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Nelson v. Productive Alternatives

June 15, 2006

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



SYLLABUS BY THE COURT

The Minnesota Whistleblower Act, Minn. Stat. §§ 181.931-.935 (2004), does not preclude common-law wrongful-discharge claims premised on our holding in Phipps v. Clark Oil & Refining Corp., 408 N.W.2d 569 (Minn. 1987).

Employee's claim that he was wrongfully discharged from his employment with a nonprofit corporation in retaliation for voting as a member of the nonprofit corporation fails to state a claim on which relief can be granted under Minn. R. Civ. P. 12.02.

Affirmed.

The opinion of the court was delivered by: Anderson, Russell A., Chief Justice.

Heard, considered, and decided by the court en banc.

OPINION

We first consider whether the Minnesota Whistleblower Act, Minn. Stat. §§ 181.931-.935 (2004), precludes common-law wrongful-discharge claims premised on our holding in Phipps v. Clark Oil & Refining Corp., 408 N.W.2d 569 (Minn. 1987). We hold, as did the court of appeals, and as now agreed by the parties, that the Minnesota Whistleblower Act does not preclude common-law wrongful-discharge claims premised on Phipps. We next consider whether appellant's common-law wrongful-discharge claim in this case states a claim on which relief can be granted under Minn. R. Civ. P. 12.02. We hold that appellant's claim that he was wrongfully discharged from his employment with a nonprofit corporation in retaliation for voting as a member of the nonprofit corporation fails to state a claim on which relief can be granted under Minn. R. Civ. P. 12.02. We affirm.

Appellant Chris Nelson, who was both an employee and a member of respondent nonprofit corporation Productive Alternatives, Inc., filed a complaint in Otter Tail County District Court claiming that he was wrongfully discharged as an employee of Productive Alternatives in retaliation for voting as a member of Productive Alternatives. Nelson argued that this discharge was a wrongful discharge in violation of public policy under Minnesota common law. The district court concluded that Nelson had failed to state a claim under Minn. R. Civ. P. 12.02(e), determining that Minnesota's Whistleblower Act precludes all common-law wrongful-discharge claims. On appeal, the court of appeals concluded that the Whistleblower Act does not preclude common-law wrongful-discharge claims, but affirmed the district court, concluding that the scope of such claims, as articulated in Phipps v. Clark Oil & Refining Corp., 408 N.W.2d 569 (Minn. 1987), is limited to situations in which an employee is fired for refusing to violate a law, regulation, or rule. Nelson v. Productive Alternatives, Inc., 696 N.W.2d 841, 846 (Minn. App. 2005).

On review of an order dismissing a claim under Rule 12.02, the sole issue is whether the pleadings are adequate. Group Health Plan, Inc. v. Philip Morris Inc., 621 N.W.2d 2, 14 (Minn. 2001). The reviewing court must accept all the plaintiff's allegations as true, but a dismissal must be affirmed if it is clear that no relief can be granted under any set of facts that can be proved consistent with the allegations. Radke v. County of Freeborn, 694 N.W.2d 788, 793 (Minn. 2005).

Nelson's complaint alleges that he was "wrongfully discharged from employment by [Productive Alternatives] because of his actual and/or perceived actions as a member of the corporation." Though his complaint is worded broadly, Nelson has exclusively argued that he was discharged in retaliation for exercising his voting rights as a member, and that his discharge for this reason gives rise to a common-law cause of action for wrongful discharge in violation of public policy. Therefore, Nelson's claim hinges on whether Minnesota's common law recognizes this particular cause of action. This is a question of law that we review de novo. See Radke, 694 N.W.2d at 793 ("An appellate court reviews [a] claim's legal sufficiency de novo * * *.").

Generally, the employee-employer relationship in Minnesota is at-will, meaning that the relationship can be terminated for any reason or for no reason at all. Anderson-Johanningmeier v. Mid-Minnesota Women's Ctr., Inc., 637 N.W.2d 270, 273 (Minn. 2002). Though there are several statutory exceptions to the at-will rule,*fn1 we have only recognized a common-law cause of action for wrongful discharge in violation of public policy once, in Phipps v. Clark Oil & Refining Corp., 408 N.W.2d 569. Phipps involved an employee, Mark Phipps, who brought suit because he had been discharged for refusing his employer's order to violate the Clean Air Act. Phipps, 408 N.W.2d at 570-71. The court of appeals recognized Phipps's wrongful-discharge claim and in doing so articulated a general exception to the at-will doctrine for all employees who are discharged "for reasons that contravene a clear mandate of public policy." Phipps v. Clark Oil & Ref. Corp., 396 N.W.2d 588, 592 (Minn. App. 1986), aff'd, 408 N.W.2d 569 (Minn. 1987). After the court of appeals' decision, but before this court decided the case on appeal, the Minnesota Legislature enacted the Minnesota Whistleblower Act, providing a statutory exception to the at-will doctrine similar to the common-law exception sought by Phipps. See Minn. Stat. § 181.932 (2004).*fn2 But because Phipps's case originated before the Whistleblower Act's effective date and was not actionable under the Act, we still faced the question on appeal of whether there existed--at least before the passage of the Act--a common-law wrongful-discharge remedy for refusing to violate the law. See Phipps, 408 N.W.2d at 571. We did not address the broader question of whether all discharges in violation of public policy gave rise to a common-law wrongful-discharge claim, but we held that 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 or rule or regulation adopted pursuant to law.

Id.

Some courts interpreting Phipps, including the district court in this case, have concluded that because Phipps's case arose before the adoption of the Whistleblower Act, the common-law cause of action that we recognized in Phipps was exclusively a pre-Whistleblower Act cause of action. See, e.g., Piekarski v. Home Owners Sav. Bank F.S.B., 956 F.2d 1484, 1493 (8th Cir. 1992). Similarly, some decisions have concluded that post-Whistleblower Act common-law causes of action for wrongful discharge are precluded by the Act, reasoning that "[o]nce the Minnesota legislature has drawn the line between employment disputes that genuinely implicate public policy and are actionable and those that are not, it is not for courts to redraw that line." Piekarski, 956 F.2d at 1493; accord McClure v. Am. Family Mut. Ins. Co., 223 F.3d 845, 855-56 (8th Cir. 2000).

Both Nelson and Productive Alternatives agree with the court of appeals' conclusion that the Minnesota Whistleblower Act does not preclude common-law wrongful-discharge claims. Nelson, 696 N.W.2d at 846. We also agree with the court of appeals. Because a statute should not be interpreted to modify the common law unless the statute does so explicitly, the Whistleblower Act, which does not expressly modify the common law, should not be read to preclude common-law wrongful-discharge actions. See Rosenberg v. Heritage Renovations, LLC, 685 N.W.2d 320, 327-28 (Minn. 2004) (holding that statutes in derogation of the common law are strictly construed, and that legislation will not be interpreted to supplant, impair, or restrict equity's normal function as an aid to complete justice). Further, the plain language of both Phipps's holding and our subsequent holding in Abraham v. County of Hennepin, 639 N.W.2d 342 (Minn. 2002), indicate that the Phipps cause of action is not merely a pre-Whistleblower Act cause of action, but a cause of action with continuing viability in the common law.*fn3 See Phipps, 408 N.W.2d at 571 (stating, after the passage of the Whistleblower Act, "we hold that an employee may bring an action for wrongful discharge," and agreeing that the "common law * * * ...


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