Balla v. Gambro, Inc.

584 N.E.2d 104, 145 Ill. 2d 492, 164 Ill. Dec. 892, 16 A.L.R. 5th 1000, 7 I.E.R. Cas. (BNA) 1, 1991 Ill. LEXIS 125
CourtIllinois Supreme Court
DecidedDecember 19, 1991
Docket70942
StatusPublished
Cited by96 cases

This text of 584 N.E.2d 104 (Balla v. Gambro, Inc.) is published on Counsel Stack Legal Research, covering Illinois Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Balla v. Gambro, Inc., 584 N.E.2d 104, 145 Ill. 2d 492, 164 Ill. Dec. 892, 16 A.L.R. 5th 1000, 7 I.E.R. Cas. (BNA) 1, 1991 Ill. LEXIS 125 (Ill. 1991).

Opinions

JUSTICE CLARK

delivered the opinion of the court:

The issue in this case is whether in-house counsel should be allowed the remedy of an action for retaliatory discharge.

Appellee, Roger Balla, formerly in-house counsel for Gambro, Inc. (Gambro), filed a retaliatory discharge action against Gambro, its affiliate Gambro Dialysatoren, KG (Gambro Germany), its parent company Gambro Lundia, AB (Gambro Sweden), and the president of Gambro in the circuit court of Cook County (Gambro, Gambro Germany and Gambro Sweden collectively referred to as appellants). Appellee alleged that he was fired in contravention of Illinois public policy and sought damages for the discharge. The trial court dismissed the action on appellants’ motion for summary judgment. The appellate court reversed. (203 Ill. App. 3d 57.) We granted appellant’s petition for leave to appeal (134 Ill. 2d R. 315) and allowed amicus curiae briefs from the American Corporate Counsel Association and Illinois State Bar Association.

Gambro is a distributor of kidney dialysis equipment manufactured by Gambro Germany. Among the products distributed by Gambro are dialyzers which filter excess fluid and toxic substances from the blood of patients with no or impaired kidney function. The manufacture and sale of dialyzers is regulated by the United States Food and Drug Administration (FDA); the Federal Food, Drug, and Cosmetic Act (Federal Act) (21 U.S.C. §331 et seq. (1988)); FDA regulations (21 C.F.R. §§820.150 through 820.198 (1987)); and the Illinois Food, Drug and Cosmetic Act (Ill. Rev. Stat. 1985, ch. 56½, par. 501 et seq.).

Appellee, Roger J. Balla, is and was at all times throughout this controversy an attorney licensed to practice law in the State of Illinois. On March 17, 1980, appellee executed an employment agreement with Gambro which contained the terms of appellee’s employment. Generally, the employment agreement provided that appellee would “be responsible for all legal matters within the company and for personnel within the company’s sales office.” Appellee held the title of director of administration at Gambro. As director of administration, appellee’s specific responsibilities included, inter alia: advising, counseling and representing management on legal matters; establishing and administering personnel policies; coordinating and overseeing corporate activities to assure compliance with applicable laws and regulations, and preventing or minimizing legal or administrative proceedings; and coordinating the activities of the manager of regulatory affairs. Regarding this last responsibility, under Gambro’s corporate hierarchy, appellee supervised the manager of regulatory affairs, and the manager reported directly to appellee.

In August 1983, the manager of regulatory affairs for Gambro left the company and appellee assumed the manager’s specific duties. Although appellee’s original employment agreement was not modified to reflect his new position, his annual compensation was increased and Gambro’s corporate organizational chart referred to appellee’s positions as “Dir. of Admin./Personnel; General Counsel; Mgr. of Regulatory Affairs.” The job description for the position described the manager as an individual “responsible for ensuring awareness of and compliance with federal, state and local laws and regulations affecting the company’s operations and products.” Requirements for the position were a bachelor of science degree and three to five years in the medical device field plus two years experience in the area of government regulations. The individual in the position prior to appellee was not an attorney.

In July 1985 Gambro Germany informed Gambro in a letter that certain dialyzers it had manufactured, the clearances of which varied from the package insert, were about to be shipped to Gambro. Referring to these dialyzers, Gambro Germany advised Gambro:

“For acute patients risk is that the acute uremic situation will not be improved in spite of the treatment, giving continuous high levels of potassium, phosphate and urea/ creatine. The chronic patient may note the effect as a slow progression of the uremic situation and depending on the interval between medical check-ups the medical risk may not be overlooked.”

Appellee told the president of Gambro to reject the shipment because the dialyzers did not comply with FDA regulations. The president notified Gambro Germany of its decision to reject the shipment on July 12,1985.

However, one week later the president informed Gambro Germany that Gambro would accept the dialyzers and “sell [them] to a unit that is not currently our customer but who buys only on price.” Appellee contends that he was not informed by the president of the decision to accept the dialyzers but became aware of it through other Gambro employees. Appellee maintains that he spoke with the president in August regarding the company’s decision to accept the dialyzers and told the president that he would do whatever necessary to stop the sale of the dialyzers.

On September 4, 1985, appellee was discharged from Gambro’s employment by its president. The following day, appellee reported the shipment of the dialyzers to the FDA. The FDA seized the shipment and determined the product to be “adulterated within the meaning of section 501(h) of the [Federal Act].”

On March 19, 1986, appellee filed a four-count complaint in tort for retaliatory discharge seeking $22 million in damages. Counts III and IV for emotional distress were dismissed from the action, as was the president in an order entered by the trial court on November 5, 1986.

On July 28, 1987, Gambro filed a motion for summary judgment. Gambro argued that appellee, as an attorney, was precluded from filing a retaliatory discharge action in light of the appellate court opinion in Herbster v. North American Co. for Life & Health Insurance (1986), 150 Ill. App. 3d 21. Gambro Germany and Gambro Sweden joined in Gambro’s motion. Appellee argued that while the Herbster opinion declined to extend the tort of retaliatory discharge to the plaintiff/attomey before the court, the opinion did not foreclose the possibility of extending the tort in the future. Appellee argued that the plaintiff in Herbster was in-house counsel for a corporation whose duties were restricted to legal matters (Herbster, 150 Ill. App. 3d at 26); whereas he served as the director of administration and personnel and manager of regulatory affairs as well as general counsel for Gambro. Appellee argued that a question of fact existed as to whether he was discharged for the performance of a purely legal function.

On November 30, 1988, the trial court granted appellants’ motion for summary judgment. In its opinion, the trial court specifically stated that “the very ground [appellee is] claiming as the basis for retaliatory discharge all [sic] involves the decisions which he made applying law to fact to determine whether these things complied with the federal regulations, and that is clearly legal work.” Thus, the trial court concluded that the duties appellee was performing which led to his discharge were “conduct clearly within the attorney-client relationship” and that Gambro had the “absolute right” to discharge its attorney.

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Bluebook (online)
584 N.E.2d 104, 145 Ill. 2d 492, 164 Ill. Dec. 892, 16 A.L.R. 5th 1000, 7 I.E.R. Cas. (BNA) 1, 1991 Ill. LEXIS 125, Counsel Stack Legal Research, https://law.counselstack.com/opinion/balla-v-gambro-inc-ill-1991.