University of Michigan v. Graduate Employees organization/aft

PHINNEY v PERLMUTTER PHINNEY v ADELMAN PHINNEY v UNIVERSITY OF MICHIGAN BOARD OF REGENTS Docket Nos. 175485, 175857, 176940. Submitted June 18, 1996, at Detroit. Decided April 4, 1997, at 9:00 A.M. Carolyn Phinney, formerly employed as a senior research associate at the Institute of Gerontology at the University of Michigan, brought an action in the Washtenaw Circuit Court against institute research scientist Marion Perlmutter, institute director Richard Adelman, and investigator Lois Verbrugge and an action in the Court of Claims against the University of Michigan Board of Regents. Phinney alleged that Perlmutter, among other things, committed fraud and misrepresentation in appropriating Phinney’s research and making false representations about the prospects of obtaining foundation grants for continued research and about Phinney’s continued employment at the institute. Phinney alleged that Adelman, Verbrugge, and the board of regents, among other things, violated the Whistleblowers’ Protection Act (wpa), MCL 15.361 et seq.; MSA 17.428(1) et seq., in taking retaliatory actions against Phinney after she complained about misconduct by Perlmutter. Judge Patrick J. Conlin, sitting as the circuit court and the Court of Claims in the respective actions, granted summary disposition for Verbrugge and found no cause of action against the board of regents. A jury returned verdicts against Perlmutter and Adelman. The circuit court entered a judgment on the verdicts, awarded prejudgment interest against Perlmutter from the date of Phinney’s fourth amended complaint and against Adelman from the date of Phinney’s first amended complaint, and denied Phinney’s request for an award of attorney fees against Adelman under the wpa. Perlmutter, Adelman, and Phinney appealed and Phinney and the board of regents cross appealed. The appeals were consolidated. The Court of Appeals held: 1. Perlmutter’s claim that the circuit court lacked subject-matter jurisdiction in view of federal copyright law is without merit. Phinney’s claim against Perlmutter was for fraud, a state-law claim over which federal courts have no jurisdiction. Phinney’s claim is not preempted by the Copyright Act in the absence of evidence that Phinney’s writings were registered with the Register of Copyrights. 2. The circuit court did not abuse its discretion in granting Phinney leave to file a fourth amended complaint against Perlmutter in the absence of a showing by Perlmutter of resulting prejudice. 3. The circuit court did not err in denying Perlmutter’s motion for summary disposition based on the statute of frauds. Assuming, for the purposes of argument, that Phinney’s fraud claim against Perl-mutter is inextricably intertwined with a contract of employment, an agreement for an indefinite term of employment, such as that which Phinney had, is generally regarded as not being within the proscription of the statute of frauds. 4. The circuit court did not err in denying Perlmutter’s motion for a directed verdict based on governmental immunity. A question of fact existed regarding whether Perlmutter’s actions were so reckless as to demonstrate a substantial lack of concern for whether injury resulted. 5. The circuit court did not abuse its discretion in denying Perl-mutter’s motions for a directed verdict, judgment notwithstanding the verdict, and a new trial, which were all based on a claim of insufficient evidence of fraud or misrepresentation. A rational trier of fact can conclude from the evidence presented that Perlmutter made material misrepresentations, that they were false, that Perl-mutter knew they were false or made them recklessly without knowledge of their truth or falsity, that Perlmutter made the misrepresentations with the intent that Phinney would act on them, that Phinney acted in reliance on Perlmutter’s misrepresentations, and that Phinney suffered damages. 6. The circuit court did not abuse its discretion with respect to any of the evidentiary rulings challenged by Perlmutter on appeal. 7. The circuit court did not err in refusing to instruct the jury, as requested by Perlmutter, that “[djamages for emotional distress, humiliation, injury to reputation or exemplary damages are not available in a fraud claim,” but did err in limiting the available damages to those based on contract principles. Damages for mental and emotional distress may be awarded where, as here, there is allegation and proof of tortious conduct independent of a breach of contract. The circuit court’s error in limiting damages does not require reversal. The circuit court did not err in refusing to instruct the jury, as requested by Perlmutter, that reliance by Phinney on the alleged misrepresentations by Perlmutter had to be reasonable. Fraud requires proof of actual, but not reasonable, reliance on the alleged misrepresentation. Appellate review of Perlmutter’s claim that the circuit court erred in instructing the jury about burden of proof is precluded in light of Perlmutter’s failure to object at trial to the instruction that was given. 8. Perlmutter waived the issue concerning the lack of a distinction between past and future damages inasmuch as she stipulated the use of a general verdict form. 9. The damages assessed against Perlmutter are not excessive because they are not higher than the highest amount the evidence can support. The circuit court did not abuse its discretion in denying Perlmutter’s motion for a new trial on the grounds of jury misconduct and improper closing argument by Phinney’s counsel. The alleged jury misconduct concerned the jury’s conduct after trial and therefore did not affect the trial or the evidence presented at trial. The circuit court was in the best position to determine whether the jury’s verdict was motivated by such impermissible considerations as passion, bias, or anger. 10. The circuit court did not abuse its discretion in denying Perl-mutter’s motion for a new trial on the ground of newly discovered evidence. Evidence of an interview of Phinney is ambiguous, and the fact that Phinney avoided further injury upon discovering Perl-mutter’s scheme does not undo the damage that was inflicted. 11. The circuit court did not abuse its discretion in denying Perl-mutter’s motion for a new trial on the asserted ground of jury prejudice in the absence of an affirmative showing by Perlmutter of prejudice. 12. Phinney is entitled to prejudgment interest from Perlmutter from the date of the original complaint against Perlmutter, not the date of the fourth amended complaint by which Phinney first alleged the claim of fraud and misrepresentation and on which the judgment was issued. Prejudgment interest is paid from the date of the original complaint because the purpose of prejudgment interest is to compensate the prevailing party for expenses incurred in bringing an action for money damages and for any delay in receiving such damages. Prejudgment interest for future damages may be assessed where, as here, the action does not result from personal bodily iryury. The case must be remanded for recalculation of prejudgment interest against Perlmutter. 13. The circuit court had proper jurisdiction over the wpa claims against Adelman. The wpa defines “employers” to include state entities and specifies that actions thereunder may be filed in the circuit court. The Legislature, in enacting the wpa, waived the right of state entities to be sued only in the Court of Claims. 14. Adelman’s claim on appeal that Phinney was not entitled to a jury trial with regard to the wpa claims is without merit. State entities against whom claims under the wpa are brought may be subjected to jury trials. In any event, Adelman consented to the jury trial. 15. The circuit court did not abuse its discretion in granting Phinney leave to file a fourth amended complaint against Adelman in the absence of a showing of bad faith on Phinney’s part or prejudice to Adelman and in view of the imposition of $10,000 in costs against Phinney. Amendment was not futile because the claims against Adelman were not barred by the applicable statute of limitations. 16. For purposes of reviewing Adelman’s claim on appeal that Phinney’s action against him is barred by the ninety-day statute of limitations of the wpa, the filing date is October 1, 1990, the date of Phinney’s original complaint, not April 1, 1991, the date of the first amended complaint by which Phinney first named Adelman as a defendant. Adelman’s counsel at trial had referred to October 1, 1990, as the filing date, and Adelman is thus barred from now taking the contrary position that the later date was the filing date. A civil action under the wpa must be brought within ninety days after the occurrence of the alleged violation of the wpa, MCL 15.363(1); MSA 17.428(3)(1). While two instances of alleged violations of the wpa by Adelman are within this limitation period, several others occurred before the ninety-day period. Phinney’s action against Adelman for alleged violations that occurred more than ninety days before she filed her action is timely under the continuing violations doctrine, which applies where there was a policy of discrimination, or, as in this case, a continuing course of conduct, i.e., a series of discriminatory acts that were sufficiently related so as to constitute a pattern, only one of which occurred within the limitation period. The circuit court did not err in denying Adelman’s motion for summary disposition based on the statute of limitations in light of the existence of a genuine issue of material fact concerning whether Adelman had engaged in continuing violations of the wpa. 17. Phinney’s claims against Adelman under the wpa are not barred by governmental immunity, and the circuit court did not err in denying Adelman’s motions for summary disposition, a directed verdict, and judgment notwithstanding the verdict, all of which were based on governmental immunity. The act explicitly includes the state in its definition of “employer” and includes an agent of an employer within its definition of “employer.” The governmental immunity statute must be read in pari materia with the wpa, the extension of the remedies under the wpa is consistent with the protections that the governmental immunity act offers to governmental employees against third parties, and the wpa not only contains no language freeing the government from its requirements, regulations, and restraints, but it explicitly includes the state among those employers who are subject to the act. The wpa, being more special and particular than the governmental immunity statute, was intended to be an exception to the governmental immunity statute, because the Legislature must be presumed not to have intended a conflict. 18. The wpa, insofar as it abrogates governmental immunity, does not, as Adelman claims on appeal, violate the Title-Object Clause of the Michigan Constitution. The purpose of the wpa is to protect employees who suffer retaliation for reporting violations of law. The inclusion of the state among employers subject to wpa is incidental to the purpose of the wpa and need not have been stated in the title of the wpa. 19. The circuit court did not abuse its discretion in denying Adelman’s motions for summary disposition, a directed verdict, and judgment notwithstanding the verdict, all of which were based on the asserted grounds that Phinney failed to prove that she had engaged in protected activity under the wpa, failed to establish any nexus between her activily and the nonrenewal of her appointment, or failed to demonstrate pretext. Viewing the evidence in the light most favorable to Phinney, the record discloses that she reported violations of law by Perlmutter to the university, a public body, that there was a sufficient nexus between Phinney’s reporting of such violations and the retaliatory actions taken by Adelman against her, and that her failure to publish academic writings was a pretext for the retaliatory actions taken against her. 20. Phinney’s claims against Adelman are within the scope of the WPA. 21. Adelman, by failing to object at trial, failed to preserve as an issue on appeal his claim that the circuit court failed to properly instruct the jury about quantum of proof. Manifest injustice will not result from the Court of Appeals’ decision not to review this issue. 22. The fact that the circuit court jury ruled against Adelman while the Court of Claims ruled in favor of the board of regents with regard to similar claims under the wpa does not mean that the trial judge improperly deferred to the jury. A trial court sitting as the Court of Claims is not obligated to return a verdict consistent with the jury’s verdict in a circuit court action joined with the Court of Claims action. 23. The circuit court did not abuse its discretion in several evidentiary rulings challenged by Adelman on appeal. 24. The circuit court did not err in denying Adelman’s motions for remittitur or a new trial. The damages assessed against Adelman were not higher than the highest amount the evidence can support, and the jury’s verdict was not motivated by impermissible considerations. Adelman waived the issue concerning a lack of distinction between past and future damages by not objecting to the verdict form used. Contrary to Adelman’s assertion, damages for emotional distress may be awarded in an action under the wpa. 25. Attorney fees in an action under the wpa may be awarded by the trial court at its discretion. In this case, the circuit court did not abuse its discretion in refusing Phinney’s request for attorney fees after considering the contingent fee arrangement between Phinney and her counsel. 26. Prejudgment interest assessed against Adelman must be from the date of the first amended complaint, when Adelman was first named as a defendant, not from the date of the fourth amended complaint, when the claims under the wpa were first made against Adelman. Prejudgment interest on future damages may be awarded where, as here, the action does not result from personal bodily injury. The case must be remanded for recalculation of the amount of prejudgment interest Adelman must pay. 27. The circuit court did not err in granting summary disposition for Verbrugge on the basis of the expiration of the period of limitation applicable to the action against her. Phinney failed to establish any fraudulent concealment, MCL 600.5855; MSA 27A.5855, by Verbrugge that would have tolled the running of the period of limitation. 28. The Court of Claims did not clearly err in finding that Phinney had failed to establish that the board of regents had violated the wpa. The record supports the Court of Claims’ findings that the board had legitimate, nondiscriminatory reasons for actions taken' against Phinney and that Phinney had not shown that those reasons were a pretext. Phinney waived the issue of a wrong burden of proof being employed by the Court of Claims when she failed to raise it in the statement of questions presented. Affirmed; circuit court case remanded for recalculation of prejudgment interest. 1. Fraud — Reliance on Misrepresentation. Fraud requires proof of actual, but not reasonable, reliance on an alleged misrepresentation. 2. Interest — Prejudgment Interest — Amended Complaints. The purpose of prejudgment interest is to compensate the prevailing party for expenses incurred in bringing an action for money damages and for any delay in receiving such damages; prejudgment interest against a defendant who loses with regard to a cause of action raised in an amended complaint should be assessed from the date of the original complaint; prejudgment interest against a defendant who is added in an amended complaint and who loses with regard to a cause of action first raised in a later amended complaint should be assessed from the date of the amended complaint by which the defendant was added (MCL 600.6013[1]; MSA 27A.6013[1]). 3. Interest — Prejudgment Interest — Future Damages. Prejudgment interest may be awarded for future damages where the action does not result from personal bodily injury (MCL ' 600.6013[1], 600.6301; MSA 27A.6013[1], 27A.6301). 4. Master and Servant — Whistleblowers’ Protection Act — Statute of Limitations — Continuing Violations. A civil action under the Whistleblowers’ Protection Act must be brought within ninety days after the occurrence of the alleged violation of the act; violations that occur more than ninety days before the bringing of the action are actionable under the continuing violation doctrine where there is a policy of discrimination or a continuing course of conduct, i.e., a series of discriminatory acts that are sufficiently related so as to constitute a pattern, only one of which occurs within the limitation period (MCL 15.363[1]; MSA 17.428[3][1]). 5. Governmental Immunity — Whistleblowers’ Protection Act. A civil action under the Whistleblowers’ Protection Act against a governmental entity or agent in their capacity as employer is not barred by governmental immunity (MCL 15.361[b], 691.1401 et seq.; MSA 17.428[l][b], 3.996[101] et seq). 6 Constitutional Law — Title-Object Clause — Whistleblowers’ Protection Act — Governmental Immunity. The Whistleblowers’ Protection Act, insofar as it abrogates governmental immunity, does not violate the Title-Object Clause of the Michigan Constitution (Const 1963, art 4, § 24; MCL 15.361 [b]; MSA 17.428[l][b]). 7. Master and Servant — Whistleblowers’ Protection Act — Emotional Distress Damages. Damages for emotional distress are awardable in a civil action under the Whistleblowers’ Protection Act (MCL 15.363[1], [3]; MSA 17.428[3][1],[3]). Green & Green (by Philip Green) (Sommers, Schwartz, Silver & Schwartz, PC. by Patrick Burkett, of Counsel), for Carlyon Phinney. Bodman, Longley & Dahling, LLP (by Jerold Lax), for Marion Perlmutter. Butzel Long (by Diane M. Soubly and James S. Rosenfeld), for Lois Verbrugge, Richard Adelman, and University of Michigan Board of Regents. Before: Wahls, P.J., and Murphy and C. D. Corwin, JJ. Circuit judge, sitting on the Court of Appeals by assignment. Wahls, P.J. Defendant Marion Perlmutter hired plaintiff, Carolyn Phinney, as a senior research associate at the Institute of Gerontology (lOG) at the University of Michigan. At the time, Perlmutter was a research scientist at the lOG, and defendant Richard Adelman was the director of the institute. Plaintiff accused Perlmutter of stealing her research. Adelman appointed defendant Lois Verbrugge to conduct an investigation. The investigators found that Perlmutter was not guilty of scientific misconduct. Perlmutter was also found not guilty in two other investigations concerning allegations that she committed plagiarism. In the meantime, plaintiff lost her job at the lOG. Plaintiff sued, alleging that Perlmutter had defrauded her of her research and that Adelman and defendant University of Michigan Board of Regents retaliated against her for reporting Perlmutter’s misconduct. The jury agreed with plaintiff and awarded her $133,000 in damages against Perlmutter for fraud and $989,200 against Adelman for retaliatory discrimination. The trial court, sitting as the Court of Claims, found no cause of action against the board of regents with regard to plaintiffs claim under the Whistle-blowers’ Protection Act (wpa), MCL 15.361 el seq.; MSA 17.428(1) et seq. In Docket No. 175485, which involved the fraud claim, Perlmutter appeals and plaintiff cross appeals the judgment against Perlmutter. We affirm in part and remand for a recalculation of the amount of prejudgment interest to which plaintiff is entitled. In Docket No. 175857, the retaliation claim against Adelman, Adelman appeals and plaintiff cross appeals the judgment against Adelman. We affirm in part and remand for a recalculation of the amount of prejudgment interest to which plaintiff is entitled. In Docket No. 176940, the claim against the board of regents, plain