Walt's Drive-A-Way Service, Inc. v. Powell
638 N.E.2d 857, 10 I.E.R. Cas. (BNA) 789, 1994 Ind. App. LEXIS 1039 (1994)
Rule of Law:
An at-will employee has a valid cause of action for wrongful discharge if terminated for refusing to commit an act that violates federal regulations for which they would be personally liable, and such state law claims are not preempted by the federal Surface Transportation Assistance Act.
Facts:
- Jerry Lee Powell worked as an over-the-road truck driver for Walt's Drive-A-Way Service and associated leasing companies.
- The employers provided Powell with a driving work schedule for March 23, 1992.
- Powell reviewed the schedule and determined that it required him to drive more hours than permitted by U.S. Department of Transportation Motor Carrier Safety Regulations.
- Powell refused to drive the assigned schedule, citing the federal safety regulations.
- The employers terminated Powell's employment on that same day due to his refusal.
Procedural Posture:
- Powell (Plaintiff/Appellee) sued the Employers (Defendants/Appellants) in the state trial court for wrongful discharge.
- The Employers filed a motion to dismiss the complaint for failure to state a claim.
- The trial court denied the Employers' motion to dismiss, ruling that a cause of action existed and was not preempted.
- The trial court certified its ruling for an interlocutory appeal.
- The Employers appealed to the Court of Appeals of Indiana.
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Issue:
Does Indiana recognize a wrongful discharge cause of action for an at-will employee fired for refusing to violate a federal regulation, and if so, is this claim preempted by federal transportation law?
Opinions:
Majority - Judge Baker
Yes, an employee may sue for wrongful discharge when fired for refusing to violate federal law, and federal law does not preempt this claim. The court reasoned that while Indiana generally adheres to the employment-at-will doctrine, the Indiana Supreme Court created a public policy exception in McClanahan v. Remington Freight Lines, Inc. for employees discharged for refusing to commit illegal acts for which they would be personally liable. The court rejected the employers' argument that this exception applies only to violations of state law, holding that there is no reasonable distinction between refusing to violate state law versus federal law, as both involve compliance with public policy. Furthermore, the court held that the federal Surface Transportation Assistance Act (STAA) does not preempt this state cause of action because the STAA language does not indicate it was intended to be the exclusive remedy for wrongfully discharged drivers.
Analysis:
This decision significantly expands the 'public policy exception' to the employment-at-will doctrine in Indiana. Previously, the exception (established in Frampton and McClanahan) covered retaliation for filing workers' compensation claims or refusing to violate state laws. This case explicitly extends that protection to refusals to violate federal regulations, specifically DOT safety rules. The court emphasized that denying a remedy would encourage criminal conduct. Additionally, the ruling clarifies that the existence of a federal administrative remedy (under the STAA) does not automatically strip the state court of jurisdiction over common law wrongful discharge claims, affirming the state's interest in regulating the employer-employee relationship.
