In Chavez-Lavagnino v. Motivation Educ. Training, Inc., 767 F.3d 744 (8th Cir. 2014), the Eighth Circuit held an employer liable for violating the Minnesota Whistleblower Act, Minn. Stat. § 181.932, and for wrongful termination in violation of public policy, despite the fact that the employer did not give authority to fire employees to the supervisor who carried out the termination. The Eighth Circuit held that although the supervisor did not have authority to fire employees, the employer was liable for violating the Whistleblower Act under the “cat’s paw” theory and under the apparent authority doctrine. The Eighth Circuit also held that individual supervisors, unlike their employers, most likely cannot be held personally liable under the tort of wrongful termination in violation of public policy.
Minnesota Whistleblower Act
Under the Minnesota Whistleblower Act, Minn. Stat. § 181.932, subd. 1, an employer shall not discharge, discipline, threaten, otherwise discriminate against, or penalize an employee regarding the employee’s compensation, terms, conditions, location, or privileges of employment for engaging in protected conduct.
Under the Act, protected conduct includes when the employee, or a person acting on behalf of an employee, in good faith, reports a violation, suspected violation, or planned violation of any federal or state law or common law or rule adopted pursuant to law to an employer or to any governmental body or law enforcement official. It also includes when the employee refuses an employer’s order to perform an action that the employee has an objective basis in fact to believe violates any state or federal law or rule or regulation adopted pursuant to law, and the employee informs the employer that the order is being refused for that reason.
Minnesota Common Law Claim for Wrongful Discharge
Under Minnesota common law, an employee may bring an action for wrongful discharge if that employee is discharged for refusing to participate in an activity that the employee, in good faith, believes violates any state or federal law. Nelson v. Productive Alts., Inc., 715 N.W.2d 452, 455 (Minn. 2006). The elements of the claim for wrongful discharge in violation of public policy are similar, but not identical, to the elements of a claim for violation of the Minnesota Whistleblower Act. See Nelson, 715 N.W.2d at 455 n. 3 (recognizing that the common law claim for wrongful discharge “may well be largely duplicative of the cause of action available under the Whistleblower Act”).
Motivation Education Training (“MET”) is a non-profit corporation that provides services and training to migrant and seasonal farm workers. MET receives most of its funding from federal grants, and in order to use those funds, MET must ensure that the worker satisfies certain eligibility requirements.
Chavez-Lavagnino began working at MET’s office in Rochester, Minnesota, in September 2008. In December, Chavez-Lavagnino’s supervisor, Cerna, ordered her to forge a worker’s signature. Chavez-Lavagnino refused. Cerna responded, “I can see that you are not willing to go an extra mile for your job.” In January 2009, Cerna ordered Chavez-Lavagnino to begin forging follow-up notes. Chavez-Lavagnino complied until late March or early April. Chavez-Lavagnino then told Cerna she would no longer falsify the notes, because doing so was illegal. MET fired Chavez-Lavagnino on May 1, 2009.
Yanez began working at MET in June 2008. Yanez claimed that during her time at MET, Cerna instructed her to forge signatures, shred tax forms, falsify follow-up notes, and register applicants whom Yanez knew to be in the country illegally. Initially, Yanez complied. In mid-October, Yanez told Cerna that she would no longer break the law. Cerna responded, “I guess you are not willing to go above and beyond the call of duty.” On December 10, 2008, Yanez went home from work early because she felt sick. The next morning, she received a voicemail advising Yanez that she was fired for abandoning her post.
The employees filed suit in Minnesota state court against MET and Cerna, alleging that the defendants fired them in retaliation for their refusals to follow Cerna’s illegal orders, in violation of Minnesota’s Whistleblower Act and Minnesota common law. MET and Cerna removed the case to federal court on the basis of diversity jurisdiction. The district court dismissed the statutory Whistleblower claim against Cerna, but the statutory claim against MET and the common law claims against both defendants were tried to a jury. The jury found in favor of the employees, awarding each employee the amount she sought in lost wages: $53,183.42 for Chavez-Lavagnino, and $35,241.67 for Yanez. After trial, the district court awarded the employees pre-judgment interest and attorney’s fees.
MET and Cerna appealed to the Eighth Circuit, arguing that the employees failed to satisfy the requirements under the Whistleblower Act. Among other things, they contended that there was no causal connection between the discharge and the protected activity because MET vested only its executive director, not Cerna, with authority to fire employees, and there was no evidence the executive director had a retaliatory motive. MET and Cerna also contended that only employers, not supervisors, can commit wrongful discharge, so the judgment against Cerna must be reversed.
Eighth Circuit Holds Employer Liable Under Cat’s Paw Theory and Apparent Authority Doctrine
The Eighth Circuit rejected the employer’s argument that since the only person with authority to fire was the executive director, not Cerna, and because the executive director had no retaliatory motive, there was no causal connection between the firing and the employee’s refusal to engage in illegal activity. The Eighth Circuit noted that Minnesota courts have concluded that the requisite causal connection is absent “if the employer is not aware of the statutorily protected activity.” The court, however, stated that the executive director is not the only relevant corporate actor. The court noted that, under the cat’s paw theory, an employer may be vicariously liable for an adverse employment action if one of its agents, other than the ultimate decision maker, intentionally and proximately causes the action. The court explained that Minnesota courts have applied this theory in employment discrimination cases and that it was likely they would apply the same analysis under the Whistleblower Act and the common law.
Applying the cat’s paw theory, the Eighth Circuit found there was ample testimony demonstrating Cerna’s role in Chavez-Lavagnino’s firing since Cerna testified that she had constant contact with her supervisor, that she specifically recommended Chavez-Lavagnino’s termination to him, and that he passed along the recommendation to the executive director. That supervisor testified that the executive director often followed his recommendations. The court noted that even if the executive director did not know of Chavez-Lavagnino’s refusal to violate the law, the evidence was sufficient for the jury to find that Cerna proximately caused her termination, and that Cerna was motivated by a desire to retaliate against her.
The Eighth Circuit also found that the jury reasonably could have determined that MET was bound by Cerna’s communication to Yanez that she was fired, because Cerna had at least apparent authority to effect Yanez’s termination. The court explained that apparent authority exists when a principal holds out a person as having authority to act on the principal’s behalf, and a third party reasonably believes the person to have that authority. The court stated that since Cerna was intimately involved in Yanez’s hiring, a jury could find that a reasonable employee in Yanez’s position would believe that Cerna had authority to terminate her employment. The court held, therefore, that MET was bound by Cerna’s exercise of her apparent authority, and Cerna’s knowledge of Yanez’s refusal to violate the law was sufficient to demonstrate causation under the Whistleblower Act.
Eighth Circuit Holds Supervisor Cannot Be Individually Liable for Wrongful Discharge
The Eighth Circuit reversed the judgment against Cerna individually under the common law claim, predicting that the Minnesota Supreme Court would conclude that only employers, not supervisors, can commit wrongful discharge. The court noted that the Minnesota Supreme Court hasn’t addressed whether a supervisor can be liable for wrongful discharge, but stated it was likely that the Minnesota Supreme Court would hold that a supervisor cannot be individually liable for wrongful discharge. The court explained that because wrongful discharge requires the existence of an employer-employee relationship, an agent “cannot commit the tort of wrongful discharge; rather, he or she can only be the agent by which an employer commits that tort.”
Lessons for Employers
In light of the decision in Chavez-Lavagnino, employers should fully understand what activities are protected under the Minnesota Whistleblower Act and train their supervisors to not carry out any adverse employment action because an employee engages in any those protected activities. In this context, employers should also identify those supervisors and managers who can influence termination decisions to ensure they receive such training.
If you have any questions about Minnesota whistleblower laws, are an employer that has been sued under the Minnesota Whistleblower Act, or are a supervisor who has been sued for whistleblower retaliation or wrongful discharge, please contact one of the Minnesota employment law attorneys at Trepanier MacGillis Battina P.A. The firm can also assist you in drafting appropriate whistleblower policies, updating reporting procedures under your employee handbook, and providing supervisory training to reduce the risk of retaliation claims.
About the Author:
Minnesota whistleblower law attorney Craig W. Trepanier practices extensively in the field of employment law, including representing employers and supervisors in defending Minnesota whistleblower and wrongful discharge claims. Craig may be reached at 612.455.0502 or firstname.lastname@example.org. Trepanier MacGillis Battina P.A. is a Minnesota whistleblower law firm located in Minneapolis, Minnesota.