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No public policy wrongful discharge for manager fired after reporting shoplifting

By Ronald Miller, J.D.

On a question certified from a federal district court, the South Carolina Supreme Court ruled that the public policy exception to the employment-at-will doctrine was not broad enough to permit a cause of action for a drug store manager terminated for reporting suspected shoplifting. The state high court pointed out no one can reasonably dispute that reporting the suspected commission of a crime is a commendable act, but the manager’s participation in the criminal justice system did not mandate an exception to the at-will employment doctrine. Rather, the court concluded that given its deference to the legislature in matter of public policy, any exception to the at-will employment doctrine should come from the legislature (Taghivand v. Rite Aid Corp., January 28, 2015, Hearn, K.).

Suspected shoplifting. The manager of a Rite Aid store in a high crime area observed a patron acting strangely and milling around the store with no apparent purpose. The patron stopped briefly in the section directly in front of the cashier, selected a few items, and made a purchase. After the patron checked out, the cashier told the manager that when the patron entered the store, he was carrying a bag that appeared to be empty but now had items in it. The manager instructed the cashier to call the police. A police officer gathered together the items the patron claimed he purchased from the store, and the manager confirmed these as belonging to the patron. The officer also searched the patron’s bag and found it contained only dirty clothes.

The manager was terminated that day and was informed that the incident was the reason for his termination. As a result, he filed this action in federal court for wrongful termination, and the employer moved to dismiss. Finding that South Carolina law was not clear on the issue raised by the motion to dismiss, the district court certified the question to the South Carolina Supreme Court: Does an at-will employee have a cause of action for wrongful termination where the employee reasonably suspects that shoplifting has occurred on the employer’s premises, and, acting in good faith, reports the suspected criminal activity to law enforcement, resulting in his termination?

Public policy. The manager put forward two arguments in support of his claim. First, he argued that there are specific statutory and common law authorities which establish a clear mandate of public policy favoring the reporting of crimes, and second, that there is a general public policy favoring the reporting of crimes inherent in the functioning of the state’s criminal justice system. However, the South Carolina high court found neither of these arguments availing.

As an initial matter, the South Carolina court pointed out that the state has a strong policy favoring at-will employment. However, adherence to the at-will employment doctrine is not without limits. Under the public policy exception, an employee who is terminated in violation of a clear public policy may pursue a cause of action in tort for wrongful termination. Courts have invoked the public policy exception in two instances: (1) where an employer requires an employee, as a condition of continued employment, to break the law, and (2) where an employer’s termination is itself illegal. Although the exception “is not limited to these situations,” South Carolina has specifically recognized no others. Nevertheless, the state high court looks to the General Assembly as the primary source of the declaration of the public policy.

Statutory arguments. Here, the manager pointed to three specific statutory and common law authorities that he argued established the basis for a public policy exception to protect the good faith reporting of suspected crime: Section 16-9-340 of the South Carolina Code, common law obstruction of justice, and Section 16-3-1505 of the South Carolina Code. However, the state high court disagreed that any clear or articulable public policy emanates from those authorities.

Witness protection. First, the court examined Sec. 16-9-340, which makes it unlawful to use threat or force to intimidate or impede a judge, magistrate, juror, witness, or potential juror or witness in the discharge of his duty. Here, the manager argued that this provision protected those involved in legal proceedings, including witnesses, from intimidation or interference connected with their role in the proceedings. As an extension, he argued that the public policy behind this statute should give rise to his cause of action for wrongful termination.

However, the court observed that the manager was terminated in response to the reporting of a crime, not to influence or impede his further involvement in any proceeding related to that crime. The plain language of the statute did not support the manager’s assertions. He was not prevented by threat or force from participating in a legal proceeding; he was discharged for incorrectly reporting a crime. Without a more definite statement from the legislature that the reporting of crime should be protected, the state court refused to read such a policy into this statute.

Reporting favored. Next, the court examined the manager’s contention that Sec. 16-3-1505, the legislative intent section of the Victim and Witness Service Act, lays out a general public policy favoring the reporting of suspected crimes. The primary purpose of the Victim and Witness Service Act is to ensure “victims are informed of their rights and any alternative means that might be available to them if the criminal prosecution is unable to meet their needs.” Thus, the court found no indication that the General Assembly intended this concept to extend outside the context of the ongoing criminal proceeding at the heart of the statute. Accordingly, the high court also found this argument without merit.

Mandate to report crime. Finally, the high court was unpersuaded by the manager’s argument that there is a general mandate of public policy for the reporting of crimes inherent in the functioning of the state’s criminal justice system. This argument is derived from the holding in the split decision of Palmateer v. International Harvester Co., a ruling from an Illinois appellate court. However, given the high court’s deference to the General Assembly in matter of public policy, the court declined to adopt the reasoning of Palmateer. Although finding that society benefits from citizen participation in the criminal justice system, absent a more clear and articulable definition of policy from the General Assembly regarding those who report suspected crimes, the court refused to broaden the exception to the at-will employment doctrine.