An architecture firm that fired a drafter after the employee refused to engage in criminal copyright infringement had wrongfully terminated that employee despite the state's employment at-will doctrine, the Texas Court of Appeals for the Second District held Feb. 7 (Young v. Nortex Foundation Designs Inc., Tex. App., No. 02-11-00470-CV, 2/7/13).
The court noted that a narrow exception to the at-will doctrine existed with res[ect to the termination of a employee forced to choose between engaging in a criminal act or losing his employment. A jury's determination that an employer wrongfully terminated an employee for refusing to work on what he believed were illegally obtained plans was supported by the evidence, the appeals court said. It accordingly reversed the trial court's issuance of a judgment notwithstanding the verdict in favor of the employer.
Adam Young was hired to work as a drafter by Nortex Foundation Designs Inc. of Fort Worth, Texas, in 2001. His duties included designing foundation plans based on the copyrighted architectural designs that were provided to him by Nortex.
In 2010, Young was given a plan that had a black stamp stating: “If this stamp is not red it is an illegal set of plans.”
The stamp also stated: “Reproduction of these plans by any means is prohibited by federal law.”
Young told his supervisor that he was uncomfortable working on the plans because of the black stamp. His supervisor, after contacting Nortex's president, said that Young would be fired if he refused to do the work assigned to him.
Young again refused to work on the plans and he was subsequently terminated and escorted from the building. He filed a claim for wrongful termination.
At trial, Nortex claimed that it had never asked Young to commit an illegal act because the homeowner on whose behalf the plans were being drafted had purchased the architectural plans. Thus, the homeowner had a red-stamped copy of the plans, and since the work was being done on her behalf it was not illegal to ask Young to work on the plans, Nortex claimed.
Young, however, testified that he had never been told that the homeowner had the red-stamped plans. Therefore, Young said that believed that he was being asked to perform an illegal act. When he refused to perform that act he was terminated, Young said. The jury found in favor of Young and awarded him damages in excess of $300,000.
After the verdict, Nortex filed a motion for judgment notwithstanding the verdict. Nortex reiterated its argument that it had never asked Young to perform an illegal act because the homeowner had the original design, and therefore copies made on her behalf were authorized. The trial court agreed and granted the motion. Young appealed.
In employment at-will states, such as Texas, either party can terminate the relationship at any time without advanced notice or explanation. However, the Texas Supreme Court recognized a narrow exception to that policy in Sabine Pilot Service Inc. v. Hauck, 687 S.W.2d 733 (Tex. 1985).
Sabine Pilot held that for public policy reasons an employer may not fire an employee for refusing to perform an illegal act. An employee should not be forced to choose between losing his or her job or possibly facing criminal liability, Sabine Pilotreasoned.
The jury applied the Sabine Pilot exception when it found Nortex liable for wrongful termination. The trial court, however, determined that the fact that the homeowner had a red-stamped version of the plans made Nortex's request that Young work on the plans legal. Therefore, it found the Sabine Pilot exception inapplicable.
The appeals court noted that Sabine Pilot was not entirely on point because in that case the employer was terminated for refusing to dump waste into water--an action that both the employer and the employee knew was illegal. Justice Lee Gabriel said: We have not found, and we have not been directed to any cases, in which the employer itself, in essence, tells the employee that the act he is being directed to perform is illegal--here by providing him with paperwork indicating his work based on that paperwork will be illegal--and then does not assuage his concerns about illegality by producing the legal paperwork, which it could have produced before firing him but did not, and then later asserts in litigation that the act was legal after all.
The court determined that though the facts of the case were unusual, Sabine Pilot and related jurisprudence made it clear that an employee could not be terminated after refusing to perform an act that he believed was illegal.
The court said that the only question in this case was whether Nortex had in fact asked Young to perform an illegal act. It determined that Young would have exposed himself to liability for criminal copyright infringement if he had worked on the black-stamped documents.
The court said: Thecopyright holder in this case (the creator of the architectural plan) granted the homeowner a license to make reproductions and derivative works from red-stamped copies. The holder did not grant the licensee the right to use black-stamped copies. To use black-stamped copies therefore would be to exceed the scope of the license granted and would violate the copyright.
The court went on to note that Nortex's argument that it had valid copies of the documents was an affirmative defense to charges of criminal copyright infringement.
“However, this affirmative defense does not change the fact that Nortex asked Young to commit a crime by using a black-stamped copy, refused to provide him with the legal red-stamped copy, and fired him when he would not use the unlicensed copy,” the court said.
Because Young was asked to perform an illegal act, the Sabine Pilot exception was appropriately applied by the jury, the court said. Thus, the trial court's JNOV was in error. The court accordingly reversed the JNOV and entered judgment in favor of Young.
Justice Sue Walker joined the court's opinion. In dissent, Justice Bob McCoy acknowledged that affirmingf the trial court's decision would lead to a “less than satisfying result” because it would allow an employer to fire an employee for refusing to perform a task that the employee believed was illegal.
Only after the employee was fired and brought an action for wrongful termination would the employer be forced to reveal that it knew all along that the act was not illegal, McCoy noted.
However, McCoy said that it was up to the legislature, and not the courts, to remedy the situation. Accordingly, he would have affirmed the JNOV on the basis that what young was asked to do was not illegal.
Text is available at http://pub.bna.com/ptcj/Young2013Feb7.pdf.
Copyright 2013, The Bureau of National Affairs, Inc.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).