The Minnesota Supreme Court issued a unanimous opinion on August 9, 2017 in Friedlander v. Edwards Lifesciences, LLC, finding that the 2013 amendments to the Minnesota Whistleblower Act (“MWA”) abrogated the requirement that a report be made for the purpose of exposing an illegality in order to be protected under the statute. With the court’s narrow ruling in Friedlander, the purpose of an employee’s report is irrelevant to the determination of whether the report can be the basis of a whistleblower claim. In other words, an employee may not need to have been attempting to expose an employer’s suspected illegal conduct in order to bring a retaliation claim in Minnesota.
The Friedlander Case
Plaintiff James Friedlander brought a whistleblower suit in Minnesota federal court claiming his employer terminated his employment in retaliation for reporting its alleged plan to breach a contract with a third party. The plaintiff voiced his objection to the same managers who purportedly concocted the scheme to breach the contract. The company subsequently discharged the plaintiff for policy violations related to expense reports after he was previously warned that such violations could result in termination.
The plaintiff moved for dismissal based on the settled law that a good-faith report under the MWA must be made for the purpose of exposing an illegality.1 The employer argued that since the plaintiff only raised his concerns with managers who already knew about the alleged unlawful activity, he did not make a good-faith report as he did not seek to expose any illegality. In opposition to the employer’s motion, the plaintiff argued that the 2013 amendments to the MWA, which provided a definition of “good faith,” abrogated the expose-an-illegality requirement. U.S. District Court Judge Susan Richard Nelson certified this question of state law to the Minnesota Supreme Court.
The History of the MWA and the Good-Faith Requirement
The Minnesota Legislature passed the MWA in 1987 in response to the Minnesota Court of Appeals’ ruling in Phipps v. Clark Oil & Refining Corp., 396 N.W.2d 588 (Minn. Ct. App. 1987), where the court recognized for the first time the tort of wrongful discharge in violation of public policy.2 The MWA essentially codified the Phipps ruling, prohibiting an employer from retaliating against an employee who, “in good faith,” refuses to participate in activity the employee believes is illegal. The MWA went further, also prohibiting retaliation against an employee who “in good faith” reports a violation or suspected violation of law. Minn. Stat. § 181.932, subd. 1. (1987). When initially passed in 1987, the MWA did not define “good faith.”
Since the MWA's enactment, the courts have provided guidance in interpreting what constitutes good faith under the statute. In Obst v. Microtron, Inc., 614 N.W.2d 196, 202 (Minn. 2000), the court held:
In order to determine whether a report of a violation or suspected violation of law is made in good faith, we must look not only at the content of the report, but also the reporter’s purpose in making the report. The central question is whether the reports were made for the purpose of blowing the whistle, i.e., to expose an illegality.
Ten years later, a plurality of the court held that an employee’s job duties could be helpful in determining whether a report is made for the purpose of exposing an illegality, noting “when it is the employee’s job to report illegality, there is no basis to infer from the mere fact of a report that the employee’s report was made to ‘blow the whistle.’” Kidwell v. Sybaritic, Inc., 784 N.W.2d 220, 228 (Minn. 2010) (involving a whistleblower claim by former in-house counsel).
The 2013 Amendments
In 2013, the Minnesota Legislature passed a number of under-the-radar amendments to the MWA. The amendments, which were advocated by the plaintiffs’ bar, significantly expanded whistleblower protection to include reports of violations of common law, such as the breach of contract claim at issue in Friedlander. The legislature also provided a definition for, among other things, “good faith.”
The statutory definition of good faith includes “any statements or disclosures” as long as they are not knowingly false or made in reckless disregard of the truth. Thus, the statutory definition requires only that the employee believe her statement to be true to qualify as a good-faith whistleblower report.
The Court’s Reasoning in Friedlander
The court began its analysis noting that it previously provided a definition of good faith in Obst to “fill a gap in the statute.” It then held that the 2013 amendments provided a legislative definition that “reports are made in ‘good faith’ as long as those reports are not knowingly false or made with reckless disregard of the truth.” As a result, any other meaning of “good faith” would contradict the plain meaning of the statute. The court noted that while Obst required courts to look at the purpose of the report as well as the content, the statutory definition allows inquiry only into the content of that report.
The court opined that any other conclusion would render the 2013 amendments superfluous and run afoul of the presumption that the legislature intends to change the law when it amends a statute. The court further observed that the statute had always excluded knowingly false or reckless reports from the scope of the MWA’s protections, such that if the amendment changed the law, it must be interpreted to have also changed the Obst definition of “good faith.”
Even prior to this decision, whistleblowing claims have been among the fastest growing employment claims in Minnesota. With the Minnesota Supreme Court’s decision last year in Ford v. Minneapolis Public Schools, 874 N.W.2d 231 (Minn. 2016), which expanded the statute of limitations for whistleblower claims to six years, these cases can result in potential exposure long after memories fade and employees leave. Employers should carefully investigate any allegation of wrongdoing by an employee, and document the steps taken in those investigations. Liability will continue to hinge on whether there was a causal connection between the report and some adverse employment action. Strong documentation regarding the content of report, as well as the investigation and the reasons for any adverse action against an employee, will remain critically important in avoiding whistleblower liability in Minnesota.