Background

In a divided opinion, the Virginia Supreme Court recently ruled that supervisors can be held personally liable for the tort of wrongful discharge in violation of public policy. VanBuren v. Chubb, No. 120348, 2012 WL 5358706 (Va. Nov. 1, 2012).

Angela VanBuren, a nurse, was employed by Virginia Highlands Orthopedic Spine Center, LLC (Virginia Highlands). Shortly after her employment began, Virginia Highlands’ owner, Dr. Stephen Grubb, allegedly began sexually harassing her. VanBuren alleged that the harassment occurred on multiple occasions, even though she made clear to him that the advances were unwelcome. VanBuren alleged that, after five years of harassment, Grubb suggested that she leave her husband and that, when she refused, he fired her. Grubb thereafter allegedly offered VanBuren one month of severance pay in exchange for her silence.

The Complaint alleged that Virginia Highlands discriminated against VanBuren in violation of Title VII of the Civil Rights Act of 1964, and that both Virginia Highlands and Grubb, in his individual capacity, were liable under Virginia common law for wrongful discharge in violation of public policy. To support the latter contention, VanBuren claimed that she had been discharged because she had refused to engage in criminal conduct — to wit, adultery in violation of Va Code § 18.2-365, and open and gross lewdness and lasciviousness in violation of Va. Code § 18.2-345. VanBuren argued that because the discharge was based upon her refusal to violate Virginia law, she could proceed not only against Virginia Highlands but also against Grubb, whose actions formed the basis of the claim.

After the defendants moved to dismiss the wrongful discharge count, the district court granted that motion only with respect to Grubb. Applying Virginia law, as it predicted the highest court of the state would, the court held that VanBuren’s common law wrongful discharge claim was cognizable only against Virginia Highlands and not against Grubb in his individual capacity, even though Grubb allegedly participated in the discharge and was the sole owner of Virginia Highlands.

The court explained that Virginia’s wrongful discharge cause of action was premised on protecting employees rather than punishing wrongdoers and that personal liability for supervisors conflicted with Virginia’s protective limited liability corporation policy. Moreover, because the Virginia Supreme Court had previously suggested that the wrongful discharge claim is meant to be a narrow exception to Virginia’s employment-at-will rule, the district court concluded that permitting individual supervisory liability would expand the wrongful discharge doctrine in a manner inconsistent with guidance the Virginia Supreme Court had provided.

VanBuren appealed the district court’s decision to the US Court of Appeals for the Fourth Circuit. After briefing and oral argument, the Fourth Circuit determined that it could not predict with confidence how the Virginia Supreme Court would rule on the issue. The Fourth Circuit accordingly certified the question to the Virginia Supreme Court, posing the question as whether Virginia law recognizes a “common law tort claim of wrongful discharge in violation of established public policy against an individual who was not the plaintiff’s actual employer but who was the actor in violation of public policy and who participated in the wrongful firing of the plaintiff?” In April 2012, the Virginia Supreme Court accepted the Fourth’s Circuit certified question.

The Virginia Supreme Court’s Decision

The Virginia Supreme Court began by narrowing the scope of the certified question to focus solely on whether supervisors or managers could be held individually liable for a wrongful discharge claim. So construed, the court answered that question in the affirmative.

At the outset, the court reiterated the district court’s observation that the tort of wrongful discharge is a narrow exception to Virginia’s strong public policy in favor of employment at will. The majority stressed, however, that such a policy preference is not absolute.

In Bowman v. State Bank of Keysville, 229 Va. 534, 331 S.E.2d 797 (1985), for example, the court had held that a corporate employer could be held liable in tort for the discharge of two employees who were also shareholders of the corporation. The corporation had discharged the employees because they had refused to vote their shares in accordance with the wishes of the corporation’s board of directors. Bowman observed that the corporation’s coercion violated the public policy underlying Virginia corporate law — which grants each shareholder in a corporation the right to cast one vote for each share he or she held. Thus, “because the right conferred by statute is in furtherance of established public policy...the employer may not lawfully use the threat of discharge of an at-will employee as a device to control the otherwise unfettered discretion of a shareholder to vote freely his or her stock in the corporation.”

By a vote of 4-3, the Virginia Supreme Court held that Bowman should be extended to suits against supervisors or managers in their individual capacity as well. Although the court had never specifically addressed the issue of individual liability for a wrongful discharge claim, it noted that “we have twice allowed wrongful discharge claims to proceed against individual defendants who both committed the acts in violation of public policy and effected the termination.” The first such case was Bowman itself, in which the court had held that Bowman could pursue a cause of action for improper discharge against both the bank for which he worked and the named directors in their individual capacity. Also, in Lockhart v. Commonwealth Educ. Sys. Corp., 247 Va. 98, 439 S.E.2d 328 (1994), the court had held that Lockhart had a cause of action against her supervisor, the president of the company from which she was allegedly wrongfully discharged, where the employer was a sole proprietorship.

Based on these precedents, as well as the comparable precedent of multiple sister jurisdictions, the court held that a wrongful discharge claim based on a violation of public policy may be brought against an individual supervisor or manager. As the court concluded, the purpose of the tort — namely, the deterrence of discharge in violation of public policy — is best served if individual employees in a position of power are held personally liable for their tortious conduct in addition to the liability of the employer qua employer: “Employer-only liability would be insufficient to deter wrongful discharges, as this case clearly demonstrates.” As such, the court answered the certified question in the affirmative, returning the case to the Fourth Circuit, which will now likely reverse the district court’s dismissal of VanBuren’s wrongful discharge claim against Grubb and remand the case for further proceedings.

Implications

The VanBuren case has important implications for employers in Virginia. It is now likely that plaintiffs asserting wrongful discharge claims against their employer will also assert such claims individually against the supervisor or manager who made the termination decision. This could make wrongful discharge cases more complicated and expensive to defend, and impose more leverage against individual defendants who do not want to face the prospect of personal involvement and liability in a lawsuit.