Utah Supreme Court Upholds Dismissal of In-House Counsel's Wrongful Termination Claim

The Utah Supreme Court issued a decision on August 5, 2015, Pang v. International Document Services, 2015 UT 63, upholding the dismissal of a in-house counsel's complaint alleging that he was terminated for refusing to violate usury laws and the Utah Rules of Professional Conduct. Pang, an at-will employee, asserted that his employer had asked him to violate Rule 1.13(b) of the Utah Rules of Professional Conduct in order to keep his job.  The Court held that his firing did not constitute wrongful termination because it did not violate a clear and substantial public policy of the State of Utah, and even if it did, other rules within the Utah Rules of Professional Conduct evince  strong policy choices that favor of allowing clients to terminate the attorney-client relationship at any time.

The Court began its analysis by noting that in Utah the presumption is that all employees are employed at-will and may be terminated for any reason or no reason, with or without notice. One exception to the at-will presumption, however, is an employer's wrongful termination of an employee in violation of a clear and substantial public policy. In order to state such a claim, an employee must prove (i) that his employer terminated him; (ii) that a clear and substantial public policy existed; (iii) that the employee's conduct brought the policy into play; and (iv) that the discharge and the conduct bringing the policy into play are causally connected.  

In Pang, the Supreme Court emphasized that the notions of "public policy" in this wrongful termination claim are much more narrow and limited than generalized notions of public policy.  Accordingly, to support a wrongful discharge claim under the public policy exception, the Court stated that "Mr. Pang‘s complaint must identify a public policy ―so clear and weighty, and as to which ―the public interest is so strong that the policy should be ―place[d] . . . beyond the reach of contract."  In order to make that determination, the Court, citing to its prior decisions, said it looks at the following factors:

(1) whether the policy at issue is reflected in authoritative sources of state public policy;

(2) whether the policy affects the public generally as opposed to the private interests of the employee and employer; and

(3) whether countervailing policies outweigh the policy at issue. 

Pang argued that prior Supreme Court decisions had established that an employer may not terminate someone for (1) refusing to commit an illegal act, (2) performing a public obligation, (3) exercising a legal right or privilege, or (4) reporting illegal activities to a public authority. The Court dismissed Pang's first argument, however, saying that his complaint failed to include allegation that his employer made him perform an illegal act and his refusal to perform such an act. With respect to the three remaining arguments, the Court held that because Rule 1.13 does not establish a clear and substantial public policy, his claim ultimately failed.

Importantly, the Court did not restrict an in-house lawyer's ability to bring such a claim, and did not decide whether the Utah Rules of Professional Conduct constitute "judicial decisions" that could independently establish an exception to at-will employment, but instead found that Rule 1.13 governs relations between attorneys and their clients "not broad matters of public importance" and that those same rules articulate other countervailing policies. As the Court stated:

                "We emphasize, however, the narrow scope of our decision today—

                 we do not hold that in-house attorneys may never raise a wrongful 

                 termination claim, nor do we foreclose the possibility that an attorney 

                 fired for complying with an ethical rule, such as reporting criminal 

                 activity to public authorities under rule 1.6, could ever make out such 

                 a claim. We hold only that an attorney‘s duty to ―report up illegal 

                 activity to an organizational client‘s highest authority is not founded 

                 in the type of clear and substantial public policy that qualifies as an 

                 exception to the at-will employment doctrine. We leave these broader 

                 issues to a future case that squarely presents them."

For more information about the Court's decision, contact one of the employment law attorneys at Stavros Law at (801) 758-7604, or visit our website on-line at utahtriallawyers.net.