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Nelson v. Productive Alternatives

May 31, 2005

CHRIS NELSON, APPELLANT,
v.
PRODUCTIVE ALTERNATIVES, INC., RESPONDENT.



Otter Tail County District Court File No. C9-04-333.

SYLLABUS BY THE COURT

I. Minnesota's Whistleblower Act does not expressly abrogate or otherwise displace the common-law tort action recognized by this court in Phipps v. Clark Oil & Ref. Corp., 396 N.W.2d 588, 592 (Minn. App. 1986) (Phipps I), as modified by Phipps v. Clark Oil & Ref. Corp., 408 N.W.2d 569, 571 (Minn. 1987) (Phipps II).

II. Under the supreme court's holding in Phipps II, an employee may bring a common-law 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 or rule or regulation adopted pursuant to law.

The opinion of the court was delivered by: Lansing, Judge

Affirmed

Considered and decided by Stoneburner, Presiding Judge; Lansing, Judge; and Willis, Judge.

OPINION

A discharged employee appeals from the dismissal of his complaint for failure to state a claim upon which relief can be granted, arguing that the district court erred in its legal conclusion that the Whistleblower Act displaced the common-law action for wrongful discharge for refusal to participate in an unlawful activity that was recognized in Phipps v. Clark Oil & Ref. Corp., 396 N.W.2d 588, 592 (Minn. App. 1986) (Phipps I), and affirmed and modified in Phipps v. Clark Oil & Ref. Corp., 408 N.W.2d 569, 571 (Minn. 1987) (Phipps II). We agree that the Whistleblower Act does not displace the common-law action recognized in Phipps I as refined and restated in Phipps II, but because the discharged employee's complaint fails to state a claim that is within the ambit of the common-law action, we affirm.

FACTS

Beginning in 1989, Chris Nelson was employed as Director of Rehabilitation with Productive Alternatives, Inc., a nonprofit corporation. Productive Alternatives terminated Nelson's at-will employment on November 3, 2003. At that time, Nelson was both an employee and a "member" of the corporation. Nelson sued for wrongful discharge, alleging that he was "wrongfully discharged from employment . . . because of his actual and/or perceived actions as a member of the corporation."

Nelson did not bring a claim under Minnesota's Whistleblower Act but asserted, instead, that his claim arose under common law. Productive Alternatives moved to dismiss for failure to state a legally sufficient claim for relief. The district court granted the motion, determining that the Whistleblower Act had displaced common-law actions for retaliatory discharge. Nelson appeals from the dismissal of his claim.

ISSUE

I. Does the Whistleblower Act displace common-law actions for wrongful discharge for refusal to ...


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