In Rasmussen v. Two Harbors Fish Co., Civ. No. A11-2178, 2013 Minn. LEXIS 274 (Minn. May 22, 2013), the Minnesota Supreme Court agreed with the Minnesota Court of Appeals, holding that a person who is both the sole owner of a business and sole harasser cannot aid and abet his or her own discriminatory conduct under the Minnesota Human Rights Act (“MHRA”). The court also clarified the proper legal standards for establishing a sexual harassment claim under the MHRA and remanded the case back to the district court to apply these standards.
Background of Rasmussen
In Rasmussen, three plaintiffs sued their former employers, Two Harbors Fish Company and BWZ Enterprises, claiming that the employers violated the MHRA based on sexual harassment perpetrated by Brian Zapolski, who was the sole owner of both companies. Plaintiffs also sought to hold Zapolski individually liable under the MHRA’s “aiding and abetting” provision.
Following a bench trial, the district court dismissed plaintiffs’ claims. On appeal, the Minnesota Court of Appeals reversed, holding that the plaintiffs were entitled to judgment on their sexual harassment claims as a matter of law. In doing so, however, the court held that Zapolski could not be individually liable under the MHRA’s aiding and abetting provision. The case was appealed to the Minnesota Supreme Court.
Minnesota Supreme Court Finds Sole Harasser Cannot Aid and Abet His Own Conduct
In a previous article, Courts Limit Aiding and Abetting Claims Under Minnesota Human Rights Act, we discussed the Court of Appeals’ conclusion that Zapolski could not aid and abet his own discriminatory conduct under the MHRA. On appeal, the Minnesota Supreme Court affirmed this decision.
Under the MHRA, “[i]t is an unfair discriminatory practice for any person . . . [to] intentionally . . . aid, abet, incite, compel, or coerce a person to engage in any of the practices forbidden by” the act. Minn. Stat. § 363A.14(1).
In Rasmussen, the Minnesota Supreme Court held the employers were liable under the MHRA due solely to the acts of Zapolski and affirmed the Court of Appeals’ holding that Zapolski could not be held liable as an aider and abettor. The court reasoned that finding him liable would create a confusing, circular situation where Zapolski would be liable for aiding and abetting his own companies’ MHRA violations, who in turn are liable solely based on Zapolski’s actions. The court reasoned that “[i]f the Employers have committed unfair employment practices here under a theory of vicarious liability based on Zapolski’s conduct, holding Zapolski liable for aiding and abetting essentially would reverse this liability pathway, making the Employers the primary wrongdoers, whose wrongdoing Zapolski must have aided and abetted.” Rasmussen, 2013 Minn. LEXIS 274 at *32.
In support of its decision, the court also explained that the legislature did not intend to create individual liability under the MHRA for a sole harasser as an aider and abettor of his employer. The court reasoned that holding the sole harasser liable in this case would make any harasser liable, “because an individual can always be said to have substantially assisted in an employer’s unfair employment practice when that individual actually perpetrates the conduct that is the basis for the employer’s unfair practice.” Id. at *33. The court further reasoned that “[i]f the Legislature had intended to create liability for any individual employee who engaged in an unfair employment practice in the employment setting, it could have done so without resorting to a theory of aiding and abetting liability.” Id. *22.
Minnesota Supreme Court Sets Legal Standards for MHRA Sexual Harassment Claims
In addition to addressing the standard for “aiding and abetting” under the MHRA, the Minnesota Supreme Court found two clear errors of law in the district court’s analysis of the plaintiffs’ MHRA sexual harassment claim.
First, the Court found that the district court improperly relied on the fact that Zapolski’s conduct was directed at both men and women in determining that the conduct was not sufficiently severe or pervasive enough to constitute actionable sexual harassment. The Court held that “a sexual harassment claim does not require proof that the conduct was directed at the victims because of sex.” Rasmussen, 2013 Minn. LEXIS 274 at *15 (citing Cummings v. Koehnen, 568 N.W.2d 418, 422-24 (Minn. 1997)). “[T]he MHRA permits ‘a hostile work environment claim based on sex, separate and apart from’ a claim for ‘sexual harassment that creates a hostile work environment.'” Rasmussen, 2013 Minn. LEXIS 274 at *16 (citing LaMont v. Indep. Sch. Dist. No. 728, 814 N.W.2d 14, 19 (Minn. 2012)).
Second, the Court found that the district court improperly relied on the fact that the employees did not lose any pay or employment benefits as a result of the harassment in dismissing their claim. The Supreme Court stated that the district court’s reliance on the absence of any lost pay or benefits “demonstrates a fundamental misunderstanding of the nature of the Employees’ causes of action.” Id. at *17. The MHRA has made two forms of sexual harassment illegal. While the loss of employment benefits would be relevant for a sexual harassment claim described in Minn. Stat. § 363A.03, subd. 43(2) (where sexual harassment “is used as a factor in decisions affecting that individual’s employment”), it is irrelevant for a sexual harassment claim under Minn. Stat. § 363A.03, subd. 43(3) (where “sexually harassing conduct has the purpose or effect of substantially interfering with an individual’s employment . . . or creating an intimidating, hostile or offensive employment . . . environment”). Rasmussen, 2013 Minn. LEXIS 274 at *26. “The district court erred as a matter of law in conflating them.” Id. at *17.
The Minnesota Supreme Court remanded the case to the district court to apply the legal standards explained above. This is a departure from the ruling of the Court of Appeals, which ruled in favor of the plaintiffs on the merits of their sexual harassment claim. The Supreme Court concluded that remanding the case was appropriate because it could not ascertain how heavily the incorrect reasoning impacted the district court’s ruling and there may be other issues of fact that support the district court’s original ruling. See id. at *26-29.
Lessons for Employers and Employees
Under Rasmussen, a sole owner of a business cannot be held individually liable under the aiding and abetting provision of the MHRA for his or her own discriminatory conduct. (Conceivably, the sole owner could be held personally liable, however, under a different theory, such as the “alter ego” or “piercing the corporate veil” doctrine.)
In Rasmussen, the Minnesota Supreme Court also clarified that employers can be liable for sexual harassment even if the conduct does not discriminate based on gender or result in a loss of pay or employment benefits.
In light of Rasmussen, employers should update their sexual harassment and anti-discrimination policies, provide sexual harassment training to executives and managers, and respond promptly to complaints of unlawful harassment.
Trepanier MacGillis Battina P.A. represents employers and business owners in all aspects of employment litigation in the State of Minnesota. If you are defending claims of sexual harassment or aiding and abetting under the Minnesota Human Rights Act, please contact any of our Minnesota employment lawyers.
About the Author:
Minnesota employment attorney Craig W. Trepanier represents clients in a broad range of employment law matters including administrative charges and lawsuits alleging discrimination, harassment, and aiding and abetting under the MHRA and/or Title VII. Craig may be reached at 612.455.0502 or email@example.com. Trepanier MacGillis Battina P.A. is a Minnesota employment law firm located in Minneapolis, Minnesota.