                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                          File Name: 13a0916n.06

                                       No. 12-5401

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT


ANTHONY GADLAGE,                             )
                                             )
                                                                          FILED
       Plaintiff-Appellant,                  )                        Oct 24, 2013
                                             )                   DEBORAH S. HUNT, Clerk
v.                                           )
                                             )
WINTERS & YONKER, Attorneys at Law,          )   ON APPEAL FROM THE UNITED
PSC,                                         )   STATES DISTRICT COURT FOR THE
                                             )   WESTERN DISTRICT OF KENTUCKY
       Defendant-Appellee.                   )




       Before: GUY, DAUGHTREY, and WHITE, Circuit Judges.


       PER CURIAM. Plaintiff Anthony Gadlage, a Kentucky attorney, appeals the district

court’s judgment granting the defendant’s motion to dismiss and its order denying a motion

to alter or amend that judgment. Gadlage filed this diversity action against Winters &

Yonker (W&Y), a law firm incorporated in Florida and doing business in Louisville. The

parties have expressly waived oral argument, and we agree that oral argument is not

needed. See Fed. R. App. P. 34(a).


       Requesting injunctive and declaratory relief, as well as compensatory damages,

Gadlage alleged that he was wrongfully terminated from his position as an associate for the

firm after he refused to follow W&Y’s policy of referring personal-injury clients to certain

medical clinics owned by Dr. Gary Kompothecras, a Florida chiropractor. Gadlage claimed
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Gadlage v. Winters & Yonker
that he “refused to engage in the [firm’s] quid-pro-quo referral arrangement” because he

believed that this arrangement created a conflict of interest in violation of the Kentucky

Supreme Court Rules. He also claimed that W&Y retaliated against him by contesting his

subsequent application for unemployment benefits.


       W&Y moved to dismiss the complaint for failure to state a claim upon which relief

may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). The district court

granted the motion, concluding that Gadlage’s allegations failed to establish that his

termination was in violation of any public policy that would except him from the “at-will”

employment doctrine in Kentucky.        The district court also rejected Gadlage’s post-

termination retaliation claim. Gadlage then filed a motion to alter or amend the district

court’s order, along with a motion to hold the case in abeyance so that the district court

could certify to the Kentucky Supreme Court the question of whether “a violation of the

Kentucky Supreme Court Rules can form the basis of a wrongful discharge claim as a

‘public policy’ exception to the employment-at-will doctrine.” The district court denied the

motion and refused to certify this question, finding that the Kentucky Supreme Court had

sufficiently addressed the issue in Firestone Textile Co. Div. v. Meadows, 666 S.W.2d 730

(Ky. 1983), and Grzyb v. Evans, 700 S.W.2d 399 (Ky. 1985).


       On appeal, Gadlage argues that the Kentucky Supreme Court Rules derive from the

commonwealth’s constitution and, therefore, trigger the public policy exception to the at-will

doctrine. Gadlage cites two Kentucky statutes that allegedly reinforce his claim and three


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cases in support of his interpretation: a recent case from the United States District Court

for the Eastern District of Kentucky, decided within the context of state contract law,

Martello v. Santana, 874 F. Supp. 2d 658, 670 (E.D. Ky. 2012), and two state circuit court

cases, Greissman v. Rawlings and Associates, No. 12-CI-00744 (Oldham Cir. Ct. Apr. 8,

2013), and Isaacs & Isaacs, PSC v. Rigor, No. 05-CI-7688 (Jefferson Cir. Ct. Oct. 18,

2010). Gadlage also filed with this court a motion to certify to the Kentucky Supreme Court

the same question that he presented in his motion to certify filed in the district court.


       We review de novo a district court’s decision to deny a motion to dismiss for failure

to state a claim under Federal Rule of Civil Procedure 12(b)(6). Berrington v. Wal-Mart

Stores, Inc., 696 F.3d 604, 607 (6th Cir. 2012). When considering a Rule 12(b)(6) motion,

“we must accept as true any well-pleaded allegations,” but “need not accept any legal

conclusions or unwarranted factual inferences.” Id. (citations omitted).


       In cases arising under federal diversity jurisdiction, we review de novo a district

court’s interpretation of state law. Berrington, 696 F.3d at 607. In such cases, we apply

the substantive law of the forum state, “anticipat[ing] how the relevant state’s highest court

would rule in the case . . . .” In re Dow Corning Corp., 419 F.3d 543, 549 (6th Cir. 2005).

Because Kentucky has not addressed the precise issue presented, we must predict how

the state supreme court would rule “by looking to all the available data.” Allstate Ins. Co.

v. Thrifty Rent-A-Car Sys., Inc., 249 F.3d 450, 454 (6th Cir. 2001). We must be “extremely




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cautious about adopting substantive innovation in state law.” Combs v. Int’l Ins. Co., 354

F.3d 568, 578 (6th Cir. 2004) (internal quotation marks and citation omitted).


       As an at-will employee, Gadlage could be discharged for “for good cause, no cause,

or for a cause that some might view as morally indefensible.” Firestone, 666 S.W.2d at

731. Kentucky applies a narrow exception to this general rule when the termination

undermines a “most important public policy.” Id. at 733 (internal quotation marks and

citation omitted). The state permits this exception only when the discharge is shown to be

“‘contrary to a fundamental and well-defined public policy as evidenced by existing law,’”

and when the policy is “‘evidenced by a constitutional or statutory provision.’” Id. at 731

(quoting Brockmeyer v. Dun & Bradstreet, 335 N.W.2d 834, 835 (Wis. 1983)). This

“narrowly defined exception” requires that any cause of action contrary to the at-will

doctrine must be “clearly defined and suitably controlled.” Id. at 733.


       After Firestone, the Kentucky Supreme Court adopted the additional caveat that

“only two situations exist where ‘grounds for discharging an employee are so contrary to

public policy as to be actionable’ absent ‘explicit legislative statements prohibiting the

discharge.’” Grzyb, 700 S.W.2d at 402 (quoting Suchodolski v. Mich. Consol. Gas Co., 316

N.W.2d 710, 711 (Mich. 1982)). The first situation is “where the alleged reason for the

discharge . . . was the failure or refusal to violate a law in the course of employment,” and

the second is “when the reason for a discharge was the employee’s exercise of a right




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conferred by a well-established legislative enactment.” Id. (internal quotation marks and

citation omitted).


       Gadlage’s strongest support for his claim derives from orders by two Kentucky circuit

courts. In Isaacs & Isaacs, a lawyer alleged that he was fired in retaliation for threatening

to contact the Kentucky Bar Association for an ethical opinion as to whether a questionable

practice by his firm violated the Supreme Court Rules. The circuit court held that the

lawyer’s actions were sufficiently protected and that his discharge was sufficiently close in

time to this threat, such that the lawyer alleged a prima facie case of wrongful discharge.

Case No. 05-CI-7688, at 8. Similarly in Greissman, a different circuit court relied heavily

on Isaacs & Isaacs to hold that the obligatory Supreme Court Rules “supply a source of

authority that can ground a claim from wrongful termination in violation of public policy.”

Case No. 12-CI-00744, at 5.


       We need not resolve here whether these two lower courts accurately anticipated

how the Kentucky Supreme Court would rule on the question. Even if obligatory Supreme

Court Rules can ground a public-policy exception to the at-will doctrine, Gadlage does not

allege a single particularized Rule violation in his complaint or in his appellate briefing. He

relies instead on vague and generalized statements about third-party conflicts of interests

and obligations to clients. Gadlage has thus failed to state a claim that is “plausible on its

face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). We are not convinced that




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Gadlage v. Winters & Yonker
the Kentucky Supreme Court would decide otherwise, considering “all available data.” See

Combs, 354 F.3d at 578; Allstate Ins. Co., 249 F.3d at 454.


       We also affirm the district court’s dismissal of Gadlage’s post-termination retaliation

claim, because he did not establish a factual basis to support his claim that W&Y’s conduct

rose to the level of outrageousness necessary to meet his burden of establishing this claim.

See Kroger Co. v. Willgruber, 920 S.W.2d 61, 65 (Ky. 1996). In regard to his motion to

certify, we decline to “trouble” the Kentucky Supreme Court with this question of state law,

because we have a “reasonably clear and principled course” to follow to resolve the matter.

Pennington v. State Farm Mut. Auto. Ins. Co., 553 F.3d 447, 450 (6th Cir. 2009) (internal

quotation marks and citation omitted).


       Accordingly, the motion to certify is DENIED, and the district court’s judgment is

AFFIRMED.




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       HELENE N. WHITE, Circuit Judge, dissenting. I respectfully dissent. I would grant

Gadlage’s motion to certify to the Kentucky Supreme Court the question whether a violation

of the Kentucky Supreme Court Rules can form the basis of a wrongful-termination claim

as a public- policy exception to the employment-at-will doctrine.


       Neither the Kentucky Supreme Court or its courts of appeals have addressed this

question. However, two recent Kentucky circuit-court decisions squarely answered the

question in the affirmative, see Greissman v. Rawlings & Assoc., No. 12-CI-00744 (Oldham

Cir. Ct. Apr. 8, 2013); Isaacs & Isaacs, PSC v. Rigor, No. 05-CI-7688 (Jefferson Cir. Ct.

Oct. 18, 2010).


       I do not agree that Gadlage’s complaint fails to state a plausible claim. Accepting

the allegations as true, as we must, Gadlage’s complaint pleaded sufficient facts to raise

a plausible inference of wrongdoing. See 16630 Southfield Ltd. Partnership v. Flagstar

Bank, F.S.B., __ F.3d__, No. 12-2620, 2013 WL 4081909, at *1 (6th Cir. Aug. 14, 2013)

(noting that under Iqbal and Twombly a plaintiff is required “to plead enough ‘factual matter’

to raise a ‘plausible’ inference of wrongdoing”).


       The verified complaint alleged that Winters & Yonker “primarily represents

individuals with personal injury claims sustained in motor vehicle accidents,” that “associate

attorneys[’] job duties include traveling to the home of new clients, conducting a thorough

interview of the client, and having the client sign various forms including a contract of

representation,” that Winters & Yonker “specifically instructs their associate attorneys to

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Gadlage v. Winters & Yonker
use this ‘sign up’ process as an opportunity to get clients to seek medical care at Kentucky

Spine and Rehab,” which is owned and operated by Florida chiropractor Dr. Gary

Kompothecras, that Kompothecras “advertises in Florida and Kentucky, not as a

chiropractor, but as a ‘medical and lawyer referral service’ under the pseudonym ‘1(800)

ASK-GARY” and that Kompothecras “refers hundreds of Kentucky injury patients to Winters

& Yonker.” Gadlage’s complaint alleged that “[i]n return Kompothecras/1 (800) ASK-GARY

expects hundreds of referrals from Winters & Yonker to his Kentucky medical clinics.”

Gadlage “found that it was more difficult to successfully resolve injury claims for individuals

who treated at 1(800) ASK-GARY clinics, and therefore believed it was in the best interest

of his clients and their claims to seek medical treatment with providers other than

1(800)ASK-GARY clinics.” PID 5. Gadlage “refused to engage in the quid-[pro-quo]

referral arrangement mandated by Winters & Yonker and its agents,” and “believed

that referring his clients to Kentucky Spine and Rehab created a third party conflict of

interest under the Kentucky’s Supreme Court Rules.” Gadlage alleged that shortly

after he and other associates were shown a spreadsheet indicating that he was the

associate who most often did not refer cases to Kentucky Spine & Rehab, his employment

was terminated. His complaint alleged that “[a]s a result of his refusal to place Winters &

Yonker and 1(800)ASK-GARY/Kentucky Spine and Rehab’s financial interest above the

interests of his clients,” his employment was terminated. PID 6.


       Gadlage’s counsel would have been well advised to cite specific Supreme Court

Rule(s) in the complaint. But the Winters & Yonker firm was not baffled; its own motion to

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Gadlage v. Winters & Yonker
dismiss identified a specific Supreme Court Rule: “it appears to be [Gadlage’s] current

claim that a referral to Kentucky Spine and Rehab might violate SCR 3.130(1.7)(a).” PID

29. The conclusion that Gadlage’s complaint did not state a claim plausible on its face

because it failed to cite a specific Supreme Court Rule is unfounded under these

circumstances.


       Finally, I note that during the pendency of this appeal this court affirmed another

case Gadlage relied on below, Martello v. Santana, 874 F. Supp. 2d 658, 670 (E.D. Ky.

2012), aff’d 713 F.3d 309 (6th Cir. 2013), rejecting the argument that public policy can be

created only by the Kentucky Legislature and not the Supreme Court of Kentucky:


       Martello argues that public policy can only be created by the Kentucky
       Legislature and not by the Supreme Court of Kentucky. However, Kentucky
       courts have held that, in the absence of legislative guidance, courts may
       determine public policy. Yeager v. McLellan, 177 S.W.3d 807, 809 (Ky.
       2005) . . . .


       The Kentucky bar is a mandatory unified bar and the Kentucky Rules of
       Professional Conduct are public policy set by the Kentucky Supreme
       Court. Ex parte Auditor of Pub. Accounts, 609 S.W.2d 682, 689 (Ky. 1980).
       These attorney standards are not created only “for the private benefit of the
       legal community.” Id. (noting the Kentucky Bar Association’s mission is to
       maintain “a high standard of professional competence” and help promote
       improvement of the judicial system); Kentucky Bar Ass’n v. Chesley, 393
       S.W.3d 584, 2011–SC–000382–KB, 2013 WL 1197510 (Ky. Mar. 21, 2013).
       The Kentucky Rules of Professional Conduct require lawyers to meet many
       ethical standards to ensure they properly represent their clients, the public.
       SCR 3.130 (preamble). Under Kentucky Rule of Professional Conduct 5.4
       “[a] lawyer or law firm shall not share legal fees with a nonlawyer. . . .” Id. at
       3.130–5.4 (professional independence). Here, Martello was not an attorney
       at any point during her work with Santana. She has a law degree, but has


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       never been admitted to any state’s bar. Thus, the fee-sharing contracts
       violate Rule 5.4.


Martello, 713 F.3d at 313–14 (emphasis added).


       Two on-point Kentucky circuit-court decisions favor Gadlage’s position as does

Martello. Our task is to “ascertain from all available data what the state law is and apply

it.” General Elec. Co. v. Sargent & Lundy, 916 F.2d 1119, 1125 (6th Cir. 1990). I disagree

with the majority that we have a reasonably clear and principled course to follow based on

25 to 30 year-old Kentucky Supreme Court decisions that do not address the question

presented and would thus grant Gadlage’s motion to certify the question.




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