MARTIN MARIETTA CORPORATION, Petitioner, v. Paul M. LORENZ, Respondent.
No. 90SC583.
Supreme Court of Colorado, En Banc.
Jan. 13, 1992.
As Modified on Denial of Rehearing Feb. 3, 1992.
823 P.2d 100
Feiger, Collison & Killmer, Gilbert M. Roman, Darold W. Killmer, Denver, for respondent.
Barry D. Roseman, Law Offices of John W. McKendree, Thomas A. Feldman, Denver, for amicus curiae Nat. Employment Lawyers Ass‘n.
Justice QUINN delivered the Opinion of the Court.
In Lorenz v. Martin Marietta Corp., Inc., 802 P.2d 1146 (Colo.App.1990), the
I.
Lorenz‘s claim against Martin Marietta was predicated on the theory of wrongful or retaliatory discharge as the result of his failure to engage in acts of deception and misrepresentation concerning the quality of materials used by Martin Marietta in designing equipment for the National Aeronautics and Space Administration (NASA). The case was tried to a jury commencing on September 15, 1986, and at the conclusion of Lorenz‘s case the trial court directed a verdict in favor of Martin Marietta. Because of this evidentiary posture of the case, we summarize the evidence in the light most favorable to Lorenz, as we must for purposes of appellate review of a directed verdict. See Jasko v. F.W. Woolworth Co., 177 Colo. 418, 422, 494 P.2d 839, 841 (1972).
Lorenz held an advanced degree in mechanical engineering and, as of the date of the trial, had completed all his work for a doctorate degree in metallurgy except a thesis. Before joining Martin Marietta in 1972, he worked for the Boeing Company in Washington on defense and aerospace projects for sixteen years and specialized in fracture mechanics, which basically involved a study of the fracture or stress resistance of materials used in design and construction of defense and aerospace equipment. In July 1972 he was offered a position with Martin Marietta in Colorado. He accepted the offer and worked for Martin Marietta as an at-will employee until his termination in July 1975.
Lorenz worked in Martin Marietta‘s research and development department as a “principal investigator” on a number of NASA projects involving the design of equipment for the United States space-shuttle program. As a “principal investigator,” Lorenz was responsible for the organization and quality control of the projects assigned to him. In the course of his responsibilities, he expressed concerns to his superiors at Martin Marietta over three major NASA projects referred to as the NDI Contract, the Mixed Mode Contract, and the Tug Irad Contract. These projects were instituted by Martin Marietta in response to NASA‘s requests for propos-
The purpose of the NDI Contract was to produce data regarding the quality of materials to be used in the design of an external tank for the space shuttle. In the fall of 1973, a design and review meeting was held to evaluate the status of the NDI Contract. During this meeting Lorenz expressed his concern that the testing sequence proposed was inadequate and that the existing data were insufficient to permit the designers to develop a safe external tank within the proposed contract price. Lorenz expressed his concern to his department head that Martin Marietta‘s proposals to NASA were “high promises” without any means to implement them. Due in part to the high cost of additional testing recommended by Lorenz, his comments were not well received by his supervisors.
In 1974 Lorenz told his supervisors that the data generated under the NDI Contract were not being communicated to the appropriate NASA personnel. When no action was taken on his concerns, he related them to the NASA project manager, who described Lorenz as “very attentive to details” and straightforward in his evaluations and criticisms of a particular project. As a result of Lorenz‘s action, a technical review session was held in order to address his concerns. Lorenz was chosen to take the minutes of this meeting and to distribute them to Martin Marietta and NASA participants. After drafting the minutes, Lorenz was instructed by a higher Martin Marietta official to make modifications in the minutes. Lorenz refused to make any changes to the minutes, and responded instead with a memorandum stating that the proposed modifications were not mere corrections but rather were retractions of important representations made by Martin Marietta officials to NASA at the review session. Lorenz was informed by his supervisor that he should have made the modifications and was warned that he should “start playing ball with management.”
Lorenz later became involved as a principal investigator in another NASA project, referred to as the “Mixed Mode Contract.” This project, which was funded from an internal research and development contribution of $25,000 from NASA, was undertaken by Martin Marietta in response to NASA‘s request for a contract proposal relating to the design and construction of a testing machine known as the Biaxial Test Fixture. The machine‘s purpose was to measure complex stresses in aluminum alloys used in the space shuttle. In August 1974 Lorenz wrote a memorandum to his superiors regarding problems which, if not corrected, could result in serious delays and costs. When asked to inspect the Biaxial Test Fixture, Lorenz found it to be deficient and unable to properly perform the function for which it was designed. Upon asking the person responsible for constructing the machine how such a defective piece of equipment could have been built, Lorenz was told that his superiors had directed that the machine be built for not more than $10,000 rather than the $25,000 allocated to the project.
The third project Lorenz undertook was an attempt to demonstrate Martin Marietta‘s ability to perform certain work for a NASA space vehicle known as “The Tug.” The contemplated use of the Tug was to transport astronauts in space from one area to another. Lorenz‘s involvement in the project was to investigate and evaluate the fracture propensities of thin gauge aluminum to be used in the fuel tank. Lorenz testified that, although he was pressured by his superiors to attest to the adequacy of certain materials, he refused to write a final report attesting to the quality of the materials. His refusal was based on his professional opinion that the materials had not been subjected to adequate testing. According to Lorenz, he told his superiors that to compromise on this issue would jeopardize his integrity and his usefulness to Martin Marietta as an expert and, in addition, would constitute a fraud on NASA.
Despite the fact that at this time Lorenz was extremely busy with various job responsibilities at Martin Marietta, he received a telephone call from his supervisor on July 22, 1975, in which he was told that Martin Marietta was laying him off for
On July 24, 1981, Lorenz filed a tort claim against Martin Marietta for wrongful discharge. The trial court, at the conclusion of Lorenz‘s case, ruled that Colorado did not recognize a claim for wrongful discharge and that his claim was time-barred by the passage of more than six years following the notice of termination given to him on July 22, 1975. The trial court accordingly entered a directed verdict against Lorenz.
Lorenz appealed to the court of appeals, which reversed the directed verdict and remanded the case for a new trial. The court of appeals held that Lorenz had established a prima facie case of wrongful discharge pursuant to the public-policy exception to the at-will employment doctrine. In so holding, the court of appeals concluded that Lorenz‘s evidence, when viewed in a light most favorable to him, established the following elements of a cognizable wrongful discharge claim outlined in its 1988 decision in Cronk v. Intermountain Rural Elec. Ass‘n, 765 P.2d 619: that Lorenz refused to perform an act ordered by his employer, Martin Marietta; that the act would violate a specific statute, namely,
II.
We consider first the cognizability of an at-will employee‘s tort claim for wrongful discharge predicated on the employee‘s refusal to comply with an employer‘s order or directive to perform an unlawful act. Martin Marietta argues that, even if we endorse the public-policy exception to the at-will employment doctrine, a claim for wrongful discharge must be based on a specific statutory prohibition evincing a clear public policy relating to an employer‘s job-related responsibilities and that the generic fraud proscription of
We have not previously ruled on the cognizability of a claim for wrongful discharge. Courts of other jurisdictions, however, have addressed this question in varied contexts, as has our court of appeals. Before addressing the merits of Martin Marietta‘s argument, therefore, we will review the general state of the law on the cognizability of a claim for wrongful discharge, as well as the decisions of our own court of appeals on that issue.
A.
A basic common-law doctrine was that, in the absence of an explicit contract to the
Cognizant of the varied interests implicated by the employment relationship, courts have engrafted on the at-will employment doctrine what has become known as the public-policy exception. This exception was first articulated in Petermann v. International Bhd. of Teamsters Local Union 396, 174 Cal.App.2d 184, 344 P.2d 25 (1959). Petermann, who was hired as a business agent for a local union for as long as his work was satisfactory, filed a civil action against the union for wrongful discharge, claiming that he was fired for failing to comply with a union directive that he give false testimony before a legislative committee. In reversing the trial court‘s entry of judgment against Petermann on the pleadings, the California Court of Appeal stated that, although an employment of no fixed duration is generally terminable at the will of either the employer or the employee, the employer‘s right to discharge an at-will employee may be limited by “considerations of public policy.” 344 P.2d at 27. Acknowledging that the term “public policy” is not subject to precise definition, the court, quoting Story on Contracts, stated that the term was intended to convey “that principle of law which holds that no citizen can lawfully do that which has a tendency to be injurious to the public or against the public good.” Id. Given that sense of the term, the court went on to conclude as follows:
The presence of false testimony in any proceeding tends to interfere with the proper administration of public affairs and the administration of justice. It would be obnoxious to the interests of the state and contrary to public policy and sound morality to allow an employer to discharge any employee, whether the employment be for a designated or unspecified duration, on the ground that the employee declined to commit perjury, an act specifically enjoined by statute. The threat of criminal prosecution would, in many cases, be a sufficient deterrent upon both the employer and the employee, the former from soliciting and the latter from committing perjury. However, in order to more fully effectuate the state‘s declared policy against perjury, the civil law, too, must deny the employer his generally unlimited right to discharge an employee whose employment is for an unspecified duration, when the reason for the dismissal is the employee‘s refusal to commit perjury. To hold otherwise would be without reason and contrary to the spirit of the law. 344 P.2d at 27.
Following the lead of Petermann, courts in the majority of states now recognize a cause of action for wrongful discharge pur-
The essence of the public-policy exception is that an employee will have a cognizable claim for wrongful discharge “if the discharge of the employee contravenes a clear mandate of public policy.” Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 685 P.2d 1081, 1089 (1984). Claims for wrongful discharge under the public-policy exception have included termination of employees for: (1) refusal to participate in illegal activity, Petermann, 344 P.2d 25; Trombetta v. Detroit, Toledo & Ironton R. Co., 81 Mich.App. 489, 265 N.W.2d 385 (1978); (2) the employee‘s refusal to forsake the performance of an important public duty or obligation, Nees v. Hocks, 272 Or. 210, 536 P.2d 512 (1975); (3) the employee‘s refusal to forego the exercise of a job-related legal right or privilege, Frampton v. Central Indiana Gas Co., 260 Ind. 249, 297 N.E.2d 425 (1973); (4) the employee‘s “whistleblowing” activity or other conduct exposing the employer‘s wrongdoing, Cummins v. EG & G Sealol, Inc., 690 F.Supp. 134 (D.R.I.1988); Harless v. First Nat‘l Bank in Fairmont, 162 W.Va. 116, 246 S.E.2d 270 (1978); and (5) the employee‘s performance of an act that public policy would encourage under circumstances where retaliatory discharge is supported by evidence of employer‘s bad faith, malice, or retaliation, Cloutier, 436 A.2d 1140.
The Colorado Court of Appeals, consistent with national developments in employment law, has considered the cognizability of a claim for wrongful discharge based on the public-policy exception in a variety of contexts. In Lampe v. Presbyterian Medical Center, 41 Colo.App. 465, 590 P.2d 513 (1978), the court concluded that the general language of the statutory scheme relating to the regulation of professional nursing, upon which the nurse-employee relied for her claim, did not manifest a legislative intent to modify the general rule that “an indefinite general hiring is terminable at will by either party.” 41 Colo.App. at 468, 590 P.2d at 516.5 In contrast to Lampe, the court in Montoya v. Local Union III of Int‘l Bhd. of Elec. Workers, 755 P.2d 1221 (Colo.App.1988), held that an employee‘s claim for wrongful discharge was cognizable where the employee alleged his discharge was the result of a refusal to participate in the embezzlement of union funds in violation of the Labor Management Reporting and Disclosure Act,
Subsequent to Montoya, the court of appeals in 1988 decided Cronk v. Intermountain Rural Elec. Ass‘n, 765 P.2d 619. Cronk, an at-will employee of a public utility, sued the public utility for wrongful discharge based on his termination for refusing to engage in several illegal acts in violation of the Colorado Public Utility Law,
The Cronk public-policy exception to the at-will employment doctrine was somewhat expanded in Lathrop v. Entenmann‘s, Inc., 770 P.2d 1367 (Colo.App.1989). Lathrop‘s claim for wrongful discharge was based upon his employer‘s alleged retaliation against him for exercising his right to receive workers’ compensation benefits rather than, as in Cronk, for refusing an employer‘s directive to violate a specific statute. Initially emphasizing that an employer has a statutory duty to provide workers’ compensation benefits and that an injured employee has a statutory right to receive such benefits, the court drew on the analysis of the Indiana Supreme Court in Frampton, 297 N.E.2d 425, and reasoned as follows:
[T]o allow an employer to terminate the employment of an employee in retaliation for the employee‘s pursuit of a work-men‘s compensation claim would open the doors to “coercion and other duress-provoking acts,” whereby employers could, by threat of retaliation, discourage or prevent employees from seeking the benefits due them and thereby undermine the fundamental purposes of the workmen‘s compensation system. 770 P.2d at 1372.
The court then concluded that “an employer‘s retaliation against such an employee for his exercise of such right violates Colorado‘s public policy” and “provides the basis for a common law claim by the employee to recover damages sustained by him as a result of that violation.” Id. at 1373.
C.
It is within the framework of the aforementioned case law that we now hold, in keeping with the majority of jurisdictions, that a cause of action under the public-policy exception to the at-will employment doctrine is cognizable in the State of Colorado. In so holding, we approve, with minor modifications hereinafter discussed, the court of appeals’ decision in Cronk.
Long before the emergence of the public-policy exception to the at-will employment doctrine, Colorado case law endorsed the principle that a contract violative of public policy should not be enforced. For example, in Russell v. Courier Printing & Publishing Co., 43 Colo. 321, 95 P. 936 (1908), this court refused to enforce a contract between two newspapers relating to the publication of proposed constitutional amendments. The contract was between the Fort Collins Express, which had entered into a contract with the Secretary of State for a weekly publication of the proposed amendments, and the Daily Courier. The contract provided that, on the condition that the Daily Courier would be successful in receiving a contract for daily publication from the Secretary of State, the Express would relinquish its contract with the Secretary of State in exchange for receiving one-half of the money received by the Daily Courier for daily publication of the constitutional amendments, less such sum of money as may be paid by the Daily Courier to the Republican State Central Committee. In holding the contract unenforceable, the court began its analysis with the proposition that “[p]ublic policy, with respect to the administration of the law, is that rule of law which declares that no one can lawfully do that which tends to injure the public, or is detrimental to the public good.” 43 Colo. at 325, 95 P. at 938. It
In light of Colorado‘s long-standing rule that a contract violative of public policy is unenforceable, it is axiomatic that a contractual condition, such as the terminability condition of an at-will employment contract, should also be deemed unenforceable when violative of public policy. There is no question that the manifest public policy of this state is that neither an employer nor an employee should be permitted to knowingly perpetrate a fraud or deception on the federal or state government. A corollary of this policy is that an employee, whether at-will or otherwise, should not be put to the choice of either obeying an employer‘s order to violate the law or losing his or her job.
Moreover, we know of no reason why the public-policy exception should not apply to the discharge of an employee either because of the employee‘s performance of an important public obligation, see Nees, 536 P.2d 512 (wrongful discharge claim predicated on employee‘s jury duty);
We recognize, of course, that the public-policy exception to the at-will employment doctrine does place some limits on an employer‘s discretion in discharging at-will employees previously hired for an unspecified duration. We are satisfied, however, that the essential elements for a valid claim under the standard adopted herein will effectively accommodate the employer‘s interest in worker efficiency and loyalty among the workforce, the employee‘s interest in not being forced to choose between, on the one hand, losing a job and, on the other, engaging in illegal conduct or conduct contrary to the employee‘s civic responsibility or statutory right or privilege, and society‘s interest in maintaining a proper balance between the two.
D.
We now consider whether Lorenz established a prima facie case of wrongful discharge under the public-policy exception. In our analysis of this issue, we note that Cronk, 765 P.2d 619, was decided by the court of appeals on September 15, 1988, and that the trial of the instant case commenced on September 15, 1986. Because the parties did not have the benefit of either the Cronk decision or this court‘s opinion relating to the additional element of a wrongful discharge claim under the public-policy exception, they obviously were at some considerable disadvantage “in marshalling evidence in support of and in defense of a claim which might or might not be legally cognizable and, if legally cognizable, might or might not encompass the particular circumstances of this case.” Perreira v. State, 768 P.2d 1198, 1220 (Colo.1989). Unless, therefore, the public-policy exception adopted in Cronk is to be given prospective effect only, or unless Lorenz‘s claim is barred by the statute of limitations—and we will address both these issues in parts III and IV, infra—then the proper disposition of this case is to remand Lorenz‘s wrongful discharge claim for a new trial under the test herein adopted, so long as the record demonstrates that Lorenz satisfied the Cronk standard for a wrongful discharge claim. We emphasize here that Martin Marietta has conceded that there was evidence showing that Lorenz refused to perform an action, that such action was ordered by his employer, and that Lorenz was terminated for refusing to perform the action. The element contested by Martin Marietta is whether the action that Lorenz was directed to perform would have violated a specific statutory proscription relating to Lorenz‘s duties or responsibilities as a Martin Marietta employee, rather than merely being contrary to a broad and general statement of public policy.
With respect to the specificity of the statutory proscription on which Lorenz‘s claim for wrongful discharge rests, Martin Marietta argues that the provisions of
Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both.
This statutory prohibition is designed to protect governmental departments and agencies from the perversion that might result from the deceptive practices described in the statute. United States v. Tobon-Builes, 706 F.2d 1092, 1096 (11th Cir.1983). In order to achieve its objective, the statute proscribes two distinct offenses: knowingly and willfully making a false or fraudulent representation; and knowingly and willfully concealing a material fact. Id. A false representation under § 1001 requires proof “that the defendant knowingly made a false or fraudulent statement; ‘concealment requires proof of willful nondisclosure by means of a trick, scheme, or device.‘” Id. (quoting United States v. Diogo, 320 F.2d 898, 902 (2nd Cir.1963)).
Courts have determined that the discharge of an employee for refusing to perform acts violative of
The evidence at trial demonstrated that Lorenz had a duty as principal investigator of several NASA projects to report quality control deficiencies, that he refused his superior‘s order to misrepresent to the government such deficiencies as well as unrealistic cost assessments resulting in false contract prices, that carrying out his superior‘s orders would have violated the specific provisions of
III.
We next address whether the court of appeals’ 1988 decision in Cronk, 765 P.2d 619, which adopted the public-policy exception as the basis for a tort claim for wrongful discharge, announced a new rule of law and thus should be applied prospectively only or should be retroactively applied to Lorenz‘s claim arising out of his discharge in July 1975. As a general rule, statutes operate prospectively, while judicial decisions are applied retroactively. See United States v. Security Industrial Bank, 459 U.S. 70, 79, 103 S.Ct. 407, 413, 74 L.Ed.2d 235 (1982). Under certain circumstances, however, judicial decisions are
First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, ... or by deciding an issue of first impression whose resolution was not clearly foreshadowed.... Second, it has been stressed that “we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.” ... Finally, we have weighed the inequity imposed by retroactive application, for “[w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the ‘injustice or hardship’ by a holding of nonretroactivity.” 404 U.S. at 106-07, 92 S.Ct. at 355 (citations omitted).
The United States Constitution neither prohibits nor requires retroactive application of a judicial decision, and the question of retrospective or prospective application of a state judicial decision to civil litigation in the state courts is a matter of state law when, as here, the rule in question involves a matter of a common-law tort and is not based on federal constitutional or statutory law. See Great Northern Ry. Co. v. Sunburst Oil & Ref. Co., 287 U.S. 358, 364, 53 S.Ct. 145, 148, 77 L.Ed. 360 (1932); James B. Beam Distilling Co. v. Georgia, — U.S. —, 111 S.Ct. 2439, 2443, 115 L.Ed.2d 481 (1991) (Souter, J., announcing judgment of court, joined by Stevens, J.).7 We adopted the Chevron three-part test for determining retroactive or prospective application of a judicial decision to state litigation in People in the Interest of C.A.K., 652 P.2d 603, and reaffirmed that three-part test in Marinez v. Industrial Comm‘n of Colorado, 746 P.2d 552, 556 (Colo.1987). It is the three-part test of Chevron, therefore, which provides the controlling standard for
A.
Because “[t]he question of retroactivity arises only when a decision establishes a new rule of law,” we need address the second and third factors of the Chevron standard only if we can say with fair assurance that Cronk did establish a new rule of law for the State of Colorado. Marinez, 746 P.2d at 557. To establish a new rule of law, a judicial decision must either overrule clear past precedent on which the litigants may have relied or must resolve an issue of first impression not clearly foreshadowed by prior precedent. Chevron, 404 U.S. at 106, 92 S.Ct. at 355. Loffland Bros. Co. v. Industrial Claim Appeals Panel of Colorado, 770 P.2d 1221, 1225 (Colo.1989).
In arguing that the Cronk decision overruled past Colorado precedent which authorized the discharge of an at-will employee for any reason whatever or for no reason at all, Martin Marietta places heavy reliance on Justice v. Stanley Aviation Corp., 35 Colo.App. 1, 530 P.2d 984 (1974). The court of appeals held in Justice that “[u]nless the circumstances indicate otherwise, a contract which sets forth an annual salary rate but states no definite term of employment is considered to be indefinite employment, terminable at the will of either party without incurring liability for breach of contract.” 35 Colo.App. at 4, 530 P.2d at 985. Contrary to Martin Marietta‘s argument, Justice did not confer an absolute right upon an employer to terminate an employee at will, but rather provided an employer with a qualified right to terminate “unless the circumstances indicate otherwise.” This interpretation of Justice is consistent with the basic rule of employment law that the presumption of at-will employment “should not be considered absolute but rather should be rebuttable under certain circumstances.” Keenan, 731 P.2d at 711.
The fact that we can say that the Cronk decision did not overrule clear past precedent does not resolve whether Cronk involved an issue of first impression not clearly foreshadowed by prior precedent. Although at the time of Lorenz‘s discharge in 1975 a Colorado appellate court had not ruled on the cognizability of a claim for wrongful discharge under the public-policy exception, one could muster several factors to support the proposition that there then existed an emerging doctrinal rationale for Colorado‘s eventual adoption of the public-policy exception to the at-will employment doctrine. These factors would include the following: four other states already had adopted the public-policy exception to the at-will employment doctrine, see Part II(A), supra; this court had previously held in Russell, 43 Colo. 321, 95 P. 936, that contracts violative of public policy were unenforceable; and a 1948 federal statute prohibited a person from making a false or fraudulent statement to any department or agency of the United States, ch. 645, 62 Stat. 683, 749 (presently codified at
B.
The second Chevron factor requires a weighing of the merits and demerits of the case by assessing the history, purpose, and effect of the rule under consideration with a view to determining whether retroactive application of the rule would further or retard its operation. As previously discussed, the public-policy exception was engrafted onto the at-will employment doctrine as a rule designed to fairly accommodate the separate and somewhat distinct interests of both the employer and the employee in the employment relationship as well as society‘s interest in maintaining a proper balance between the two. In light
C.
We are also convinced that, with respect to the third Chevron factor, retroactive application of the public-policy exception will not result in any real injustice or intolerable hardship to Martin Marietta or other similarly situated employers. We acknowledge that our decision in this case imposes on the employee the responsibility of making an evidentiary showing that, in addition to the elements for a wrongful discharge claim articulated in Cronk, the employer had actual or constructive knowledge that the employee‘s refusal to obey the employer‘s order or directive was based on the employee‘s reasonable belief that the action ordered by the employer was illegal, contrary to clearly expressed statutory policy relating to the employee‘s duty as a citizen, or violative of the employee‘s legal right or privilege as a worker. Part II C, supra, at 109. This added requirement, as we previously remarked, should enable the employer to distinguish between the conscientious employee who refuses a directive out of a legitimate concern for its legality and the employee who refuses a directive without justifiable excuse, and, as well, should provide the employer, prior to the discharge decision, with fair notice of circumstances supportive of an employee‘s reasonable belief that the employer‘s directive is unlawful. Id. at 109-110. In light of these considerations, it is obvious to us that the added evidentiary requirement placed on the employee enures to the sole benefit of the employer. Given that fact, it cannot plausibly be argued that the additional evidentiary requirement militates against any retroactive application of Cronk because it somehow results in an injustice or hardship to the employer. If anything, the more plausible argument runs in the opposite direction—that is, because the added evidentiary requirement works to the benefit of the employer, it thereby diminishes any asserted inequities resulting from a retroactive application of Cronk. We decline, however, to turn the case on this line of argument and instead treat the added evidentiary requirement as without legal significance to the issue of retroactivity.
Martin Marietta bases its argument for prospective application on the proposition that it relied on the terminable-at-will aspect of the at-will employment doctrine in making a conscious decision to discharge Lorenz. We find no justification, however, for countenancing the terminability condition of at-will employment as a warrant for discharging an employee solely because of the employee‘s refusal to engage in conduct violative of a criminal statute. In our view, the injustice or hardship resulting from a discharge decision under such circumstances falls solely on the discharged employee. Moreover, the responsibility of demonstrating the likelihood of serious adverse consequences resulting from the retroactive application of a judicial decision rightly falls on Martin Marietta. See Marinez, 746 P.2d at 559. Martin Marietta, however, has failed to make such a showing either with regard to itself or to other similarly situated employers. We therefore conclude that the three-part Chevron test for determining the retroactive application of a judicial decision weighs in favor of retroactive application of the public-policy exception to Lorenz‘s cause of action for his wrongful discharge in 1975.
IV.
The final question for consideration is whether the court of appeals correct-
A.
Inasmuch as a claim for wrongful discharge based on the public-policy exception to the at-will employment doctrine sounds in tort, Lorenz was required to file his complaint “within six years after the cause of action accrue[d]; and not afterwards.”
B.
In arguing that Lorenz‘s cause of action accrued on July 22, 1975, the date on which he received notice of his termination, Martin Marietta places substantial reliance on the United States Supreme Court‘s decision in Delaware State College v. Ricks, 449 U.S. 250, 101 S.Ct. 498, 66 L.Ed.2d 431 (1980), and the court of appeals’ decision in Quicker v. Colorado Civil Rights Comm‘n, 747 P.2d 682 (Colo.App.1987). We do not regard these cases as authoritative precedent for resolving the timeliness of Lorenz‘s claim.
Ricks, 449 U.S. 250, 101 S.Ct. 498, which was decided under Title VII of the Civil Rights Act of 1964 and
In concluding that Ricks’ federal lawsuit was untimely, the Supreme Court began its analysis with the observation that the timeliness of Ricks’ complaint depended on the precise “‘unlawful employment practice’ of which [Ricks] complains.” 449 U.S. at 257, 101 S.Ct. at 503. The Court then reasoned that the “only alleged discrimination occurred—and the filing limitation periods therefore commenced—at the time the tenure decision was made and communicated to Ricks,” even though “one of the effects of the denial of tenure—the eventual loss of a teaching position—did not occur until later.” 449 U.S. at 259, 101 S.Ct. at 504. Since the alleged act of discrimination occurred on the notification date of June 26, 1974, Ricks’ Title VII complaint filed with the EEOC on April 4, 1975, was beyond the one-hundred-eighty day limitations period for that claim, and Ricks’ § 1981 claim filed in the district court on September 9, 1977, was similarly beyond the three year limitations period applicable to that claim.
In contrast to Ricks’ lawsuit for unlawful discrimination, which accrued at the time of the commission of the unlawful act of discrimination regardless of whether loss of employment eventually ensued as a result thereof, Lorenz‘s tort claim for wrongful discharge required actual injury in the form of lost employment as a necessary element of the claim. Because Lorenz suffered no actual injury until he was deprived of his job, and because that deprivation did not occur until the conclusion of his last day of work on July 25, 1975, it was on the last day of his employment that his cause of action accrued.
Quicker, 747 P.2d 682, which was decided under the Colorado Employment Practices Act,
Clearly, a statutory claim for redressing an unfair employment practice, which itself may be the basis for legal redress without regard to any ensuing loss of employment, is analytically distinct from the common law tort of wrongful discharge, which requires actual injury in the form of loss of employment as an essential element of the tort. The test for determining the accrual date of the former is also analytically distinct from the test applicable to the latter. See St. Cyr v. Workers’ Compensation Appeals Bd., 196 Cal.App.3d 468, 243 Cal.Rptr. 1, 3 (1987). We thus agree with the court of appeals that Lorenz‘s claim for wrongful discharge was timely filed.
We affirm the judgment of the court of appeals, and we direct that the new trial ordered by the court of appeals be conducted in accordance with the views herein expressed.
ERICKSON, J., concurs in part and dissents in part, and ROVIRA, C.J., and VOLLACK, J., join in the concurrence and dissent.
Justice ERICKSON concurring in part and dissenting in part.
The majority establishes a public-policy exception to the at-will employment doctrine and grants retroactivity to the deci-
The principle that no employee should be required to violate the law or falsify facts in order to maintain his employment is sound. In my view, the acts alleged by Paul Lorenz constitute grounds for a civil action and damages. While I agree that the rule announced today should be applied to the parties before the court, I do not agree that we should formulate new law creating liability for conduct that was not actionable in the past, and permit recovery under the public-policy exception for conduct that occurred prior to our announcement of the new rule. I would limit the application of the public-policy exception for cases predicated on conduct occurring after the announcement of this opinion.
I agree with the majority that James B. Beam Distilling Co. v. Georgia, — U.S. —, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991) (plurality opinion), which rejected “selective” prospective application of a new rule in civil cases, id. 111 S.Ct. at 2447, does not compel this court to dispense with the analysis of the prospective or retrospective issue under the three-prong test set forth in Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 349, 355-56, 30 L.Ed.2d 296 (1971). It has long been held that
[a] state in defining the limits of adherence to precedent may make a choice for itself between the principle of forward operation and that of relation backward. It may say that decisions of its highest court, though later overruled, are law none the less for intermediate transactions.... The choice for any state may be determined by the juristic philosophy of the judges of her courts, their conceptions of law, its origin and nature. Great N. Ry. Co. v. Sunburst Oil & Ref. Co., 287 U.S. 358, 364-65, 53 S.Ct. 145, 148-49, 77 L.Ed. 360 (1932).
The principle of state court control of the retroactivity of its decisions has been recently affirmed. See Beam Distilling, 111 S.Ct. at 2443; American Trucking Ass‘ns v. Smith, 496 U.S. 167, 110 S.Ct. 2323, 2330, 110 L.Ed.2d 148 (1990) (plurality opinion) (“When questions of state law are at issue, state courts generally have the authority to determine the retroactivity of their own decisions.“). Three other states have either declined to follow or have distinguished Beam Distilling in resolving the selective prospectivity issue. Harper v. Virginia Dept. of Taxation, 410 S.E.2d 629, 631 (Va.1991), petition for cert. filed, 60 U.S.L.W. 3406 (U.S. Nov. 15, 1991) (No. 91-794); Devrnja v. West Virginia Bd. of Medicine, 408 S.E.2d 346, 349 (W.Va.1991); First Interstate Bank v. Larson, 475 N.W.2d 538, 545 (N.D.1991).
The Chevron factors were first reviewed by this court to analyze the retroactive application of an evidence standard announced by the United States Supreme Court in a parental termination proceeding. People in the Interest C.A.K., 652 P.2d 603, 607-09 (Colo.1982). C.A.K. recognized two justifications for denying retroactive application to a judicial ruling: First, the protection of parties who relied on the earlier state of the law, and second, the protection of societally important interests in stability. Id. at 608 (citing Thomas S. Currier, Time and Change in Judge-made Law: Prospective Overruling, 51 Va.L.Rev. 201 (1965)). In relation to the first justification, we recognized:
The reliance factor is more persuasive when the change in the law at issue concerns pre-litigation conduct that becomes the subject of later litigation, because most acts, once done, cannot be undone. Consequently, it would be inequitable to subject conduct to a standard that did not obtain when the conduct was engaged in. Id.
The Chevron analysis has three parts: (1) whether the decision at issue establishes new law, (2) whether retrospective application of the new rule would further or retard its operation, and (3) whether retrospective application of the new rule could
Today‘s decision establishes a six-factor test to determine whether an employee‘s discharge violates public policy and grants an exemption to the well recognized at-will employment rule.1 To succeed in establishing a prima facie case for the tort of wrongful discharge in violation of public policy “a plaintiff must prove (1) that he refused to perform an action (2) ordered by his employer (3) which would violate a specific statute (4) whose terms are more than a broad general statement of policy and (5) that his termination resulted from his refusal,” Cronk v. Intermountain Rural Elec. Ass‘n, 765 P.2d 619, 622 (Colo.1988), as well as (6)
that the employer was aware, or reasonably should have been aware, that the employee‘s refusal to comply with the employer‘s order or directive was based on the employee‘s reasonable belief that the action ordered by the employer was illegal, contrary to clearly expressed statutory policy relating to the employee‘s duty as a citizen, or violative of the employee‘s legal right or privilege as a worker. Maj. op. at 109.
The majority has engrafted the sixth step on the Cronk rule, creating a new principle of law that could not have been foreseen. Since the Chevron threshold has been met, we must now balance the remaining factors.
The second factor in Chevron, whether retrospective application of the new rule would further or retard its operation, was derived from an earlier criminal case, Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965), which held:
Once the premise is accepted that we are neither required to apply, nor prohibited from applying a decision retrospectively, we must then weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retroactive operation will further or retard its operation. We believe that this approach is particularly correct with reference to the Fourth Amendment‘s prohibitions as to unreasonable searches and seizures. Rather than “disparaging” the Amendment we but apply the wisdom of Justice Holmes that “[t]he life of the law has not been logic: it has been experience.” Id. at 629, 85 S.Ct. at 1737 (quoting Oliver W. Holmes, The Common Law 5 (Howe ed. 1963)).
At issue in Linkletter was whether the application of the exclusionary rule to the states in Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961), was to be applied retroactively. In examining the purpose of Mapp, the Court stated,
Mapp had as its prime purpose the enforcement of the Fourth Amendment through the inclusion of the exclusionary rule within its rights. This, it was found, was the only effective deterrent to lawless police action. Indeed, all of the cases since Wolf [v. Colorado, 338 U.S. 25, 69 S.Ct. 1359, 93 L.Ed. 1782 (1949)], requiring the exclusion of illegal evidence have been based on the necessity for an effective deterrent to illegal police action. We cannot say that this purpose would be advanced by making the rule retrospective. The misconduct of the police prior to Mapp has already occurred and will not be corrected by releasing the prisoners involved.
Linkletter, 381 U.S. at 636-37, 85 S.Ct. at 1741-42 (citation omitted, emphasis added). The Court concluded Mapp was only to be
Here, the general purpose of the public-policy exception to at-will employment is to deter employers from using economic power to coerce employees to violate statutory law. The exception is primarily designed to benefit the public rather than employees. See Harrison, The Price of the Public Policy Modification of the Terminable-at-Will Rule, 34 Lab.L.J. 581, 581 (1983) (public-policy exception is designed to “counteract what can be termed the ‘externalities’ of the traditional terminable-at-will rule“). The purpose of the sixth prong is to limit frivolous litigation by discouraging an employee from bringing a public-policy wrongful discharge suit without proof that the defendant employer had actual or constructive knowledge that the employee refused to perform an order he reasonably believed to be illegal. Neither purpose would be furthered by applying today‘s decision to litigants asserting claims based upon conduct occurring prior to the announcement of this opinion. We may properly address the issue in this case, but to grant retrospective application of the law announced today to cases based on prior conduct would amount to judicial legislation. The misconduct of other parties has already occurred and cannot be corrected by retroactive application of the public-policy exception. The majority states that “the retroactive application of the public-policy exception will have the salutary effect of prohibiting an employer from discharging an employee for refusing to engage in conduct clearly illegal or detrimental to the public good.” Maj. op. at 114. While this may be true, prospective application will have exactly the same effect without creating new claims where no cognizable claim existed before.
In evaluating the third factor in Chevron, whether retrospective application of the new rule could produce substantial inequitable results, I agree with the majority that it would not be inequitable to apply the public-policy exception to Lorenz‘s claim for relief. The fact that we apply today‘s rule to the case before us does not dispense with the necessity for the Chevron analysis of inequity. To be comprehensive, such a general inequity review must not be limited to a one-sided examination of the retroactive effect of a rule. We cannot be certain of the outcome of similar public-policy cases which are not before us. The majority predicts that application of the employer knowledge prong will “enure[] to the sole benefit of the employer.” Maj. op. at 114. I question whether this inevitably will be the case. Consider, for example, a hypothetical case in which an employee has written a memorandum to her employer explaining that she refuses to obey orders on the basis that obeyance would violate statutory law. With such a declaration, the employee‘s case would be stronger rather than weaker under today‘s rule. What is relevant to Chevron is not which type of similarly situated party may benefit from retroactive application of a new rule, but rather whether similarly situated parties on either side would suffer inequitable detriment.
While the majority admits that the additional evidentiary requirement may result in “injustice or hardship” to employees, it declines to ascribe any retroactive significance to this supposed fact. See maj. op. at 114. In essence, the majority holds that the probability of inequity to employees is irrelevant. Under such a rule, the flexibility of the Chevron retroactivity analysis would be greatly diminished. Analysis would be limited to a one-sided equity appraisal. I would not endorse such a result. Without speculating on the effect today‘s rule may have on pending cases, it can surely be said that the public-policy exception enunciated today significantly changes
I am authorized to say that Chief Justice ROVIRA and Justice VOLLACK join in this dissent.
SHAPIRO AND MEINHOLD, Gerald M. Shapiro, Don H. Meinhold, P.C., Haligman and Lottner, P.C., Kevin H. Burke & Associates, P.C., Janet M. Adams, in her official capacity as Clerk of the Denver District Court and on behalf of the class of persons herein described, E. Marie Gardner, in her official capacity as Clerk of the El Paso District Court and on behalf of the class of persons herein described, Patricia Patterman, in her official capacity as Clerk of the Boulder District Court and on behalf of the class of persons herein described, Petitioners,
v.
James ZARTMAN, Mary DeLancy, Robert Morphew, Individually and on behalf of the class of persons herein described, Respondents.
No. 90SC758.
Supreme Court of Colorado, En Banc.
Jan. 13, 1992.