Vol. 17, No. 20May 20, 2013 minnlawyer.com

Worker also hasright to jury trialon retaliationBy Jane Pribek

Minnesota’s workers’ compen-sation law allows a cause ofaction for threatening to dis-charge an employee for seekingbenefits, the Court of Appeals hasrecognized. The court additionally held

that a claimant alleging retaliatorydischarge under the act has aright to a jury trial.The latter ruling especially is

“vitally important” to employeesin Minnesota alleging retaliatorydischarge, said Minneapolis attor-ney Michelle Dye Neumann, rep-resenting plaintiff Darrel Schmitz.“It’s a constitutional right. And

it’s an important right that peoplehave their rights vindicated infront of their peers.”

Facts Schmitz worked at U.S. Steel’s iron-ore

facility in Keewatin, where in 2006, heallegedly injured his back at work. Afterward, his supervisor and a higher-

up, Larry Sutherland, called Schmitz.Sutherland allegedly told him U.S. Steelwould take a “very dim view” of him filingan accident report, the first step in a work-ers’ compensation claim. Schmitz hasn’t worked at U.S. Steel since

January 2007. He filed a subsequent work-ers’ compensation claim, which wasdenied. He filed a complaint asserting retaliatory

discharge for seeking workers’ compensa-tion and failure to offer continued employ-ment. The St. Louis County court granted

summary judgment against him, but theCourt of Appeals reversed.On remand, the District Court granted

U.S. Steel’s motion to quash Schmitz’sdemand for a jury trial. The court alsogranted Schmitz’s motion to amend thecomplaint to add the threat-to-dischargeclaim. After a bench trial, the District Court

rejected Schmitz’s retaliatory-dischargeclaim, but entered judgment for Schmitz onhis threat-to-discharge claim, awarding$15,000 in emotional-distress damages, andlater $203,113 in fees and over $9,000 incosts. Post-verdict, U.S. Steel filed a motion

arguing that the District Court shouldn’t

have recognized the threat-to-dischargecause of action, and claiming it was entitledto assert a Faragher/Ellerth affirmativedefense. The company additionally arguedthe District Court should’ve applied theMcDonnell Douglas burden-shifting frame-work to Schmitz’s threat-to-dischargeclaim, and that Schmitz didn’t prove thatU.S. Steel’s conduct was “cruel or venal.” Judge Shaun Floerke denied U.S. Steel’s

motion. U.S. Steel appealed, and Schmitz cross-

appealed regarding his jury-trial rights.The Court of Appeals affirmed in part,

reversed in part and remanded, rulingalmost entirely for Schmitz in a 44-pageopinion on May 13.

Worker has cause of action

Work Comp l Page 2

STAFF PHOTO: BILL KLOTZ

Michelle Dye Neumann and Phil Kitzer say their client is “fighting the good fight.”

The Opinion First, the court upheld the threat-to-dis-

charge cause of action.There was no caselaw regarding threats

to discharge, but the court characterizedthe statute as “unambiguous.” Specifically,sec. 176.82, subd. 1 calls for civil liability for“discharging, threatening to discharge, orintentionally obstructing” an employeeseeking workers’ compensation. The court listed the claim’s elements: (1) A person with knowledge that the

plaintiff suffered a workplace injury; (2) Attempts to dissuade him from seek-

ing workers’ compensation benefitsthrough one or more communications; (3) The communication(s) create a rea-

sonable apprehension of discharge; and,(4) As a result, plaintiff delays or ceases

seeking workers’ compensation. Next, the court rejected U.S. Steel’s con-

tention that recovery requires showing“cruel or venal” conduct by the defendant.“The concern of the statute is not with

how severe or outrageous a particularthreat might be, but whether it deters anemployee from filing a claim,” wrote JudgeNatalie Hudson. “Indeed, it is often themost insidious or seemingly benign threatsthat are the most effective.” The court then held that Floerke correct-

ly declined to analyze Schmitz’s threat-to-discharge claim using McDonnell Douglasburden-shifting, applicable to retaliatorydischarge claims. Hudson wrote: “Unlike the retaliatory-discharge con-

text, in which the employee suffers anadverse employment action, such as dis-charge or demotion, for which there mayhave been a legitimate reason, it is neverpermissible to deter an injured employeefrom seeking workers’ compensation bene-fits.” Likewise, the court rejected U.S. Steel’s

argument that it should have been allowed

to assert the Faragher/Ellerth affirmativedefense, used in hostile work environmentcases, because Sutherland made the threatand there was no evidence U.S. Steel hadactual or constructive knowledge ofSutherland’s threat. The court relied upon the agency princi-

ples laid out in both Faragher and Ellerth,where an employer may escape vicariousliability for its employees’ torts only if thetortfeasor is acting outside the scope ofemployment. Unlike sexual harassment,the proscribed conduct here falls directlywithin a supervisor’s scope of employment,the court reasoned. Lastly, the court rejected Schmitz’s claim

that the failure-to-offer-continued employ-ment claim warranted a jury trial, butagreed that a constitutional jury-trial rightexists for his retaliatory discharge claim.The rulings turned on whether the claim

is an action at law, for which the MinnesotaConstitution guarantees a right to a jurytrial, or an equitable action where there’s noconstitutional jury-trial right. “Having analyzed both the substance of

the claim and the relief sought, as deter-mined by all of the pleadings, we concludethat an action brought in District Courtunder Minn. Stat. § 176.82, subd. 1, allegingthe tort of retaliatory discharge and seekingonly money damages, is an action at law forwhich the Minnesota Constitution guaran-tees the right to a jury trial,” Hudson wrote. The continued-employment claim, how-

ever, sought an equitable remedy and thereis no attendant jury-trial right.

Counsel’s CommentsNeumann, of Halunen & Associates, said

the jury-trial ruling is the opinion’s mostimportant conclusion — for her client cer-tainly, but also, it signals a greater willing-ness by the appellate courts to find a consti-tutional right to a jury trial in other types ofemployment claims, potentially including

the Minnesota Human Rights Act. “This is a helpful opinion in moving that

argument forward,” she said.Neumann also said the court appropri-

ately rejected the “convoluted burden-shift-ing formula” advocated by the defense. Her co-counsel, Phil Kitzer, said the

court didn’t address the fees and costs rul-ing, but he anticipates the issue will re-emerge after trial on the remaining claim.Schmitz, who lives in a part of the state

where jobs are scarce, remains unem-ployed and is seeking disability benefits.He’s been living on his retirement savingssince his injury. Kitzer said, “He’s been fight-ing the good fight for six years now, and wepotentially have two more in front of us.”Chuck Knapp chairs the state bar’s

Employment Law Section. The FaegreBaker Daniels attorney said the opinionvery likely merits high-court review, giventhe novelty of its issues.“The opinion itself is a great read and

any young employment lawyer should readit,” Knapp said. “While the cause of action it recognizes,

I don’t think at the end of the day as a prac-tical matter is a significant new claim, clear-ly there was some great advocacy on bothsides that led to this outcome,” he said.Knapp reasoned that the damages were lowin this case, which would likely hold true inother cases, too -– so that’s why its signifi-cance is somewhat diminished. William Mitchell College of Law Prof.

Kenneth Kirwin characterized the opinionas “pretty straight forward, comprehensiveand well-reasoned.”Doug Christensen and Marilyn Clark of

Dorsey & Whitney in Minneapolis, and RodTorbic of U.S. Steel in Pittsburgh represent-ed the company. None of them returnedcalls seeking commentary.

The case is , Schmitz v. U.S. Steel.

Work Comp ‘Any young employment lawyer should read

the opinion’Continued from page 1

Reprinted with permission of Minnesota Lawyer ©2013