Can My Employer Sue Me After I File an Alabama Retaliatory Discharge Claim?

Can My Employer Sue Me After I File an Alabama Retaliatory Discharge Claim?

An injured Alabama worker files a workers’ compensation claim, is later fired, and brings a retaliatory discharge lawsuit against the employer.  Then the employer does something the employee may never have expected-the employer files a counterclaim against the employee.

Can an employer do that?

Yes. An employer does not lose its right to bring a legitimate legal claim simply because an employee has filed a workers’ compensation or retaliatory discharge lawsuit; but there is an important other side to that rule. An employer cannot necessarily use a baseless lawsuit simply as a weapon to intimidate or harass an injured employee. Under appropriate circumstances, Alabama law recognizes a separate claim for malicious prosecution.

And the Alabama Supreme Court has specifically held that a counterclaim filed in an earlier lawsuit can provide the basis for a later malicious-prosecution action.

A Counterclaim Is Not Automatically Wrongful

This distinction is important.  If an employee sues an employer for retaliatory discharge and the employer has a legitimate claim against that employee, the employer is entitled to assert it.  The fact that the employer files a counterclaim does not by itself prove retaliation or malicious prosecution.

Even more importantly, the fact that the employer eventually loses the counterclaim does not automatically make it malicious prosecution.

Alabama courts have traditionally viewed malicious-prosecution claims cautiously because people and businesses must generally be free to bring legitimate disputes to court without facing another lawsuit merely because they ultimately lose. Moon v. Pillion, 2 So. 3d 842, 845 (Ala. 2008).   Something more is required.

What Must Be Proven for Malicious Prosecution in Alabama?

The Alabama Supreme Court has stated the elements as:

1. a judicial proceeding initiated by the defendant;
2. lack of probable cause;
3. malice;
4. termination of the proceeding in favor of the malicious-prosecution plaintiff; and
5. damages.

Moon v. Pillion, 2 So. 3d 842, 845–46 (Ala. 2008).

Each element matters.

An employer’s counterclaim therefore does not become malicious prosecution merely because the employee believes it is unfair, aggressive, or retaliatory; there must be evidence supporting the actual elements of the tort.

Can an Employer’s Counterclaim Really Lead to Malicious Prosecution?

Yes.

This particular question reached the Alabama Supreme Court in Barrett Mobile Home Transport, Inc. v. McGugin, 530 So. 2d 730 (Ala. 1988).  Here, the Court considered whether malicious prosecution could be based upon a counterclaim filed in the underlying lawsuit, and the Court held that it could.  The Court reasoned that asserting a counterclaim is effectively the institution of a claim against the opposing party. Accordingly, a counterclaim filed maliciously and without probable cause can, under appropriate circumstances, provide the predicate for a later malicious-prosecution action.

That does not mean that every unsuccessful counterclaim creates another lawsuit.  It means Alabama law does not give a party immunity from malicious-prosecution principles merely because the allegedly wrongful claim was labeled a “counterclaim” rather than filed as a separate lawsuit.

What Does “Without Probable Cause” Mean?

This is one of the most important requirements.  The issue is not simply whether the employer’s counterclaim eventually succeeded.

Alabama courts examine whether there was a reasonable basis for pursuing the claim based upon the circumstances existing when the proceeding was instituted. Moon explains that the focus is essentially upon whether the party acted in good faith based upon the appearance of things at the time.

That distinction is important because a legitimate claim can lose.

Witnesses can be disbelieved. Evidence can develop differently than expected. A judge or jury can simply disagree with the party bringing the claim.  Simply losing does not establish lack of probable cause.

But when a claim lacked probable cause when it was brought, an entirely different issue may arise.

What About Malice?

The third element in a claim for malicious prosecution is malice.  Ala.Code §6-11-20 deals with the imposition of punitive damages, and this section states punitive damages may be awarded in civil cases where, by a clear on convincing standard, “the defendant consciously or deliberately engaged in oppression, fraud, wantonness, or malice with regard to plaintiff.”

Malice is defined as:

The intentional doing of a wrongful act without just cause or excuse, either: (a) with an intent to injure the person or entity, or (b) under such circumstances that the law will imply an evil intent.

The requirement of the existence of malice is one reason malicious prosecution should not be casually alleged every time an employer files an aggressive counterclaim.  The facts surrounding why the claim was filed, what the employer knew when it filed it, how the claim was pursued, and what ultimately happened to it can all become important.

Our firm encountered an unusually strong example of this in actual retaliatory-discharge litigation.

Powell and Denny Has Litigated This Issue

In one of our retaliatory discharge cases, the employer filed a counterclaim against our injured client, alleging that the retaliatory discharge claim was filed without substantial justification, was filed for the sole purpose of gaining leverage in plaintiff’s underlying workers’ compensation claim, and the defendant/employer requested damages.

After 3 weeks of trial, the Court ultimately found that the employer did violate Ala.Code §25-5-11.1, that they did terminate plaintiff from his job in retaliation for his seeking workers’ compensation benefits, that the defendant was less than truthful in their arguments, and we were awarded $750,000.00.

Furthermore, in the decision, the Court stated the defendant had provided “no credible explanation” for why the counterclaim had been filed and concluded that it had been filed to “intimidate and harass” the employee.

Those findings eventually became the basis for a separate malicious-prosecution claim.

Powell and Denny filed a malicious prosecution suit.   The defendant continued to deny liability and vigorously defended the claim, but ultimately, the defendant paid $400,000 at mediation to settle the malicious-prosecution case.

That was an unusual case, and we would never suggest that every employer counterclaim amounts to malicious prosecution, but our experience demonstrates that the issue is not merely theoretical.

There is a significant difference between legitimately defending a retaliatory discharge lawsuit and using a baseless claim to intimidate the injured worker who brought it.

Why Can’t the Employee Immediately Sue for Malicious Prosecution?

There is another important wrinkle.  One of the required elements of malicious prosecution is that the underlying proceeding must have terminated favorably to the person bringing the malicious-prosecution claim.  Consequently, the employee generally cannot respond to the employer’s new counterclaim by immediately filing a malicious-prosecution claim while that counterclaim remains unresolved.

The Alabama Supreme Court addressed the accrual question in Barrett. The Court held that a malicious-prosecution action does not accrue until the underlying proceeding has finally terminated favorably, including completion of the appellate process where applicable.

So, these cases can develop in stages.

First comes the underlying litigation.  Only after the challenged proceeding is favorably terminated can a potential malicious-prosecution claim fully mature.

What Should I Do If My Employer Files a Counterclaim Against Me?

First, do not assume that the employer must be right simply because it filed something in court.  A complaint or counterclaim contains allegations. Filing it does not establish those allegations as facts.

At the same time, do not assume the counterclaim is malicious merely because you believe it is unfair.  It should be evaluated carefully.

Among the questions an attorney may want to investigate are:

• What exactly is the employer alleging?
• What legal basis does the employer claim supports the counterclaim?
• What evidence did the employer possess when it filed the claim?
• Who made the decision to file it?
• When was that decision made?
• What damages does the employer claim?
• Is the employer actually pursuing the claim?
• Has the employer’s explanation for the claim changed?
• How is the counterclaim ultimately resolved?

Those questions may become particularly important if the evidence later suggests that the counterclaim was brought for reasons other than legitimately obtaining relief from the court.

A Counterclaim Can Also Be Evidence

There is another issue worth considering in a retaliatory-discharge case.

Even when an employer’s counterclaim never becomes the basis for a separate malicious-prosecution action, the circumstances surrounding it may still be relevant to the larger litigation.

Retaliatory discharge cases are frequently proven through circumstantial evidence.

As we discussed in Recommended Reading: The Aldridge Factors: How Alabama Workers Prove Retaliatory Discharge Without a Smoking Gun, Alabama courts examine evidence such as the employer’s attitude toward the injured employee, adherence to company policies, treatment of similarly situated employees, and whether the employer’s stated reasons are credible.

The circumstances surrounding later litigation may therefore deserve careful examination rather than being viewed in isolation.

There Is a Difference Between Defending a Lawsuit and Misusing One

An employer accused of retaliatory discharge has every right to defend itself.

It can deny the allegations.

It can conduct discovery.

It can challenge the employee’s evidence.

It can seek summary judgment.

It can take the case to trial.

And if it possesses a legitimate claim against the employee, it can assert that claim.

That is how an adversarial legal system works.

But Barrett establishes an equally important principle: calling a claim a “counterclaim” does not insulate it from Alabama malicious-prosecution law. A counterclaim brought maliciously and without probable cause can, when all of the required elements are ultimately established, become the basis for a separate malicious-prosecution action.

The Bottom Line

Yes, an Alabama employer can file a legitimate counterclaim against an employee who brings a retaliatory discharge lawsuit.

No, an unsuccessful employer counterclaim does not automatically amount to malicious prosecution.

But Alabama law recognizes a remedy in the unusual case in which the required elements of malicious prosecution can actually be proven.

Powell and Denny has litigated that issue firsthand. In one of our retaliatory-discharge cases, the trial court found that the employer’s counterclaim had been filed to “intimidate and harass” our injured client. After continuing to deny liability and defend the subsequent malicious-prosecution claim, the defendant ultimately paid $400,000 at mediation to settle it.

That experience illustrates why an employer’s counterclaim should neither be automatically feared nor automatically dismissed as meaningless. The facts, the evidence, and the reason the claim was filed matter.

Recommended Reading: What Evidence Should I Save If I Think I Was Fired Because of My Alabama Workers’ Compensation Claim? discusses the documents and communications that can become important when evaluating what actually happened before and after an employee’s termination.

If you suffered an Alabama job injury, were subsequently fired, and have questions about your rights under Alabama’s retaliatory discharge law, don’t hesitate to contact and speak with one of the experienced Alabama Workers Compensation and Social Security Disability attorneys at Powell and Denny today for a free consultation. Appointments are available in person, or virtually via Zoom if more convenient.  Powell and Denny would appreciate the opportunity to help.  And remember, there is no fee unless you win.

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