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Walker v. State

Court of Appeals of Oregon

September 18, 2019

Kyle K. WALKER, Plaintiff-Appellant, Cross-Respondent,
STATE OF OREGON, by and through the Semi-Independent State Agency, the Oregon Travel Information Council, branded and doing business as the Oregon Travel Experience, Defendant-Respondent, Cross-Appellant.

          Argued and submitted April 13, 2018.

          Marion County Circuit Court 15CV02202 Mary Mertens James, Judge.

          Luke W. Reese argued the cause for appellant-cross-respondent. Also on the briefs was Garrett Hemann Robertson PC.

          Denise G. Fjordbeck, Assistant Attorney General, argued the cause for respondent-cross-appellant. Also on the briefs were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

          Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.

         Case Summary:

         Plaintiff appeals a judgment of the trial court rejecting her statutory whistleblowing claim under ORS 659A.203. The State of Oregon cross-appeals, assigning error to the trial court's denial of its motion for directed verdict on plaintiff's common-law wrongful-discharge claim. Held: The trial court erred in denying the state's motion for directed verdict on plaintiff's common-law wrongful-discharge claim because there was no evidence from which a jury could [299 Or.App. 433] find that plaintiff had been discharged for fulfilling an important public duty. In light of that disposition, which requires reversal of the judgment for plaintiff on her common-law wrongful-discharge claim, the Court of Appeals rejected plaintiff's appeal concerning her statutory whistleblowing claim, which was dependent in part on the judgment for plaintiff on the wrongful-discharge claim.

         [299 Or.App. 434] ARMSTRONG, P. J.

         Plaintiff Kyle Walker brought claims against defendant Oregon Travel Information Council (the Council), a semi-independent agency of the State of Oregon, for common-law wrongful discharge and statutory "whistle-blowing," ORS 659A.203,[1] arising out of her discharge from a position as the Council's director. The trial court allowed plaintiffs wrongful-discharge claim to be submitted to the jury, which awarded plaintiff damages of $1.2 million. However, the court rejected plaintiffs claim for statutory whistleblowing, which was tried to the court. Plaintiff appeals, assigning error to the trial court's rejection of the statutory claim. The Council cross-appeals, contending that the trial court erred in allowing the common-law wrongful-discharge claim to go to the jury. We conclude that the trial court did not err in rejecting plaintiffs statutory claim, but we agree with the Council on its cross-appeal that the trial court erred in submitting the wrongful-discharge claim to the jury. We therefore reverse the judgment.

         The Council, together with the Department of Transportation, is responsible for the placement and permitting of tourist-oriented signs along state highways. The Council also manages, maintains, improves, and develops a number of rest areas around the state that are owned by the Department of Transportation and the Department of State Parks and Recreation. ORS 377.805; ORS 377.841. The Council receives its funding from sign-permit fees and the State Highway Fund, as allocated to the Council by the Department of Transportation. ORS 377.841(6).

          [299 Or.App. 435] The Council consists of 11 volunteer members, including the chairperson of the Oregon Transportation Commission (or designee) and 10 members appointed by the Governor from the public at large. ORS 377.835(2) (2013).[2] The Council's bylaws state that a quorum of six members is required to transact business. The Council elects officers (a chair, vice-chair, and secretary) and is supported by a staff of paid employees, including a director, who serves at the Council's pleasure and is charged with "administrative control" of the Council. ORS 377.835(7).

         The Council is a "semi-independent" agency. ORS 377.835. It is permitted to develop its own personnel rules and salary-classification system.[3] The Council is required to adopt a biennial budget, ORS 291.206(1) (relating to rules guiding state agencies in preparation of budget requests), but the budget is not subject to review or approval by the legislature or to future modification by the Emergency Board or the legislature, and is exempt from state spending limitations. ORS 377.840(6). However, the Council must file an annual report with the Governor, the legislature, and the Legislative Fiscal Officer, ORS 377.838, and the Council's finances are subject to annual review by the Secretary of State. ORS 377.840(7).

         The Council staff is led by the director. At the relevant time, ORS 377.835(7) (2013) provided:

"The Council shall be under the administrative control of a director who is appointed by and who holds office at the pleasure of the Council. The director of the Council may appoint all subordinate officers and employees of the Council and may prescribe their duties and fix their compensation. The director of the Council may delegate to any subordinate officer or employee any administrative duty [299 Or.App. 436] function or power imposed upon the Council by or pursuant to law."[4]

         Under its bylaws, the volunteer Council is the governing body for the agency and is responsible for establishing its budget. The bylaws state that the Council has exclusive authority to determine the employment status and compensation of the director, who serves at the pleasure of the Council. The director, in turn, has the authority to appoint all subordinate officers and employees and may prescribe their duties and compensation, within the Council's salary guidelines. The director may contract with state agencies but may not, without prior approval of the Council, authorize an expenditure of funds in excess of $25,000. ORS 377.838.

         Under the Council's bylaws, the executive committee consists of three elected officers and one other member of the Council. The executive committee is charged with serving as a resource to the director and staff on all matters that relate to the administration of the organization and making recommendations to the Council. The executive committee is also required to conduct an annual evaluation of the director. Under the bylaws, the finance committee consists of one executive committee member and a minimum of two other council members and is charged with coordinating with staff to review planned budgets and financial reporting.

         Because it is largely dispositive of the issues raised on appeal, we first address the Council's contention raised on cross-appeal that the trial court erred in allowing plaintiffs wrongful-discharge claim to be submitted to the jury. We summarize the undisputed facts from the record.

         The Council hired plaintiff as the Council's director in December 2012. The offer of employment stated:

[299 Or.App. 437] "Beginning on December 10, 2012, you will serve as the CEO/Executive Director of Oregon Travel Experience. Pursuant to ORS 182.468, this position is an unclassified executive service position in which you serve at the pleasure of the Oregon Information Council in an 'at will' status, with no property interest to this position.
"This is an appointment to a semi-independent agency. Your gross salary will be paid monthly at $9,585.33 per month ($115,000 annually). Benefits include three weeks paid vacation, accrued upon execution of this letter for the first year; vacation will accrue monthly in subsequent years. You will also receive a comprehensive package of state benefits, including full coverage health insurance for you and your family for medical, dental and vision paid by the agency, excepting adjustable fees that are dependent on your responses to the PEBB annual [renewal] questionnaire. PEBB requires employees to contribute 5% toward the cost of health and dental coverage.
"The executive committee will conduct a performance review six months after hire; any compensation adjustments will be made at the first anniversary of your hire."

         An audit by the Secretary of State the previous year had directed the Council to develop an employee classification and salary structure, and plaintiff hired a human resources director to begin that process. As a semi-independent agency, the Council was exempt from the personnel policies of the State of Oregon. The Council expressed to plaintiff its concern that the current salary structure was "top heavy" and its desire to stay within its existing budget. The Council chair told plaintiff that, although the Department of Administrative Services (DAS) "Hay"[5] system could be a resource for the employee handbook and for mapping out positions and salary ranges, salaries should be kept within the budget that had been adopted by the Council, with plaintiffs salary at the top. Almost immediately, conflicts arose between plaintiff and the Council's executive committee over the salary structure.

         Plaintiff recognized that her own salary would be the "keystone" for the Council's personnel compensation plan. [299 Or.App. 438] At her six-month review in June 2013, plaintiff presented the Council with an analysis comparing her salary to that of directors of other semi-independent agencies. Plaintiff requested that, beginning on plaintiffs one-year service date, the Council establish a director salary aligned with a DAS management salary range 7-PEMH of $9,955 per month. Plaintiff also requested a 5 percent ($2,875) retroactive raise to compensate her for human resources work that she had assumed during her first six months of employment before the hiring of a human resources director.

         Plaintiff also sought an increase in her sick-leave benefit. Because she had had only 8.5 days of sick leave available during the first few months of employment, plaintiff stated that she had been required to use vacation time for treatment related to an on-the-job injury. She requested an additional sick-leave "bank" of 40 hours to offset the loss of vacation time and for an anticipated medical procedure before the end of the year.

         The Council did not approve the additional retroactive pay and told plaintiff that an adjustment to her salary would be considered as a part of her year-end review. In its review of plaintiffs performance, the Council's executive committee expressed concern over plaintiffs resistance to the executive committee's "changes in process," her level of communication with the Council and the executive committee, her attempts to "over-manage" the executive committee, and her "over-focus on total compensation (salary and benefits)." The Council extended plaintiffs probationary period for an additional six months.

         On June 30, 2013, the Council adopted its proposed budget for the 2013-2015 biennium. The budget included a 1.5 percent cost-of-living increase for employees. The Council directed plaintiff to present a salary structure to the Council that was within the Council's existing budget and to seek Council approval for any classification or pay decisions that affected the budget. Plaintiff agreed to come back to the Council before implementing a new salary structure.

         Plaintiff and the human resources director continued to analyze employee positions, including plaintiffs position, [299 Or.App. 439] under the Hay classification system used by DAS and to develop a compensation plan that aligned with DAS salaries. The plan, which the human resources director shared with the Council in December 2013, classified plaintiffs position as a "Principal Executive Manager ...

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