Court of Appeals Office of Appellate Courts
Thomas F. Andrew, Jane C. Poole, Aaron R. Bransky, Andrew & Bransky, P.A., for respondents/cross-appellants.
Joseph J. Roby, Jr., Johnson, Killen & Seiler, P.A., for appellants.
Dorene R. Sarnoski, Dorene R. Sarnoski Law Office, Stephen L. Smith, Law Firm of Stephen L. Smith, and David Schlesinger, Steven A. Smith, Nichols Kaster, LLP, and Leslie L. Lienemann, Culberth & Lienemann, LLP, and Justin D. Cummins, Cummins & Cummins, for amicus curiae Minnesota Chapter National Employment Lawyers Association.
1. That sexually explicit behavior was directed at men as well as women is not relevant to a determination of whether plaintiffs proved a claim for hostile work environment sexual harassment under the Minnesota Human Rights Act, Minn. Stat. § 363A.03, subd. 43(3) (2012).
2. A plaintiff may prove a claim for hostile work environment sexual harassment under the Minnesota Human Rights Act, Minn. Stat. § 363A.03, subd. 43(3), without proving loss of pay or other employment benefits.
3. An individual and sole owner of an employer whose conduct subjects the employer to vicarious liability for hostile work environment sexual harassment claims cannot be individually liable as an aider and abettor under the Minnesota Human Rights Act, Minn. Stat. § 363A.14(1) (2012).
GILDEA, Chief Justice.
At issue in this case is whether the respondents/cross-appellants Jaime Rasmussen, Jennifer Moyer, and Kathe Reinhold are entitled to relief under the Minnesota Human Rights Act (MHRA), Minn. Stat. §§ 363A.01-.43 (2012). Rasmussen, Moyer, and Reinhold (the Employees) filed a complaint alleging that their employers, Two Harbors Fish Company and BWZ Enterprises (the Employers), violated the MHRA based on sexual harassment perpetrated by Brian Zapolski, who is the sole owner of both entities.
The Employees also alleged that Zapolski was individually liable under the MHRA's aiding and abetting provision.
The district court dismissed the Employees' claims with prejudice, finding that they had not been subject to harassment that is actionable under the MHRA. The Employees appealed, and the court of appeals reversed. Rasmussen v. Two Harbors Fish Co., 817 N.W.2d 189, 191 (Minn.App. 2012). The court of appeals held that the district court's determination that the harassment was not actionable was clearly erroneous, and the court of appeals ruled as matter of law that the Employees were entitled to judgment on their claims. Id. at 202. But the court held that Zapolski could not be individually liable for aiding and abetting the Employers' MHRA violations. Id. at 203.
The Employers and Zapolski appeal the court of appeals' decision on the merits of the Employees' sexual harassment claims. On cross-appeal, the Employees challenge the ruling on Zapolski's liability as an aider and abettor. We agree with the court of appeals that Zapolski cannot be liable on an aiding and abetting theory. But because we conclude that the district court made errors of law in its decision on the merits of the Employees' MHRA claims, we reverse and remand.
The Lake County District Court held a bench trial on the Employees' claims. At trial, the Employees testified about Zapolski's behavior. The district court made findings specific to each of the Employees.
With respect to Rasmussen, the district court found that her "testimony was substantially credible." Rasmussen testified that approximately 6 months after she began working for the Employers, Zapolski began asking her questions about her sexual preferences. When Zapolski asked her these questions, Rasmussen told him that it was "none of [his] business." Zapolski also told Rasmussen about his sexual preferences and sexual dreams. Zapolski called Rasmussen several pet names and used very explicit sexual language in the workplace. Rasmussen testified that she told Zapolski that she did not want to hear those things. Zapolski also told Rasmussen stories of a sexual nature regarding other employees, made sexual comments about female customers, and made a joke about his penis size. Rasmussen testified that she was "totally humiliated" by the comments Zapolski made toward female customers.
In addition to making comments of a sexual nature, Rasmussen testified that Zapolski engaged in other inappropriate conduct, including touching Rasmussen on the posterior on at least two occasions. Zapolski showed Rasmussen and other employees a picture in a Playboy magazine and told Rasmussen that the woman in the picture looked like her. Zapolski also gave Rasmussen a pornographic DVD and asked her to watch it.
Rasmussen testified that she was "grossed out by the way [Zapolski] looked at" her and talked about her. She said that she continued to work for the Employers for as long as she did because her husband was laid off, and she was the sole provider for her family. Despite the problems she was experiencing with Zapolski, however, Rasmussen recommended that Moyer begin working for the Employers in May 2009.
Rasmussen terminated her employment with the Employers in March 2010. The district court found that "Zapolski's conduct may have been a partial factor in Rasmussen's decision to leave her employment."
Regarding Moyer, the district court found that "Moyer's testimony was moderately credible." Moyer began working for the Employers in May 2009, and she worked between 10 and 20 hours per week. Moyer testified that about 2 or 3 weeks after she started working for the Employers, Zapolski began to ask Moyer about her sex life and told her about his sex life. He also occasionally made comments of a sexual nature to her about other people. In addition, Zapolski would sometimes call Moyer at work during an evening shift and ask, "[h]ow's my little horny one?" Moyer said that she did not want to answer the phone at work because she was "scared that it was gonna be [Zapolski] on the other line." Also, on one occasion, Zapolski referred to Moyer as his girlfriend in front of a male employee. Moyer told Zapolski that she was not his girlfriend and "he got mad and walked out."
Moyer testified that Zapolski asked her if she had any single friends that she "could hook him up with." Zapolski told Moyer that he would be "willing to pay for it." Moyer was also touched by Zapolski at least once when Zapolski grabbed her waist. Zapolski showed Moyer the same picture in the Playboy magazine that Rasmussen described and asked Moyer if the picture reminded her of Rasmussen. Moyer testified that the experience made her feel "[e]xtremely violated . . . [a]nd uncomfortable."
Moyer quit working for the Employers at the end of August 2009. On the day Moyer quit, Zapolski criticized her for using her cell phone at work. Moyer told him that she only used her phone to check on her daughter during the day. The district court found that "Moyer's decision to terminate her employment was precipitated, at least in part, by Zapolski['s] discipline regarding Moyer's use of her cell phone at work."
Regarding Reinhold, the district court found that her "testimony was substantially credible." Reinhold began working for the Employers in November 2009, but she soon quit. Reinhold testified that Zapolski began making sexual comments to Reinhold on her first day of work and did so every day thereafter, including describing the sex life of others and discussing the size of men's genitals. Zapolski told Reinhold that he was going to call her "Sweets." Reinhold told Zapolski that she would not like that and that he should not call her that. Zapolski also touched Reinhold, including leading her around by the hand, and picking wood chips from the chest area of her sweater after she had been splitting and stacking wood. Zapolski's physical touching embarrassed Reinhold. Also, during her brief employment, Reinhold ran into Zapolski outside of work. She mentioned that there was a football game on the day she ran into Zapolski, and Zapolski said, "Well, it's a perfect day to watch football and make love." Reinhold felt that Zapolski's comment "was an invitation" and it made her feel anxious.
Reinhold's last day of employment was November 16, 2009. The district court found that "Zapolski's sexually inappropriate conduct may have been a partial factor in Reinhold's decision to leave her employment."
Zapolski testified at trial and denied that any of the offensive behavior the Employees described had occurred. The district court did "not believe Zapolski's testimony was truthful and therefore [the court] generally disregarded his denials."
After trial, the district court issued written findings of fact and conclusions of law and dismissed the Employees' claims. The court made findings of fact regarding the conduct perpetrated by Zapolski against each Employee and stated that "even if [the conduct complained of was] totally true, " the Employees had not established sexual harassment that rose to a sufficiently severe or pervasive level so as to be actionable under the MHRA. The court found that the Employees were "subjected to coarse sexual talk, gestures, and conduct they did not welcome" and "that the majority of the sexual comments [were] based on sex." But the court found that the Employees' employment was not conditioned on their submission to or participation in any sexual acts and that they did not suffer adversely in their employment because they did not lose salary or work hours for failing to participate. Ultimately, the court found that the Employees had not met "the high threshold of actionable harm by showing that the workplace is permeated with discriminatory intimidation, ridicule and insult." In reaching this conclusion, the court noted that none of the Employees "sought counseling" or "were explicitly sexually propositioned." Moreover, the court noted that Zapolski's sexual comments "were widespread throughout the employment setting and not merely directed at females."
The Employees moved the district court to amend and supplement its findings of fact and conclusions of law, and included in their motion a request that the court make findings of fact regarding specific instances of misconduct that had been alleged by the Employees. The court issued Amended Findings of Fact, Conclusions of Law, and Order for Judgment and Decree, but declined to "address each and every alleged act or statement plaintiffs offered in support of their claims, " noting that "[e]nough detail was provided to explain to the parties the basis for the Court's original opinion."
The Employees appealed. The court of appeals reversed, concluding that the district court erred in its determination that Zapolski's conduct "was not sufficiently severe and pervasive to create a hostile, intimidating, or offensive work environment" under the MHRA. Rasmussen, 817 N.W.2d at 191. The court of appeals recited the facts as found by the district court regarding the conduct directed at each Employee, but also noted that the district court had "sanitized" or "omitted" more explicit or egregious aspects of the Employees' testimony. Id. at 192-95. But because the district court found that the Employees were "moderately credible" or "credible, " found Zapolski "not credible, " and reasoned that "even if totally true" the allegations of the Employees did not constitute sexual harassment under the MHRA, the court of appeals determined that it could consider incidents of alleged misconduct about which the district court did not make explicit findings. Id. The court of appeals also considered the applicable standard of review and stated that it "believe[d] that the ultimate determination of sexual harassment is a legal conclusion rather than a finding of fact." Id. at 197. The court of appeals, however, "did not make a definitive determination on the standard of review, " because even under a clearly erroneous standard, the court of appeals concluded that the district court had erred. Id. Based on its consideration of additional facts not found by the district court, the court of appeals ruled in favor of the Employees and directed the district court on remand to enter judgment in favor of each of the Employees and address the question of their damages. Id. at 203. The court of appeals also held that while Zapolski might be personally liable as an "alter ego of the corporation, " he was not liable under the MHRA as an aider and abettor of the Employers. Id.
The Employers and Zapolski petitioned our court for further review, arguing that the court of appeals had, effectively and inappropriately, performed a de novo review of the district court's decision. The Employees responded to the petition for review and requested that in the event we granted the petition, we also review the court of appeals' holding that Zapolski could not be held individually liable under the MHRA's aiding-and-abetting provision. We granted the petition for further review and granted the request for conditional cross-review.
The MHRA is a remedial act that should be "construed liberally, " Minn. Stat. § 363A.04, in order to accomplish its purpose of "secur[ing] for persons in this state, freedom from discrimination, " Minn. Stat. § 363A.02, subd. 1(a). In Continental Can Co. v. State, we held that sex discrimination as prohibited under the MHRA includes "sexual harassment which impacts . . . the conditions of employment." 297 N.W.2d 241, 249 (Minn. 1980). We reasoned that differential treatment based on sex is apparent when promotion or continued employment "is conditioned on dispensation of sexual favors." Id. at 248. And we said that sexual discrimination is "invidious, although less recognizable, when employment is conditioned either explicitly or impliedly on adapting to a workplace in which repeated unwelcome sexually derogatory remarks and sexually motivated physical contact are directed at an employee because she is a female."  Id.
After our decision in Continental Can, the Legislature amended the MHRA to expressly state that sexual harassment is a form of sex discrimination and added a definition of "sexual harassment." Act of Mar. 23, 1982, ch. 619, §§ 2-3, 1982 Minn. Laws 1508, 1511 (codified as amended at Minn. Stat. § 363A.03, subds. 13, 43). The MHRA makes it illegal for "an employer, because of . . . sex . . . [to] discriminate against a person with respect to hiring, tenure, compensation, terms, upgrading, conditions, facilities, or privileges of employment." Minn. Stat. § 363A.08, subd. 2(3). And "[t]he term 'discriminate' includes segregate or separate and, for purposes of discrimination based on sex, it includes sexual harassment." Minn. Stat. § 363A.03, subd. 13. The MHRA defines "sexual harassment" in relevant part, as "unwelcome sexual advances, requests for sexual favors, sexually motivated physical contact or other verbal or physical conduct or communication of a sexual nature when . . . that conduct or communication has the ...