An employee “whistleblower” suing for retaliatory discharge under Tennessee law must have reported the alleged misconduct to someone other than the person engaging in the alleged misconduct, the Tennessee Court of Appeals has ruled. Haynes v. Formac Stables, Inc., No. W2013-00535-COA-R3-CV (Tenn. Ct. App. Dec. 4, 2013). Where the plaintiff-employee’s complaint was to the owner of the company, who was a participant in the allegedly illegal activity, the Court found the employee failed to establish a claim and affirmed dismissal. Further, the intermediate appellate court declined to recognize an exception to the reporting requirement where the person engaged in the misconduct is the owner or manager of the employer.

Background

Formac Stables, Inc. employed Charles Haynes as a horse groomer. In April 2010, a horse kicked and injured Haynes in the head; Haynes asked for medical care. Formac’s owner referred Haynes to a veterinarian to have his injury stitched. Haynes protested the proposed treatment, and the owner threatened to terminate him. Haynes underwent the treatment, but protested the conduct to the owner and the veterinarian. Thereafter, Haynes began to suffer headaches and complained to the owner that he thought the headaches were due to his not receiving appropriate medical treatment. On June 29, 2010, Formac terminated Haynes.

Haynes subsequently sued Formac for whistleblower retaliatory discharge under Tennessee law. Formac moved to dismiss the complaint because Haynes did not report the illegal activity to a party other than the persons who assertedly were engaged in the illegal activity. The court granted the motion. Haynes appealed.

Applicable Law

Under Tennessee law, all employment is presumed to be “at-will,” permitting either party to terminate the employment relationship at any time, for any reason. Tennessee law also recognizes a limited exception to the at-will doctrine for retaliatory discharge. 

To prevail on a claim for common law retaliatory discharge, an employee must establish that (1) an employment-at-will relationship existed between the employee and the employer, (2) the employee was discharged, (3) the employee was discharged for attempting to exercise a statutory right or for any other reason that violates a clear public policy, and (4) such action was a substantial factor in the employer’s decision to discharge the employee. In cases involving whistleblowing, the Tennessee Supreme Court has held that employees must report the illegal conduct. However, the identity of the person(s) to whom the employee must make a report remains unsettled under Tennessee law and has not been addressed by the Tennessee Supreme Court.

Reporting Requirement

Haynes argued that where the person engaging in illegal activity is the owner of the company, reporting the illegal activity to that person should satisfy the reporting requirement for whistleblower retaliatory discharge because there is no higher-ranking person to whom to make the report. 

After reviewing other appeals court decisions on whistleblower retaliatory discharge, the appellate court rejected Haynes’s argument. It ruled that Haynes’s complaint about his medical treatment to Formac’s owner did not satisfy the reporting requirement. The Court held, “When a plaintiff brings a claim based on his refusal to remain silent about illegal activity, the plaintiff must establish that he made ‘a report to some entity other than the person or persons engaging in the allegedly illegal activities.’” 

Haynes supports the majority view in Tennessee that a whistleblower must report the alleged illegal conduct to a third party, not the wrongdoer alone. To address employee concerns about illegal or unethical conduct in the workplace, employers should consider developing a comprehensive complaint-reporting procedure so that issues may be timely addressed and litigation possibly avoided.