Gagliardi v. Ortho-Midwest, Inc.

• Decision Date: 19 June 2007
• Docket Number: No. A06-1318.,A06-1318.
• Citation: 733 N.W.2d 171
• Parties: Lisa GAGLIARDI, Appellant, v. ORTHO-MIDWEST, INC., Respondent.
• Court: Minnesota Court of Appeals

733 N.W.2d 171

Lisa GAGLIARDI, Appellant, v. ORTHO-MIDWEST, INC., Respondent.

No. A06-1318.

Court of Appeals of Minnesota.

June 19, 2007.

Steven Andrew Smith, Adam A. Gillette, Nichols Kaster & Anderson, PLLP, Minneapolis, MN, for appellant.

Stephen G. Andersen, Jennifer J. Kruckeberg, Ratwik, Roszak & Maloney, P.A., Minneapolis, MN, for respondent.

Considered and decided by ROSS, Presiding Judge; KALITOWSKI, Judge; and HALBROOKS, Judge.

OPINION

ROSS, Judge.

This case requires us to decide whether a saleswoman who worked for an orthopedic-devices distributor has raised facts sufficient to preserve her workplace sexual-harassment and retaliation claims for submission to a factfinder. Lisa Gagliardi appeals from the district court's grant of summary judgment in favor of her former employer, Ortho-Midwest, Inc. The district court dismissed her lawsuit after it concluded that Gagliardi did not present facts sufficient to sustain her claims of sexual harassment or retaliation by Ortho-Midwest. It also concluded that Ortho-Midwest is not liable for the alleged harassment by the employees of Aircast, Ortho-Midwest's client. We hold that the district court appropriately dismissed Gagliardi's claims of harassment arising from the alleged conduct of Aircast employees and her claim of retaliation. But we hold that the disputed facts, construed in the light most favorable to Gagliardi's claims, may allow a factfinder to find that Ortho-Midwest, through the conduct of its sole owner, subjected Gagliardi to a hostile work environment in violation of the Minnesota Human Rights Act. We therefore affirm in part and reverse in part.

FACTS

Lisa Gagliardi's harassment and retaliation claims arise from conduct that she alleges occurred during her approximately six weeks of employment at Ortho-Midwest, Inc., from January 15 to February 28, 2005. Ortho-Midwest, a manufacturer's representative solely owned by Craig Carlander, sells Aircast orthopedic devices and products. The alleged illegal conduct involved personnel at Ortho-Midwest and Aircast, Ortho-Midwest's largest client. Carlander hired Gagliardi to sell Aircast and other products to hospitals and physicians in Minnesota and to assist Carlander with maintenance and reporting requirements for the product lines. Ortho-Midwest engaged independent contractors to sell in other regions. Ortho-Midwest has no sexual-harassment policy, no employee handbook, and no human-resources personnel. Employment-related complaints must therefore be made to Carlander. Carlander had an informal agreement with his sales representatives, which she claims he described as, "You don't sue me, I don't sue you."

Beyond indicating that she would be required to travel extensively with Carlander, Carlander did not give Gagliardi a specific explanation of her job expectations, goals, or duties. Following Carlander's suggestion, Gagliardi spoke with a former female sales representative to learn more about the job. According to Gagliardi, the former representative told her that the job had few expectations and no sales goals. She warned Gagliardi to be very firm with Carlander to reject his sexual advances.

During her brief employment at Ortho-Midwest, Gagliardi took four business trips, three of them with Carlander. Gagliardi claims that she was subjected to sexually inappropriate comments and groping by Aircast employees during her first business trip with Carlander. She asserts that Carlander made inappropriate romantic or sexual advances and inappropriately touched her during their second trip together. And she claims that Carlander's unwelcome romantic or sexual conduct continued during her third and final business trip with him. She points to other statements and conduct by Carlander to support her allegations of pervasive and severe sexual harassment. Gagliardi told Carlander about one of the incidents of alleged harassment by an Aircast employee, and her boyfriend complained directly to Aircast about romantic emails Gagliardi had been receiving from another Aircast employee. Over about a four-day period at the end of February 2005, Carlander attempted by electronic mail and telephone to contact Gagliardi regarding specific work assignments, requesting her response. Gagliardi did not respond, and, on the evening of February 28, Carlander terminated her employment.

Gagliardi sued Ortho-Midwest under the Minnesota Human Rights Act, alleging that she was the subject of sexual harassment that created a hostile work environment based on the actions of three Aircast employees and Carlander. She also alleged that Ortho-Midwest retaliated against her because of her boyfriend's report complaining about the alleged harassment by Aircast employees. The district court granted summary judgment, determining that Gagliardi failed to prove a prima facie case of sexual harassment, that she failed to prove that her termination was illegal retaliation, and that Ortho-Midwest had a legitimate nondiscriminatory reason for terminating her employment, which she could not show was a pretext for retaliation. This appeal follows.

ISSUES

I. Did the district court err by granting summary judgment and dismissing a discharged employee's claims of sexual harassment by her employer's client and her supervisor?

II. Is a report of alleged incidents of sexual harassment conduct protected by the Minnesota Human Rights Act when the report is made by a third-party nonemployee?

ANALYSIS

Summary judgment is proper when, based on the pleadings, discovery, and affidavits filed with the court, there are no genuine issues of material fact and either party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03. On appeal from summary judgment, we review de novo whether there are any genuine issues of material fact and whether the district court erred in its application of the law. Prior Lake Am. v. Mader, 642 N.W.2d 729, 735 (Minn.2002). No genuine issue of fact exists when "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (quotation omitted). A court deciding a summary-judgment motion, either in the first instance or on appeal, may not weigh the evidence or determine credibility. See id. at 70 (stating that court should not weigh evidence); Forsblad v. Jepson, 292 Minn. 458, 459-60, 195 N.W.2d 429, 430 (1972) (stating that court should not determine credibility). Instead, we must view the evidence in the light most favorable to the party against whom the district court granted summary judgment. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). We apply this standard first to Gagliardi's sexual-harassment claims and then to her retaliation claim.

I

Gagliardi argues that the district court mistakenly concluded that she failed to establish a prima facie case of sexual harassment. She asserts that the district court failed to construe disputed facts in a light favorable to her claims and made unfavorable credibility determinations. Viewing the evidence in the light most favorable to Gagliardi, we find that she has not established a prima facie case of sexual harassment with respect to her allegations involving the Aircast employees, but that she has with respect to those involving Carlander.

The Minnesota Human Rights Act prohibits sexual harassment as a form of employment discrimination. Minn.Stat. §§ 363A.03, subd. 13, 363A.08, subd. 2(3) (2006). Sexual harassment includes "unwelcome sexual advances, requests for sexual favors, sexually motivated physical contact or other verbal or physical conduct or communication of a sexual nature." Id. § 363A.03, subd. 43 (2006). Both parties agree that to prevail on her claim of sexual harassment creating a hostile work environment, Gagliardi must show that:

(1) she is a member of a protected group; (2) she was subject to unwelcome harassment; (3) the harassment was based on membership in a protected group; (4) the harassment affected a term, condition or privilege of her employment; and (5) the employer knew of or should have known of the harassment and failed to take appropriate remedial action.

Goins v. West Group, 635 N.W.2d 717, 725 (Minn.2001).

To be actionable, the sexual harassment must have been so severe or pervasive that it altered the conditions of employment and created an abusive work environment. Id. We determine whether an environment is sufficiently hostile or abusive to support a claim by viewing "the totality of the circumstances, including the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee's work performance." Wenigar v. Johnson, 712 N.W.2d 190, 207 (Minn.App.2006) (quotation omitted). Although isolated instances of harassment may seem inconsequential, taken together they may demonstrate a course of conduct that creates a hostile environment. Giuliani v. Stuart Corp., 512 N.W.2d 589, 594 (Minn.App.1994).

Aircast Employees' Alleged Sexual Harassment

Gagliardi introduced her deposition testimony as evidence that three Aircast employees made sexually inappropriate comments to her and that one physically assaulted her during her first business trip with Carlander to San Diego. An employer may be held liable for the sexual harassment of its employees by nonemployees, including customers, when the employer is aware of the harassment but fails to take timely remedial action. Costilla v. State, 571 N.W.2d 587, 592 (Minn. App.1997), review denied (Minn. Jan. 28, 1998). The legislature amended the definition of sexual harassment in 2001 by deleting the provision that "in the case of employment, the employer knows or should know of the existence of the harassment and fails to take timely and appropriate action." 2001 Minn. Laws ch. 194, § 1. Gagliardi footnotes this change but continues to argue, as she did in the...