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Bench & Bar of Minnesota is the official publication of the Minnesota State Bar Association.

Whither Whistleblowing? Uncertainty Stalks the Way Ahead

The Minnesota Supreme Court’s Kidwell decision has left whistleblowing employees, employers, and advocates for both with less than they had hoped for, while leaving a number of uncertainties for all who ponder the new bounds of whistleblower law.

The long-awaited ruling this summer by the Minnesota Supreme Court in the landmark whistleblower case of Kidwell v. Sybaritic, Inc. is likely to have significant effect on employment law in this state for a long time to come.1 Many employees and their advocates feared it would be a final stake in the steadily eroding rights of whistleblowers.  Some employers and their affiliates hoped it would be.  But the fears and hopes of both seem unfulfilled.  Now that nearly six months have passed since the ruling, it is an opportune time to consider what Kidwell portends for employees and employers in Minnesota, an inquiry confounded by a number of uncertainties.

The ruling held that an inhouse lawyer was not protected by the Minnesota whistleblower statute, Minn. Stat. §181.932.  The attorney had been fired early in 2005, following complaints to management about a “pervasive culture of dishonesty” within the company, including alleged concealment of discovery documents in an intellectual property case.  But the decision was brewing for a long time.

At the district court level in Hennepin County, the case yielded a $197,000 verdict for the discharged lawyer, plus awarding him more than $130,000 in attorney’s fees and costs.  Following reversal of this decision by the Minnesota Court of Appeals,2 the Minnesota Supreme Court heard oral argument in early February, 2009.  More than 16 months later—an extraordinarily long span—the supreme court finally issued its ruling early in the summer of 2010, upholding the appellate court decision, but on other grounds.

The reason that the decision may have been pending for such a long time?and why it is likely to have long-term impact in Minnesota?is because the case left more issues unresolved that it settled.  It did definitively answer one question:  Is an inhouse lawyer protected by the whistleblower law?  The answer, resoundingly, was yes. But a number of other key issues, ranging from the applicable legal standard to the burden of proof, and many more in between, remain unsettled.

The case was under submission so long that some observers thought it had fallen off the court’s radar screen.  A few sages thought that because the case presented such difficult issues, the court was ignoring them with the hope that they might go away.  But, a week before Chief Justice Eric Magnuson did go away, leaving the court after two and one-half years to return to private practice, the court finally issued its ruling.  It turns out that the departing chief justice provided the pivotal vote.

Varying Views

In resolving the Kidwell case, the supreme court expressed varying views about the whistleblower statute and its extension to inhouse lawyers who raise complaints about corporate practices. A three-member group, led by incoming Chief Justice Lorie Gildea and joined by Justices G. Barry Anderson and Christopher Dietzen, upheld the employer’s position, ruling that the complaining lawyer was not covered by the whistleblower law because he was acting in conformity with his job-assigned duties and did not have a purpose “to expose” any illegality when he blew the whistle.  A trio of dissenters, led by Justice Paul Anderson and including Justices Alan Page and Helen Meyer, felt that the majority created an overly constrictive standard and that the evidence supported a determination that the inside lawyer acted in “good faith” in conformity with the whistleblower law.

But it was departing Chief Justice Magnuson whose vote was decisive.  He concurred with the majority, although on wholly different grounds.  He reasoned that the claimant’s attorney had breached a fiduciary duty by giving a copy of the complaint letter he furnished to management to an outsider, his father.  This transgression was deemed by the jury to be a breach of duty but without damage.  It prompted the chief justice to opine that the attorney was not entitled to protection under the whistleblower statute, reasoning that was not adopted by either of the two other factions.

Intriguing Issues

As the dust continues to settle from the Kidwell decision, employers, employees, and their respective advocates are trying to figure out whither whistleblowing.  In doing so, they will have to sort out a number of intriguing issues left unresolved by the case.  Some of the unanswered questions include the following:

What Does It Mean? The main question left in the wake of Kidwell is, What does it mean?  The court of appeals, in reversing the trial court, held that the inhouse attorney was not entitled to statutory whistleblower protection against retaliation because he was carrying out his “job duty,” invoking an evolving doctrine that has stricken down many whistleblower claims.3

But the supreme court plurality did not embrace that concept in totality.  Rather, it came up with a modified version of the “job duty” principle.  Under its articulation, an employee is generally not protected from reprisal for reporting illegality under Minn. Stat. §181.932, subd. 1(a), the most commonly invoked of the four whistleblower prongs, if the employee is acting pursuant to an “assigned duty” that involves the obligation “to investigate and report wrongdoing.” The court applied this principle in holding against the inhouse attorney.  To be protected, the plurality opined, an employee must act in “neutral” fashion “outside normal channels.”

But whether that outlook will be controlling in future cases is questionable.  The three dissenters offered a different view, adhering to the statutory term “good faith,” which they coupled with the statute’s “contemporaneous purpose” of exposing illegality to find criteria which they felt the claimant satisfied.  But the “fiduciary duty” concept, predicating the swing vote of Chief Justice Magnuson, carried the day for the plurality.  Because of that fractured outcome, the ruling narrowly bars whistleblower protection for attorneys who have breached a fiduciary duty.

But for the vast number of whistleblower claimants who are attorneys, the applicable standard is unsettled.  While both plurality and dissenters seem to agree that whistleblower protection depends, in part, on an underlying purpose of exposing illegality, the significance of the employee’s job duties divided the two camps.  The battle between the narrow “assigned duty” criterion, articulated by the plurality, and the broader “good faith” test urged by the dissenters, will have to be fought out in future litigation.

Burden of Proof:  Who has the burden of proving the elements of whistleblowing is somewhat opaque following the Kidwell case.  Ordinarily, a claimant would have to prove satisfaction of the standards required for protected status under the statute.  But, under preexisting law, the courts have adopted a three-part, burden-shifting test akin to the standard used in discrimination lawsuits under McDonnell-Douglas v. Green, 411 U.S. 792 (1973), which has been adopted by Minnesota case law as well.4 Under that standard, the claimant must establish a prima facie case of statutory coverage, thus shifting the burden to the employer to proffer a legitimate explanation for its action, which tilts the burden back to the claimant to refute the employee’s explication as a sham or pretext.

But the burden-shifting analysis seems ill-suited to post-Kidwell claims.  It would appear, at first blush, that the claimant must establish the elements for statutory protection, consisting of a “good faith” intention “to expose an illegality.”  But the employer may have the burden, as an affirmative defense, of showing that the employee’s action was not so intended, pointing to the employee’s job assignment to establish that the employee’s duties included the obligation “to investigate and report wrongdoing” and that the employee did not act “outside normal channels” in blowing the whistle.  How these various elements of proof are to be structured provides an unanswered question for future resolution.

Role of the “Job Description.” Because the plurality hinged its ruling on the employee’s “normal or assigned work responsibilities,” the role of job descriptions furnished by the employer to employees may be significant.  While rejecting a categorical “job duty” doctrine, as adopted by the intermediate appellate court, the plurality deemed delineation of job duties “helpful [to] … address the question of the employee’s purpose” in engaging in whistleblowing activities.5 This suggests that job descriptions may be critical to post-Kidwell analysis, at least from the perspective of the plurality, although of not much consequence in the view of the dissenters.

But the role of job descriptions is not readily resolvable.  Employers can try to elevate the role of job duties by stating, in job descriptions, that employees have a responsibility to “report” any wrongdoing that comes across their path.  But doing so may not be talismanic.  In Garcetti v. Ceballos, a 1st Amendment whistleblowing case in the public sector, the United States Supreme Court cautioned that employers should not expect to restrict employees’ whistleblowing rights by creating excessively broad job descriptions.6

The courts probably will need to examine the actual, realistic job duties of employees, rather than relying solely upon their documented duties in order to address this issue.  Nonetheless, employers may be tempted to draw up documents defining job duties broadly to fend off whistleblower claims.

What About Insubordination? The statutory protection afforded whistleblowers may depend on how they blow the whistle.  The statute speaks of their reporting “actual or suspected” violations of law or regulations to management or law enforcement authorities.  The pattern in most whistleblower cases is an employee making a written report to management of perceived improprieties.

But the Kidwell plurality indicates that raising complaints internally may be insufficient to gain protection under the statute, and that it could be necessary for employees to go “outside normal channels … [to be] engaged in protected conduct.”7 In other words, the plurality seemingly suggests that reporting to management is insufficient, especially if an employee is doing so in conformance with job-assigned duties, and that the employee should instead blow the whistle externally, complaining to outsiders or the media.

But in doing so, the plurality seems to invite action that may imperil whistleblowers.  They could be disciplined for insubordination by taking their complaints outside of “normal channels.”  That occurred in the Ceballos case, where a whistleblower, also an attorney, went to the media to complain about improprieties, which led to his demotion.  The Supreme Court held that management did not infringe the rights of the attorney, because he should have internalized his complaints, rather than going outside the workplace.  The Kidwell plurality, however, might encourage making complaints externally, even though that may place the employee in jeopardy for insubordination or other trespasses.

Management could try to rein-in whistleblower claims not only by defining job duties broadly, but also by directing that all complaints be kept internally.  In this scenario, an employee who went “outside normal channels,” as urged by the plurality in Kidwell, could run into insubordination charges, which could undermine whistleblower protection.

How About Summary Judgment? Whistleblower cases have tended to be resolved on summary judgment.  But that is unlikely post-Kidwell.

Both the plurality and the dissenters viewed whistleblower claims as being inhospitable to summary disposition.  In the eyes of the plurality, whether an employee is acting with the requisite intent to expose an illegality “usually present[s] a question of fact” that must be decided “on a case by case basis.”8 The dissent is even more pointed in viewing the “good faith standard” as creating a fact issue not susceptible to summary judgment.9

While summary judgment may be appropriate for some issues in whistleblower cases, such as whether a requisite “report” was made or compliance with the statute of limitations, the key issue of coverage under the statute, in light of the opinions of both the plurality and the dissenters, is unlikely to be resolved on summary judgment.  The discouragement of summary disposition may bolster the strategic leverage of claimants and enhance their posture for settlement purposes.

Employers will try to fend off these claims by showing that the whistleblower had ulterior reasons besides “to expose” illegality.  Defense strategies during pretrial discovery may focus on revealing a whistleblower’s desire to strengthen job security, embarrass management, or other reasons unrelated to exposing illegality for purpose of seeking summary judgment, notwithstanding the barriers seemingly erected by both the plurality and the dissenting opinions in Kidwell.

There are a myriad of other questions that are likely to arise in the post-Kidwell world of whistleblower litigation.  Whether these issues will crop up and how they will be decided will go a long way to address the main issue left in the wake of Kidwell: Whither whistleblowing?

Four Types of Whistleblowing Claims

  • Reporting actual or suspected illegality
  • Participation in governmental investigation of the workplace
  • Refusal to abide by illegal directive from management
  • Reporting substandard care in the health care industry

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

Notes

1 Kidwell v. Sybaritic, Inc., 784 N.W.2d 220 (Minn. 2010).
2 Kidwell v. Sybaritic, Inc., 749 N.W.2d 855 (Minn. App., 2008).
3 See, e.g., Freeman v. Ace Telephone Ass’n., 404 F. Supp. 2d 1127 (D. Minn. 2005); Gee v. Minnesota State Colleges & Universities, 700 N.W.2d 538 (Minn. App. 2005).
4 E.g. Sigurdson v. Isanti County, 386 N.W.2d 715 (Minn. 1986).
5 Kidwell v. Sybaritic, 784 N.W.2d at 227.
6 Garcetti v. Ceballos , 547 U.S. 410, 424 (2006) (noting that “job descriptions often bear little resemblance to the duties an employee actually is expected to perform”).
7 Kidwell v. Sybaritic, 784 N.W.2d at 228. See also Huffman v. Office of Personnel Mgmt., 263 F.3d 1341, 1354 (Fed. Cir. 2001).
8 784 N.W.2d at 229 n. 8.
9 784 N.W.2d at 238-39.

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