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Justices rule on constructive discharge issue

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The Indiana Supreme Court decided Tuesday that a claim for constructive retaliatory discharge falls within the state's public policy exemption to the employment-at-will doctrine.

The opinion, Brennan Baker and Moisture Management v. Tremco Inc. and Rick Gibson, No. 29S02-0902-CV-65, addressed only three of five issues Brennan Baker raised on appeal: constructive retaliatory discharge; whether a noncompetition agreement is unenforceable because Baker's new company actually competes with a subsidiary of his former employer, Tremco; and whether a statement from his former supervisor, Rick Gibson, was slanderous per se so as to create an actionable defamation claim.

Baker worked for Tremco selling construction and maintenance of roofing systems. After 13 years with the company, he resigned following a dispute regarding the company's sales and bidding practices, believing they were illegal. Baker then formed Moisture Management, which provided a service similar to one provided by a Tremco subsidiary.

Baker sued Tremco for a declaration the noncompete covenant he signed is unenforceable and also asserted claims for wrongful termination, defamation, and violation of Indiana's blacklisting statute. Tremco counterclaimed seeking enforcement of the covenant and said that Baker breached his contract. The trial court granted summary judgment in favor of Tremco and Gibson and issued injunctive relief against Baker and his new company.

Baker claimed when he told Tremco he didn't want to participate in the company's allegedly unlawful pricing practices, he was advised he would be fired, so instead, Baker resigned. The Supreme Court concluded that a constructive retaliatory discharge falls within the ambit of the narrowly drawn public policy exception to the employment-at-will doctrine.

The reason for the discharge must fit within the exception as recognized by Frampton v. Cent. Ind. Gas Co., 260 Ind. 249, 297, N.E.2d 425 (1973) and McClanahan v. Remington Freight Lines Inc., 514 N.E.2d 390, 392-93 (Ind. 1988); Baker's claim isn't within the ambit of the recognized exceptions, wrote Chief Justice Randall T. Shepard.

"At its heart, Baker's constructive discharge claim rest on his allegation that the roofing activities conducted under this statutory regime (Indiana Code Section 20-20-1-1) contravene other statutes about bidding public projects," he wrote. "We can be agnostic on such a question of statutory construction and still conclude as a matter of common law that it is not on par with the rights and obligations recognized as a basis for discharge complaints in Frampton and McClanahan."

Using Ohio law and Baker's deposition to settle the noncompete issue, the justices affirmed the trial court finding that Baker was competing for business he had been conducting for Tremco with his new company, Moisture Management.

Finally, the high court addressed Baker's claim that Gibson made defamatory statements per se when he told someone Baker had engaged in inappropriate sales practices. Gibson's statement was far too vague to conclude that they were "so obvious and naturally harmful that proof their injurious character can be dispensed with," wrote the chief justice.

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  1. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  2. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  3. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

  4. I totally agree with John Smith.

  5. An idea that would harm the public good which is protected by licensing. Might as well abolish doctor and health care professions licensing too. Ridiculous. Unrealistic. Would open the floodgates of mischief and abuse. Even veteranarians are licensed. How has deregulation served the public good in banking, for example? Enough ideology already!

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