Virginia Fiduciary Law Blog

JUDICIAL EXPANSION OF A TORT'S ZONE OF DANGER: AN EMPLOYEE DUTY FOR WRONGFUL DISCHARGE

When an employment relationship sours, and a termination results, an employee may harbor the idea that he or she has a wrongful discharge claim.  Employees frequently use the label “wrongful discharge” to denote a broad range of claims for the unlawful firing of an employee.  In Virginia, wrongful discharge can be a legal term of art, and, until recently, it has meant a very narrowly circumscribed set of actionable claims. The state of the law may be changing, however.

 In a recent case, the Virginia Supreme Court advised the United States Court of Appeals for the Fourth Circuit that Virginia law would recognize the liability of an employee for the tort of wrongful discharge.  The potential for an employer to be liable for a wrongful discharge was not in question. The novel twist in the question before the Court was whether the supervisor of the allegedly wrongfully discharged employee also could be held liable for that tort.  In a sharply divided Virginia Supreme Court opinion, over the dissents of Justice Kinser who was joined by Justices Goodwyn and McClanahan, the Virginia Supreme Court held that a supervisory employee may be liable for the wrongful discharge of the employer.

 The majority opinion noted that the actual predicate giving rise to a wrongful discharge claim remains narrowly construed under Virginia law. The majority also noted that recognizing another employee’s potential liability for the employer’s wrongful discharge would be consistent with agency law principles by which “employers and employees are deemed to be jointly liable and jointly suable for the employee's wrongful act.”  Both the majority and dissenting opinions drew on out-of-state legal decisions in support of their stated rationales. 

 Justice Kinser’s dissenting opinion pointed out, however, that, at present, there exists no precedent in Virginia for the proposition that one employee may be liable to another for carrying out a wrongful discharge by the employer.  Justice Kinser noted that “the legal duty at issue in a claim for wrongful discharge does not flow from one employee to another employee.”  She noted that although the Court’s majority opinion was intended to further the policy of deterring a wrongful discharge in the workplace, “such policy determinations are for the General Assembly, not this Court.”  The case is VanBuren v. Grubb (Va. 2012). 

STARE DECISIS OR A "RESTRICTED RAILROAD TICKET”?

Claims by employers against former employees, managers, or officers for breach of fiduciary duties abound.  Frequently, in the case of employers who have implemented noncompetition agreements, also known as restrictive employment covenants, one or more claims against a former employee are based upon the terms of a “noncompete.”  A recent decision of the Supreme Court of Virginia, Home Paramount Pest Control Companies, Inc. v. Shaffer, may render reliance on existing noncompetition agreements less certain for employers, however.

    Over a rare and blistering dissenting opinion by one of the Justices, decrying the abandonment of stare decisis (adherence to legal precedent), the Virginia Supreme Court reversed the position it took 22 years previously by striking down an employee’s noncompetition agreement as unenforceable.  The noncompetition agreement at issue in 2011 was for the same company and upon the same terms that, in 1989, the Court held to be enforceable.  In the present case, the Court did not strike down the noncompetition agreement on the basis of any geographic “over-breadth” (too large of a geographic area) or because its terms stretched too far into the future (excessive duration of the noncompetition period).  Rather, the Court’s analysis came down to a “functional” analysis – whether the prohibition of working for a competitor in “any” capacity was overly broad. 

    The majority opinion characterized the Court’s holding as part of a gradual refinement of the law, noting that the Court’s decisions since 1989 have “incrementally clarified” the Court’s position on the subject matter.  The dissenting Justice, however, cautioned that “frequent overruling of an appellate court’s decisions tends to bring adjudications of the tribunal ‘into the same class as a restricted railroad ticket, good for this day and train only.”’  Whether seen as an extension of an evolving body of case law or a repudiation of stare decisis, employers, employees and their respective counsel will want to undertake a functional analysis of any existing agreements in light of the Shaffer case.