The Utah Supreme Court held that Rule 1.13(b) of the Utah Rules of Professional Conduct, which requires in-house counsel to report suspected illegal activity to upper management, does not reflect a “clear and substantial public policy” of the kind sufficient to constitute an exception to the “at-will” employment doctrine. In doing so, the Court reaffirmed the “at-will” presumption of employment in Utah and declined to broaden the exceptions to this “at-will” doctrine.

In Utah, all employment relationships are presumed to be “at-will,” meaning an employer and employee may terminate employment at any time for any (or no) reason. The only exceptions to this rule are a contractual relationship between the employee and employer, when a statute (such as Title VII or the ADA) prohibits termination, or when the termination violates a “clear and substantial policy” of the state. The plaintiff in Pang v. International Document Services, 2015 UT 63, claimed that he was terminated for reporting illegal activity to his superiors as required by Rule 1.13(b) of the Utah Rules of Professional Conduct. He claimed that his termination was wrongful because Rule 1.13(b) constituted a clear and substantial public policy of the State of Utah.

Attorneys licensed in Utah must follow the Utah Rules of Professional Conduct. Rule 1.13(b) requires that if in-house counsel believes that his employer is acting in a manner that is likely to result in substantial injury to the organization, he/she must report it to his/her superiors. Mr. Pang believed that he had been terminated for complying with Rule 1.13(b). (For purposes of the motion to dismiss, the Court was required to accept Mr. Pang’s allegations as true; the defendants dispute Mr. Pang’s allegations.) Accordingly, Mr. Pang brought a claim for wrongful termination in violation of public policy. Recognizing the deficiencies in his claim, defendants, through their counsel, Ballard Spahr, moved to dismiss Mr. Pang’s complaint. The district court granted the motion.

On appeal, the Utah Supreme Court affirmed this dismissal and held that Rule 1.13(b) does not constitute a clear and substantial public policy of the state because Rule 1.13 does not directly serve the public’s interest but, instead, inures primarily to benefit the employer; and  other rules of Professional Conduct strongly support an organization’s right to select its own counsel, including terminating at any time an attorney with which it disagrees. The Court concluded “that an in-house counsel’s duty to ‘report up’ illegal activity to his or her superiors is not the type of clear and substantial public policy that qualifies as an exception to the at-will employment doctrine.” Pang v. Int’l. Doc. Svcs., 2015 UT 63, ¶ 39.

The Court did not hold that in-house counsel never has a wrongful termination claim or that none of the Utah Rules of Professional Conduct could express a clear and substantial public policy upon which a wrongful discharge claim could be based. Indeed, the Court hinted that an attorney fired for exercising the right under Rule 1.6 of the Utah Rules of Professional Conduct to disclose confidential information to prevent death, substantial bodily harm, or substantial injury to financial interest, may constitute grounds for a wrongful termination claim by an in-house counsel.

Ballard Spahr is on the front lines of shaping Utah law with respect to wrongful termination and the scope of public policy exceptions to “at-will” employment. Ballard Spahr’s litigation employment practice includes representation of employers in actions involving, among others, the following claims: age discrimination; sexual harassment; failure to accommodate; trade secrets; retaliation; FMLA; breach of non-solicitation, noncompetition and non-disclosure agreements; wrongful discharge; employment tort claims, including claims for defamation and emotional distress; and employee benefits and disputes arising under ERISA.

If you have any further questions about Pang v. International Document Services, or need assistance in your employment matters, please feel free to contact Jason D. Boren at 801.517.6827 or borenj@ballardspahr.com or Quinton J. Stephens at 801.531.3089 or stephensq@ballardspahr.com, counsel for the defendants in this case.


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