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Balla v. Gambro, Inc.

    Brief Fact Summary.

    When Balla (Plaintiff) was discharged from his position as Gambro’s (Defendant) in-house counsel after he informed the firm’s president that he would take any steps necessary to stop the sale of defective dialyzers, Balla (Plaintiff) brought this action seeking damages for retaliatory discharge.

    Synopsis of Rule of Law.

    In-house counsel should not be permitted the remedy of an action for retaliatory discharge. 

    Facts.

    Balla (Plaintiff), former in-house counsel for Gambro, Inc. (Defendant), advised Gambro (Defendant) to refuse a shipment of dialyzers from its German affiliate because the dialyzers did not comply with FDA regulations.  The dialyzers were to be used by patients with little or no kidney function.  At first, Gambro’s (Defendant) president informed Gambro Germany (Defendant) that it would not accept the machines, but he later agreed to accept them for sale.  Plaintiff informed the president that he do whatever was necessary to stop the sale of the dialyzers.  After Plaintiff was discharged from employment for Gambro (Defendant), he reported the shipment of the dialyzers to the FDA.  The FDA determined that the dialyzers did not meet FDA requirements and seized them.  Plaintiff then sought damages for retaliatory discharge.  The trial court granted Gambro’s (Defendant) motion for summary judgment.  The appellate court reversed.  Gambro (Defendant) appealed

    Issue.

    Should in-house counsel be permitted the remedy of an action for retaliatory discharge? 

     

    Held.

    (Clark, J.)  No.  In-house counsel should not be permitted the remedy of an action for retaliatory discharge.  Apparently Gambro (Defendant) discharged Valla (Plaintiff) in retaliation for his activities, and such discharge violated a clearly mandated public policy.  However, Plaintiff was not only an employee but also general counsel for Gambro (Defendant).  Under the Rules of Professional Conduct, an attorney shall disclose information regarding a client to the extent it appears necessary to prevent the client from committing an act that would result in death or serious bodily injury.  By seizing the dialyzers, the FDA indicates that their use would cause death or serious bodily injury.  Therefore, Plaintiff was under a mandate to report the sale of the dialyzers.  Unlike other employees who are confronted with the dilemma of whether to file for worker’s compensation and risk being fired or keep their jobs and lose their right to a remedy, Plaintiff did not have a choice regarding the course of action he could follow.  Plus, extending the tort of retaliatory discharge to in-house counsel would have an undesirable chilling effect on the attorney-client relationship between employers and their in-house counsel.  The trial court’s decision is affirmed

    Dissent.

    (Freeman, J.)  The lawyer’s ethical obligation is an inadequate safeguard for protecting the lives and property of Illinois citizens.  The incentive needed is recognition of a cause of action for retaliatory discharge.  Allowing a corporate employer to discharge its in-house counsel without fear of any sanction give the assistance and protection of the courts to crooks.  The majority overlooks the very real possibility that discharged in-house counsel will be stigmatized within the legal profession.

     

    Discussion.

    In general, a client may discharge his attorney at any time, with or without cause.  This rule applies equally to in-house and outside counsel.  Employers might hesitate to seek advice from their in-house counsel regarding potentially questionable corporate conduct knowing that their in-house counsel could use this information in a retaliatory discharge suit.  The Illinois version of the confidentiality rule imposes a mandatory duty of disclosure instead of the permissive rule of disclosure embodied in the ABA Model Rule 1.


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