Update: On February 12, 2020, the Supreme Court of Ohio handed down a merit decision in this case. Read the analysis here.

Read an analysis of the oral argument here.

On April 23, 2019, the Supreme Court of Ohio will hear oral argument in Christine House v. Bruce Iacovelli, et al., 2018-0434. At issue is whether the statutory penalties for employers imposed by R.C. 4141 preclude an employee from bringing a common law tort for wrongful discharge in violation of public policy.

Case Background

Christine House (“House”) was a server at Riverstone Taverne, a restaurant owned and operated by Bruce Iacovelli (“Iacovelli”) and his business, Windham Enterprises. During House’s employment at Riverstone, she worked between 35 and 50 hours per week and was paid a variable hourly rate that accounted for the tips she received during her shift. House allegedly approached Iacovelli and raised concerns about inaccuracies in the payroll which underreported House’s pay and the tips she earned. Iacovelli admitted to failing to pay all of House’s unemployment compensation insurance under Ohio law. House further alleges that after she brought the matter to Iacovelli’s attention he fired her for causing “too much drama,” rather than addressing the issue. After House was terminated, she claims Iacovelli urged her to mislead the Ohio Department of Job and Family Services by stating that she was terminated for “lack of work” to qualify for unemployment benefits. In exchange for her cooperation, Iacovelli offered to pay House $150 every two weeks to offset the lower unemployment benefits she would receive due to Iacovelli’s failure to report her wages and tips accurately.

On August 7, 2015, House filed suit against Iacovelli for wrongful termination, conversion, and violations of the Fair Labor Standards Act. Iacovelli filed an answer denying House’s claims. House then filed an amended complaint solely alleging wrongful termination in violation of R.C. Chapter 4141 for failing to report House’s wages accurately and to make adequate contributions to Ohio’s unemployment compensation insurance program. In the amended complaint, House stressed that she did not agree to participate in Iacovelli’s scheme to defraud the government and cheat her out of employment benefits. Iacovelli’s motion to dismiss House’s claim was denied, as was a subsequent motion arguing that only the corporation, not Iacovelli personally, was implicated here. After numerous motions and responses by both parties, Judge Joyce Kimbler of the Medina County Court of Common Pleas ruled that while House satisfied the clarity element in support of her public policy wrongful termination claim, she failed to satisfy the jeopardy element as a matter of law because R.C. 4141.27 allows for the Attorney General to bring actions for violations of R.C. 4141. Judge Kimbler dismissed House’s amended complaint. House appealed.

On appeal, the Ninth District, in a unanimous opinion authored by Judge Donna Carr, joined by Judges Lynne Callahan and Thomas Teodosio, affirmed in part and reversed in part.  Pertinent to the Supreme Court appeal, the Ninth District held that Judge Kimbler erred in finding that House failed to satisfy the jeopardy element of the wrongful termination claim. According to the Ninth District, the jeopardy element is satisfied where there is no meaningful opportunity for a plaintiff to recover, and R.C. 4141.27 does not afford House such an opportunity. Iacovelli now appeals.

Votes to Accept the Case

Yes: Justices DeWine, French, Kennedy, and former Justice DeGenaro

No: Chief Justice O’Connor, Justice Fischer and former Justice O’Donnell

Key Statutes and Precedent

R.C. 4141.27 (Proceeding Against Employer Who Fails to Comply) (The Director of Job and Family Services or the Attorney General may compel an employer to accurately disclose and pay taxes into Ohio’s unemployment insurance fund. If an employer refuses to comply, legal actions may be initiated against such an employer.)

R.C. 4141.281(A) (Right of Appeal to Director) (Any party notified of a determination of benefit rights or a claim for benefits determination may appeal within twenty-one calendar days after the written determination was sent to the party . . .)

Greeley v. Miami Valley Maintenance Constr., 49 Ohio St.3d 228 (1990) (Public policy requires an exception to the employment at-will doctrine when an employee is discharged or disciplined for a reason prohibited by statute; in such cases, employees may bring suit in tort for wrongful discharge.)

Kulch v. Structural Fibers, 78 Ohio St.3d 134 (1997) (An employee who is wrongfully discharged may maintain a statutory cause of action, a common law cause of action, or both, but the employee is not entitled to double recovery.)

Wiles v. Medina Auto Parts, 2002-Ohio-3994 (When federal statutes provide sufficient individual remedies for wrongfully discharged employees, it is unnecessary to permit the maintenance of a common law claim of wrongful discharge.)

Ripley v. Montgomery, 2007-Ohio-7151 (10th Dist.) (There is no need to recognize a common law action for wrongful discharge if there already exists a statutory remedy that adequately protects society’s interests by discouraging the wrongful conduct.)

Iacovelli’s Argument

The common law tort of wrongful discharge is an exception to the employment at-will doctrine. Wrongful discharge consists of four elements: (1) a clear public policy concern must have existed either in state or federal statute, constitution, administrative regulation, or in common law; (2) the manner in which the employee at issue was discharged would jeopardize that public policy; (3) the plaintiff’s dismissal as motivated by conduct related to the public policy; and (4) the employer lacked an overriding legitimate business justification for the dismissal. Prong two, often called the jeopardy element, has proved most challenging for courts to interpret. It is for that reason that Iacovelli asks this Court to clarify that element for future courts to consider.

The case from this Court which has likely caused the most confusion among lower courts on this issue is Kulch v. Structural Fibers. In Kulch, the Court permitted the employee to maintain his suit for wrongful discharge because a common law wrongful discharge tort provided remedies not available under the whistleblower statute. According to the Court, the remedies available under the whistleblower statute and wrongful discharge are cumulative. Later decisions, however, have held that there is no need to recognize a common law action for wrongful discharge if there is already a statutory remedy that protects the public interest.

The issue is whether an individual should be allowed to recover personally if the statutory scheme contains adequate remedies to protect the public.  Iacovelli concedes that there is a clear public policy in favor of employers accurately reporting all employee wages to the Director of Job and Family Services. Iacovelli further concedes that no specific remedies are available to individual employees in House’s position if employers violate this public policy. However, R.C. 4141.27 establishes specific procedures where the Director of Job and Family Services or the Attorney General may proceed against any employer who fails to report all employee wages. Iacovelli submits that if the law provides remedies to protect the public’s interest and to dissuade an employer from the conduct alleged, a wrongful discharge claim is not necessary to protect the public’s interest and should fail under the jeopardy element. In this case, various provisions of R.C. 4141 provide for the protection of the public’s interest by imposing fines on employers found to be noncompliant.

Since Ohio recognizes the employment at will doctrine and a public policy exception to that doctrine, it is appropriate to create parameters for the exception that make it truly exceptional. If the Court adopts the interpretation of the Ninth District in this case, the exception will swallow the rule. Because R.C. 4141 adequately protects the public’s interest against the conduct alleged by House, allowing an individual claim for wrongful discharge is unnecessary to protect the public interest. Furthermore, House was not left without any remedy. She could have proceeded under the whistleblower statute. Therefore, House’s claim fails to meet the jeopardy element, and the decision of the Ninth District should be reversed.

House’s Argument

It is undisputed that Ohio has a clear public policy against employers terminating employees in retaliation for making complaints about an employer’s illegal conduct in not making accurate reports and payments to the Ohio Department of Job and Family Services’ unemployment compensation insurance fund. There is no statutory remedy for House under R.C. 4141 et seq. Ohio law merely imposes a fine on a noncompliant employer. As such, House must be allowed to proceed with a Greeley tort in this situation.  Fining an employer does nothing to protect or compensate the wrongfully discharged employee nor incentivize the employer not to do the same to others.

Aside from the necessity of allowing House to move forward with her wrongful termination claim to adequately protect Ohio’s public policy, House must be permitted to move forward because Iacovelli’s alternative calls for House to actually violate the law to receive her benefits, and then lie about it.

Iacovelli’s arguments are unsupported by this Court’s precedent. Iacovelli’s claim that precedent does not require the recognition of a common law wrongful discharge claim if there is already a statutory scheme that protects society’s interests is taken entirely out of context. In particular, while Wiles held that there was no need to recognize a separate claim when the remedy under the statute involved was sufficient, here House has no remedies under the existing statutory scheme. A statute that provides no remedy for an individual, like the one at issue here, does not provide an adequate remedy. Nor does the whistleblower statute provide a remedy in a retaliatory discharge case. Accordingly, House should be allowed to pursue her claim of common law wrongful discharge.

Iacovelli’s Proposed Proposition of Law

In a common law tort claim for wrongful termination, if there is a statutory scheme to protect the public’s interest in the public policy involved, the jeopardy element is not met even if there is no relief available to the individual employee.

Amici in Support of House

Ohio Employment Lawyers Association

The Ohio Employment Lawyers Association (OELA) filed a brief in support House. OELA is a professional membership organization comprised of lawyers who represent employees in labor, employment and civil rights disputes.

OELA asserts that the jeopardy element is firmly established, and it requires that effective remedies be available for terminated employees. If a remedy is not provided to individually terminated employees, then the public interest cannot be served, no matter the rest of the statutory scheme. Here, there is no remedy for individual wrongfully discharged employees; R.C.4141 only punishes noncompliant employers and does not protect the terminated employee. Under this scheme the public interest is not served and could not be served even if harsher penalties were applied to employers.

OLEA’s Proposed Proposition of Law

For purposes of a common-law cause of action for wrongful discharge, a public policy is jeopardized if employers can terminate employees with impunity for making good-faith reports of conduct that violates the public policy.

Ohio Association for Justice

The Ohio Association for Justice (OAJ) also filed a brief in support of appellee House. OAJ’s mission is to preserve constitutional rights and to protect meaningful access to the civil justice system for all residents of this state.

The public policy requiring that employers accurately report employee wages and make the appropriate contributions would be undermined if employees can be terminated for opposing an employer’s noncompliance. To accept Iacovelli’s proposition would not only have the Court issue an advisory opinion, but would also require the Court to overrule precedent in its wrongful discharge jurisprudence. Finally, Iacovelli’s whistleblower statute argument should be dismissed because it was not raised in the lower court.  The Court should either affirm the Ninth District or dismiss the appeal as improvidently granted.

OAJ’s Proposed Proposition of Law

The public policy of R.C. Chapter 4141 requiring employers to accurately report an employee’s income and make the requisite contributions would be jeopardized if employees could be fired in retaliation for opposing their employer’s noncompliance.

Student Contributor: Paul Taske