Crews v. Buckman Laboratories International, Inc.
18 I.E.R. Cas. (BNA) 1246, 78 S.W.3d 852, 2002 Tenn. LEXIS 252 (2002)
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Rule of Law:
In-house counsel may bring a common-law action for retaliatory discharge when terminated for complying with a provision of the Code of Professional Responsibility that represents a clear and definitive statement of public policy.
Facts:
- In 1995, Julia Beth Crews was hired as associate general counsel for Buckman Laboratories International, Inc. ('Buckman'), reporting to General Counsel Katherine Buckman Davis.
- In 1996, Crews discovered that Davis did not possess a license to practice law in Tennessee and expressed her concerns to a member of Buckman's Board of Directors.
- After Davis passed the bar exam but failed to complete all licensure requirements, Crews continued to inform Buckman officials of the problem.
- On June 17, 1999, Davis angrily confronted Crews about her actions. Crews subsequently received her first-ever below-average raise.
- In August 1999, after seeking legal advice on her ethical obligations, Crews informed the Board of Law Examiners of Davis's situation.
- After the Board issued a show-cause order to Davis, Davis confronted Crews again and scheduled her performance review.
- Crews informed company executives that the situation was untenable, and they agreed to transfer her to a new position before she would leave the company in six to nine months.
- While this new arrangement was being implemented, Davis terminated Crews's employment, asserting that Crews had already given her notice of resignation, which Crews denied.
Procedural Posture:
- Julia Beth Crews filed a suit for common-law retaliatory discharge against Buckman Laboratories International, Inc. in the Shelby County Circuit Court (trial court).
- Buckman filed a Rule 12.02(6) motion to dismiss for failure to state a claim upon which relief can be granted.
- The trial court granted Buckman's motion and dismissed the complaint.
- Crews, as appellant, appealed the dismissal to the Tennessee Court of Appeals.
- The Court of Appeals affirmed the trial court's judgment, holding that in-house counsel could not state a claim for retaliatory discharge.
- The Supreme Court of Tennessee granted Crews permission to appeal.
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Issue:
Does an in-house lawyer state a valid claim for common-law retaliatory discharge when she is terminated for reporting that her employer's general counsel was engaged in the unauthorized practice of law?
Opinions:
Majority - Barker, J.
Yes. An in-house lawyer may bring a common-law action for retaliatory discharge when the termination results from the lawyer's compliance with an ethical duty that represents a clear and definitive statement of public policy. The court rejected the reasoning of prior cases, like Balla v. Gambro, which denied such claims based on the arguments that lawyers are already ethically bound to act and that allowing such suits would chill the attorney-client relationship. The court found that the economic pressures on in-house counsel, who depend on a single client for their livelihood, justify providing this protection to encourage adherence to ethical standards. Furthermore, the court determined that the public policy against the unauthorized practice of law, as reflected in the Code of Professional Responsibility, is a sufficiently clear public policy to support a retaliatory discharge claim. To make this cause of action viable, the court also modified Tennessee's ethical rules to permit lawyers to reveal client confidences to the extent reasonably necessary to establish such a claim.
Analysis:
This decision significantly alters the landscape for in-house counsel in Tennessee by providing them with employment protections previously denied. It aligns Tennessee with a modern trend of recognizing that attorneys who are also employees should not have to forfeit their rights. By concurrently amending the state's Code of Professional Responsibility to create an exception to confidentiality for such claims, the court established a truly functional cause of action, preventing the right from being merely theoretical. This ruling strengthens the ethical position of in-house lawyers, empowering them to resist corporate pressure to violate public policy without facing certain termination and unemployment.
