Mary Beth Vancleave v. Reelfoot Bank

Citation: Not availableDocket: W2008-01559-COA-R3-CV

Court: Court of Appeals of Tennessee; October 30, 2009; Tennessee; State Appellate Court

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In the case of Mary Beth VanCleave v. Reelfoot Bank, the plaintiff, a former Assistant Vice President at the bank, claimed retaliatory discharge after refusing to open a bank account in a manner she perceived to be illegal. The customer, James Lynch, sought to open an account that would not list his name but instead be registered under another individual's name, which VanCleave believed violated banking laws. Following her refusal, Lynch complained to her supervisor, which led to her termination.

VanCleave sued the bank, asserting both common law and statutory claims for retaliatory discharge. The trial court granted the bank's motion for summary judgment, ruling that the plaintiff did not demonstrate any violation of statutes or regulations that implicated significant public policy. The court also concluded that VanCleave's refusal to comply with Lynch's request was motivated by a desire to protect the bank rather than serve the public interest.

On appeal, the Court of Appeals of Tennessee reversed the trial court's decision, holding that some of the statutory provisions cited by VanCleave did indeed implicate important public policy and could form the basis for a retaliatory discharge claim. The court further stated that intent to further the public good is not a necessary element for such claims. The case was remanded for further proceedings.

Elgin instructed VanCleave to have Lynch and Gammons return to the Bank to open an account, emphasizing that Lynch needed to properly sign a signature card and provide ID. VanCleave communicated this to Elgin, who became frustrated and left. Gammons subsequently opened the account, deposited $26,000, and wrote a $25,000 check to Lynch, who then opened another account in a different city. On November 4, 2002, a meeting involving VanCleave, Elgin, and Bank branch manager Carol Reed addressed the incident with Lynch. Elgin expressed anger over the situation, while VanCleave insisted her actions were to protect the Bank’s interests. Following this, on November 6, 2002, VanCleave was terminated after a meeting with Bank president Mike Dickerson. VanCleave filed a lawsuit on November 5, 2003, claiming wrongful termination for refusing to engage in illegal activity. The Bank denied wrongdoing and asserted legitimate reasons for her termination. In a motion for summary judgment filed on February 29, 2008, the Bank contended that VanCleave failed to demonstrate that the alleged banking law violations constituted significant public policy violations. The trial court ruled in favor of the Bank, stating that the violations did not affect public health, safety, or welfare and noted VanCleave's intent was to protect the Bank, not the public. VanCleave appealed, raising issues regarding the trial court's findings on public policy violations, her intent to serve the public good, and the court's handling of the Bank's summary judgment motion.

Summary judgment is warranted when the moving party shows no genuine issue of material fact and is entitled to judgment as a matter of law, as stated in Tenn. R. Civ. P. 56.04. Courts must favor the nonmoving party when evaluating evidence and drawing reasonable inferences. The appellate review of summary judgment is de novo, with no correctness presumption. 

VanCleave challenges the trial court's ruling that violations of certain regulations and statutes do not sufficiently support her retaliatory discharge claim, arguing these violations lack a clear public policy connection and do not impact public health, safety, or welfare. Tennessee's employment-at-will doctrine allows for termination at any time, establishing a narrow exception for retaliatory discharge under limited circumstances.

VanCleave claims retaliatory discharge under common law and the Tennessee Public Protection Act (TPPA). To succeed under the TPPA, she must prove: (1) employment status with the defendant, (2) refusal to participate in or silence about illegal activities, (3) termination, and (4) a causal link between her refusal and termination. Under common law, the requirements are similar but focus on the existence of an employment-at-will relationship, the discharge reason being an exercise of a statutory or constitutional right, and that the discharge was influenced by the employee's compliance with clear public policy.

The trial court noted that for both the TPPA and common law claims, the employer's violation must involve significant public policy issues. If the infractions cited by VanCleave do not engage fundamental public policy concerns, her retaliatory discharge claim cannot succeed.

VanCleave’s amended complaint cites various statutes and regulations that she claims would have been violated had the account been opened as requested by Lynch. Key legal provisions referenced include:

1. **Financial Recordkeeping and Reporting Act** (Currency and Foreign Transactions Act of 1970, 31 U.S.C. 1051 et seq. and 12 U.S.C.A. 1951 et seq.) and the **Bank Secrecy Act** (31 CFR Part 103), which mandates banks to secure taxpayer identification numbers and retain documentation verifying signature authority, suggesting a potential violation if the account was opened improperly.

2. **Internal Revenue Code of 1986** (specifically 26 U.S.C. 6109 and related regulations), which governs taxpayer identification requirements.

3. **U.S.A. Patriot Act** provisions, particularly Title 31 Section 103.121 and Anti-Money Laundering regulations (Section 352).

4. **Privacy of Consumer Information** regulations (12 CFR 216).

5. **Tennessee Code Annotated** (Tenn. Code Ann. 66-3-101 et seq.).

The Court assesses public policy by referencing constitutional and statutory provisions, alongside judicial interpretation. The Bank Secrecy Act was enacted following extensive Congressional hearings linking banking secrecy to criminal activities such as tax evasion and money laundering, highlighting its intent to aid federal investigations. The applicable federal regulation (31 C.F.R. 103.34) requires banks to maintain customer identification records, and the Court finds that a reasonable fact-finder could conclude that non-compliance would occur under the circumstances described. The public policy implications of these regulations were further examined in a related case, Franklin v. Swift Transportation Co., where adherence to regulatory requirements was deemed significant to the legal claims made.

A "de minimus regulatory violation" was identified, with the relevant regulation deemed not to involve fundamental public policy concerns. The Bank contends that the Bank Secrecy Act regulations serve its own protection rather than that of the public. It compares the case to Collins v. AmSouth Bank, where a bank employee was terminated for refusing to follow a supervisor's directive to place cash in a night deposit box, which she claimed violated regulations. The appellate court in Collins affirmed summary judgment for the bank, finding no evidence that the employee's actions constituted illegal activity or a breach of bank policy, framing the dispute as one of workplace procedures.

In the current appeal, the Bank asserts that VanCleave's termination similarly concerns workplace procedures. However, the court disagrees, emphasizing that the Bank Secrecy Act and its regulations are designed to assist in investigations of serious crimes, thereby implicating significant public interests. The court finds that these regulations do affect public policy, contrary to the trial court's view that they do not implicate public health and safety concerns.

Additionally, the trial court's summary judgment order noted VanCleave's intent to protect the Bank rather than the public. It is unclear if this subjective intent influenced the trial court's decision, suggesting that VanCleave may have been required to demonstrate a desire to protect the public for her claims to be valid. The court's conclusion regarding the Bank Secrecy Act makes further examination of the other statutes in VanCleave’s complaint unnecessary.

The trial court's summary judgment order extensively cites Collins v. AmSouth Bank, emphasizing that individuals claiming statutory or common law whistleblowing must demonstrate that their actions to expose illegal or unsafe practices serve a significant public policy interest, rather than personal motives. This principle is supported by Guy v. Mutual of Omaha Ins. Co., which clarifies that whistleblowers must assert that their reporting serves a public purpose deserving protection. Subsequent cases have referenced these rulings but have not deemed the employee's subjective intent as a decisive factor. 

The term "retaliatory discharge" encompasses two types of claims: (1) retaliation for whistleblowing (refusing to remain silent about illegal activities) and (2) retaliation for refusing to engage in illegal activities. Both claims require the plaintiff to demonstrate employment with the defendant and a causal link between the discharge and refusal actions. Moreover, the illegal activities must relate to significant public policy issues supported by clear legal provisions. The Supreme Court's ruling in Guy, which involved a whistleblowing claim from an insurance agent reporting misconduct, indicates that any requirement for the plaintiff's motivation to be aligned with public good pertains specifically to whistleblowing claims.

The trial court's reliance on a statement from Collins regarding whistleblowing claims was inappropriate, as that statement is considered dicta and not essential to its holding. VanCleave is not asserting a whistleblowing claim; instead, she claims retaliatory discharge for refusing to open a bank account in violation of laws. It would be unreasonable to require her to demonstrate a subjective intent to protect the public when declining to participate in illegal activities. The Bank did not provide precedent necessitating such a showing of intent. Retaliatory discharge claims typically recognize that the refusal to engage in illegal conduct may stem from self-protection rather than public interest. VanCleave's assertion that her refusal was to protect either the Bank or herself does not undermine her claim. The court finds that the alleged violations of the Bank Secrecy Act represent significant public policy concerns, and therefore, VanCleave need not prove an intent to further the public good. Consequently, the trial court's grant of summary judgment to the Bank is reversed, and the case is remanded for further proceedings, with costs of the appeal charged to Reelfoot Bank.