The Minnesota Supreme Court in Bahr v. Capella Univ., No. A08-1367 (Minn. Sept. 9, 2010), by a recent four-member majority opinion, rejected an employee’s retaliation claim based on the pleadings, in which she alleged that she was terminated after refusing to treat an African-American female employee more favorably than others under her supervision. In dismissing the complaint, the Court held that a plaintiff must do more in her complaint of retaliation than make a conclusory allegation of a subjective belief she was opposing a discriminatory practice, but must allege facts demonstrating that a reasonable person could also believe that the employment practices opposed were prohibited by the law. In addition, the Court clarified, consistent with the law of the Eighth Circuit, that the underlying claim of discrimination requires an allegation of a material or tangible change in duties or working conditions – “[n]ot everything that makes an employee unhappy is an actionable adverse employment action.”
Plaintiff Elen Bahr, an employee in Capella’s Communications Department, served as a supervisor to an African-American woman identified as “L.A.” In September 2006, Bahr found that L.A.’s performance fell below company standards. After informal counseling and improvement efforts failed, Bahr suggested to Capella’s Human Resources Department that L.A. should be placed on a Performance Improvement Plan (“PIP”). Despite the fact that Capella had previously cooperated with Bahr in issuing PIPs to other underperforming employees, Capella refused to allow issuance of a PIP against L.A., demanding that Bahr “move slowly” with L.A.
In the months that followed, Bahr continued to complain to Capella that L.A.’s failing performance compromised the entire department. Nonetheless, Capella demanded that Bahr continue to “move more slowly on the matter [with L.A.] than she had ever moved on a performance issue” because L.A. had history that was “racially based.” When the time came for Bahr to write L.A.’s annual performance review, Capella told Bahr to “minimize the performance issues raised” and to “do the right thing” and provide “balance” to L.A.’s review.
Ultimately, Bahr notified Capella that she viewed its treatment of L.A. as “unfair and discriminatory to [L.A.] and to other employees” because no other employee was receiving the same treatment. Shortly thereafter, Bahr told Capella that she could no longer participate in the treatment of L.A. that Bahr perceived as discriminatory. Two months later, Capella terminated Bahr.
Bahr filed suit alleging that Capella violated the Minnesota Human Rights Act (“MHRA”) anti-retaliation provision, Minn. Stat. § 363A.15, by retaliating against Bahr for refusing to participate in discriminatory conduct—for refusing to treat an underperforming African-American female employee more favorably than other underperformers. In other words, Bahr alleged that she was retaliated against for opposing reverse discrimination by Capella for its refusal to place a minority employee on a PIP. Capella immediately brought a Rule 12 motion to dismiss, arguing the complaint did not state a valid claim of retaliation. The district court agreed and dismissed the case, ruling there could be no claim of retaliation if what the plaintiff employee had objected to was not in fact illegal. Bahr appealed and the Minnesota Court of Appeals reversed, concluding that Bahr only had to plead a good-faith, reasonable belief that Capella’s actions, which Bahr opposed, were violations of the MHRA, consistent with the standard for analyzing reprisal claims developed in the federal courts under Title VII of the Civil Right Act.
Capella appealed to the Minnesota Supreme Court, arguing that in a reprisal claim under the MHRA, the plain meaning of the statute requires that the practice opposed must be actually forbidden under the MHRA, not simply a good faith, reasonable belief that Capella’s practices were forbidden by the MHRA and she opposed them. Recognizing it as an issue of first impression, the Supreme Court granted certiorari and agreed to hear the case.
The Supreme Court’s Analysis:
Significantly, the Court first specifically adopted the United States Supreme Court’s higher pleading standard established in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), stating that a plaintiff must provide more than “labels and conclusions” to survive a motion to dismiss. Thus, going forward, Minnesota trial courts will have a greater gate keeping responsibility to scrutinize pleadings in assuring they assert plausible grounds upon which relief may be granted, and the burden on plaintiffs in crafting a complaint will be higher.
In light of the Twombly standard, the Minnesota Supreme Court went on to examine Bahr’s retaliation claim. However, it declined to determine the overarching issue of whether a plaintiff must plead opposition to a practice that is actually forbidden under the MHRA in order to survive a motion to dismiss, or must merely plead “a good-faith, reasonable belief” that the opposed practice was forbidden under the MHRA. Instead, it stated that the only issue was whether Bahr’s belief that she was opposing discriminatory and prohibited conduct under the MHRA was even objectively reasonable. Accordingly, the Court emphasized that Bahr could not merely make a conclusory claim that she had a reasonable belief that the practices she opposed were forbidden by the MHRA to avoid scrutiny of her claim.
In analyzing Bahr’s complaint, the Court found that that the reasonableness of a party’s belief must be connected to the substantive law. It emphasized that “[i]f a practice is not unlawful under the plain terms of the MHRA, a party’s belief that the practice is unlawful cannot be reasonable.” The Court cautioned that Bahr’s position that the basis for reasonable belief need not be tied to substantive law, would allow a plaintiff to rely entirely on the plaintiff’s own subjective reasoning. The court concluded that, based on the substantive law, the plaintiff had not objected to discrimination, or objected to conduct that one could reasonably believe was discrimination.
In reaching its conclusion, the Supreme Court decided a second issue of first impression. Specifically, the court ruled that a claim of discrimination requires an allegation of a material or tangible change in duties or working conditions. Here, the court found that Capella’s decision to not place the employee on a PIP is not such a material change to L.A.’s or the other employees’ “hiring, tenure, compensation, terms, upgrading, conditions, facilities, or privileges of employment.” While Bahr certainly opposed Capella’s practices regarding L.A., the Minnesota Supreme Court held that Bahr could not have reasonably believed that Capella unlawfully discriminated against L.A. According to the Court: “no reasonable person could believe that Capella’s treatment of L.A. was forbidden by the MHRA because L.A. was not subjected to anything that could remotely be considered an adverse employment action.” In footnote 8, it further noted that no federal court has held that placing an employee on a PIP, without anything more, constitutes an adverse employment action and, therefore, not placing an employee on a PIP, could not reasonably be believed to constitute an adverse employment action. Therefore, Bahr’s complaints to Capella about their favorable treatment of L.A. by not placing her on a PIP could not constitute protected conduct. The Court ultimately reversed, reinstating the trial court’s judgment in favor of Capella.
It is noteworthy that three justices dissented, indicating they would have permitted Bahr’s claims to proceed. As Justice Page reasoned, “[a]lthough Bahr had no basis to believe that Capella had engaged in employment discrimination against L.A., Bahr may have reasonably believed that Capella’s race-based preferential treatment of L.A. constituted reverse discrimination against Capella’s non-black employees who were subject to all of Capella’s performance and disciplinary standards.” The majority dismissed Justice Page’s concerns, stating “[w]e fail to see how Capella’s treatment of employees other than L.A. under Capella’s normal employment practices could in any way be reasonably believed to constitute an adverse employment action against such employee.
This is a significant decision for Minnesota employers, both as to retaliation claims and discrimination claims in general. In light of the Bahr decision, employers will have a better opportunity to avoid significant litigation expense at a threshold stage based on an objective standard regarding the reasonableness of a plaintiff’s belief that he or she complained of retaliation under the MHRA. This case also clarifies for Minnesota employers for the first time that only a material adverse change in an employee’s duties or work conditions can support a claim of discrimination or retaliation based on opposition to discrimination.
While the Bahr decision appears to provide employers with a bit more predictability with regard to retaliation and discrimination claims, time will tell how Minnesota courts will apply Bahr in cases based on closer facts, and whether they will follow the “good-faith, reasonable belief” standard or instead require an allegation of an actual MHRA violation.