Cokley v. City of Otsego

• Decision Date: 06 March 2001
• Docket Number: No. C7-00-1327.,C7-00-1327.
• Parties: Phyllis Kay COKLEY, Respondent, v. CITY OF OTSEGO, a municipality, Appellant.
• Court: Minnesota Court of Appeals

623 N.W.2d 625

Phyllis Kay COKLEY, Respondent, v. CITY OF OTSEGO, a municipality, Appellant.

No. C7-00-1327.

Court of Appeals of Minnesota.

March 6, 2001.

Review Denied May 15, 2001.

Robert D. Boedigheimer, Peter J. Horejsi, McCloud & Boedigheimer, P.A., Bloomington, MN, (for respondent).

Patricia Y. Beety, League of Minnesota Cities, St. Paul, MN, (for appellant).

Considered and decided by KALITOWSKI, Presiding Judge, HALBROOKS, Judge, and STONEBURNER, Judge.

OPINION

STONEBURNER, Judge

This is an action by a former employee of the City of Otsego for damages under the Minnesota Whistleblower Act, Minn. Stat. § 181.932 (2000). After a jury verdict in favor of the employee, the City appeals from denial of its motions for JNOV and a new trial, and the district court's enhancement of the attorney-fee award. Because the employee did not engage in protected activity and failed to establish a causal link between her action and elimination of her position, we reverse.

FACTS

The township of Otsego was incorporated into a city in 1990. When the township's clerk-treasurer retired in 1995, appellant the City of Otsego (the City) restructured its administrative staff. After several city council meetings and subcommittee meetings, in April 1995, the City employed respondent Phyllis Kay Cokley under a four-year contract, as the City's first business/finance director and director of economic development.¹

Cokley's contract provided for three months advance notice of termination of her position and defined one of Cokley's duties as to more fully define her job duties, because both positions were newly created. A job description for business-finance director had been developed before Cokley was hired. In October 1995, Cokley prepared and presented to the city council a revised job description covering both positions. The city council never approved this version of Cokley's job description, and the previous job description for the business/finance director remained unamended to include any additional duties regarding the director of economic development position or more fully describe the actual duties Cokley was expected to perform. Both job descriptions included managing the City's payroll and pay equity issues, supervising OSHA mandate programs, and keeping informed on state and federal legislation as Cokley's responsibility, but the evidence at trial established that she did not supervise OSHA programs. The exact scope of her duties was disputed at trial.

Cokley became aware that the city clerk and deputy clerk had a practice of scheduling a partial workday, using some vacation time for the hours not worked and then accruing overtime pay for attending evening city council meetings. Cokley, whose responsibilities included issuing checks based on submitted time cards, but not making a determination of the accuracy of those time cards, believed that this practice for accruing overtime did not conform to provisions of the Federal Labor Standards Act (FLSA). In January 1996, in the context of serving on a subcommittee to rewrite the City's personnel policy, Cokley submitted a memorandum to the city clerk who chaired the subcommittee, suggesting changes to the policy about work hours and how overtime was earned and paid. The memorandum states: "[t]he City's personnel policy discusses employees to whom the Federal Fair Labor Standards Act [FLSA] applies, and yet past procedures regarding overtime and compensatory time have not been in conformance with the Act."

At about the same time in January 1996, Cokley discussed her concerns regarding FLSA requirements and the clerk's and deputy clerk's practices with councilmember Ronald Black, who was also on the subcommittee.² According to Cokley, Black, an attorney, told her that her interpretation of FLSA requirements was correct, but he advised her to "leave it alone" because the City had "bigger problems" and the "mayor has his head in the sand" and "somebody's going to get hurt." There is no evidence that Cokley raised concerns about the FSLA after January 1996.

Duane Fiedler, a city maintenance employee, self-initiated an OSHA compliance review for the City in 1994 and reported his results to the city council at that time. Fiedler knew Cokley before the City hired her. Fiedler discussed his OSHA concerns with Cokley. Cokley did not independently verify any of Fiedler's concerns because, she testified, it was not her responsibility. She did, however, arrange a lunch with Fiedler, and councilmember Black in May 1996, at which time Fiedler again expressed his concerns about OSHA compliance. Cokley may have also discussed Fiedler's concerns with councilmember Fournier.

In May 1996, Cokley attended a League of Minnesota Cities Insurance Trust Loss Control Workshop. She submitted a memorandum to the city council summarizing material contained in the sessions of the workshop that she attended. The memorandum notes that the workshop offered tracks in administration, public works, small cities and parks and recreation, and states: "I attended sessions that I thought were most beneficial to the [C]ity in both the administrative and small cities tracks." One session involved OSHA training requirements. The memorandum states that the City "must provide training and be able to document that training has occurred," outlines "the 14 most cited training standards for the public sector" discussed, and concludes that "[s]afety training must be done and must be documented."

One of Cokley's undisputed duties was to review and recommend insurance carriers and act as liaison between the City and its insurance carriers in order to limit exposure and meet statutory requirements. In early 1996, prior to the annual insurance audit that usually occurred in February or March, Cokley became concerned that the building inspector, who was classified as an independent contractor rather than an employee, had not provided a certificate of insurance. Based on her knowledge and experience, Cokley believed that the building inspector should have been classified as an employee, because he worked out of city hall and was provided with a desk and telephone and code books by the City. Cokley testified that she talked to councilmember Black about not having an insurance certificate for the building inspector and about her concerns that the position was misclassified. Cokley could not recall when this conversation occurred. Cokley testified that if PERA had determined the position should be classified as an employee, the City could have been penalized for not making contributions to the public employee retirement fund, but there is no evidence that she shared this specific concern with Black or any other member of the council.

At trial, Cokley was asked by her attorney: "Did you consider the classification of the building inspector to be unlawful in terms of the independent contractor laws in Minnesota?" to which she responded: "Yes." No evidence of any such law or regulation was provided. Cokley was asked: "Did you suggest to the City that they reclassify him?" She responded: "I suggested to the City in that memorandum that they needed to address that issue." The memorandum to which Cokley referred is the summary of the workshop described above. In her summary of a session titled "A Cure for the Common CODE" that covered "the current law in Minnesota regarding building inspections," Cokley wrote: "If the [C]ity has a contracted building inspector, the building inspector must have insurance and indemnify the [C]ity." And, in a summary of the workshop highlights, Cokley wrote, in bold:

Require independent contractors to carry insurance indemnifying the [C]ity. They must be careful on advise [sic] and suggestion and not act as a consultant regarding building code regulations.

There is nothing in the memorandum about classification of building inspectors as employees or independent contractors.

In November 1996, a new mayor and two new city councilmembers were elected. Cokley wrote a note to the new mayor on November 6th, congratulating him on his election:

I hope you will find time during this interim period to meet with me, to allow me to understand the ideas you want to bring forth as mayor, and to allow me to discuss various issues that I feel are of concern.

At the November 12, 1996 city council meeting, councilmember, mayor-elect Fournier read a prepared statement about the need for reorganization and a city administrator. Fournier moved to eliminate Cokley's position, contract out the financial duties performed by Cokley and use the savings to fund the position of city administrator. The city council, without any discussion, voted unanimously to proceed with Fournier's proposal. On the recommendation of the city attorney, the council immediately placed Cokley on administrative leave and scheduled a public hearing for November 19, 1996 to give Cokley an opportunity to respond to the reorganization proposal. At the November 19th meeting, Cokley, through counsel, focused not on whether Cokley's position should be eliminated, but rather on the process leading up to the proposal and adoption of the motion to eliminate the position. At this meeting the city council voted unanimously in favor of the reorganization proposal. Cokley's position was eliminated and she was provided with a three-month-severance package.

In 1998, Cokley sued the City under the Minnesota Whistleblower Act, Minn.Stat. § 181.932 (2000). The City moved for summary judgment on the ground that Cokley had failed to establish, as a matter of law, that she had engaged in protected activity under the Act. The district court denied the motion, and the case was tried to a jury. The district court denied the City's motion for a directed verdict at the close of Cokley's evidence and the jury returned a special verdict, finding Cokley had made a good faith report of an actual or suspected violation of law and that the City eliminated her...