Jacobson v. Parda Federal Credit Union

577 N.W.2d 881, 457 Mich. 318

• Court: Michigan Supreme Court
• Decided: May 19, 1998
• Docket: 105050, Calendar No. 16
• Status: Published

Opinions

Cavanagh, J.

The case calls on us to decide whether the plaintiffs action, which was successful on the merits before a jury, was barred by the statute of limitations prescribed by the Whistleblowers’ Protection Act.¹ Because the plaintiff has alleged and proven an act by her employer in violation of the Whistleblowers’ Protection Act within the limitation period, we find that her action is not barred.

The plaintiff filed her action on January 19, 1990, ninety days after writing and sending her letter of resignation to her employer. Her complaint alleged, inter alia, that she had been constructively discharged from her employment in violation of the act.² Following a jury verdict³ for the plaintiff, the trial court granted defendant’s motion for directed verdict,⁴ agreeing with defendant’s contention that the plaintiff’s claim was barred because the plaintiff had not filed her claim within the ninety-day statutory period for claims under the act.⁵

The Court of Appeals reversed in part, finding a continuing pattern of discriminatory conduct, with most acts outside the statutory period, but at least one act within it.⁶ The Court of Appeals concluded that this fit within an exception to the limitation period for continuing violations,⁷ and that the plaintiff’s complaint was therefore timely filed. We granted defendant’s application for leave to appeal.⁸

We find that the plaintiff has shown that she was constructively discharged⁹ on the date of resignation in retaliation for conduct protected by the act.¹⁰ It is undisputed that when the plaintiff filed her action, the period of limitation covering any actions on the date of her resignation, October 21, 1989, had not expired. Accordingly, we affirm the result reached by the Court of Appeals, but on different grounds.¹¹

i

Plaintiff G. Marie Jacobson worked for defendant Parda Federal Credit Union from 1972 until her resignation on October 21, 1989. Beginning as a temporary employee, she eventually rose to the position of executive vice president and chief operating officer. While serving in this position, plaintiff, after consulting with her private attorney, contacted the Federal Bureau of Investigation on February 28, 1989, to report her suspicions regarding a bond claim filed by the defendant with its insurer. Plaintiff believed that this bond claim was unsupported and, therefore, improper and perhaps fraudulent.

That same day, the board of directors of the credit union learned of plaintiff’s action. Thereafter, plaintiff noted a dramatic decline in her relationship with the board. The plaintiff testified that the board was upset and outraged that she had reported the credit union to the FBI.¹²

Joseph Abate was president and CEO of the credit union during this time, but had announced his retirement effective April 1, 1989. Plaintiff believed herself to be generally considered to be Abate’s successor. Shortly before Abate’s retirement, she was assured by members of the board that no search was being conducted for a replacement for Abate, and that, even if there was to be a search, she would have a “fair chance” in any search to fill Abate’s position. Following Abate’s retirement, however, the chairman of the credit union’s board, Herman Armstrong, was named acting interim CEO.

From there, the plaintiff detailed at trial an extensive collection of actions adverse to her taken by the board, including the placing of a blind advertisement for the CEO position, the offering of the position to another candidate (who declined it), the failure of the board to inform her of its eventual decision to appoint her CEO, and the rescission of that decision before it in fact took effect.¹³ It is undisputed that all these actions occurred well outside the statutory limitation period present when the plaintiff filed her action.

Eventually, on August 16, 1989, the credit union hired Katie Stone as interim president and CEO. Simultaneously, plaintiffs staff was assigned to report to Stone, and plaintiff was relieved of her previous job duties. Plaintiff testified that from this point forward she was ostracized and ignored by the board.

On October 21, 1989, plaintiff typed out a letter of resignation and mailed it to the board members, leaving an additional copy on Stone’s desk. It is undisputed that plaintiff was alone at work that day, a Saturday. Plaintiff reported to work on the following Monday, October 23, 1989, and was instructed by Stone to clean out her desk and leave at once. Plaintiff complied with Stone’s instructions.

On January 19, 1990, exactly ninety days after the day plaintiff wrote and mailed her letter of resignation, she filed this action. The defendant moved for a directed verdict at the close of plaintiff’s proofs and again at the close of its proofs. The trial court took both motions under advisement. Following a jury verdict in favor of the plaintiff, the trial court granted a directed verdict (judgment notwithstanding the verdict) in favor of the defendant on all counts. The Court of Appeals reversed in part, with respect to the finding that plaintiffs whistleblowers’ action was barred by the statute of limitations. It is from this portion of the Court of Appeals decision that the defendant appeals. We now affirm, for reasons other than those stated by the Court of Appeals.

n

The issue whether a claim is within the period of limitation is one of law, Solowy v Oakwood Hosp Corp, 454 Mich 214, 216; 561 NW2d 843 (1997), and hence reviewed de novo, Cardinal Mooney High School v Michigan High School Athletic Ass’n, 437 Mich 75, 80; 467 NW2d 21 (1991). Here, because a jury has found in favor of the plaintiff, and the trial court entered a directed verdict, plaintiff on appeal is entitled to all factual issues being viewed in the light most favorable to her, along with the drawing of reasonable favorable inferences from them. Caldwell v Fox, 394 Mich 401; 231 NW2d 46 (1975).

Plaintiff filed her action on January 19, 1990. Under the act, the period of limitation for an action alleging unlawful retaliatory conduct is ninety days. Therefore, the first step in any analysis of this claim is to determine whether the plaintiff has stated a claim regarding events within the limitation period.¹⁴ Even if we were to agree with the analysis of the Court of Appeals of the events that were otherwise barred by the statute of limitations, the analysis must nevertheless begin at those times within the period of limitation.¹⁵ Simply stated, if the plaintiff has alleged an action within the period of limitation, and the trier of fact has found in favor of the plaintiffs claims, we need look no further.

Here the plaintiff resigned on October 21, 1989. She was admittedly alone at work on that day, a Saturday. Plaintiff testified that her working conditions had become intolerable, and offered considerable testimony in support of her claims that the conditions had steadily deteriorated in response to her reporting certain actions of the board of directors of her employer to the FBI.

The question when a constructive discharge occurs has been previously addressed by this Court only in the context of a Michigan Civil Rights Act¹⁶ claim. Champion v Nation Wide Security, Inc, 450 Mich 702; 545 NW2d 596 (1996). Noting that “a constructive discharge occurs only where an employer or its agent’s conduct is so severe that a reasonable person in the employee’s place would feel compelled to resign,”¹⁷ we found that the supervisor’s conduct in Champion was severe enough to compel the plaintiff to resign.¹⁸

Defendant argues that Champion stands for the proposition that the act of an employer constitutes the action that results in the “discharge” in a constructive discharge situation, and that, therefore, the timing of the action of the employer controls. We disagree. The act of the employer and the constructive discharge were inseparable in Champion. Our analysis did not deviate from the standard expressed in Vagts, that is, would a reasonable person in plaintiff’s position have felt compelled to resign as a result of the employer’s sexual assault? Applying that same standard, the defendant’s motion for judgment notwithstanding the verdict should not have been granted if, viewing the evidence in a light most favorable to the plaintiff, jurors could have reached different conclusions whether plaintiff’s working conditions were so intolerable that a reasonable person in plaintiff’s position would have felt compelled to resign. Champion, 450 Mich 710; Vagts v Perry Drug Stores, Inc, 204 Mich App 481, 487; 516 NW2d 102 (1994).¹⁹

m

In this case, the plaintiff alleged that her work conditions, as a result of retaliatory action prohibited by the act, became intolerable as of October 21, 1989, and she submitted her resignation on that day. The trier of fact accepted this contention.

While an employer’s action may lead to a constructive discharge, such a discharge itself generally cannot become evident until the employee has, in fact, left the employment. It seems, therefore, that to say that a discharge occurred whenever an employer’s action that resulted in the discharge occurred would be to set a date of occurrence in retrospect. Until the employee resigns, the employer’s action has yet to prove to be one of discharge. A discharge, be it constructive or otherwise, must have in place all the events necessary to determine its existence.²⁰

On the day she resigned, plaintiff found her working conditions to finally be intolerable. As we have noted above, “a constructive discharge occurs only where an employer or its agent’s conduct is so severe that a reasonable person in the employee’s place would feel compelled to resign.” Champion at 710-711, citing Vagts at 487-488, and Young v Southwestern Savings & Loan Ass’n, 509 F2d 140 (CA 5, 1975). Our approach historically has been to apply an objective standard of reasonableness to the action of the employee.

We decline the defendant’s invitation to depart from our longstanding rule that a discharge occurs when a reasonable person in the employee’s place would feel compelled to resign. In analyzing such circumstances, we cannot know what place the employee is in, and hence evaluate her conduct, until she actually resigns. It seems, therefore, that our focus in these far more common situations must be on the moment of resignation.²¹ Here, the employee’s resignation occurred on October 21, 1989. A jury later agreed that it was reasonable for her to resign at that time. She was constructively discharged on October 21, 1989.²²

“[O]nce individuals establish their constructive discharge, they are treated as if their employer has actually fired them.” Champion at 710. The law does not differentiate between employees who were constructively discharged and those who were actually discharged. Id. At the time plaintiff filed her claim, any act that occurred on October 21, 1989, could timely be addressed. If the plaintiff had been fired by her employer on October 21, 1989, her claim would be timely. We, therefore, would find it timely on the basis of her constructive discharge.²³

Because reasonable jurors could differ regarding whether plaintiff was constructively discharged in violation of the act at the time she resigned, we affirm the result of the Court of Appeals, which reversed the directed verdict, and reinstate the jury’s award on the basis of the reasoning herein.²⁴

Mallett, C.J., and Boyle and Kelly, JJ., concurred with Cavanagh, J.

1 MCL 15.361 et seq.; MSA 17.428(1) et seq.

2 While plaintiffs suit initially named several individual members of her employer’s board of directors as defendants, the trial court dismissed these claims pursuant to MCR 2.116(C)(8), finding the individual directors not to be employers within the meaning of the Whistleblowers’ Protection Act. The Court of Appeals affirmed this dismissal, and the plaintiff has not filed a cross appeal on this issue.

3 The jury awarded the plaintiff $277,000 in present economic damages and $128,000 in future economic damages. The jury also awarded $100,000 in noneconomic damages on the plaintiff’s claim of intentional infliction of emotional distress. The trial court granted a directed verdict on this claim, and the Court of Appeals affirmed. Plaintiff has not filed a cross appeal on this issue.

4 Now a judgment notwithstanding the verdict, MCR 2.610.

5 MCL 15.363(1); MSA 17.428(3)(1).

6 Unpublished opinion per curiam, issued November 17, 1995 (Docket No. 162885).

7 The Court of Appeals cited Sumner v Goodyear Tire & Rubber Co, 427 Mich 505, 528; 398 NW2d 368 (1986), for this proposition.

8 454 Mich 905 (1997).

9 Constructive discharge is not, itself, a cause of action, but rather a defense to a claim of the voluntary leaving of the employee. See Vagts v Perry Drug Stores, Inc, 204 Mich App 481, 487; 516 NW2d 102 (1994). However, discharge is among the retaliatory actions prohibited by the act. Plaintiff alleged she was constructively discharged. The actual posturing of her claim, accordingly, is one of discharge in violation of the act.

10 In reviewing a motion for judgment notwithstanding the verdict, we examine the testimony and all legitimate inferences that may be drawn in a light most favorable to the nonmoving party. If reasonable jurors could have reached different conclusions, the motion should have been denied. Matras v Amoco Oil Co, 424 Mich 675, 681-682; 385 NW2d 586 (1986).

11 As will be seen, we find no need to reach the issue of a possible “continuing violation” encompassing acts beyond the limitation period.

12 It is apparent that, before the plaintiff contacted the FBI, she had brought her concerns regarding the bond claim to the board of directors, which nonetheless authorized the filing of the claim.

13 While it is apparent that the board decided to promote plaintiff to ceo after the other candidate refused the position, the plaintiff testified she was never informed of that decision and learned of it by way of a third-party’s congratulatory letter a month later. When confronted by the plaintiff, the board informed her that it had already rescinded her promotion, and thereafter hired Katie Stone as interim CEO.

14 A motion for judgment notwithstanding the verdict should be granted only if the evidence, viewed in a light most favorable to the nonmoving party, fails to establish a claim as a matter of law. Orzel v Scott Drug Co, 449 Mich 550, 557-558; 537 NW2d 208 (1995).

15 Our decision rests on a claim of constructive discharge within the limitation period. Plaintiff also alleged numerous discriminatory acts by the defendant outside the limitation period. While those allegations do not, by themselves, form the basis we decide this matter on, they are nonetheless relevant to determining the reasonableness of the plaintiff’s resignation, a determination required in addressing a claim of constructive discharge. See Vagts, n 9 supra at 487-488.

16 MCL 37.2101 et seq.-, MSA 3.548(101) et seq.

Subsection 103 of the act provides:

(i) Discrimination because of sex includes sexual harassment which means unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct or communication of a sexual nature when:

(ii) Submission to or rejection of such conduct or communication by an individual is used as a factor in decisions affecting such individual’s employment, public accommodations or public services, education, or housing.

17 Champion at 710, citing Vagts, n 9 supra at 487-488, and Young v Southwestern Savings & Loan Ass’n, 509 F2d 140 (CA 5, 1975).

18 In Champion, the plaintiff was forcibly raped by her supervisor while at work. The plaintiff, not surprisingly, never returned to work. She later filed an action against her employer under the Michigan Civil Rights Act, MCL 37.2101 et seq.; MSA 3.548(101) et seq., alleging sexual harassment. We held “that an employer is liable for such rapes where they are accomplished through the use of the supervisor’s managerial powers.” Champion, 450 Mich 704. We also held that the rape was equivalent to a decision to discharge and that this “ ‘decision affecting . . . employment’ is actionable under MCL 37.2103(i)(ii); MSA 3.548(103)(i)(ii) . . . .” Id. at 711.

19 We note that the rule of Vagts defining a constructive discharge was not new to our jurisdiction. For at least fourteen years, Michigan appellate cases have applied this standard in determining a constructive discharge. See, e.g., Mourad v Automobile Club Ins Ass’n, 186 Mich App 715, 721; 465 NW2d 395 (1991); Fischhaber v General Motors Corp, 174 Mich App 450, 454-455; 436 NW2d 386 (1988); LeGalley v Bronson Community Schools, 127 Mich App 482, 486-487; 339 NW2d 223 (1983).

20 There may, of course, be instances where the events necessary to determine a constructive discharge may be in place before the date of resignation, such as when the employee has received definite notice of the termination. Such circumstances might compel a finding of a constructive discharge on a date before the date of resignation, although we do no more than make this observation, because that is not the case before us. Herein, while the plaintiff may have had indications that the upward mobility of her career was in jeopardy, the record, when viewed, as required, in a light most favorable to her, does not reveal that she had definite notice of termination of her employment at some point before the date of her resignation, and does indicate that, at that time, her resignation was reasonable under the circumstances.

21 We are not alone in relying on the date of resignation as the date on which a constructive discharge accrued. Several courts have determined, using a variety of rationales, that such a date provides the most clearly determinable indication of when a constructive discharge occurred. See, e.g., Armington v School Dist of Philadelphia, 767 F Supp 661, 666 (ED Penn, 1991), aff’d 941 F2d 1200 (CA 3, 1991), Eure v United States Postal Service, 711 F Supp 1365, 1372 (SD Miss, 1989), and Stroud v VBFSB Holding Corp, 917 SW2d 75, 81 (Tex App, 1996).

22 The potential concern often argued against allowing an employee who controls the date at which she resigns to thereby “control” the accrual of her cause of action has been effectively dealt with by several courts. In particular, we note the Supreme Court of California’s comprehensive statement in this regard:

[The defendant’s] concern to avoid vesting employees with sole control over the commencement of the statute of limitations period, which it asserts would leave employers unaware of the accrual of a cause of action until an employee resigns, is misplaced .... The essence of constructive discharge is that it is a termination of employment secured by the employer through indirect means. The employer remains in control in that he or she coerces the employee’s resignation. Just as an employer who gives advance notice of impending termination of employment has knowledge sufficient to prepare for a possible lawsuit, an employer who creates or knows of intolerable conditions is in the same position to be prepared for a possible lawsuit when the coerced resignation finally occurs. In addition, the alleged intolerable condition — a circumstance in the control of the employer — normally continues up until the time of resignation, so that the litigation will not relate to some long-ago event, but to recent circumstances. Nor is it true that having the statute of limitations run from the date of termination leaves the employee able to delay the bringing of a lawsuit indefinitely. The longer the employee delays his or her resignation, the more difficult it may be to prove that the allegedly intolerable conditions of employment actually were intolerable on an objective basis ... , or that it was these conditions that caused the employee’s resignation. Further, the employer, who has created or permitted the persistence of known intolerable conditions, should not be able to complain of delay when the employee retains employment in the hope that conditions will improve or that informal conciliation may succeed. [Mullins v Rockwell Int’l Corp, 15 Cal 4th 731, 740; 63 Cal Rptr 2d 636; 936 P2d 1246 (1997) (citations omitted).]

23 Hence we find no reason to address the other issues raised by the plaintiff, such as the continuing violation doctrine.

24 We pause to again address the dissent's claim that our action impairs the function of the statute of limitations in these cases. Despite the dissent’s claims, our decision today entails a workable framework for the evaluation of statute of limitations issues in constructive discharge cases. Whether a resignation was reasonable at the time it was made controls the presence of a constructive discharge. Obviously a person claiming “intolerable” working conditions for some number of years will be hard pressed to convince a trier of fact, or even raise a question of fact, that such conditions were reasonably “intolerable.” The hypothetical tardy plaintiff so feared by the dissent is more likely to harm, rather than help, her cause by delaying action.

We also note another likely consequence if the view of the dissent were to prevail. Faced with the likelihood that a court, in retrospect, would examine the factual record and fix the first serious negative action as the date of occurrence of the constructive discharge, the only logical advice a competent practitioner could offer a potential plaintiff would be to, at the first sign of serious trouble, resign, and file a claim of constructive discharge. To remain and attempt to resolve the problem would lead to the expiration of a claim, even if the work environment had become far worse since the time of the last identifiable management action that appears in the record. The natural resolution of most workplace difficulties, which thankfully do not reach the level of litigation, would likely be frustrated.