Recent Developments in Retaliation Law

The Retaliation Claim Conundrum: Where We Go From Here

Co-Authors:

Sheila Engelmeier, Engelmeier & Umanah, P.A.
Justin D. Cummins, Cummins & Cummins, LLP
Clayton Hulunen, Halunen & Associates
David Duddleston, Jackson Lewis, LLP

TABLE OF CONTENTS

Page

I. RETALIATION CLAIMS UNDER FEDERAL LAW............................................................. 1

A. Title VII.................................................................................................................... 1

B. § 1981...................................................................................................................... 1

C. ADEA....................................................................................................................... 2

D. FLSA........................................................................................................................ 2

E. USERRA.................................................................................................................. 2

F. NLRA....................................................................................................................... 2

G. ADA......................................................................................................................... 3

H. Sarbanes-Oxley Act and Financial Regulations....................................................... 3

II. RETALIATION CLAIMS UNDER STATE LAW.....................................................................4

A. Minnesota Whistleblower Act..................................................................................... 4

B. Minnesota Common Law............................................................................................5

C. MHRA....................................................................................................................... 6

III. OTHER CONSIDERATIONS................................................................................................ 6

A. Obstruction Claims Involving Worker's Compensation.............................................. 6

B. Ethical Considerations............................................................................................... 7

  1. RETALIATION CLAIMS UNDER FEDERAL LAW

A. Title VII

Burlington North and Santa Fe Ry. Co. v. White, 548 U.S. 53 (2006)

The Court held that adverse action includes any conduct that " might have 'dissuaded a reasonable worker from making or supporting a charge of discrimination.'" Id. at 68 (emphasis added). The Court's explanation of the standard has special import for the summary judgment stage of litigation: "[w]e phrase the standard in general terms because the significance of any given act of retaliation will often depend upon the particular circumstances. Context matters ." Id. at 69 (emphasis added). Based on that liberal standard, the Court ruled that action not tied to terms and conditions of employment, including exclusion from lunches in this case, can support a valid retaliation claim. Id. at 69-71.

Crawford v. Metropolitan Government of Nashville, 129 S. Ct. 846, 555 U.S. 271 (2009)

In an opinion by Justice Souter, the Court held that Title VII's anti-retaliation provision protects employees from retaliation when employees merely participate in an employer's internal investigation of a potential Title VII violation. Id. at 849. The Court reasoned that, if employees could be subject to adverse action for responding to questions during an internal investigation, employees would feel compelled not to report violations against themselves or others - undermining enforcement of the statute. Id. at 852-53.

Thompson v. North Amer. Stainless, LP, 131 S.Ct. 863 (2011)

In a unanimous opinion announced by Justice Scalia, the Court held that adverse action against a third party can support a retaliation claim; the Court determined that the termination of a discrimination complainant's fiancé was such unlawful action because it would dissuade a reasonable employee from asserting rights under Title VII. Id. at 868. The Court further found that the third party fiancé has a right to sue because he was in the zone of interest sought to be protected by Title VII's anti-retaliation provision and, therefore, the fiancé was not "collateral damage." Id. at 870.

B. § 1981

CBOCS West, Inc. v. Humphries, 553 U.S. 442 (2008)

The Court held that Section 1981 protects individuals who have complained about potential Section 1981 violations concerning a third party. Id. at 445. The Court's decision essentially read an anti-retaliation provision into the statute based on Congressional action that rejected the Court's prior precedent (which largely limited Section 1981 cases to pre-contract-formation claims). Id. at 449-53.

C. ADEA

Gomez-Perez v. Potter, 553 U.S. 474 (2008)

In an opinion by Justice Alito, the Court basically read an anti-retaliation provision into the ADEA. Id. at 478-79. In doing so, the Court again embraced the private attorney general principle: that, to promote full enforcement of the ADEA, employees should be encouraged to make reports of possible violations. Id. at 484-86.

D. FLSA

Kasten v. Saint-Gobain Perform. Plastics Corp., 131 S.Ct. 1325 (2011)

The Court held that the anti-retaliation provision of the FLSA protects employees who only make an oral complaint, rejecting the trend under state law that increasingly requires formal and/or written reports to trigger protection. Id. at 1329. The Court observed that the text of the statute did not provide sufficient guidance, so the analysis emphasized the importance of considering workplace practicalities. Id. at 1333. In particular, the Court relied on the private attorney general principle to reason that broad application of anti-retaliations provisions is necessary for the enforcement scheme to be effective. Id. at 1332-35.

E. USERRA

Staub v. Proctor Hosp., 131 S.Ct. 1186 (2011)

In an opinion by Justice Scalia, the Court held that an employer is liable for the animus of an employee who, although not the ultimate decision-maker, influenced the decisional process. Id. at 1189. The Court's analysis turned on the view that a contrary ruling would enable employers to immunize themselves by simply isolating the ultimate decision-maker from the underlying decisional process. Id. at 1189-93. Although this case technically concerned discrimination claims, the analysis logically applies to retaliation claims as well. See, e.g., McKenna v. City of Phila., 649 F.3d 171, 178-81 (3 rd Cir. 2011) (affirming the plaintiff verdict because an internal disciplinary hearing did not sever the causal connection between the supervisor's retaliatory animus and the plaintiff's discharge after opposing apparent discrimination).

F. NLRA

Hispanics United of Buffalo, Inc., Case No.: 3-CA-27872 (ALJ Decision Sept. 2, 2011)

The Board issued a Complaint alleging that the employer terminated several employees for engaging in protected, concerted activity under the NLRA. Id. at *1. The conduct in question included a Facebook posting criticizing the employer's customer service and responsive postings that complained about working conditions. Id. at *4-6. No part of the exchange between employees occurred during work time or through work computers. Id. at *6. The employer terminated the employees for allegedly violating the employer's policy against bullying and harassment. Id. The ALJ concluded that the employees' Facebook communications constituted protected activity despite not being directed at the employer or aimed at changing employment terms or conditions because the postings related to the work environment. Id. at *8. The ALJ further reasoned that the employees' communications did not forfeit protection under the NLRA. Id. at *9 (noting the communications did not take place at work, were related to employment conditions, and did not contain any outbursts).

For a survey of litigation in this area, see National Labor Relations Board, Office of General Counsel, Division of Operations-Management, Memorandum OM 11-74 (Aug. 18, 2011); National Labor Relations Board, Office of General Counsel, Dicision of Operations-Management, Memorandum OM 12-31 (January 24, 2012).

G. ADA

Heisler v. Metropolitan Council, 339 F.3d 622 (8th Cir. 2003).

The Eighth Circuit reversed a lower court's grant of summary judgment on an employee's retaliation claim under the ADA. Id. at 628. The employer argued, among other things, that the retaliation claim was precluded as a matter of law because the lower court had found that the individual was not disabled. Id. at 628. Even though the circuit court affirmed the lower court's holding that plaintiff was not disabled under the ADA, the court held that the retaliation claim was cognizable; "Requesting an accommodation is protected activity, and termination is certainly an adverse employment action." Id. at 632 (internal citation omitted). The court accepted that alleging retaliation caused by the protected activity, requesting an accommodation even if not entitled to one under the ADA, constituted an allegation of a prima facie case of unlawful retaliation. Id.

Generally the other circuits have embraced ADA claims involving retaliation for activity protected by the ADA. See e.g. Wright v. CompUSA, 352 F.3d 472 (1st Cir. 2003); Shellenberger v. Summit Bancorp, Inc., 318 F.3d 183 (3d Cir. 2003); Barnett v. U.S. Air, Inc., 228 F.3d 1105, 1121 (9th Cir. 200) (en banc), vacated on other grounds, 122 S. Ct. 1516 (2002); Standard v. A.B.E.L. Services, Inc., 161 F.3d 1318, (11th Cir. 1998).

The ADAAA makes clear that employees who are protected from disability discrimination only under the "regarded as" prong, are not entitled to reasonable accommodations. It is unclear whether this will result in courts holding that employees who are not entitled to an accommodation are still protected from retaliation in the event they seek one.

H. Sarbanes-Oxley Act and Financial Regulations

The Sarbanes-Oxley Act of 2002 also created new protections against retaliation by prohibiting publicly traded companies from retaliating against employee whistleblowers who report about corporate fraudulent activities to management, law enforcement, regulating agencies or members of Congress . Specifically, protected conduct includes:

  1. to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344, or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders, when the information or assistance is provided to or the investigation is conducted by-

(A) a Federal regulatory or law enforcemetn agency;
(B) any member of Congress or any committee of Congress; or
(C) a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct); or

2. to file, cause to be filed, testify, participate in, or otherwise assist in a proceeding filed or about to be filed (with any knowledge of the employer) relating to an alleged violation of section 1341, 1343, 1344, or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders.

See 18 U.S.C. 1514A.

The Dodd-Frank bill likewise protects employees from retaliation resulting from lawful employee conduct in providing information to or otherwise assisting in or initiating investigations, or judicial or administrative action and creates a private right of action for violations which permit awards of back pay, reinstatement and attorney fees. See H.R. 4173-470 et. seq.

II. RETALIATION CLAIMS UNDER STATE LAW

A. Minnesota Whistleblower Act

Kratzer v. Welsh Companies, LLC, 771 N.W.2d 14 (Minn. 2009)

The Court set out a test for determining whether a report of wrongdoing would be protected under the MWA. Kratzer was fired after he reported a fellow real estate agent for a "dual agency" transaction - where one agent represents both buyer and seller - and for not informing the seller that the agent would receive a higher commission if he negotiated a lower price for the buyer. Id. at 15-18; see also id. n.5. The Court said that a whistleblower will be protected if the facts reported constitute a violation of a law or rule adopted pursuant to law. Id. at 22. If the facts do not "implicate" a violation of law , then the whistleblower is not protected. Id. Thus, the employee was not protected because the reported conduct, unethical behavior, did not violate a statute or regulation, and the case was dismissed. Id. at 23.

Kidwell v. Sybaritic, 784 N.W.2d 220 (Minn. 2010)

Kidwell was a former in-house counsel who was fired when he reported illegal activity to his superiors. Id. at 221-23. A plurality of the Court held that, if an employee's job requires him/her to report illegal activity to the employer, the employee has to do more than his/her normal job to act in good faith and obtain protection under the MWA. Id. at 228. Chief Justice Magnuson concurred in the plurality's decision but not with the reasoning, noting that the in-house attorney who shared client confidences should not recover when the client fires him. Id. at 232-34. Chief Justice Magnuson relied, in part, on the special relationship between an attorney and his/her client. Id. In light of this ruling, it appears that a retaliation claim may fail if the "whistleblowing" happens as part of an employee's "normal" duties. However, the dissenting opinion appropriately notes there are federal statutes with similar language that reject the "normal duties" exception suggested by the plurality opinion. Id. at 237 (noting for example, that administrative decisions applying Sarbanes-Oxley act do not acknowledge normal duties exception to protection from retaliation).

B. Minnesota Common Law

Phipps v. Clark Oil Refining Corp., 408 N.W.2d 569 (Minn. 1987)

This case involved Minnesota's first successful whistleblower claim, predated the Minnesota Legislature's enactment of any employee-protection laws similar to the MWA, and represents arguably Minnesota's only common law exception to the employment-at-will doctrine. Phipps sued his employer after being fired for refusing the employer's directions to fill a customer's gas tank with leaded gas even though the vehicle gas tank was labeled as only for unleaded fuel. Id. at 570-71. Phipps claimed that following his employer's directions would have violated the Clean Air Act. Id. The Court created an exception to the employment-at-will doctrine for employees discharged "for reasons that contravene a clear mandate of public policy." Id. at 592. It is an open question whether the common law exception first set forth in Phipps still has relevance today, especially given the Minnesota Supreme Court's recent ruling in Nelson discussed below.

Nelson v. Productive Alternatives, Inc., 715 N.W. 2d 452 (Minn. 2006)

While the Court held that the MWA does not preclude a Phipps claim, the Court ruled in favor of the employer and stated that the employee had not plead an actual violation of the law. Id. at 453-57. Instead, Nelson claimed that he was fired from a non-profit corporation as a result of exercising his rights to vote as a member of the non-profit organization. Id. at 453. The Court concluded there was not "a clear public policy at stake" largely because the employee had not alleged a violation of any law. Id. at 455-57. Tellingly, the Court noted, "[w]e recognize that the common-law cause of action recognized in Phipps, though still viable, may well be largely duplicative of the cause of action available under the Whistleblower Act." Id. at n.3.

C. MHRA

Bahr v. Capella University, 788 N.W.2d 76 (Minn. 2010)

The Court addressed the issue of what constitutes a reasonable belief that one is opposing a discriminatory practice. Bahr, a manager in Capella's communications department, was terminated after repeatedly asking permission to address an African-American employee's poor performance by putting her on the company's performance improvement plan. Bahr's termination came after a pattern of telling her supervisors that she thought avoiding the employee's poor performance was discriminatory and was harmful to the rest of her team.

The Court noted that the standard for a viable claim of reprisal is either a good-faith reasonable belief that Capella's actions were violations of the MHRA or the stricter standard of pleading actions that actually violate the MHRA. The Court found, as a matter of law, that Bahr did not meet the more lenient standard. The Court ruled that "no reasonable person could believe that the practices Bahr opposed were prohibited under the MHRA," and the Court affirmed the dismissal of the lawsuit for failure to state a claim. Id. at 84-85.

III. OTHER CONSIDERATIONS

A. Obstruction Claims Involving Worker's Compensation

Nunn v. Noodles & Company, 11-1531 (8th Cir. Mar. 22, 2012)

In applying Minnesota's Worker's Compensation statutes the Eighth Circuit reversed the lower court's grant of summary judgment in favor of the employer in a case dealing with intentional obstruction of worker's compensation benefits. The employer and its workers compensation carrier argued that since ultimately the employee received benefits, complete obstruction was missing and the statutory prohibition on intentional obstruction did not apply. The employer further argued that it was entitled to defend against the worker's compensation claim and thus it could not be punished for pursuing a defense that had little chance of success.

The court, however, held that the manner in which it defended its claim, including concealing information from the worker's compensation ALJ and a factually inaccurate claim denial and the resulting delay in receipt of benefits were encompassed within the meaning of obstruction. Regarding the motive element of the plaintiff's claim the court noted: "An unfounded refusal to pay, or even a substantial delay in payment, designed to induce settlement qualifies as intentional obstruction in an outrageous and extreme, or egregiously cruel or venal manner. There are genuine issues of material fact whether this conduct was outrageous and extreme, or egregiously cruel or venal." The court also noted that the clear and convincing evidentiary standard required for claims of obstruction of worker's compensation benefits does not change the manner in which summary judgment works or what questions should be reserved for a jury.

Brown v. Cassens Transport Co., 10-2334 (6th Cir. Apr. 6, 2012)

In Cassens the Sixth circuit was looking at a claim that involved obstruction and fraudulent denial of worker's compensation benefits. Various plaintiffs had sued Cassens, its worker's compensation carrier and the alleged "cut off" doctor alleging a fraudulent enterprise intent on depriving plaintiffs of their property interest in worker's compensation benefits under RICO. The court reversed the lower court's dismissal and allowed the RICO claim to proceed, noting that the interest in benefits was a sufficient property interest and that the plaintiffs had alleged a sufficient enterprise, operated and managed by the employer, the carrier and the doctor. The court also noted that the general exclusivity of worker's compensation remedies was insufficient to supersede the federally created RICO remedy under the supremacy clause.

B. Ethical Considerations

Scripting Contact Between Clients and Represented Parties

The position of the Director's Office and Minnesota's Lawyers Professional Responsibility Board is that an attorney may not, under Rule 4.2, script any communication or draft any agreement to be presented to an adverse party by a client. This position is inconsistent with a formal opinion issued by the ABA in September 2011 (Formal Opinion 11-461) which states that at a minimum, attorneys should advise their clients to encourage an adverse party to consult with their legal counsel prior to entering into obligations, making admissions or disclosing information when making direct contact. Minnesota will, for the time being, not follow the ABA's formal opinion and retain its prohibition on scripting communications between a client and a represented adversary.