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Tennessee Supreme Court Makes It Harder for Employers to Obtain Pre-Trial Dismissals...

TENNESSEE SUPREME COURT MAKES IT HARDER FOR EMPLOYERS TO OBTAIN PRE-TRIAL DISMISSALS OF EMPLOYMENT RELATED LAWSUITS FILED IN STATE COURT

In Gossett v. Tractor Supply Company, Inc., the Tennessee Supreme Court ruled that an employer that seeks to dismiss an employee’s employment-related claims, by filing a motion for summary judgment, must comply with the recently clarified standard under the Tennessee Rules of Civil Procedure for summary judgment. In so holding, the Supreme Court ruled that the burden shifting framework used by federal courts in federal employment discrimination cases (McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973)) and previously followed by Tennessee Courts, was inconsistent with the standard for summary judgment recently enunciated by the Court in Hannan v. Alltel Publishing Co.,270 S.W. 3d 1, 8-9 (Tenn. 2008).

In Gossett, the plaintiff was an accountant from inventory control who was allegedly told to “fudge” the figures by removing products from inventory reserve in order to show more of a profit to the SEC. He refused to do so and was fired. The defendant asserted that the termination was due to a reduction in force. The trial court originally denied the defendant’s summary judgment motion, but on reconsideration upheld the motion because the plaintiff had not reported his supervisor’s alleged illegal activity to anyone. The Court of Appeals reversed the grant of summary judgment. The Supreme Court used the case to not only uphold the reversal on the basis of the reporting requirement, but also used the case to make a broad pronouncement on the relationship of McDonnell-Douglas and Tennessee Rule of Civil Procedure 56 which governs motions for summary judgment.

The Supreme Court’s ruling in Gossett as a practical matter will make it harder for employers in all types of employment cases pending in Tennessee state courts to obtain a pretrial dismissal of the lawsuit. It also makes it easier for employees to set forth a common law claim where they assert that they were terminated for “refusing to participate in illegal activities” such as supervisor instructions that are contrary to an unambiguous constitutional, statutory, or regulatory provision evincing a clear public policy. The Gossett case changes the law in Tennessee involving how summary judgment may be considered in a state court lawsuit involving common law retaliatory discharge. The effect of the Gossett case is to essentially destroy the McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) and Anderson v. Standard Register Co., framework previously utilized in state summary judgment procedure. Moreover,  Gossett reverses prior law that held that an employee alleging retaliatory discharge has to report the illegality to maintain a cause of action for refusal to participate in illegal activities,” reversing Collins v. AmSouth Bank, 241 S.W.3d 879 (Tenn. Ct. App. 2007).