the Whistle, Sound the Drum:
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
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 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
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
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
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
7. Minnesota Matters
8. Procedural Points
9. Remedies & Restrictions
10. Evidentiary Enigmas
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 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
13. Arbitration Actions
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
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
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
18. Performance Problems
19. ‘Duty’ Defense
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
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.
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).
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.