Vol. 63, No. 9 | October 2006
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Blow the Whistle, Sound the Drum:
Marking the 20th Anniversary of Minnesota’s Whistleblower Law

 November marks the 20th anniversary of the Minnesota Court of Appeals decision in Phipps v. Clark Oil Refining Corp., wherein the appellate court first upheld a whistleblowing case in Minnesota. Both the Supreme Court and the Legislature have since elaborated and refined the law in a process that has alternately seen advantages accrue to employers and employees, but which seems to affirm whistleblower law as a fixture in the Minnesota legal landscape.

 By  Marshall H. Tanick

One score years ago, Minnesota lawyers, legislators, and judges brought forth into this state a new concept, conceived in litigation and legislation, and dedicated to the proposition that all employees should be treated fairly.  That tenet was the Minnesota whistleblower law.

Originally a court-created product of common law, then enacted by the State Legislature, and thereafter judicially confirmed, the principle prohibits employers from taking adverse action against employees as reprisal for participating in socially desirable practices.  The Minnesota whistleblower law, similar to counterparts in many other jurisdictions, forbids employers from retaliating against employees who report actual or suspected violations of law to management, participate in governmental investigations, or refuse to abide by illegal directives, and includes a special provision protecting medical personnel who report substandard health care practices.

The whistleblower law is hardly novel, dating back to the Civil War.  But it was a newcomer to Minnesota when first recognized by the Court of Appeals late in 1986, and then affirmed by the Minnesota Supreme Court in mid-1987.  Those rulings were sandwiched around a statute that spells out the rights and obligations of employers and employees dealing with whistleblowing in the workplace.

The 20th anniversary of whistleblowing in Minnesota can be ascribed to several different dates: November 17, 1986, when the Court of Appeals first upheld a whistleblowing case in Minnesota; May 11, 1987, when the whistleblower law, Minn. Stat. §181.932 was enacted; June 26, 1987, when the Supreme Court gave its blessing to the measure; or August 1, 1987, when the new statute went into effect.  Whichever date is selected, whistleblowing is now celebrating its 20th birthday in Minnesota.

The concept has become a major legal tenet in employment relations in Minnesota and elsewhere. Commemoration of its 20th anniversary constitutes an appropriate occasion to consider an equal number of tips for litigants and their lawyers in dealing with whistleblowing matters.

1. Adam & Honest Abe 
The first whistleblowing may have taken place in the Garden of Eden, when Eve reported to Adam the perfidy of the snake, who induced her to eat an apple from the Tree of Knowledge.1 But the concept was not recognized in the eyes of the law until 1863, with the passage of the False Claims Act, a federal law providing cash rewards for those turning in contractors who bilked the federal government in supplying materials for the Union army.

Now codified as 31 U.S.C. §3729, the measure constitutes the basis for qui tam actions in which citizens can reap rewards for exposing fraudulent government contractors.2  The measure, effectively referred to as the Honest Abe Law in homage to President Lincoln, is the basis from which modern whistleblowing laws are derived. 

2. Phipps Proceeding
The Minnesota whistleblower law stems from Phipps v. Clark Oil Refining Corp., 396 N.W.2d 588 (Minn. App. 11/18/86), (Phipps I), aff’d. 408 N.W.2d 569 (Minn. 06/26/87), (Phipps II).  The lawsuit was brought by a cashier at a service station, who was fired after refusing to follow a directive from his boss to illegally fill a customer’s gas tank with leaded gas, even though the vehicle was equipped only for unleaded fuel, which the attendant felt violated the Clean Air Act, 42 U.S.C. §74, et seq. 

The case was unusual in several respects. It arose in the now-vanished era when Minnesota filling stations actually had attendants servicing vehicles.  More significantly, it arose in the absence of any employee protection laws in Minnesota.  Without a governing statute, the employee claimed that the termination violated “public policy,” consisting of discharge for refusal to violate the law. 

The Court of Appeals, reversing a decision of the Hennepin County District Court, agreed with the employee and held that the termination was actionable. Even though he was an at-will employee, who could be fired for any reason or no reason at all, the claimant could prevail for a violation of “public policy” if he could show that his termination transgressed “a clear mandate of public policy, either legislatively or judicially-recognized.”3   The ruling was affirmed eight months later by the Supreme Court, although the “public policy” issue was not central to the decision because, in the interim, the Legislature enacted the statute that codified and expanded the appellate court ruling. Thus, as the Supreme Court noted, the termination was actionable if the employee could show “that the discharge was for an impermissible reason.”4

3. Federal Focus
There are a number of other whistleblower-type laws at the federal level, some relatively ineffectual and others still untested. 

Federal employees are furnished with a modicum of protection against retaliation, but no claim for damages, under the Federal Whistleblower Protection Act of 1989, 5 U.S.C. §1211, et seq.  The most prominent whistleblowing statute is the Sarbanes-Oxley Act, 15 U.S.C. §7201, which was enacted in the wake of the corporate scandals of Enron and other publicly traded companies in 2002. The statute includes a whistleblowing provision that enables employees who suffer retaliation because of reporting financial or legal improprieties by public companies to pursue civil claims through a combination of administrative and litigation mazes, whose labyrinthic features are of uncertain effectiveness.

4. State Support 
Modern whistleblowing laws date back to the post-Watergate era of the mid-1970s.  The improprieties of the Nixon Administration ushered in a plethora of laws aimed at encouraging individuals with information about wrongdoing to come forward without fear of reprisal. All 50 state jurisdictions and the District of Columbia now recognize whistleblower rights, an increase by 50 percent since Phipps.  The cause of action usually is based on “public policy” grounds as in Phipps, or statutory provisions, or a combination of both.5   The substantive and remedial provisions of these measures vary from state-to-state. One of the more extensive measures, for example, is the Connecticut statute, which requires only that an employee “suspect” a violation of law.6  In contrast, the law in the adjoining state of New York is described as “impotent” by one commentator.7 

Employers in Minnesota with operations or staff in other states needs to be mindful of the laws in those jurisdictions, which may differ from Minnesota law. Similarly, employees who work in other states should also be cognizant of the measures in effect in those places.

5. Statutory Situations
Minnesota boarded the whistleblowing bandwagon relatively late. By the time the state statute was enacted in 1987, about three dozen states had adopted similar measures, either by statute or common law.  The Minnesota statute, Minn. Stat. §181.932, expressly prohibits employers from taking adverse action against employees who, in good faith, report actual violations of any laws or regulations, are engaged in governmental investigations or hearings, or, much like the gas station cashier in Phipps, refuse, in good faith, to obey an illegal directive. 

The statute extends only to claims made by employees, not independent contractors,8 and the claims must be made against the employer, not third parties or individual supervisors.9 Nor does the statute provide for individual liability on the part of supervisors or other management personnel.10  

6. Widened Whistleblowing
The Minnesota statute was widened in 1997 to include a provision dealing specifically with the health care industry.  Under Minn. Stat. §181.932, subd 1(d), employees who report any substandard medical matter that “potentially places the public at risk of harm,” even though not violative of law, are entitled to whistleblower protection. This provision, a rarity in whistleblower laws, furnishes special protection to employees in one particular profession, while the balance of law applies to all Minnesota employers, regardless of nature or size, including the state and any of its political subdivisions.11 

7. Minnesota Matters 
Several other statutes have whistleblowing implications, although they are not explicitly regarded as whistleblowing laws.  A section of the Occupational Safety & Health Act (OSHA), Minn. Stat. §182.654, subd. 9, forbids employers from retaliating against employees who raise health and safety issues.  The workers compensation statute, at Minn. Stat. §176.82, sub. 1 contains an antiretaliation provision proscribing adverse action by employers against employees because of their filing workers compensation claims.  Another statute, Minn. Stat. §181.937, prohibits reprisals against employees for not contributing donations to charities or other community organizations.  The Human Rights Act also contains an antiretaliation provision, Minn. Stat. §363A.15, which parallels its federal counterpart under Title VII of the Civil Rights Act, 42 U.S.C. §2000e-3(a).  Whistleblowing also may implicate issues under Government Data Practices Act.  That statute provides that the identity of a whistleblower generally is private data under the act.12 

8. Procedural Points
The Minnesota whistleblower statute is subject to a two-year statute of limitations.13 Although not enumerated in the measure, the limitation period was attached to the law.  The statute, consistent with general legal principles, is subject to notice pleading requirements under Rule 8 of the Minnesota Rules of Civil Procedure and not to the heightened pleading provisions of Rule 9, which requires specificity for allegations of fraud or other states of mind.  Whistleblowers need not specify in pleadings the specific law or regulation being transgressed as long as they plead generally that they were retaliated against for engaging in statutorily protected activities.14 After some years of doubt, the Minnesota Supreme Court four years ago clarified that whistleblowers are entitled to jury trials.15

9. Remedies & Restrictions 
The law specifically allows for “any and all” compensatory damages, which may consist of lost income and emotional distress, as well as recovery of reasonable attorney’s fees by a prevailing claimant.16  Injunctive relief also may be sought to reinstate a discharged employee or remove disciplinary matters from a personnel file.17  Punitive damages were initially rejected in Phipps II, 408 N.W.2d at 573, because the doctrine was so new to Minnesota, but later federal cases have held that such damages are recoverable, an issue not yet recognized by the highest court in this state.18 An exemplary award is governed by the provisions of Minn. Stat. §549.191, which requires court approval to claim punitive damages, as well as bifurcated trial proceedings.

10. Evidentiary Enigmas 
The evidentiary standard for an actionable whistleblower claim has been enigmatic over the years. In Phipps II, the Supreme Court established a three-part test, requiring first a showing by the claimant that the discharge “may” have been improper, inviting the employer to show “another reason for the discharge,” and then requiring that the plaintiff prove that the discharge was for an impermissible reason.”19    The Supreme Court, in McGrath v. TCF Bank Savings, 509 N.W.2d 365 (Minn. 1993), later clarified that an employer’s “legitimate reason” for a discharge can be overcome if the claimant shows that an illegitimate reason “more likely than not” was the reason for the adverse action.

This morphed into the three-part burden-shifting standard used in federal civil rights litigation. In Cokely v. City of Otsego, 623 N.W.2d 625, 630 (Minn. App. 2001), rev. denied (Minn. 05/15/01), the Court of Appeals, reversing a $380,000 verdict for a whistleblower,  held that the applicable standard consists of initial establishment by the plaintiff of a prima facie case of whistleblowing activity followed by adverse action by the employer, which then invokes the employer’s obligation to show a legitimate, nonretaliatory reason for the action, which then shifts the burden back to the employee to demonstrate that the employer’s proffered reason is pretextual. The same standard is used in employment litigation under federal discrimination law as well as the parallel Minnesota Human Rights Act.20 

11. Preemption Principles
The reprisal provision of the Human Rights Act trumps a whistleblower claim.  In Williams v. St. Paul Ramsey County Medical Center, 551 N.W.2d 483 (Minn. 1996), the Supreme Court held that a whistleblower claim based upon the same underlying facts that predicate a discrimination charge under the Human Rights Act is preempted under the “exclusivity” provision of the Human Rights Act, Minn. Stat. §363.03, subd. 7. 

The inability of claimants to pursue overlapping claims under both statutes and the requirement that they must select one or the other can necessitate some strategic considerations. Discrimination claims do not provide for a jury trial, have an $8,500 ceiling on punitive damages, and have a shorter statute of limitations — one year compare to two years — than claims under the whistleblower law. But the human rights statute allows for trebling of damages. Litigants with parallel whistleblowing and human rights claims need to take these considerations into account in deciding which one to assert. 

But the whistleblowing statute does not impair rights under the collective bargaining agreements.21 Nor are whistleblowing claims preempted by parallel claims under OSHA.22  They also are not subject to a 1st Amendment defense by religious organizations.23 

Federal preemption principles also may apply in some circumstances.  The federal Employee Retirement & Income Security Act (ERISA) 29 U.S.C. §1001, et seq. is preemptive of claims implicating ERISA’s governing plans.24 

But immunity may bar some whistleblowing claims by public sector employees.  If the underlying action supporting a whistleblower claim was committed by a group of people, such as a board or a committee, official immunity does not apply, although it may apply to actions taken by individual public sector decision makers.25  But in no event does statutory immunity apply because the whistleblower statute includes an implied waiver of the statutory immunity provision.26 

12. Phipps Persists
The concept of “public policy,” on which the finding in the Phipps case was predicated and which prefigured the whistleblower statute, still persists.  A common law claim of wrongful termination in violation of “public policy” is not preempted by the whistleblower statute.  In Nelson v. Productive Alternatives, Inc., 715 N.W.2d 452 (Minn. 2006), the Supreme Court held that a common law “public policy” claim still exists, but it dismissed the lawsuit on grounds that the claimant failed to plead a clearly defined, specific “public policy” that was transgressed in connection with his termination. Generally, it is preferable to assert a whistleblower claim, which offers broader remedies, including equitable relief under §181.935(a), although a “public policy” claim may be advisable if the episode does not fall within the scope of the whistleblowing statute. The claims may be asserted in the alternative, to preserve both common law and statutory causes of action, although the Court in Nelson notes that the two claims may be “largely duplicative.”27 

13. Arbitration Actions
Whistleblowing claims may be subject to arbitration.  Employers can encompass whistleblowing claims in a standard arbitration agreement, and the claims also may be subsumed in broad language in a grievance-arbitration provision in a collective bargaining agreement.28 

However, if an arbitration agreement does not embrace whistleblowing claims, the party who prevails in an employment-arbitration proceeding can still pursue a whistleblower claim.  Although arbitration may result in reinstatement and backpay for a wrongfully disciplined whistleblower, because the statute allows for broader remedies, including attorney’s fees, the Court of Appeals in Grothe v. Ramsey Action Programs, Inc., 2006 WL 1529447 (Minn. App. 2006) (unpublished), permitted an employee who prevailed in an arbitration proceeding and obtained her job back, along with back pay, to pursue a subsequent whistleblower action.29 

14. “Public Policy” Punctured 
For several years, the Minnesota courts required that whistleblower activities have the purpose of vindicating the broad “public interest,” rather than some insular issue related solely to the whistleblower and not of broad societal concern. The “public interest” defense, however, was punctured early in 2002 in Anderson-Johanningmeier v. Mid-Minnesota Women’s Center, Inc., 637 N.W.2d 270 (Minn. 2002),  and ultimately deflated a month later in Abraham v. County of Hennepin, 639 N.W.2d 342 (2002). 

Those two cases abrogated any requirement that a whistleblower’s activities implicate any “public interest.”  They allow claims to be pursued based upon reported violations of law that narrowly affect the whistleblower alone or a small segment of the workforce.

15. Statutory Salvos
The most common type of whistleblower claim arises under subdivision 1(a) of the statute, which protects employees who make reports of actual or suspected violations of law. Whistleblowers need not prove that the law was violated, but simply that they reported what they believed to be a legal violation.  The statutory prohibition applies to any statute, federal or state, or governmental regulation.30  It even extends to obscure statutes that are little known and rarely enforced.31

To invoke the statute, an employee need not make an official or formal report; it suffices if the employee relates or tells management of the infraction.32

16. Valid Violation 
While a whistleblower need not cite the specific statute or regulation that is being violated, there must be some underlying illegality in order for a whistleblower claim to be actionable.  Complaints that lack transgression of statutes or regulations are not viable.  The infraction must be of a statute or governmental regulation and not simply a nonstatutory or nonregulatory problem or breach of contract.33 

17. Exposure Expected
Whistleblowers who are merely trying to solve a problem may not be statutorily protected.  Some case law suggests that whistleblowers must be motivated to expose wrongdoing, rather than merely calling a problem to the attention of superiors in the workplace for corrective action.34

18. Performance Problems
Whistleblower cases typically involve employees who have been disciplined — usually terminated — for reasons that they claim are covered by the statute, while employers generally assert that the employees had performance problems that justified disciplinary action.  Poor performance, therefore, constitutes the obstacle that employees usually face in averting summary judgment, which employers invariably seek.  There are a number of factors that may be taken into account in determining whether the claimant satisfies the three-part burden-shifting test to hurdle summary judgment.  One consideration is the temporal proximity between the whistleblowing activity and the disciplinary action. Although there is no bright-line rule, case law generally demands a relatively short-time frame for inferring retaliatory intent.35 The severity of the employee’s alleged misconduct, the prior warnings issued by the employer, and the existence of contemporaneous documentation of the performance problems can be instrumental in helping an employer establish that performance reasons were legitimate grounds for the disciplinary action and thereby achieve summary judgment.

19. ‘Duty’ Defense
Perhaps the most provocative and unsettled doctrine involving whistleblowers is the “job duty” defense.  Under that principle, employees whose whistleblowing activities come within the scope of their job duties are not protected from retaliation.  The principle was endorsed by the United States. Supreme Court last spring in Garcetti v. Ceballos, 126 S.Ct. 1951 (2006). The high court held, by a 5-4 margin, that public sector employees are not entitled to constitutional protection from retaliation for whistleblowing activities done within the scope of their “job duties.” Under that principle, employees become increasingly less protected the higher they are in the chain of command, with top-level personnel receiving minimal protection compared to low level employees, who have constricted job duties. 

Although Ceballos involved a constitutional question, the “job duty” defense has been raised in statutory cases, as well, with mixed results in Minnesota and elsewhere.36  Some cases have adopted the principle, while others have not.   Depending upon its scope, the “job duties” defense could eviscerate many whistleblowing claims, especially those of mid-level and high-level employees or others who have broad job-related duties, such as in-house accountants and financial personnel, lawyers, and other professionals.

20. Future Forecast 
The future fate of whistleblowers remains difficult to forecast. The past 20 years truly have been a roller coaster for them in Minnesota.  Emerging and evolving legal doctrines are likely to change the contours of the whistleblowing landscape for both employers and employees.

While addressing the past 20 years of whistleblowing and anticipating its future, they can rest assured that the doctrine born of the employees, developed for the employees, and often-litigated by the employees, shall not perish from the workplace.

Notes
1Genesis 2:10-13.

2 See Vermont Agency of Natural Resources v. United States, 529 U.S. 765 (2000) (qui tam case not maintainable by state entities).

3 Phipps v. Clark Oil Refining Corp. (“Phipps I”), 396 N.W.2d 588, 592 (Minn. App. 1986).

4 Phipps v. Clark Oil Refining Corp. (“Phipps II”), 408 N.W.2d 569, 572 (Minn. 1987).  The claimant in Phipps also asserted a defamation claim that was dismissed by the Trial Court but reinstated by the Appellate Court in Phipps I and affirmed in Phipps II.

5 See generally V.L. Donalti, “Whistleblowers and Other Retaliation Claims,” 729 Proc. L. Inst. 1095 1109-27 (2005).

6 Conn. Gen. St. §31 - 51m.

7S.A. Moss “Where There’s At-Will, There Are Many Ways: Redressing The Increasing Incoherence of Employment At Will,” 67 U. Pitt. L. Rev. 295, 304 (2005).

8 Minn. Stat. §181.931, subd. 2.

9  Schmitt v. Lunch Time Solutions, Inc., 2005 WL 7009049 (Minn. App. 2005) (unpublished).

10  Obst v. Microtron, Inc., 588 N.W.2d 550 (Minn. App. 1999), aff’d., 614 N.W.2d (Minn. 2000).

11 Minn. Stat. §181.931, subd. 3.

12 Minn. Stat. §181.932, subd. 2.

13 Rice v. Target Stores, 677 F. Supp. 608 (D. Minn. 1988).

14 See Morrow v. Air Methods, Inc., 884 F. Supp. 1353, 1356-58 (D. Minn. 1995), aff’d. 92 F.2d 1189 (8th Cir. 1996).   

15 Abraham v. County of Hennepin, 639 N.W.2d 342, 354-55 (2002); see also McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1972); Sigurdson v. Isanti County, 386 N.W.2d 715 (Minn. 1986).

16 Minn. Stat. §181.935(a).

17 Id.

18Abraham v. County of Hennepin, 639 N.W.2d 342 (Minn. 2002).

19 Phipps II, 408 N.W.2d at 572.

20 Black v. Snyder, 471 N.W.2d 715 (Minn. App. 1991), rev. denied (Minn. 08/19/91).

21 Minn. Stat. §188.937, subd. 4.

22 Nelson v. Productive Alternatives, Inc., 715 N.W.2d 452, at 455 n.3 (Minn. 2006).

23Eissinger v. Northwest Airlines, Inc., 2006 WL 1529447 (Minn. App. 2006) (unpublished).

24 McLean v. Carlson Companies, 777 F. Supp. 1480 (D. Minn. 1991).

25 Janklow v. Minn. Bd. of Examiners for Nursing Home Adm’rs., 552 N.W.2d 711, 716 (Minn. 1996).

26 Id. at 718.

27Nelson,  715 N.W.2d at 455 n.3.See also Wheale v. Cloquet Community Memorial Hosp., 2003 WL 4667172 (D. Minn. 2003).

28 Hedglin v. City of Willmar, 582 N.W.2d 897 (Minn. 1998).

29 Groneweg v. Interstate Enterprises, Inc., 2005 WL 894768 (Minn. App. 2005) (unpublished).

30 Janklow v. Minn. Bd. of Examiners for Nursing Home Adm’rs.  536 N.W.2d 20, 23 (Minn. App. 1995) aff’d 552 N.W.2d 711 (Minn. 1998)

31 Donahue v. Schwegman, Lundberg, Woessner & Kluth, P.A., 586 N.W.2d 811; 813-14 (Minn. App. 1998); rev. denied (Minn. 02/18/99).

32 Obst v. Microtron, Inc., 614 N.W.2d 196 (Minn. 2000); McCormick v. Banner Engineering Corp., 2006 WL 330144 (Minn. App. 2006) (unpublished).

33 Gee v. MNSCU, 700 N.W.2d 540 (Minn. App. 2005).

34 Erickson v. City of Orr, 2005 WL 2277395 (Minn. App. 2005) (unpublished).

35Dietrich v. Canadian Pac. Ltd.¸ 536 N.W.2d 319 (Minn. 1995); Campbell v. Thompson, 845 F. Supp. 665, 675 (D. Minn. 1994) (four-month lapse suffices); Ring v. Sears Roebuck & Co., 250 F. Supp. 1130 (D. Minn 2003) (eight-month interval too long); Minn. Assn. of Nurse Anesthetics v. Unity Hospital, 59 F.3d 80, 83 (8th Cir. 1995)(“long intervals ... undermine the inference” of reprisal).

36 Erickson v. City of Orr, 2005 WL 27773915 (Minn. App. 2005) (unpublished) (fact dispute whether whistleblower concerns were within job duties); Marano v. Dept. of Justice, 2 F.3d 1137 (Fed. Cir. 1993) (“job duties” rationale rejected); McGinn v. Pa. Rival Water Authority, 2005 WL 373720 (Pa. Comm. Pl. 2005) (unpublished) (“job duties” defense inapplicable).


The author appreciates the assistance of John Kokkinen, a law clerk with the firm, for his assistance in preparing this article. 


MARSHALL H. TANICK is an attorney with the law firm of Mansfield, Tanick & Cohen, P.A. in Minneapolis and St. Paul, Minnesota.  He is certified as a Civil Trial Specialist by the Minnesota State Bar Association (MSBA) and represents employers and employees in a variety of  workplace related matters.