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Whistleblowers wonder: When will we win?

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Whistleblowers are an endangered species in Minnesota and, for that matter, in much of the rest of the country as well.  Once venerated, employees who raise concerns in the workplace about improprieties or participated in governmental investigations, are experiencing repeated setbacks when litigating employment termination claims.

Their assertions of retaliation have been repeatedly rejected by the courts, particularly in recent years, leaving whistleblowers and their advocates wondering whether they can ever win their cases.

In Minnesota, whistleblowers have been reeling for some period of time, highlighted by the fractured decision of the Minnesota Supreme Court overturning an award of nearly $330,000 for a discharged in-house lawyer in Kidwell v. Sybaritic Inc., 784 N.W.2d 220 (2010).

A pair of recent rulings of the Federal and state appellate courts in Minnesota confirm this trend.  Ironically, the decisions came on the 25th anniversary of the initial original recognition of the rights of whistleblowers as a common law matter by the Court of Appeals and affirmed by the Minnesota Supreme Court in Phipps v. Clark Oil  & Ref. Corp., 396 N.W.2d  588 (Minn. App. 1986), aff’d. 408 N.W.2d 569 (Minn. 1987), which was bracketed around the enactment of the Minnesota whistleblower statute, codified as Minn. Stat. sec. 181.932.

Anti-kickback appeal

A sales executive with a local medical device company, who lost her job as part of a Reduction-In-Force (RIF) following her expression of concerns about violation of  anti-kickback laws, experienced the agony of defeat in Hilt v. St. Jude Medical S.C. Inc., 687 F3d 375 (8th Cir. Aug 1, 2012).  The employee claimed that her lay-off was attributable to her reporting of violation of anti-kickback laws by sales personnel leaving equipment, software, and other material in hospitals to induce sales, as well as participating in a federal investigation of the practice.

U. S. District Court Judge Richard H. Kyle Jr. granted summary judgment for the employer, and the 8th Circuit affirmed.  The employee was terminated as part of a 10 percent reduction in personnel, after she was ranked among the bottom five employees, although two that were lower ranked were kept because the company deemed them to have potential for greater future contributions than the claimant.  Her whistleblower claim was not actionable under the burden shifting framework of the McDonnell-Douglas standard, which requires employee to show protected activity followed by the employer establishing a legitimate business reason for the action, which then tilts the burden back to the employee to show that the employee’s reason is pretextual.  Noting the three prongs, the court addressed the “dispositive issue;” whether the employee “presents sufficient evidence to demonstrate that [the employer’s] proffered reasons for including her in the RIF was pretext for a retaliatory motive.”  The ex-employee failed to establish her claim, including her principal argument that the “temporal proximity” of one month from the time she told management that she was participating in an investigation until the time of her RIF constituted circumstantial evidence of retaliation. While the issue of timing of termination creates a “complicated picture” under whistleblowing case law, it is well established that mere timing is “usually insufficient” to establish pretext.

The employee’s claim that the company furnished a “false reason” for including her in the RIF also was unavailing.  Her “positive performance,” in past evaluations were not inconsistent with her low pre-RIF ranking.  Although she had received a promotion before being laid off, her post promotion activities included an incident which management described as “terribly unprofessional” in dealing with a customer.  The employee’s relative competence was a “pivotal issue” because lower ranked employees were not terminated.  But management is entitled to rely upon “subjective analysis” in concluding that lower ranked employees should not be laid off because they had more potential compared to the claimant.  Because the employee failed to generate “genuine issue of material fact on the pretext issue,” summary judgment was properly granted and the case dismissed.

Public policy

The doctrine of public policy, which animated the recognition of whistleblower rights in the landmark Phipps case, failed to stir the Minnesota Court of Appeals in De Noto v. Sears Imported Autos, Inc., 2012 WL 1149350 (Minn. App. April 9, 2012) (unpublished) rev. denied (Minn. July 17, 2012).  The case was brought by an automobile salesman who complained about inadequate defrosting mechanisms in vehicles on the lot.  He was about to be fired for work performance reasons, when he quit and then sued for retaliation.

Although his claim did not fall within the whistleblower statute, he asserted a common law claim for violation of “public policy.”  The Hennepin County District Court dismissed his claim, and the appellate court affirmed.  Unlike some whistleblower cases, the claim did not pertain to a statute that expressly prohibits the claimed concealment by the car dealership of the allegedly defective defrosters.  The employee’s claims did not trigger the “public policy” doctrine because his concerns do not “implicate a clear public policy.”  The employee’s reference to Minn. Stat.    169.71, subd 3, which prohibits drivers from operating motor vehicles lacking “proper vision,” is not germane because it does not “embody a clear public policy that supports a cause of action.”

There was no indication that public safety was implicated because there was no evidence that any vehicles were driven with “improper vision in violation of the statute.”  Therefore, the pre-Phipps common law whistleblower claim is not tenable and the case was properly dismissed. Bloomington should be changed to Minnetonka.

Hollywood often portrays whistleblowers in a laudatory light.  However, as these cases reflect, when the reel world blends into the real world of whistleblowers, claimants often find their claims met with unfavorable review by the courts.

Originally published in the October 22, 2012 edition of Minnesota Lawyer.