Justice Hudson's Dissent in
Physio, Ltd v. Naifeh (Tex.App. - Houston [14th Dist.] Feb. 4, 2010)(Yates)
employment law - wrongful termination; no individual liability of boss who fired employee in Sabine-Pilot
wrongful termination claim brought against corporate employer absent alter ego)
In my view, the public policy considerations raised in Sabine Pilot, i.e., to relieve “at-will”
employees from being pressured to commit criminal acts, would rationally apply to both
the employer and its agents.  The pressure exerted against Naifeh to falsify records was
no less intimidating because it was asserted by a fellow employee.  Tanja had the
power to terminate Naifeh and did so because she would not become a party to a
criminal enterprise.  Her conduct constitutes the very essence of the common law tort
created by Sabine Pilot.  Accordingly, I respectfully dissent.
Before Justices Brock Yates, Hudson and Sullivan    
14-08-00017-CV   Physio GP, Inc., Physio, Ltd, Tanja Saadat and Shawn Saadat v. Natalie Naifeh
Appeal from 295th District Court of Harris County
Trial Court Judge:
Tracy Kee Christopher
Dissenting Opinion by Justice Hudson in Physio GP, Inc.v. Natalie Naifeh (pdf)   

D I S S E N T I N G    O P I N I O N

Does the Sabine Pilot[1] exception to the “employment-at-will doctrine” extend to an individual defendant who is
not the employer of the plaintiff?  In other words, may an individual, who is not the employer of the plaintiff, be
liable for wrongful discharge of the plaintiff under the Sabine Pilot doctrine?  

The majority answers negatively and supports its position with cogent arguments and authorities.  However, as
the majority acknowledges, this is an issue on which jurists have struggled and the states are divided.  Unlike
my colleagues, I find myself persuaded by a contrary rationale and opposing authorities.

The majority argues the Saadats could not logically be liable for wrongful termination because they had no
authority to fire Naifeh.   The majority concludes that only the employers, i.e., Physio GP, Inc. and Physio, Ltd.,
had the power to terminate Naifeh’s employment.  While the rationale has a logical allure, it rests on a legal
fiction.  In the real world, no one disputes the fact that Naifeh was fired by Tanja Saadat.  Moreover, no one
disputes the effectiveness of that termination.  Only in the most abstract sense can it be said that Tanja did not
fire Naifeh, and it is little comfort to her to now learn that Tanja had no intrinsic, individual authority to terminate
her employment.

The majority’s strongest argument, in my mind, is that the specter of individual liability could discourage
corporate supervisors from terminating employees in legitimate situations.  In the majority of cases, an employer
is shielded by the employment-at-will doctrine.  The doctrine does not stem from an inherent right of the
employer, but from the absence of a contractual agreement regarding the period of employment.  Thus,
employment may be terminated by the employer or the employee at will, for good cause, bad cause, or no
cause at all.  Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998).  By definition, the
employment-at-will doctrine does not require an employer to be reasonable, or even careful, in making its
termination decisions.  Tex. Farm Bureau Mut. Ins. Cos. v. Sears, 84 S.W.3d 604, 609 (Tex. 2002).

Further, I do not doubt that the employment-at-will doctrine is decidedly beneficial to economic efficiency.  Nor
do I dispute the notion that fear of unjustified litigation can cripple corporate productivity.  However, the Texas
Supreme Court recognized a common law exception to the employment-at-will doctrine in Sabine Pilot when a
termination is based on an employee’s refusal to do an unlawful act.  The wisdom of that decision and its public
policy ramifications are not at issue here.  Having found such an exception, it is our duty, as in intermediate
appellate court, to give it application where appropriate.

There are good reasons to believe a corporate employee may be liable in his or her individual capacity for
wrongful termination.  First, the tort is intensely personal.  It is not based on negligence, but on intentional
malice.  In other words, the gravamen of wrongful termination is not found in some corporate mistake, but in the
uniquely human passion of hatred, spite, meanness, and revenge.  For example, the uncontroverted evidence
in this case shows that Tanja asked Naifeh to participate in a massive insurance fraud scheme by signing
patient records reflecting treatments and services that had never been administered.  Naifeh refused, and she
was fired.

The Saadats then set out on a campaign to destroy Naifeh’s credibility and professional reputation.  The
Saadats alleged that Naifeh was fired because she had performed unauthorized treatment on a patient’s knee.  
The allegation was untrue, and the Saadats later admitted at a Texas Workforce Commission hearing that they
had a copy of the prescription, authorized by the patient’s physician, for treatment of the knee.

The day after Naifeh was fired, the Saadats filed a police report falsely alleging Naifeh had stolen documents.  
The Saadats also manufactured a fake “Confidentiality Agreement” (with Naifeh’s forged signature) stating that
“all information related to Physio[’s] day-to-day operation in regards to patient information and billing shall be
kept confidential[,] and I shall not share any of this information with any patient or any individual.”  Using the
fabricated Confidentiality Agreement and false police report, the Saadats asserted claims against Naifeh for
misappropriation of confidential and proprietary information and conspiracy to misappropriate confidential and
proprietary information.  They also filed a claim under the Texas Theft Liability Act.

The Saadats also created multiple false disciplinary records and submitted them to the Texas Workforce
Commission in an attempt to prevent Naifeh from receiving unemployment benefits.  Finally, the Saadats
submitted multiple false disciplinary records to the Texas Physical Therapy Board in an effort to have Naifeh’s
professional license revoked.

The tort committed here is akin to assault, battery, false imprisonment, and other intentional torts.  The conduct
was purposely directed at Naifeh with the deliberate intention of inflicting an injury upon her.  This is the very
behavior Sabine Pilot was intended to prevent, and there is no Texas authority restricting liability solely to the
corporate employer.  

As the majority notes, other states have considered, with mixed results, whether the common law tort of
wrongful discharge can expose a corporate employee to personal liability.[2]  Some view wrongful discharge as
any other tort and impose individual liability on employees for their own tortious conduct.[3]  Others have
reasoned that the tort can only be committed by the person or legal entity that employed the terminated
employee.[4]  “These courts reason that an individual officer or employee of a corporation cannot commit the
tort of wrongful discharge because an individual officer or employee has no authority separate from the
authority exercised on behalf of the corporation to discharge an employee of the corporation.”  Jasper v. H.
Nizam, Inc., 764 N.W.2d 751, 775 (Iowa 2009).  Thus, they reason that “the existence of an employment
contract is . . . the most fundamental prerequisite to a claim of wrongful discharge.”  Bourque v. Town of Bow,
736 F. Supp. 398, 401 (D.N.H. 1990).  Accordingly, these courts hold that “wrongful discharge is a corporate
tort within a corporate setting, not an individual tort.”  Jasper, 764 N.W.2d at 776.

In Texas, however, the common law tort of wrongful discharge is not derived from principles of contract law;
neither does it spring from a contract of employment.  If the employee’s termination violates some contractual
provision, he can sue for its breach.  It is precisely because an “at-will” employee is not protected from a “bad
cause” termination; because he has no contractual protections; and because public policy seeks to discourage
criminal acts, that Sabine Pilot created a narrow exception to the employment-at-will doctrine.  Further, it is the
general rule in Texas that a corporation’s employee is personally liable for tortious acts which he directs or
participates in during his employment.  Walker v. Anderson, 232 S.W.3d 899, 918 (Tex. App.—Dallas 2007, no

A corporate shareholder or director, for example, who wrongfully terminates an employee is liable for tortious
interference with the corporation’s employment contracts if the action is willful, intentional, and advances the
interest of the actor rather than the interests of the corporation.  See Holloway v. Skinner, 898 S.W.2d 793,
795–96 (Tex. 1995).  Here, the evidence and the reasonable inferences there from would be sufficient to
establish that Tanja’s actions were willful and intentional, that although it was not in Physio’s interest to
terminate Naifeh for refusing to commit a criminal act, Tanja acted in her own interests in doing so.[5]

In my view, the public policy considerations raised in Sabine Pilot, i.e., to relieve “at-will” employees from being
pressured to commit criminal acts, would rationally apply to both the employer and its agents.  The pressure
exerted against Naifeh to falsify records was no less intimidating because it was asserted by a fellow employee.  
Tanja had the power to terminate Naifeh and did so because she would not become a party to a criminal
enterprise.  Her conduct constitutes the very essence of the common law tort created by Sabine Pilot.

Accordingly, I respectfully dissent.
J. Harvey Hudson

                                                                            Senior Justice

Panel consists of Justices Yates (majority), Sullivan, and Senior Justice Hudson.*


[1] Sabine Pilot Serv., Inc. v. Hauck, 687 S.W.2d 733, 735 (Tex. 1985).

[2] Other jurisdictions take varied approaches to claims of individual liability for wrongful termination.  At one end of the spectrum,
California, Illinois, and Kansas do not recognize liability for wrongful-discharge claims against individual non-employers.  See
Reno v. Baird, 957 P.2d 1333, 1334 (Cal. 1998) (holding that supervisors may not be sued individually under California’s Fair
Employment and Housing Act, and stating that this holding “also applies to common law actions for wrongful discharge”);
Buckner v. Atl. Plant Maint., Inc., 694 N.E.2d 565, 569–70 (Ill. 1998) (no personal liability for retaliatory discharge of subordinate for
filing a workers’ compensation claim); Rebarchek v. Farmers Coop. Elevator, 35 P.3d 892, 903–04 (Kan. 2001) (same).  At the
opposite end of the spectrum, Iowa, New Jersey, Pennsylvania, and West Virginia recognize the personal liability of individual
non-employers for wrongful termination even when the individual acted within the course and scope of his or her employment in
firing another employee.  See, e.g., Jasper v. H. Nizam, Inc., 764 N.W.2d 751, 777 (Iowa 2009) (holding that liability for the tort of
wrongful discharge based on refusal to commit an unlawful act can extend to the corporate officers who authorized or directed the
discharge); Ballinger v. Del. River Port Auth., 800 A.2d 97, 110 (N.J. 2002) (“[A]n individual who personally participates in the tort of
wrongful discharge may be held individually liable.”); Kamensky v. Roemer Indus., Inc., 1 Pa. D. & C.4th 497, 499–500 (1988)
(president of employer corporation is subject to personal liability for terminating a reinstated worker’s employment for failure to
withdraw an unemployment compensation claim); Harless v. First Nat’l Bank in Fairmont, 289 S.E.2d 692, 698 (W. Va. 1982)
(“The discharge serves to fix responsibility on the employer but this does not mean that another employee who has been the
principal protagonist in obtaining the employee’s discharge would not also be liable.”).  Other jurisdictions consider whether the
“principal protagonist” acted within the course and scope of his own employment when wrongfully discharging another
employee.  For example, the Mississippi Supreme Court has held that an individual is not liable for his actions in wrongfully
discharging an employee if the individual acted within the course and scope of his employment, but it has not addressed the
question of whether an individual should be held liable for wrongful termination if he acted outside his employment duties or
contrary to the employer’s interests.  See DeCarlo v. Bonus Stores, Inc., 989 So. 2d 351, 358–59 (Miss. 2008) (en banc); see also
Bourgeous v. Horizon Healthcare Corp., 872 P.2d 852, 855–56 (N.M. 1994) (leaving open “the question of whether a retaliatory
discharge claim lies against a supervisor, agent, or coemployee if the firing was an intentional act done solely for the supervisor,
agent or coemployee’s own interest and therefore outside the scope of employment”).

[3] See DeCarlo v. Bonus Stores, Inc., 512 F.3d 173, 176–77 (5th Cir. 2007) (collecting cases); Higgins v. Assmann Elecs., Inc.,
173 P.3d 453, 458 (Ariz. Ct. App. 2007); Ballinger, 800 A.2d at 110–11; Harless, 289 S.E.2d at 698–99.

[4] See Hooper v. North Carolina, 379 F. Supp. 2d 804, 814–15 (M.D.N.C. 2005) (North Carolina law); Miklosy v. Regents of the
Univ. of Cal., 188 P.3d 629, 644–45 (Cal. 2008); Reno, 957 P.2d at 1347; Buckner, 694 N.E.2d at 569–70; Rebarchek, 35 P.3d at

[5] Although no question of whether Tanja’s conduct was itself criminal is at issue in this civil case, the difference between Tanja’
s interests and Physio’s interests is easily seen when one considers separately the risks and benefits to each arising from
Tanja’s conduct in (a) altering the documents, and in (b) asking Naifeh to sign the altered documents and in terminating her for
refusing to do so.  It was conceivably in Physio’s financial interests to inflate its bills, and thus, one could make a colorable
argument that by altering records used to support its billing practices, Tanja was acting in Physio’s best interests.  But because a
person who makes false statements in connection with the delivery of or payment for health care services can face imprisonment
for up to five years, the person who makes such a statement has a personal stake, distinct from that of a corporate employer, in
avoiding detection.  A reasonable factfinder therefore could conclude that in asking Naifeh to sign the patient records, Tanja was
acting in her own interest to conceal the fact that the documents had been altered, so that if it were discovered that insurers were
billed by Physio for services that were not performed, it would appear that Naifeh and not Tanja was responsible.

* Senior Justice J. Harvey Hudson, sitting by assignment.