§ 6.1.7.4 WHISTLEBLOWING.

• Jurisdiction: Arizona

§ 6.1.7.4 Whistleblowing. There are relatively few reported Arizona decisions addressing public policy violations premised upon employee whistleblowing.²⁵⁹Wagner was the first Arizona case to deal specifically with the issue.²⁶⁰ The court stated that this "distinct" category of public policy violation²⁶¹?i.e., the employee who is discharged for exposing employer wrongdoing?poses the most difficult analytical problems for courts and litigants.²⁶²

In Wagner, a police officer alleged that he was terminated for reporting his employer's illegal detention of a prisoner to a city magistrate.²⁶³ The plaintiff asserted that if he had acquiesced in the detention, he might have been personally liable to the detainee.²⁶⁴ If this were true, the court noted that the plaintiff's conduct might have been protected as a refusal to participate in illegal activity.²⁶⁵

However, because the plaintiff was not actually required to choose between his job and participating in illegal activity,²⁶⁶ the most directly applicable category of conduct protected by the public policy exception was whistleblowing.²⁶⁷ The court distinguished the more typical public policy violation as follows:

The employee who chooses to report illegal or unsafe conduct by his employer differs significantly from the employee forced to choose between his job and actual participation in illegal behavior. The latter is the paradigmatic case of a public policy violation; in contrast the whistleblower faces the arguably less onerous choice of either ignoring the known or suspected illegality or becoming an instrument of law enforcement.²⁶⁸

The EPA authorizes a public policy tort claim where an employee is terminated for disclosing, in a reasonable manner, information (or the employee's reasonable belief) that the employer has violated or will violate the Arizona Constitution or statutes, and the disclosure is made to the employer or a representative of the employer who the employee reasonably believes is in a supervisory position with authority to investigate and act on the information disclosed, or to a public body or political subdivision of the state.²⁶⁹ Statutory and public policy whistleblower protections are discussed in more depth in Article 6.9, infra.

Although the EPA requires that the disclosure involve an alleged violation of "the Constitution of Arizona or the statutes of this state,"²⁷⁰ it does not specifically require that the reported violation involve a matter of public interest.²⁷¹ In Evers v. Safety-Kleen Systems, Inc.,²⁷² an Arizona federal district court judge held that the latter requirement, which originated in Wagner,²⁷³ is implicitly embodied in the EPA.²⁷⁴ The Evers court explained:

For two reasons, . . . the Court concludes that [the] "important public policy" requirement from Wagner continues to apply. First, A.R.S. § 12-1501 was generally intended to narrow the scope of wrongful discharge causes of action. An intent to supersede Wagner's "important public policy" requirement would be contrary to this general purpose because it creates the possibility that any violation of a state statute, no matter how trifling, could form the basis for a whistleblowing retaliation claim. Second, the "important public policy" requirement comports with society's general understanding that whistleblowing brings to light important issues of broad interest, rather than essentially personal disputes.²⁷⁵

In Knox v. United Rentals Highway Technologies, Inc.,²⁷⁶ an Arizona federal district court judge held that in order to prevail on a whistleblower claim under the EPA, the employee must show (1) that he or she engaged in protected activity, (2) that the employer subjected the employee to an adverse employment action,²⁷⁷ and (3) a causal link between the protected activity and the adverse employment action.²⁷⁸ The court noted that in order to establish this causal link, "the employee must show that the employer's 'retaliatory motive played a part in the employment action.'"²⁷⁹

The requisite causal connection occasionally can be established directly,²⁸⁰ by presenting evidence of the employer's retaliatory animus toward the employee.²⁸¹ The causal connection also can be established circumstantially,²⁸² by showing that the employee's protected activity was followed closely in time by the adverse employment action,²⁸³ or that the complaining employee was treated less favorably than other similarly situated employees who did not engage in protected activity.²⁸⁴

However, a retaliatory motive, like other states of mind, "is seldom . . . susceptible of proof by direct evidence and must ordinarily be proven by circumstantial evidence,"²⁸⁵ because "an employer will rarely admit to retaliatory intent."²⁸⁶ In Walters v. Maricopa County,²⁸⁷ for example, the Arizona Court of Appeals observed that "it is unlikely that the employer would tell the employee that he or she is being disciplined or dismissed as reprisal for disclosure of information damaging to the employer."²⁸⁸

Although a court may infer causation from a close temporal proximity between the employee's protected activity and the adverse employment action,²⁸⁹ the temporal proximity must be "very close."²⁹⁰ A "mere coincidence in timing . . . is not enough to sustain a claim for retaliation,"²⁹¹ nor is an employee's mere subjective belief that he or she was terminated for engaging in protected activity."²⁹²

The Everscourt discussed two potential alternative standards for analyzing the causation requirement in whistleblower cases brought under the EPA.²⁹³ Under one alternative, premised on the McDonnell-Douglas v. Green²⁹⁴ burden-shifting analysis applicable in Title VII cases,²⁹⁵ "the causation element is characterized as a question of whether the employer had a retaliatory motive that played a part in the employment action."²⁹⁶ In this scenario, the employee has the initial burden of presenting evidence sufficient to raise an inference that his or her protected activity was the likely reason for the employer's adverse action.²⁹⁷ If this burden is met, the employer then must articulate some legitimate, non-retaliatory reason for the adverse action, and once it does, the plaintiff may show that the articulated reason was actually a pretext for retaliation.²⁹⁸ In order to create a triable issue of fact, the evidence of pretext must be "specific and substantial."²⁹⁹

The other alternative approach to analyzing the causation element in a whistleblowing case stems from the Supreme Court's analysis of a First Amendment retaliation claim in Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle.³⁰⁰ This approach involves a "two part burden-shifting scheme" in which the plaintiff must initially establish that his or her conduct was protected, and that it was a substantial or motivating factor in the employer's adverse employment action.³⁰¹ If the plaintiff satisfies that burden, the employer "can escape liability by showing that it would have taken the same action even in the absence of the protected conduct."³⁰²

Another court has described the principal difference between the two tests in the following terms:

In the McDonnell Douglas context [the employer's articulated] reasons serve to suggest the absence of [a] discriminatory [or retaliatory] motive. In the Mt. Healthycontext?in which a discriminatory [or retaliatory] motive has already been found to have been a determining factor?these same reasons may serve to show that there was a mixture of legal and illegal motives and that the legal motives standing alone would have brought about the plaintiff's dismissal.³⁰³

The Everscourt predicted that Arizona's state courts would apply Mt. Healthy's mixed motive analysis to causation questions under the EPA.³⁰⁴ The court asserted that this approach more closely resembles the approach applied in Murcott v. Best Western International, Inc.³⁰⁵ and other Arizona whistleblowing cases arising prior to the EPA's enactment.³⁰⁶

In Murcott, the Arizona Court of Appeals addressed the causation issue in a case in which the EPA did not apply because the plaintiff's termination occurred prior to its enactment.³⁰⁷ The court did not specifically discuss Mt. Healthyor the mixed motive analysis, but upheld a jury verdict in favor of a terminated employee on his public policy wrongful discharge claim where the evidence supported the inference that the plaintiff's whistleblowing activities "were a substantial factor motivating the termination."³⁰⁸ This analysis mirrors the language in Mt. Healthy indicating that an employee claiming to have been subjected to unlawful retaliation must show that his or her constitutionally protected conduct "was a 'substantial factor' – or to put it in other words, that it was a 'motivating factor' in the [employer's] decision."³⁰⁹ If the employee makes such a showing, the employer still may prevail if it can establish that "it would have reached the same decision . . . even in the absence of the protected conduct."³¹⁰

The Everscourt's prediction is consistent with the Ninth Circuit's earlier ruling in Gerberry v. Maricopa County³¹¹ that the Mt. Healthy mixed motive analysis should apply to retaliatory discharge claims brought under the EPA.³¹² The court in Gerberry explained:

Before A.R.S. § 23-1501 was enacted, Arizona courts applied that analysis to retaliatory termination claims brought on common law grounds of public policy. A.R.S. § 23-1501 was enacted as part of the Arizona Employment Protection Act, which was intended to narrow the availability of wrongful termination claims. This suggests that the Mt. Healthy rule was intended to continue to apply after the [EPA] was enacted.³¹³

A number of courts have also based their recognition of the "after-acquired evidence" defense,³¹⁴ which the Arizona Supreme Court adopted in O'Day v. McDonnell-DouglasHelicopter Co.,³¹⁵ on Mt. Healthy's mixed motive analysis.³¹⁶ Without discussing Mt. Healthy,³¹⁷ the court in O'Day held that after-acquired evidence of an...