Carol Greissman v. Rawlings and Associates, Pllc

• Court: Kentucky Supreme Court
• Decided: April 18, 2019
• Docket: 2017-SC-0518
• Status: Unpublished

Opinion

RENDERED: APRIL 18, 2019 TO BE PUBLISHED

2017-SC-000518-DG

CAROL GREISSMAN APPELLANT

ON REVIEW FROM COURT OF APPEALS V. CASE NOS. 2016-CA-000055 AND 2016-CA-000062 OLDHAM CIRCUIT COURT NO. 12-CI-00744

RAWLINGS AND ASSOCIATES, PLLC APPELLEE

OPINION OF THE COURT BY JUSTICE VANMETER

AFFIRMING

Absent an employment contract, Kentucky adheres to the doctrine of

employment-at-will by which an employer may terminate an employee’s

employment for any or no reason. An exception to this rule exists when the

termination violates public policy as expressed by the employee’s exercise of a

constitutional or statutory right, which may give rise to an action for wrongful

termination. In this case, Carol Greissman, a licensed attorney in Kentucky,

was terminated by Rawlings and Associates, PLLC (hereinafter, “Rawlings &

Associates”) for refusing to sign an agreement providing, inter alia, for non­

solicitation of Rawlings & Associates’ customers or clients following cessation of

employment. Greissman’s refusal was based on her belief that the provision

violated a Rule of Professional Conduct prohibiting non-competition agreements between lawyers and law firms. SCR1 3.130, Rule 5.6. The

primary issue we must resolve in this case is whether the Court of Appeals

erred in opining that the Rules of the Kentucky Supreme Court do not

establish public policy which in turn may form a basis for a wrongful

termination claim. We hold that the Court of Appeals erred in holding that

Greissman’s complaint should have been dismissed for failure to state a claim,

but nonetheless affirm on other grounds. The Oldham Circuit Court properly

granted summary judgment in favor of Rawlings & Associates since the

agreement at issue contained a savings clause which excepted the solicitation

of legal work from coverage “to the extent necessary to comply with rules of

professional responsibility applicable to attorneys.” Thus, we agree with the

circuit court that the agreement furnished to Greissman for signature did not

violate SCR 3.130, Rule 5.6 as a matter of law.

I. Factual and Procedural Background.

Rawlings & Associates, a law firm that practices in the area of health

care subrogation, employed Greissman as a subrogation analyst from June

1997 through September 21, 2011, when it terminated her employment.2 The

event that led to termination of her employment was that Rawlings &

1 Kentucky Rules of the Supreme Court. 2 Rawlings & Associates is one of three companies that make up The Rawlings Group. The other two companies include The Rawlings Company, LLC and Rawlings Financial Services, LLC. Multiple versions of the Confidentiality and Non-Solicitation Agreement were created for distribution: one for The Rawlings Company, one for Rawlings Financial, and two separate agreements for Rawlings 85 Associates - one for its non-attorney employees and one for its attorney employees.

2 Associates presented Greissman, as well as to its other employees, an

agreement that included a covenant not to solicit, contact, interfere with, or

attempt to divert any of Rawlings & Associates’ customers or potential

customers after ceasing employment with Rawlings & Associates.3 The version

of the agreement presented to the attorneys was the same as the non-attorney

version, except in the attorney version the non-solicitation paragraph was

preceded by a “savings clause” exempting the solicitation of legal work from

coverage under the non-solicitation clause. The agreements were distributed to

all Rawlings Group employees, who were given time to review and sign. After

consulting with her personal attorney, Greissman refused to sign the attorney

version of the agreement, due to her belief that its terms violated SCR 3.310,

Rule 5.6, which prohibits an attorney from agreeing to restrict his or her

practice after leaving an employer, with limited exceptions. Rawlings &

Associates thereafter terminated Greissman’s employment.

Greissman filed suit against Rawlings & Associates alleging she had been

wrongfully terminated in violation of public policy and sought damages and

restoration of her former position. In lieu of an answer, Rawlings & Associates

filed a motion to dismiss on grounds that SCR 3.130, Rule 5.6 was not a public

policy embodied in a statutory or constitutional provision and therefore, under

Grzyb v. Evans, 700 S.W.2d 399, 401 (Ky. 1985), Greissman’s complaint failed

to state a claim upon which relief could be granted. The circuit court denied

3 The agreement also included provisions relating to non-disclosure of confidential information and non-solicitation of non-legal business.

3 Rawlings & Associates’ motion to dismiss and held that an obligatory Rule of

Professional Conduct, as established by the Kentucky Supreme Court, falls

within the public policy exception for purposes of a wrongful termination claim

and that Greissman’s cause of action could proceed.

Rawlings & Associates filed an answer to Greissman’s complaint and

discovery ensued. Greissman filed a motion for partial summary judgment on

the issue of liability, arguing that the savings clause in the agreement did not

cure the violation of the Rules and that her good faith, reasonable belief that a

violation occurred was enough to save her wrongful termination claim; she did

not need to prove an actual violation. In turn, Rawlings & Associates sought

dismissal of Greissman’s complaint on summary judgment grounds, asserting

that the savings clause in the non-solicitation section removed the agreement

from the purview of SCR 3.130, Rule 5.6 since the agreement only restricted

disclosure of confidential information and the solicitation of non-legal business;

it did not restrict an attorney’s ability to practice law. Rawlings & Associates

also argued that no public policy exception exists upon which Greissman could

base her claim for wrongful termination since she failed to allege a

constitutional or statutory violation.

The circuit court, while recognizing Greissman’s claim as cognizable,

nonetheless held that the agreement did not violate the Rules of Professional

Conduct since the savings clause would have protected Greissman from any

violation of the Rules had she signed it. Furthermore, the circuit court

determined that Greissman’s belief that the agreement violated the Rules of

4 Professional Conduct was insufficient to rescue her wrongful termination

claim. Accordingly, the circuit court denied Greissman’s motion for partial

summary judgment and granted summary judgment in favor of Rawlings &

Associates.

Greissman appealed that decision and Rawlings & Associates cross-

appealed from the circuit court’s earlier order denying its motion to dismiss.

The Court of Appeals upheld the circuit court’s ultimate decision dismissing

Greissman’s complaint, but ruled that SCR 3.310, Rule 5.6 did not provide the

public policy to support Greissman’s wrongful termination claim and thus the

circuit court should have granted Rawlings & Associates’ motion to dismiss.

Greissman petitioned this Court for discretionary review, which we granted.

II. Standard of Review.

We review a circuit court’s ruling on a motion to dismiss and a motion

for summary judgment de novo, owing no deference to the circuit court on a

question of law. Fox v. Grayson, 317 S.W.3d 1, 7 (Ky. 2010); Blackstone Mining

Co. v. Travelers Ins. Co., 351 S.W.3d 193, 198 (Ky. 2010).

III. Analysis.

The agreement furnished by Rawlings & Associates to Greissman

provides in relevant part as follows:

Non-Solicitation. Except to the extent necessary to comply with the rules ofprofessional responsibility applicable to attorneys, I agree that for as long as I am employed and for three (3) years following termination of my employment, for any reason, I will not, without the prior written consent of Rawlings & Associates: (i) solicit, contact, interfere with, or attempt to divert any customer served by Rawlings & Associates, or any potential customer (defined as a prospective customer who was solicited by Rawlings & Associates 5 within 5 years); or (ii) solicit any person then or previously employed by Rawlings & Associates to join me, whether as a partner, agent, employee, or otherwise, in any enterprise engaged in a business that competes with business engaged in by Rawlings & Associates at the time my employment ceases.

(emphasis added).

Greissman’s refusal to sign the agreement was based on her belief that it

violated SCR 3.130, Rule 5.6, an obligatory rule which prohibits an attorney

from restricting her right to practice after leaving an employer, with some

exceptions. Rule 5.6 states:

A lawyer shall not participate in offering or making:

(a) a partnership or, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement; or

(b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.

Pursuant to Kentucky’s terminable-at-will doctrine, ordinarily an

employer may discharge an at-will employee “‘for good cause, for no cause, or

for a cause that some might view as morally indefensible” as long as the

employee was not terminated for an unlawful reason “‘in contravention of

statutory or constitutional provisions.”’ Asbury Univ. v. Powell, 486 S.W.3d

246, 262 (Ky. 2016) (quoting Wymer v. JH Properties, Inc., 50 S.W.3d 195, 198

(Ky. 2001)). Kentucky recognizes a narrow public-policy exception to the

terminable-at-will doctrine. To establish a cause of action for wrongful

discharge, an employee must show that the termination was contrary to public

6 policy evinced by a constitutional or statutory provision, or that the discharge

directly resulted from the employee’s refusal to violate the law during the

course of his employment. Grzyb, 700 S.W.2d at 401; Firestone Textile Co. Div.

v. Meadows, 666 S.W.2d 730, 733 (Ky. 1983).

This Court has summarized the public policy exceptions to the

employment-at-will doctrine as follows:

1) The discharge must be contrary to a fundamental and well- defined public policy as evidenced by existing law.

2) That policy must be evidenced by a constitutional or statutory provision.

3) The decision of whether the public policy asserted meets these criteria is a question of law for the court to decide, not a question of fact.

Grzyb, 700 S.W.2d at 401. The Grzyb court recognized two situations in which

“grounds for discharging an employee are so contrary to public policy as to be

actionable absent explicit legislative statements prohibiting the discharge.” Id.

at 402 (citation omitted). Those two situations include “where the alleged

reason for the discharge of the employee was the failure or refusal to violate a

law in the course of employment. . . . [and] when the reason for a discharge

was the employee’s exercise of a right conferred by well-established legislative

enactment.” Id. (citation omitted).

When an employee exercises a constitutional or statutory right which

leads to his termination from employment, the exercised right must have “an

employment-related nexus” for a wrongful discharge claim to lie. Id. In other

words, “important to a finding of wrongful discharge is the requirement that

7 the public policy must be defined by statute and directed at providing statutory

protection to the worker in his employment situation.” Shrout v. TFE Grp., 161

S.W.3d 351, 354 (Ky. App. 2005) (dismissing wrongful discharge claim because

federal, not state, regulation was at issue and because federal regulation

concerned employee drug testing that was aimed primarily at ensuring

passenger safety rather than protecting employees).

The Court of Appeals in the case at bar concluded that since SCR 3.130,

Rule 5.6 was not a constitutional or statutory mandate, Greissman had no

public policy violation upon which to base her wrongful termination claim.

This conclusion, however, ignores the unique area of attorney disciplinary

matters, and the fact that this field is wholly regulated by the judicial branch.

Section 116 of the Kentucky Constitution vests the Kentucky Supreme

Court with exclusive rule-making power regarding attorney discipline. The

legislature has no authority to enact statutes in this area; that responsibility

lies with the judicial branch alone. As a result, the Supreme Court Rules are

the sole source of public policy in this area. In this respect, for purposes of

wrongful termination actions, we believe that an obligatory Rule of Professional

Conduct for attorneys carries equal public policy weight as any public policy

set forth in our Constitution or in a statute enacted by the General Assembly.

See Martello v. Santana, 874 F. Supp. 2d 658, 670 (E.D. Ky. 2012) (“to simply

dismiss the Rules of Professional Conduct as unequal to statutes of general

application fails to recognize that the power to regulate attorney discipline

constitutionally lies solely with the Supreme Court of Kentucky. . . . the

8 Kentucky Supreme Court, through its rule-making powers and oversight of the

Kentucky Bar Association, sets the public policy in dealings between lawyers

and non-lawyers[]”);4 see also Giuliani v. Guiler, 951 S.W.2d 318, 321 (Ky.

1997) (“It is beyond challenge that public policy is determined by the

constitution and the legislature through the enactment of statutes. However,

when those organs of public policy are silent, the decision can be made by the

courts[]”). As the circuit court below aptly observed, “[c]ertainly it would be

counterintuitive to require lawyers to conform their conduct to the obligatory

sections of the Rules [of Professional Conduct] then to turn around and dismiss

a claim that they were discharged for refusal to violate an obligatory rule.”

While an obligatory Rule of Professional Conduct as enacted by the

Kentucky Supreme Court may qualify as public policy for purposes of a

wrongful discharge claim, the professional rule must be designed to serve the

interests of the public at large, rather than the sole interests of the profession.

Here, SCR 3.130, Rule 5.6 is designed to protect society at large by allowing

clients to freely choose counsel who can best represent their interests and by

not limiting an attorney’s right to practice law. We believe the rule represents a

fundamental and clear statement of public policy.

4 But see Gadlage v. Winters & Yonker, Attorneys at Law, P.S.C., No. 3:11-CV- 354-H, 2011 WL 6888538, at *2 (W.D. Ky. Dec. 29, 2011) (“the source of the Kentucky Supreme Court’s authority to establish rules does not transform those rules into the equivalent of a constitutional or statutory provision. ... In Kentucky, a public policy from a court rule is insufficient to support a wrongful discharge claim[]”).

9 While we disagree with the Court of Appeals’ decision that Greissman’s

complaint should have been dismissed for failure to state a claim, we

nevertheless affirm because we agree with the circuit court’s grant of summary

judgment in favor of Rawlings & Associates.5 On its face, the savings clause

applies only to restrict Greissman’s ability to solicit non-legal business; it

exempts the solicitation of legal work from coverage under the non-solicitation

clause, expressly noting that the signor does not agree to those terms to the

“extent necessary to comply with the rules of professional responsibility

applicable to attorneys.” Unambiguously, the signor agrees not to solicit

Rawlings’ non-legal business; the savings clause does not apply to the

solicitation of legal work since that would violate the Rules of Professional

Conduct. Indeed, the savings clause expressly recognizes that the Rules of

Professional Conduct govern if any conflict exists between them and the

agreement. Since the plain language of the savings clause excludes any

interpretation of the agreement that conflicts with the Rules of Professional

Conduct, the agreement did not violate SCR 3.130, Rule 5.6.6

Lastly, Greissman has not created a genuine issue of material fact about

whether she had a reasonable, good faith belief that signing the agreement

5 The Court of Appeals’ majority opinion did not reach the issue of whether summary judgment was proper since it held that the complaint should have been dismissed for failure to state a claim. 6 Had Greissman signed an agreement restraining her ability to practice, she would have been subject to professional sanctions. Similarly, Rawlings & Associates, as a law firm, would also have been subject to discipline had it required its employees who are attorneys to agree to restrict their right to practice after termination of the employment relationship.

10 would result in a rule violation. As stated above, the unambiguous savings

clause makes clear that the requested conduct - signing the agreement - would

not have resulted in a rule violation. Furthermore, we note that Greissman

had ample time to consult the KBA Ethics Hotline for an advisory opinion as to

whether signing the agreement would violate Rule 5.6. If she had done so, the

opinion she received most likely would have protected her from any discipline.

KBA members

may obtain personal advice about their own contemplated future conduct by means of an informal ethics opinion. The KBA has established an Ethics Hotline staffed with trained volunteers in each Supreme Court District. These volunteers work under the direction of the Ethics Committee and are authorized to provide advice promptly upon request to members who wish to determine the ethical course to take in a situation. The informal opinion, if based upon an accurate statement of the facts, and followed, can serve as a defense to a later complaint of misconduct which arises from the same facts.

See Kentucky Bar Association, https: / / www.kybar.org/page/EthicsHotline.

(last visited March 25, 2019). The KBA Ethics Hotline is a valuable resource

for attorneys, and had Greissman utilized it, perhaps years of litigation and

expense may have been avoided.

IV. Conclusion.

For the foregoing reasons, we affirm the Court of Appeals, but on

different grounds.

All sitting. All concur.

11 COUNSEL FOR APPELLANT:

Alton D. Priddy David Lindsay Leightty Alison M. Messex PRIDDY, CUTLER, NAAKE & MEADE, PLLC

COUNSEL FOR APPELLEE:

Jordan White Mitzi Denise Wyrick WYATT, TARRANT & COMBS, LLP