Kidwell v. Sybaritic Inc, No. A07-584

• Citation: 784 N.W.2d 220
• Decision Date: 24 June 2010
• Docket Number: A07-788.,No. A07-584
• Parties: Brian F. KIDWELL, Appellant,v.SYBARITIC, INC., Respondent.
• Court: Supreme Court of Minnesota (US)

784 N.W.2d 220

Brian F. KIDWELL, Appellant,v.SYBARITIC, INC., Respondent.

Nos. A07-584, A07-788.

Supreme Court of Minnesota.

June 24, 2010.

Syllabus by the Court

1. Minnesota's whistleblower statute, Minn.Stat. § 181.932 (2008), does not contain a job duties exception that categorically bars employees who report an illegality or suspected illegality as part of their job duties from bringing a claim under the statute. But an employee's job duties are relevant in determining whether the employee made a report in good faith for purposes of exposing an illegality.

2. In-house general counsel did not offer evidence from which a reasonable jury could conclude that he engaged in protected conduct for purposes of the whistleblower statute, Minn.Stat. § 181.932 (2008), when he reported to his client his legal opinion that his client was illegally withholding discovery.

James H. Kaster, Jessica J. Clay, Sofia B. Andersson, Nichols Kaster, P.L.L.P., Minneapolis, MN, for appellant.

Katherine A. McBride, James R. Roegge, Bradley J. Lindeman, Meagher & Geer, P.L.L.P., Minneapolis, MN, for respondent.

Daniel E. Warner, Warner Law Office, P.A., Inver Grove Heights, MN; and Leslie Lienemann, Culberth & Lienemann, LLP, St. Paul, MN, for amicus curiae National Employment Lawyers Association, Minnesota Chapter.

OPINION

GILDEA, Justice.

Appellant Brian Kidwell appeals from a Minnesota Court of Appeals' decision overturning a jury verdict in his favor and granting respondent Sybaritic, Inc., judgment as a matter of law. After Kidwell was terminated from his position as in-house general counsel for Sybaritic, he commenced an action, alleging a violation of the whistleblower statute, Minn.Stat. § 181.932 (2008). Sybaritic counterclaimed, alleging breach of fiduciary duty and conversion. A jury found in favor of Kidwell and awarded him damages in the amount of $197,000, plus fees and costs. The district court denied Sybaritic's motion for judgment as a matter of law or for a new trial, and Sybaritic appealed to the court of appeals. The court of appeals reversed, holding that Kidwell did not engage in conduct protected by the whistleblower statute because he was fulfilling the responsibilities of his position of employment when he reported a suspected violation of the law. Kidwell v. Sybaritic, Inc., 749 N.W.2d 855, 866-67 (Minn.App.2008). Because we conclude that Kidwell did not offer evidence from which a reasonable jury could conclude that he engaged in protected conduct, we affirm.

Sybaritic is a company that manufactures and sells equipment and spa products to spa and medical-spa industries. Kidwell was hired as in-house general counsel for Sybaritic in July 2004. Kidwell's position involved a variety of duties, including supervising company litigation, providing contract assistance, and advising on employment law issues. Kidwell explained at trial that as general counsel, he was “responsible for providing advice on any legal affairs of the company.” Kidwell's employment agreement describes the broad scope of his job: “To assist the President in assuming responsibility and decisions as to all corporate legal matters, and the general legal administration of activities at Sybaritic.”

On Sunday, April 24, 2005, shortly after returning from a business trip to Estonia, Kidwell sent an email to Sybaritic's management team entitled “A Difficult Duty.” Kidwell began the email by stating: “I write to you all with deep regret, but I cannot fail to write this email without also failing to do my duty to the company and to my profession as an attorney. That I will not do.” In the email, Kidwell expressed concern about a “pervasive culture of dishonesty” at Sybaritic and then proceeded to set forth specific matters that concerned him. Kidwell mentioned several ongoing concerns he had, including that the company had failed to investigate dishonest salespeople, allowed someone on the staff to engage in the unauthorized practice of medicine, and failed to pay taxes owed in California. Kidwell then stated that while those acts of dishonesty were outside his area of responsibility, he had become aware of activity which he had a responsibility to report.¹

Kidwell's “Difficult Duty” email was primarily concerned with emails Kidwell had come across earlier in 2005. Kidwell characterized these emails as “smoking guns” because he believed the emails weakened or destroyed intellectual property claims Sybaritic had pending against NeoQi, an Estonian company. Kidwell suspected that Sybaritic was obstructing discovery of the potentially damaging emails relevant to the ongoing litigation. In his “Difficult Duty” email, Kidwell said that after discovering the damaging emails, he had raised his concerns with Steve Daffer, Sybaritic's president. Daffer is also a lawyer and, according to Kidwell, Daffer implausibly claimed the emails were not discoverable. Kidwell reported that Daffer later stated that NeoQi “may have a hard time getting their hands on the damaging emails.”

Shortly after Kidwell discovered the potentially damaging emails, he was scheduled to leave for Estonia to take depositions in the NeoQi case. Before Kidwell left for Estonia, the information technology manager was asked to copy the potentially damaging emails to a disk and to provide copies of the disk to Daffer, Kidwell, and Sybaritic's outside counsel, T.A. While Kidwell was in Estonia, T.A. informed Kidwell that Sybaritic had contacted T.A. expressing concern that the disk containing the emails had a virus. While T.A. was confident his antivirus software would prevent any problems, Sybaritic insisted on retrieving the disk.

Kidwell's “Difficult Duty” email, written shortly after he returned from Estonia, said that Sybaritic had retrieved the disk from T.A. and had not replaced it. According to Kidwell's email, he and T.A. both believed the disk did not contain a virus. Kidwell said he became even more suspicious when his email password suddenly changed while he was in Estonia and when, upon returning home from Estonia, he found his office door locked despite the fact he had never been provided a key to the office.

In his “Difficult Duty” email, Kidwell explained the possible legal implications of Sybaritic's actions, expressing his opinion that there were false allegations in the pleadings Sybaritic filed in the NeoQi litigation and that Sybaritic had failed to comply with discovery orders. Kidwell also expressed his belief that Sybaritic may face Rule 11 sanctions, or charges for obstruction of a court order or obstruction of justice. Kidwell concluded his “Difficult Duty” email by writing:

It is my firm conviction that Sybaritic intends to continue to engage in tax evasion, the unauthorized practice of medicine and obstruction of justice. Accordingly, it is my intention to advise the appropriate authorities of these facts. I do this with no ill-will. To the contrary, I wish that I was not obliged to do so. However, the demand of Sybaritic that I become attorney of record in the [intellectual property action] has made it impossible to ignore the obstruction of justice issue, and compels me to speak out about the tax evasion and unauthorized practice of medicine issues which the company has refused to address. I regret that I see no other course of action available.

At trial, Kidwell testified that he sent the email to Sybaritic management “[b]ecause I hoped that we could pull this company back into compliance by enlisting some of the other members of management, and as the person responsible for the legal affairs of the company, that's what I had to do.”

Kidwell also sent a copy of the email to his father, a retired businessman. Kidwell said that he sent his father a copy of the email because he “had confided in my father the ethical dilemma that I was confronted with and wanted him to know what I had elected to do and be aware of that information should I need to talk to him in the future about any action the company might take.”

Kidwell researched whistleblower law before he sent the email to Sybaritic management. He testified that he did this research before sending the email because he “wanted to know if I confronted the company about these matters, what legal protections I might have.”

On Monday, April 25, 2005-the morning after Kidwell sent the “Difficult Duty” email-Sybaritic responded. Sybaritic decided to change Kidwell's supervisor from Steve Daffer to Steve Chelsey, another member of Sybaritic's management team. Kidwell met with members of the Sybaritic management team that morning, and by the end of the day, a framework had been developed to work toward resolution of the issues Kidwell raised. Three weeks later, Sybaritic terminated Kidwell's employment.

Following his termination, Kidwell commenced an action against Sybaritic in Hennepin County District Court, claiming that he had been fired in violation of the whistleblower statute. Sybaritic responded with counterclaims for breach of fiduciary duty and conversion. At trial, Daffer explained that T.A.'s computer disk had been retrieved because of concerns over a computer virus. Sybaritic's information technology manager testified that when Daffer tried to access the disk containing the emails, Daffer had found hundreds of duplicate emails, and Daffer had expressed concern that any virus that may be causing that problem would also infect T.A.'s computer. The information technology manager explained that Sybaritic had requested that the disk be returned so that he could clean the disk of viruses, eliminate the duplicate emails, and create a new clean disk.

Sybaritic also presented evidence at trial that, on April 19, 2005, T.A. expressed concern to Kidwell over possible evidence tampering and indicated his plans to write a letter to Daffer, but that Kidwell asked that the letter be routed to him instead. Sybaritic's information technology manager testified that he had not prevented Kidwell from accessing the potentially...