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Perspectives: Court to hear ‘silent’ limitations case

"And the vision that was planted in my brain,
Still remains
Within the sound of silence”

Simon & Garfunkel, “Sounds of Silence” (1965)

Employment cases have taken up a large portion of the workload of the Minnesota Supreme Court this year.

The tribunal ordinarily decides a modest number of workplace-related cases each year, in addition to the many petitions for review it receives — and usually denies. But in the first 10 weeks of 2015 alone, the court issued rulings in four high-profile cases raising a panoply of employment law issues —fraudulent inducement, indemnification, pre-judgment interest, and tortious interference. Nichols v. State, 858 N.W.2d 773 (Minn. Feb. 4, 2015) (secretary of state not subject to suit for fraudulent inducement); Nelson v. Schlemer, 859 N.W.2d 288 (Minn. Feb. 11, 2015) (denial of employee indemnification not reviewable);Kinworthy v. Soo Line RR860 N.W.2d 355 (Minn. April 4, 2015) (no pre-judgment interest under FELA);Sysdyne Corp. v.Rousslang860 N.W.2d 347 (Minn. March 4, 2015) (advice of counsel defense for tortious interference claim). At this pace, the justices would decide nearly two dozen employment law cases this year, an astoundingly high and unrealistic portion of the overall docket. But the pattern abated over the past 10 weeks with no new workplace cases.

But there will be at least one more upcoming soon, an important case for whistleblowers, their advocates, employers, and their attorneys as well. Ford v. Minneapolis Public Schools857 N.W.2d 725 (Minn. App., 2014) rev. granted (Feb. 25, 2015). The case requires the justices to examine, actually re-examine, the statute of limitations for whistleblower claims. The Ford case recently concluded the briefing stage and probably will be decided before the year ends, adding to the complement of significant 2015 workplace cases decided by the Supreme Court.

Anniversary appeal

The pendency of the Ford appeal takes place on the second anniversary this week of the expansion of the whistleblower law. On May 24, 2013, the statute was enlarged to cover more types of protected conduct, including reports of common law transgression and any “planned violations of law,” compared to the more narrow form of criminal and regulatory offenses under pre-existing law, as well as concerns expressed by state government employees to legislators and other state officials.

Meanwhile, whistleblowers are being accorded more protection at the federal level. On April 1, 2015, the Securities and Exchange Commission (SEC), the body that regulates publicly traded companies, showed it was not fooling around; it imposed a $130,000 penalty on a Texas technology and engineering firm for requiring employees to sign “restrictive” confidentiality agreements compelling them to give notice to the company before contacting the SEC with whistleblowing concerns, In re KBR, Inc.,File No. 3-16466 (April 1, 2015). The SEC’s enforcement director announced the stipulated settlement as part of the agency’s plan to “vigorously enforce rules that protect whistleblowers.” That action follows an SEC fine last year for a hedge fund that retaliated against an employee who reported the fund’s misbehavior to the agency.

The stepped-up efforts are undertaken pursuant to the Dodd-Frank financial overhaul legislation from the early 2000s, which led to creation of a special whistleblower act with the SEC that has doled out about $50 million to corporate whistleblowers.

Statutory silence

The statute prohibiting retaliation against employees for various types of whistleblowing conduct, Minn. Stat. § 181.1932, which was enlarged significantly by legislation two years ago, does not mention any limitations period. This silence stems from the original measures originally enacted in 1987, in the wake of the ruling of the Court of Appeals in Phipps v. ClarkOil & Refining Corp., 396 N.W.2d 588 (Minn. App. 1986), aff’d. 408 N.W.2d 569 (Minn. App. June 26, 1987). Nor did any of its subsequent amendments to the Legislature prescribe a time period for permissible claims. Despite the specificity of the latest round of reviews, which went into effect in May, 2013, it was, again, notably silent regarding the statute of limitations.

The appellate courts have stepped in to fill the vacuum, albeit imperfectly and inconsistently. The Fordcase reflects that roller-coaster reality.

The case is traceable to the summer of 2007, when the claimant, who worked in administration in the Minneapolis Public Schools, reported financial improprieties and budget discrepancies to the district superintendent and a staff person. Nearly a year later, in late April 2008, her supervisor told her that her job was going to be eliminated for the coming school year and her last day of work was to be June 30, 2008.

Claiming whistleblower status, she filed a lawsuit on June 29, 2010, slightly more than two years after she was first notified of her job elimination, but one day less than two years from the time her job actually ended. The action was brought in Hennepin County District Court, but removed due to appended federal claims to U.S. District Court, which dismissed the federal claims and remanded the state whistleblowing claim to state court. The return to Hennepin County District Court initially yielded a dismissal on grounds that the two year statute of limitations applicable to certain “personal injury” torts governed the whistleblower claim. It was deemed time barred because the limitations period began in late April 2008, when she was first notified her job was being eliminated and was not tolled under the doctrine of equitable estoppel during the time period leading up to her actual termination. It seemingly relied on well settled law,Larson v. New Richland Care Center, 538 N.W.2d 915 (Minn. App. 1995), rev. den’d (Minn. March 4, 1997), which held that the whistleblower claims, in the absence of an explicit statute of limitations is governed by the two year statute of limitations for intentional torts.

The claimant appealed, eschewing a challenge to the two-year statute-of-limitations ruling by arguing that the trial court erred in deeming the statute commenced when she was notified of her impending termination and not tolled under the estoppel theory. The appellate court affirmed, holding that the statute began to run when she was notified that her job was to be eliminated and was not equitably suspended, 845 N.W.2d 566 (Minn. App. 2014) vacated (Minn. July 15, 2014).

But the Supreme Court vacated the decision and remanded solely for “reconsideration” of the statute of limitations, based upon its ruling a year earlier in Sipe v. STS ManufacturingInc., 834 N.W.2d 683 (Minn. 2013) that a claim of wrongful termination under the Drug & Alcohol Testing in the Workplace Act (DATWA), Minn. Stat. § 181.953, subd. 10, which has no explicit statute of limitations, is governed by the 6-year statute of limitations under Minn. Stat. § 541.05, subd. 1(2), for liabilities created by statute. The court reasoned that because a DATWA claim was a “creature of statute,” it was not subject to the two year statute of limitations under § 541.07(1), pertaining to “other tort resulting in personal injury.” The 2-year period is inapplicable because it is “limited to common law cause of action not created by statute.” The broader six year statute of limitations, therefore applies to DATWA actions as a “liability created by statute.”

On remand, the appellate court last December took to heart the Supreme Court’s reasoning in Sipe, which the appellate tribunal viewed as “one that essentially overrules this court’s reasoning in Larson,” that whistleblower claims are subject to a two year statute of limitations. Because the whistleblower claim was, like the DATWA claim in Sipe“created by statute before it was recognized by common law,” the six year statute of limitations under § 541.05, subd. 1(2) is applicable to the claimant’s whistleblower claim. Therefore, the school administrator’s whistleblower cause of action was “not barred by the statute of limitations” since it was brought within two years of the time of termination and only a little more than two years from the time of notification of impending job loss.

But the last word has not been heard on the silent statute of limitations, yet. The Supreme Court took review of the case this winter, one week shy of the 18th anniversary of its denial of review in theLarsoncase that established the two year statute of limitations for whistleblower claims. As a result, the statute of limitations remains an open issue for whistleblowers, subject to its resolution soon by the Supreme Court.

Suit stream

The Ford case is part of a stream of suits addressing procedural issues under silent workplace related statutes. They include the limitations period in the Sipedrug testing case, allowing juries for workers compensation retaliation claim in Schmidtz v. United States SteelCorp., 831 N.W.2d 656 (Minn. 2014); and for whistleblowers, as well Abraham v. County ofHennepin, 639 N.W.2d 342 (Minn. 2002); as well as a ruling last year denying an implied cause of action for retaliation for filing an application of claim for unemployment compensation benefits, Dukowitz v. Hannon Security Services, 847 N.W.2d 141 (Minn. 2014).

The Fordcase represents the latest in this series of actions, requiring the court to add its voice to a silent statute. While advocates for both whistleblowers and employers focus on whether the statute of limitation will be two years or six years, even that focal point might be blurred. The court has an out: it could determine that the two year statute of limitations applies, but that it runs from the time the employee was notified of the impending job loss, consistent with the principle for employment discrimination claims under federal and state law. Delaware State College V. Ricks, 449 U.S. 25, 258 (1980) (Title VII); Turner v. IDS Fin. Services, Inc.,471 N.W.2d 105, 108 (Minn. 1991) (Human Rights Act). On the other hand, it could hold that the two year statute of limitations applies but, under the precept of equitable tolling, start the statute of limitations when the termination occurred, thus keeping alive the claimant’s lawsuit, which was commenced a year before the two-year period from the time of the actual job elimination.

Neither of these prospects, however, would arise if the court were to accept the reasoning of the appellate court under the Siperationale and graft a six year limitations period onto the silent statute. If so, the ensuing sounds will be shrieks of joy from whistleblowers and their advocates and moans of dismay from employers and their attorneys.

The Supreme Court deliberations in Ford will attract the usual coterie of amici and other interested observers. Depending upon the outcome, it also may trigger some legislative action to conform or abrogate the limitations period to be decided by the court.

Either way, employees, employers and their respective advocates are unlikely to be mute when the statutory silence is adjudicated by the court later this year.


Some workplace limitations periods

  • Title VII, Federal Civil Rights Act: 300 days.
  • Minnesota Human Rights Act: one year.
  • Libel or slander: two years.
  • Overtime, minimum wages: two years, three if willful.
  • Government Data Practices Act: six years.

*Originally published in Minnesota Lawyer