After an appeal to the Eighth Circuit which reinstated the plaintiff’s whistleblower retaliation claim, Minnesota District Court Judge Ann Montgomery issued a decision denying summary judgment to the employer on the plaintiff’s claim for punitive damages. Sellner v. MAT Holdings, Inc., No. 13-1289, 2018 WL 784062 (D. Minn. Feb. 8, 2018).
The lawsuit was brought by an employee (“Sellner”), who alleged he was fired because he refused to report inaccurate test results. MAT Holdings (“MAT”), the employer, manufactures and markets air compressors, pneumatic air tools, and pressure washers. Sellner worked for MAT as a lab-quality technician at MAT’s facility in Springfield, MN.
On March 29, 2012, the Springfield facility’s manager, Alan Stark (“Stark”), told Sellner to present data on a pump that was set to be added to Sears Roebuck & Co.’s product line. The pump had serious problems with oil leakage during testing. After another manager said Sellner’s data could not be used in a report to Sears, Stark allegedly told Sellner to “produce a report showing no major issues” with the pump. When Sellner replied that no units performed without major issues, Stark replied, “Well, if you don’t do this we’re all going to be on the street—no, you’re going to be on the street.” Stark also allegedly told Sellner to “get creative with [his] documentation.”
The next day, March 30, Sellner called the Minnesota Department of Labor and Industry (MNOSHA) and complained he was instructed to “doctor up some documentation” and filed an online report on the issue. Another lab technician testified he told Travis Strong (“Strong”), the lab technicians’ direct supervisor, about the report to MNOSHA within a day or two. That same day, MAT posted a job opening for a Quality Assurance/Test Lab Leadperson. Strong recommended Sellner for the promotion.
On April 10, while Sellner and Strong were away on business, human resources received an anonymous email accusing Sellner of inappropriate conduct. On April 23 through 25, human resources investigated and several employees made allegations about Sellner’s workplace behavior. The next day, Sellner was terminated. MAT maintained it fired Sellner for unacceptable conduct including inappropriate and offensive statements made to and about his colleagues, inability to maintain positive and productive relationships with his coworkers, and engaging in conduct that adversely affected the productivity in the workplace.
Sellner sued MAT for wrongful termination under the Minnesota Whistleblower Act. The District Court granted MAT summary judgment. On appeal, the Eighth circuit reversed. The Eighth Circuit found Stark’s remark that “we’re all going to be on the street—no, you’re going to be on the street” if Sellner did not “get creative with [his] documentation” was direct evidence of retaliation. Sellner v. MAT Holdings, Inc., 859 F.3d 610 (8th Cir. 2017). The District Court had determined this comment was too remote in time from the firing to be direct evidence, but the Eighth Circuit held that 27 days between Sellner’s report to MNOSHA (which his supervisor allegedly knew about within a day or two) and his firing created an inference of retaliation to defeat summary judgment.
On remand to the District Court, MAT moved for summary judgment again, but on the issue of punitive damages. The District Court determined that a claim for punitive damages is proper if MAT knew of facts or intentionally disregarded facts that created a high probability that Sellner’s right to be free from retaliatory employment consequences under the whistleblower statute would be injured, and deliberately proceeded to act in conscious or intentional disregard or with indifference to the high probability of such injury. The District Court found that Sellner had alleged enough evidence to proceed to trial with a punitive damages claim. According to the District Court, the evidence showed that MAT supervisors had knowledge of Sellner’s report to MNOSHA when they decided to terminate him.
This case is an important reminder for employers to think twice before disciplining or discharging an employee who has made complaints to an administrative body regarding workplace practices. Employers should make sure their reasoning for discipline or termination is well-documented and based on objective facts.
Update on Minnesota Pending Legislation that May Impact Employers
Sexual Harassment Definition Bill (HF 4459, SF 4031)
The Bill proposes to remove the “severe or pervasive” requirement from the definition of “sexual harassment” related to hostile work environment claims under the Minnesota Human Rights Act. This Bill was introduced in the House, and the Senate has referred it on to the Judiciary and Public Safety Finance and Policy Committee.
Tip Credit Bill (HF 4061, SF 3108)
The Bill proposes to allow employers to pay their tipped employees a lower minimum wage. Large employers (employers with annual gross receipts of $500,000 or more) may cap an employee’s minimum wage at $9.65, so long as the employee makes an average of 414 per hour, including tips. For small employers (employers with annual gross receipts of $500,000 or less), an employer may cap an employee’s base wage at $7.87 if the employee makes an average of $12 per hour, once the tips are included. This Bill was introduced in the House, and the Senate has referred it on to the Jobs and Economic Growth Finance and Policy Committee.
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