to violate the law or any well-established and clear mandate of public policy as expressed in the constitution, statutes, regulations promulgated pursuant to statute, or rules created by a governmental body, or . . . report[s] wrongdoing or violations of the law to superiors or public authorities.”[17]  The employee must also prove that the employer discharged the employee, the employee’s refusal to violate public policy or whistleblowing was a contributing factor to the discharge, and the employee sustained damages.[18]
In 2010, the Supreme Court of Missouri first recognized the public policy exception to at-will employment.[19]  That year, the Supreme Court of Missouri decided three cases regarding whether the employee was discharged for following a clearly mandated public policy.[20]  The first two cases favored employees.  In Fleshner v. Repose Vision Institute, P.C., the court held that reporting unfair labor practices to a federal investigator was covered by the policy of the Fair Labor Standards Act even though the statute said that the employee must report violations to state officials to prosecute a violation of the statute.[21]  In Keveney v. Missouri Military Academy, a teacher told school administrators that he believed a child was suffering abuse because he saw bruises on the child and was fired on the same day.[22]  The court held that the employee stated a claim for wrongful discharge for refusing to perform an illegal act because a Missouri statute clearly designates teachers as mandatory reporters of suspected child abuse.[23] 
The third case favored employers by holding that an employee cannot rely on vague statues.  In Margiotta v. Christian Hospital Northeast Northwest, the court held that the employee did not have a claim for wrongful discharge under a whistleblower theory because the statutes the employee relied on were too vague.[24]  In Newsome, the court had to determine if the statute the employee relied on was too vague to support his claim for wrongful discharge in violation of public policy.
III.  Instant Decision
In Newsome, the court held that firing Newsome for refusing to alter an independent contractor’s contract or telling his supervisor that the District wanted to purchase Escapes rather than Explorers qualified as wrongful discharge in violation of public policy.[25] 
The court held that the Escapes purchase order violated public policy.[26]  Newsome argued that both the Epps payment request and the Escapes purchase order were outside the terms of the District’s contracts.[27]  He argued that changing the terms of a contract is prohibited by section 432.070 of the Missouri Revised Statues.[28]  The statute says that a school district may not make a contract unless it is within the scope of the district’s power and it must be “made upon a consideration wholly to be performed or executed subsequent to making the contract.”[29]  The court noted that the public policy does not have to be explicitly stated in the statute, rather, it must be “reflected by a. . . statute. . . or a rule created by a governmental body.”[30]  Therefore, the court agreed with Newsome because the court found that the statute’s purpose was to ensure that the terms of the contract are “fixed when the contract is entered into.”[31] 
The District argued that the Escapes purchase order did not violate public policy because the District only made a request to purchase the Escapes rather than actually making the purchase.[32]  The court held that reporting the District’s intent to go through with the purchase was sufficient[33] because the purpose of the public policy exception is to discourage employers from firing employees who are acting for the benefit of society.[34]  The court reasoned that holding otherwise would be inconsistent with that purpose.[35]
The court held that the Epps payment request also violated public policy.[36]  The District again argued that only requests for payment were made, not actual payments.[37]  However, the court held that the requests were sufficient because the action was “submitted under a refusal theory, not a whistleblower theory.”[38]  Therefore, the court held that the trial court did not err in overruling the District’s motion for judgment notwithstanding the verdict.[39]
IV.  Comment
When courts determine whether to uphold an employee’s claim for wrongful discharge in violation of public policy, the court must balance the benefits of at-will employment against protecting employees and the public.  The at-will doctrine favors employers.[40]  It is important because it is “[r]ooted in freedom of contract and private property principles, designed to yield efficiencies across a broad range of industries.”[41]  The public policy exception favors employees.  It is important because allowing employers to fire employees for following statutes and other rules would be contrary to the public good,[42] and it would lead to a disincentive to follow the law.
 While Missouri courts state that wrongful discharge in violation of public policy is a narrow exception to the at-will employment doctrine and is reserved for violations of clearly expressed public policy, the courts have continued to expand the doctrine.[43]  Previous cases upheld employees’ claims when a statute required or prohibited the action at issue.[44]   For example, Fleshner took a small step away from looking exclusively at the plain language of the statute when the court held that the public policy protected the reporting of wrongdoing to both federal investigators and state officials.[45] Newsome extended that principle by granting protection to Newsome for refusing to violate the policy behind a statute as interpreted by a prior case, even though the interpretation was further removed from the plain language of the statute.[46]  Additionally, Newsome, unlike Fleshner and Keveny, held that an intent to violate public policy was sufficient.  Newsome gave employees greater protection under the public policy exception.
      While greater protection for employees likely benefits the public as well as employees, it could be harmful to employers.  Employers may face greater uncertainty about whether they can fire an employee because the public policy must simply be reflected by a statute or other rule; it does not have to be explicitly stated.  Increased litigation and settlement costs may result in small businesses closing or decreasing in size.[47]  Overall, greater protection for employees who blow the whistle or refuse to violate public policy likely benefits society because it encourages both employers and employees to uphold laws that are intended to protect the public; however, it is important to keep the costs in mind as well.
- Ariel Kiefer


[1] Fleshner v. Repose Vision Inst., P.C., 304 S.W.3d 81, 91-92 (Mo. 2010) (en banc).
[2] Newsome v. Kansas City, Mo. Sch. Dist., SC 95538, 2017 WL 2119347 (Mo. May 16, 2017) (en banc).
[3] Id. at *1.
[4] Id.
[5] Id.
[6] Id.
[7] Id.  This incident will be referred to as the “Epps payment request.”
[8] Id.
[9] Id. This incident will be referred to as the “Escapes purchase order.”
[10] Id.
[11] Id.
[12] Id.
[13] Id.
[14] Id.  Newsome initially chose to resign and signed a release of claims, but he timely revoked it and was terminated. Id.
[15] Margiotta v. Christian Hosp. Ne. Nw., 315 S.W.3d 342, 345-46 (Mo. 2010) (en banc).
[16] Fleshner, 304 S.W.3d at 92.
[17] Newsome, 2017 WL 2119347, at *3; Fleshner, 304 S.W.3d at 92.
[18] Newsome, 2017 WL 2119347, at *5; Mo. Approved Jury Instr. (Civil) 38.03 (7th ed.).
[19] Fleshner, 304 S.W.3d at 91-92.
[20] Id.
[21] Id. at 93.
[22] Keveney v. Mo. Military Acad., 304 S.W.3d 98, 101 (Mo. 2010) (en banc).
[23] Id. at 104.
[24] Margiotta v. Christian Hosp. Ne. Nw., 315 S.W.3d 342, 348 (Mo. 2010) (en banc).
[25] Newsome, 2017 WL 2119347, at *4.  The court reviewed the evidence in response to the District’s motion for judgment notwithstanding the verdict. Id. at *2.
[26] Id.
[27] Id.
[28] Id.; Mo. Rev. Stat. § 432.070 (West 2017). 
[29] Mo. Rev. Stat. § 432.070.
[30] Newsome, 2017 WL 2119347, at *5.
[31] Id. at *4 (quoting Investors Title Co. v. Hammonds, 217 S.W.3d 288, 294 (Mo. 2007) (en banc).
[32] Id.
[33] Id.
[34] Id. (citing Fleshner, 304 S.W.3d at 92).
[35] Id.
[36] Id.
[37] Id.
[38] Id.
[39] Id.
[40] See Margiotta v. Christian Hosp. Ne. Nw., 315 S.W.3d 342, 346 (Mo. 2010) (en banc).
[41] Id. (quoting James A. Sonne, Firing Thoreau: Conscience and At–Will Employment, 9 U. Pa. J. Lab. & Emp. L. 235 (2007)).
[42] Boyle v. Vista Eyewear, Inc., 700 S.W.2d 859, 871 (Mo. Ct. App. 1985).

[43] Mark G. Jacobs, Donated Organ Gives Employee a Second Chance. . . To Get To Trial, 22 Mo. Emp. L. Letter 1 (2012).
[44] See Part II, supra.
[45] Fleshner, 304 S.W.3d at 93.
[46] Newsome, 2017 WL 2119347, at *4.
[47] Jay Goltz, Top 10 Reasons Small Businesses Fail, N.Y.Times, Jan. 5, 2011, https://boss.blogs.nytimes.com/2011/01/05/top-10-reasons-small-businesses-fail/.