Business & Employment

Ruling Clarifies "Good Faith" in Whistleblower Act

August 10, 2017

By Melinda Sanders and Lauren Yde

The Minnesota Supreme Court last week made a ruling that impacts employers under the Minnesota's Whistleblower Act. In the case of Friedlander v. Edwards Lifesciences, the Court determined that its prior interpretation of "good faith" has been replaced by the legislature's definition of "good faith."

Now, as of the Aug. 9 ruling, when terminating an employee that "blows the whistle," an employer needs to evaluate its exposure based only on whether it believes that the report made by the employee was "knowingly false or made in reckless disregard of the truth of the matter asserted in the report."

Employers should no longer disregard a potential whistleblower claim because the alleged illegal activity was already known to the employer or because the employee bringing it to the employer's attention was simply doing his or her job in bringing it up.

Before 2013, the Whistleblower Act did not define the phrase "good faith." In Obst v. Microtron, Inc., the Court interpreted "good faith" to mean that the alleged whistleblower must act with "the purpose of blowing the whistle, i.e., to expose an illegality."

Then in 2013, the Minnesota Legislature amended the Act to define "good faith" to mean "conduct that does not violate section 181.932, subdivision 3." This means the report at issue must not be knowingly false or made in reckless disregard of the truth.

In this recent case, the Court determined whether the previous ruling was eliminated by the 2013 amendment.

James Friedlander sued his former employer, Edwards Lifesciences, claiming he was terminated for expressing his concerns that his superiors were breaching contracts and fiduciary duties, and competing in violation of Unfair Competition law. Both Mr. Friedlander and Edwards Lifesciences agreed that they already knew about the conduct in question before Mr. Friedlander reported it.

Basing its argument on the Obst definition of good faith, Edward Lifesciences argued that Mr. Friedlander made his report only to people who already knew about the alleged unlawful conduct. Mr. Friedlander, on the other hand, argued that the 2013 amendment abrogated the Court's prior interpretation of "good faith."

The Court held that its interpretation in Obst only filled a gap in the statute. Because the legislature provided a definition of "good faith" in 2013 that does not require a whistleblower to act with the purpose of exposing an illegality, Edwards Lifesciences' defense that Mr. Friedlander did not intend to expose illegal conduct through his complaints to management was not enough to defeat his claim.

Judge Freezes Department of Labor's New Overtime Rules: Now What?

November 30, 2016

A Federal District Court Judge out of the Eastern District of Texas issued a nation-wide temporary injunction halting the Dec. 1 implementation date of the Department of Labor's new overtime rules. Because this is a temporary order, employers have been left wondering what impact it may have on their organization.

No final decision has been made regarding the new overtime rules.

How did this happen?

Twenty-one states sued the Department of Labor in Federal Court, arguing that various provisions of the new overtime rules were unlawful and/or beyond the scope of the Department of Labor and asked the court to freeze (enjoin) implementation of the rules while the lawsuit proceeds. The judge agreed and issued the injunction - ordering that the injunction applies nationwide rather than just in the 21 states who sued.

What does this mean?

Until the temporary injunction is modified or lifted, the DOL's new overtime rules will not be implemented. At this point, there is no estimated time line for when the rule will either be implemented or be struck down as unlawful.

How does this impact me?

Given the uncertainty and volatility this injunction has caused, organizations should proceed carefully. If you have already implemented the new overtime rules, we caution against rushing to reverse those changes without careful consideration of several factors:

  1. The fight is not over. Sitting tight and carefully monitoring the situation may save you from compliance whiplash in which you reverse course on implemented changes and then have to re-implement changes going forward. The injunction may be appealed prior to December 1st. Until we get more information about what is happening in that lawsuit, staying the course is likely the wisest course of action.
  2. Non-monetary impacts. Employee communication and employee morale are significant strategic considerations every organization should keep in mind as it considers whether to reverse wage increases or other compensation changes made to comply with the new rules. Having a sound strategy for reversing implemented changes will be important for employee/employer relations - and that requires time, thought, and strategy.

Best practice if you've already implemented changes: wait and watch, for now.

If you have not yet implemented changes, we recommend you remain fully prepared to implement those changes by December 1st but wait on actually implementing those changes.

Our Employment Group is always willing to assist in finding the solution that is best for your organization. You can reach Ron or Melinda at 320-200-4928.

This article is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By reviewing this article, you understand that there is no attorney client relationship between you and the attorney. This article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Batten down the hatches - dealing with business lawsuits

September, 2016

By: Melinda M. Sanders and Kenneth H. Bayliss

Melinda Sanders Kenneth Bayliss

Most businesses will eventually be faced with some type of lawsuit. Here are basic tips to help you through the process:

Don't Ignore the Lawsuit Papers

If you receive a Summons and Complaint, you must respond, usually within 20 days. Failure to respond in a timely manner will lead to results you would rather avoid.

Don't Do Anything Foolish Upon Receiving Lawsuit Papers

Before anything else, take a deep breath and step back. Try not to react emotionally to the lawsuit. Understand that while litigation may be painful it's the best mechanism our society has for resolving many disputes. Do not contact the other party to vent your frustrations. Do not make any statements about the matter and get your attorney on the line quickly.

Hire an Attorney

Civil lawsuits have very technical processes and it is to your advantage to work with an attorney. Contact your business advice attorney and if he or she is not a litigator, seek a referral to an attorney who is. It is important to hire experienced attorneys, ones familiar with litigation and knowledgeable in assessing strategy and the value of your case.

Make Sure To Retain Relevant Evidence: The Litigation Hold

Once you know of a claim you will need to implement a "litigation hold." This preserves all evidence that may be relevant to the lawsuit, including documents, photographs, emails, texts, voice mails, and meta data. You may have a fantastic case, but if information in your control goes missing, the judge or jury may blame you for it and assume the worst.

Understand the Process

In very basic outline, here is the process you will go through during the lawsuit:

  • Answering the Complaint

You will work with your attorney to file an answer to the Complaint. If you have a potential claim against the other party, discuss it with your attorney at this time.

  • Initial Disclosures

Parties must automatically exchange basic information about the lawsuit. This includes information about key witnesses and documents, an itemization of damages, and insurance information.

  • Written Discovery and Depositions

Both sides are permitted to serve written questions on each other and request documents. This process, "discovery," also allows the parties to take depositions. Your attorney will be present and will prepare you in advance if you are deposed.

  • Mediation

Current rules require the parties to consider "Alternative Dispute Resolution" ("ADR"). In most cases this will be mediation, a non-binding process. Most cases settle at mediation or shortly thereafter. Sometimes it will be appropriate to try to mediate the case very early on.

  • Trial

When lawsuits are not resolved by motions or ADR, they are tried to a judge or a jury. Trials usually take place within approximately one year of the filing of the lawsuit, though there is considerable variation in the amount of time from filing to trial. Once the matter is tried-either to a judge or jury-a decision will be handed down. Parties generally have 60 days to appeal from the decision of the judge or jury.

  • Keep Your Eye on the Ball

During the lawsuit, make sure you focus on your business, and remember your business is not the lawsuit. Do not let the fear of what might end up on the expense side of the balance sheet cause you to ignore the revenue side. And almost as importantly, try to control your reaction to the lawsuit. Do not let it rule your life.

Abiding these few tips will help you better navigate the seas of litigation.