Tuesday, December 12, 2017

A Most Unsatisfying Opinion With Respect to Kentucky Public Policy and the Termination of Attorneys

A Most Unsatisfying Opinion With Respect to Kentucky Public Policy and the Termination of Attorneys

      In a decision rendered by the Kentucky Court of Appeals in August, from which no appeal has been taken to the Kentucky Supreme Court, it was held, inter alia, that there is essentially no public policy exemption to the generally applicable rule of “employment at will” in Kentucky with respect to attorneys and violations of the ethical rules by which we are bound. Greissman v. Rawlings and Associates, PLLC, No. 2016-CA-000055-MR and No. 2016-CA-000062-MR, 2016 WL 3567838 (Ky. App. Aug. 18, 2017).
      Carol Greissman (“Greissman”) alleged that her termination from Rawlings and Associates, PLLC (‘Rawlings”) was improper in that it was triggered by her refusal to sign a Confidentiality and No Solicitation Agreement (the “Agreement”) that she believed violated certain ethical rules, specifically Rule 5.6. Under the Agreement, Rawlings, had she signed it, would have agreed that while employed and for three years following, she would not without Rawlings prior written consent “solicit, contact, interfere with, or attempt to divert any customer served by Rawlings, or any potential customer.” As described by the Court of Appeals, “Rule 5.6 prohibits an attorney from agreeing to restrict his or her right to practice after leaving an employer.”

       Because Rawlings believed that the Agreement violated Rule 5.6, she refused to sign it. Thereafter, Rawlings terminated her employment. She then brought suit against Rawlings, alleging that Rule 5.6 set forth Kentucky public policy and that termination for refusal to violate public policy is an exception to the rule of employment-at-will, her termination was wrongful. In response, Rawlings asserted that Rule 5.6 and the other rules of the Kentucky Supreme Court did not constitute “public policy” justifying an exception from the rule of employment at will. The trial court would deny the motion to dismiss (Rule 12.02) filed by Rawlings but would, ultimately on summary judgment, rule in Rawling’s favor. While the court would find that Rule 5.6 does constitute Kentucky public policy, it also found that a “savings clause” in the Agreement protected Rawlings from any violation thereof. On that basis, she was not terminated for refusing to violate Kentucky law, and her termination was on that basis legitimate.
      The Court of Appeals will focus upon the question of whether the rules of professional conduct promulgated by the Kentucky Supreme Court governing the conduct of Kentucky attorneys satisfy the public policy component. Parsing a variety of cases which looked to Kentucky's statutory law and Constitution as the basis of public policy, in the course thereof rejecting a variety of other sources such as federal and state regulations, it would ultimately conclude that the rules of the Supreme Court do not embody public policy. Hence, even a direct violation of Rule 5.6 would not support a claim for an exception from the employment at will doctrine.
      This opinion creates a significant gap in the law. Unique of all the professions, attorneys are not subject to regulation by statutes passed by the Kentucky General Assembly. Rather, the regulation of the legal practice is governed by rules promulgated by the Kentucky Supreme Court. This bifurcation is consequent to separation of power principles. It is for that reason that, for example, while the General Assembly could pass the limited liability company act and declared that LLCs may be used by any business or professional practice, it required a separate rule from the Kentucky Supreme Court to squarely enable attorneys to utilize that form.
      With the Greissman decision, attorneys may not cite the rules of professional conduct by which we are bound as the basis for public policy. In consequence, a law firm may terminate an attorney for refusing to sign and could require an attorney to sign an agreement that violates Rule 5.6 (or any other rule) without risk that a court will find that termination improper. While it is conceivable that the terminated employee could bring an action, presumably via the Kentucky Bar Association, challenging that action, that will be at best a torturous path.
       Other states follow different rules, treating as public policy the rules promulgated by various state supreme courts with respect to the regulation of attorneys. Those decisions avoid the gap that the Greissman opinion has in Kentucky created.


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