332 P.3d 1085
Wash. Ct. App.2014Background
- Becker, CFO of Rockwood Clinic (owned by CHS), projected a $12M EBITDA operating loss for 2012; employer demanded a recalculation showing a $4M loss.
- Becker refused, reasonably believing the $4M figure would be false/misleading and criminally unlawful; he reported concerns internally and threatened resignation if misconduct was not abated.
- Rockwood/CHS treated Becker’s performance as unacceptable and accepted his resignation the next day; Becker sued for wrongful discharge in violation of public policy (constructive discharge).
- Defendants moved to dismiss under CR 12(b)(6), arguing statutory and regulatory remedies (criminal, civil, administrative, and federal whistleblower statutes) made a private tort redundant and the jeopardy element unsatisfied.
- Trial court denied dismissal; appellate court granted discretionary review on whether other enforcement means adequately protect the public policy of honest corporate financial reporting.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Becker pleaded jeopardy element of wrongful discharge tort | Becker: refusal to submit false financial figures was directly related to public policy and was the only adequate means to protect investors (jeopardy) | Rockwood/CHS: statutory/regulatory schemes (SOX, Dodd‑Frank, securities/criminal laws, SEC remedies) adequately protect the policy, so private tort is superfluous | Held: Becker plausibly pleaded jeopardy; dismissal improper — private tort can coexist with statutory remedies where other means are uncertain or depend on employee action |
| Whether comprehensive statutory remedies (including SOX/Dodd‑Frank) preclude tort | Becker: statutes are not exclusive and may be inadequate to vindicate public policy in context | Defendants: those statutes provide robust whistleblower protections and enforcement channels, so tort relief is unnecessary | Held: SOX/Dodd‑Frank’s non‑exclusivity weighs in favor of allowing tort; statutory remedies do not foreclose common‑law claim here |
| Whether criminal/civil/administrative securities remedies make tort unnecessary | Becker: relying on external enforcement is uncertain given his role and the dependence of enforcement on his cooperation; threat of discharge would chill such internal compliance | Defendants: multiple criminal statutes, private securities causes of action, and SEC enforcement provide adequate alternatives | Held: Court finds those alternatives may be inadequate in this context (CFO forced to choose between job and criminal exposure); tort survives pleading stage |
| Proper standard on CR 12(b)(6) for public‑policy tort with alternative remedies | Becker: accept pleadings as true and consider whether facts could show jeopardy and causation | Defendants: argue legal insufficiency because of alternate remedies | Held: de novo review; complaint survives because, accepting facts, plaintiff could prove a set entitling him to relief (no insuperable bar on face of complaint) |
Key Cases Cited
- Thompson v. St. Regis Paper Co., 102 Wn.2d 219 (1984) (recognized wrongful discharge tort where employer punished compliance with FCPA)
- Gardner v. Loomis Armored, Inc., 128 Wn.2d 931 (1996) (formulated four‑element test including the jeopardy requirement)
- Korslund v. DynCorp Tri‑Cities Servs., Inc., 156 Wn.2d 168 (2005) (declined tort where federal statutory scheme provided adequate exclusive protections)
- Cudney v. ALSCO, Inc., 172 Wn.2d 524 (2011) (declined tort where WISHA provided comprehensive remedies)
- Piel v. City of Federal Way, 177 Wn.2d 604 (2013) (recognized tort where statutory remedies were inadequate or nonexclusive to vindicate public policy)
- Danny v. Laidlaw Transit Servs., Inc., 165 Wn.2d 200 (2008) (jeopardy requires showing alternative means are inadequate when conduct is necessary to enforcement)
- McGarrity v. Berlin Metals, Inc., 774 N.E.2d 71 (Ind. Ct. App. 2002) (CFO wrongful discharge for refusing to underreport tax liability supports tort)
- Gossett v. Tractor Supply Co., 320 S.W.3d 777 (Tenn. 2010) (CFO wrongful discharge for refusing misleading accounting entries supports tort)