In 1904, the Indiana Supreme Court found that I.C. § 22-5-3-2, the Blacklisting Statute, could not be enforced by discharged employees because doing so would violate the single-subject rule. In
, ___ N.E.2d ___ (Ind. 2012), Cause No. 94S00-1109-CQ-546, the Indiana Supreme Court revisited this issue. Based on changes to the constitution, the Court found that the 1904 case was no longer good law, thus opening up a new claim to discharged employees.
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The Blacklisting Statute prevents a company from taking actions that would prevent a discharged employee "from obtaining employment with any other ... company." If a company violates this statute, the "company shall be liable to such employee in such sum as will fully compensate him, to which may be added exemplary damages." The title of this statute was "An act for the protection of discharged employes and to prevent blacklisting."
In
Wabash Railroad Co. v. Young, 162 Ind. 102, 69 N.E. 1003 (1904), (a case too old for me to freely link) the Court applied the then-applicable version of the single-subject rule in the Indiana Constitution,
Article 4, Section 19. At the time, the Constitution required that the single subject of a statute be expressed in its title. That has been changed, most recently in 1974; the Constitution now limits an act to "one subject and matters properly connected therewith." The constitutional change and subsequent case law made the answer to whether
Young was still good law "ease enough. Whether
Young was wrongly decided in 1904 or not, we hold that it is no longer
stare decisis on the question of whether an employee who voluntarily leaves her employment may pursue a claim under the Blacklisting Statute." today, the Blacklisting Statute "does not run afoul of Section 19."
The next subject dealt with whether attorney's fees are available to an employee under the Blacklisting Statute as compensatory damages. The employee compared this statute to the wrongful death statutes, statutes which,
as the Court decided last year, allow attorney's fees as compensatory damages. The Court disagreed.
According to the Court, the statutes addressed last year were part of a statutory scheme that specifically stated that attorney's fees were part of the recoverable "necessary and reasonable costs and expenses of ... prosecuting or compromising the action." In this case, "none of the other statutes in the blacklisting chapter contain an authorization for attorney fees," so the rationale behind last year's decisions did not apply here. Moreover, the Court found that the Blacklisting statute limited damages to compensatory and exemplary damages, thus leaving no room to include attorney's fees as damages.
Finally, the Court addressed whether a trade secrets lawsuit could be a basis for a blacklisting claim. The Court held that it could not. First, Indiana already recognizes claims for abuse of process and malicious prosecution that could cover such a claim. Second, the Court held that this type of conduct is not blacklisting, which it defined as follows:
In light of the particular history of blacklisting, we think the specific prohibition—-the actual blacklist-—is best defined as a list of one or more workers, circulated by employers, who are to be refused employment or otherwise marked for special avoidance, antagonism, or enmity, because those workers are reputed to hold opinions or engage in actions contrary to the employers' interests. The act of blacklisting, then-—or as the statute says, "to black-list"—-would be transmission or distribution of this list from one employer to another, with the wrongful intent of preventing those employees from obtaining future employment within that industry.
The Court further found that policy concerns prevented it from finding that bringing an unsuccesful lawsuit should give rise to a blacklisting claim.
It effectively creates a form of per se blacklisting, whereby any unsuccessful lawsuit to enforce a noncompetition agreement or protect trade secrets—-and without any finding of the suit being frivolous, baseless, brought in bad faith, or motivated by malice—would itself provide grounds for a retaliatory blacklisting claim awarding compensatory damages, attorney fees, and potential punitive damages. Rather than vitiating any in terrorem effect of a noncompetition agreement, this approach would multiply it. It would create a standoff between the former employer, potential employer, and the employee, and the threat of their own mutually assured destruction would deter everyone from seeking any redress whatsoever. While this approach may work well as a plot device in movies, or as a strategic nuclear policy, we would prefer it not be the norm in such a routine body of law as employer-employee litigation.
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We do not discount the possibility that an ill-minded employer might attempt to misuse the court system to leverage its business interests over the rights of a former employee, and the law provides a number of remedies and defenses for the former employee who is so besieged. The Indiana Blacklisting Statute, however, is not one of them.
