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KM&M Client Prevails In Two-Plaintiff Whistleblower/Constructive Discharge Arbitration

September 9, 2005

KM&M successfully defended an acute-care hospital and its corporate parent against claims by two former employees that they were forced to resign in retaliation for safety complaints. The employees sought lost earnings, emotional distress damages, and punitive damages. After a four-day arbitration hearing, the arbitrator denied the claims in their entirety.

The plaintiffs worked as part of a helicopter ambulance service provided by the hospital. Along with several of their co-workers, they complained of mechanical problems involving one of the two helicopters leased by the program. The hospital took the helicopter out of service, arranged for it to undergo extensive repairs and evaluation, and only returned it to service after it had been cleared to fly by the Federal Aviation Administration ("FAA") and all employees (except plaintiffs) voted to resume flights. Plaintiffs continued to express concerns about the aircraft and about their interactions with their peers and supervisor. As a result, they were allowed to fly exclusively on the other helicopter, to work together as partners, and to report to a different supervisor. Months later, plaintiffs resigned, claiming that they continued to experience hostility from co-workers and their supervisor and that it would be unsafe for them to keep flying under those circumstances.

Plaintiffs filed a complaint in state court alleging wrongful termination in violation of public policy, violation of Cal. Labor Code Section 6310 (prohibiting discrimination against employees who complain of unsafe working conditions), and breach of the implied covenant of good faith and fair dealing. The defendants successfully moved to compel binding arbitration pursuant to the employer's alternative dispute resolution program and, after discovery, the matter proceeded to hearing. Seventeen witnesses testified over the course of the hearing.

The arbitrator concluded that: (1) plaintiffs had not proven a constructive discharge because they failed to show that their working conditions were so intolerable that resigning was their only reasonable option; (2) the employer did not create (or even know about) the allegedly intolerable working conditions of which plaintiffs complained; (3) even if they were terminated, the terminations were not a result of their earlier safety concerns; and (4) having acknowledged that they were employed at will, plaintiffs could not claim that the terminations breached the implied covenant of good faith and fair dealing. These findings disposed of plaintiffs' claims in their entirety.

This decision demonstrates the importance of having appropriate personnel policies in place. In this case, both employees had acknowledged their obligation to arbitrate disputes and had confirmed their at-will status. The arbitration provision enabled the employer to steer the case to a forum (arbitration rather than a jury trial) in which it could have greater confidence that the decision would be based on the facts instead of emotions. The case also demonstrates the importance of dealing with employee complaints proactively. By addressing plaintiffs' safety issues promptly and providing them a mechanism to raise subsequent concerns, the employer made it more difficult for plaintiffs to claim that their complaints were met with hostility and that they had no choice but to resign.

Please contact Jeff Polsky in our San Francisco for more information about this matter, or any of our attorneys for information about preventing and responding to wrongful discharge claims.