Rico v. State

• Citation: 472 N.W.2d 100
• Decision Date: 21 June 1991
• Docket Number: No. C5-90-397,C5-90-397
• Parties: Edward J. RICO, Petitioner, v. STATE of Minnesota et. al, Respondents.
• Court: Minnesota Supreme Court

Page 100

472 N.W.2d 100

Edward J. RICO, Petitioner, v. STATE of Minnesota et. al, Respondents.

No. C5-90-397.

Supreme Court of Minnesota.

June 21, 1991.

Syllabus by the Court

1. Respondents' unamenability to suit under 42 U.S.C. § 1983 is not dispositive of whether petitioner may maintain any state common law claims against respondents.

2. Respondents are entitled to immunity under the discretionary function exception to the Minnesota Tort Claims Act for the decision to remove petitioner, a policymaking employee in the unclassified service, from the position of Assistant to the Commissioner.

3. Respondent Gregg did not commit a wilful or malicious wrong because he had no reason to believe his conduct was prohibited at the time he acted; thus he is entitled to official immunity for the decision to remove petitioner, an unclassified policymaking employee, from the position of Assistant to the Commissioner.

Mark L. Seeger, William Starr & Associates, Minneapolis, for petitioner.

Hubert H. Humphrey, III, Atty. Gen., Alan C. Page, Asst. Atty. Gen., St. Paul, for respondents.

Heard, considered and decided by the court en banc.

KEITH, Chief Justice.

Following his removal from an unclassified position as Assistant to the Commissioner of the Minnesota Department of Veterans Affairs, petitioner Edward J. Rico brought this action against respondents, the State of Minnesota and William J. Gregg, the Commissioner of Veterans Affairs, alleging breach of an employment contract and wrongful discharge in retaliation for expressing concerns about the operation of the Department of Veterans Affairs. The trial court granted summary judgment on Rico's breach of contract claim but refused to dismiss the retaliatory discharge claim. Later the trial court denied respondent's second summary judgment motion based on governmental, official, and qualified immunity doctrines. Upon the joint appeal of the state and Gregg from the order denying the second summary judgment motion pursuant to Anderson v. City of Hopkins, 393 N.W.2d 363 (Minn.1986), the court of appeals, interpreting the wrongful discharge claim as an action brought under 42 U.S.C. § 1983, dismissed Rico's complaint because the state and its employees acting in their official capacity are not persons amenable to suit under section 1983. Because we find that the state and Gregg are entitled to governmental immunity under the discretionary function exception in the Minnesota Tort Claims Act, Minn.Stat. § 3.736, subd. 3(b) (1990), and that Gregg is entitled to official immunity, we affirm.

I

Edward J. Rico began working for the State of Minnesota in January 1975 at the Faribault State Hospital. Within weeks he was transferred to St. Paul. Rico rose through the ranks of state government: from an unemployment claims representative, to a personnel officer, later to a senior personnel officer, to Personnel Director I at Moorhead State University, and then to Personnel Director II at Cambridge State Hospital. In 1983, Rico secured a transfer to St. Paul as Personnel Director I and later as Personnel Director II, both classified positions in the Department of Veterans Affairs (DVA).

In 1984, a legislator suggested to Commissioner William Gregg that he promote Rico because Rico's lobbying efforts had been instrumental in the passage of legislation affecting the department. Commissioner Gregg processed a request to promote Rico to Personnel Program Manager, a position within the classified service. The Department of Employee Relations rejected the request and suggested that DVA create an unclassified position to give Rico more management responsibility.

Rico then prepared a letter dated September 21, 1984, for Commissioner Gregg's signature to the Department of Employee Relations requesting that his classification be changed from Personnel Director II to Assistant to the Commissioner, an unclassified position. According to the letter, the nature of Rico's position changed from performing personnel matters to administration at the managerial level--"Mr. Rico shares fully in the management of the Department and makes program as well as administrative decisions." An audit review approved the creation of Rico's unclassified position effective October 22, 1984. This review determined that Rico's department-wide policy development and implementation function, budget and legislative activities, and supervision and management responsibilities were comparable to Assistant to the Commissioner positions in other departments. Rico took a leave of absence from his then-abolished classified Personnel Director II position to accept the newly-created unclassified position.

By late 1985, Rico's relationships with several coworkers began to deteriorate. Rico attributed the fallout to his complaints about illegalities and improprieties within the DVA including the receipt of gifts by DVA employees in exchange for lobbying efforts, irregularities in expense account reporting, improper salary increases for undeserving employees, and administrative and fiscal mismanagement at the Minnesota Veterans Home. The state alleges that these issues had been discovered in already-released audit reports and that Rico actually participated in, or at least turned his head to some of the improprieties. Rico's superiors, Commissioner Gregg and Deputy Commissioner Jeffrey Olson, attributed the counterproductive work atmosphere to Rico's personality clashes with coworkers and department constituents, his attempts to undermine the department, his initiation of heated arguments in staff meetings, and his continued threats and allegations. In March 1986, Gregg and Olson decided to transfer Rico's offices from the DVA building to the Minnesota Veterans Home, according to Olson, because they felt Rico had "burned most of his bridges in state employment" and he needed a position with less personal contact.

According to Rico, dissatisfied with DVA officials' responses to his concerns and allegations, he met on July 8, 1986, with Governor Perpich's Chief of Staff, Gregg and Olson, to raise his concerns again. The state claims that Rico called the meeting not to discuss departmental improprieties but for personal gain. Rico admits that at the meeting he asked for a transfer to another department and discussed his demand for a salary increase. In a letter dated July 25, 1986, Gregg notified Rico of his removal from the Assistant to the Commissioner position effective August 19, 1986. Rico alleges that he was fired in retaliation for expressing his concerns about serious issues regarding the management of state government. In his deposition, Olson asserted the basis for the termination as follows:

Olson: [W]e had determined that the on-going problems of Mr. Rico's personality, his interpersonal relationships with other employees, members of our veterans constituency, threats and allegations, were not consistent with the type of department that we wanted to run.

Q: Were there any other considerations that went into the decision to let him go?

Olson: We also discussed whether or not we needed an Assistant to the Commissioner, if the workload was really great enough to justify the position.

Q: And what conclusion did you come to?

Olson: No.

Q: Did anything else go into the decision to let him go?

Olson: Not really.

Q: When was the decision made to let him go?

Olson: Mid-June.

Rico was not fired from state employment. Because he was on leave of absence from his since-abolished Personnel Director II position, Rico had rights to "bump" the least senior Personnel Director I in the department. Although there was no Personnel Director I position within the department, Rico also was eligible to bump the least senior Personnel Officer, Senior within the department. Rico did not exercise this option, and has been on layoff status since his removal from the Assistant to the Commissioner position.

II

The court of appeals, interpreting Rico's retaliatory discharge claim as an action under 42 U.S.C. § 1983, dismissed the claims against the state and Gregg because the state and its officers acting in their official capacities are not persons amenable to suit under section 1983. Rico v. State, 458 N.W.2d 738, 740-41 (Minn.App.1990); see Michigan v. Will, 491 U.S. 58, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989). The state's and Gregg's unamenability to suit under section 1983, however, is not dispositive of whether Rico may maintain actions against the state and Gregg under any common law theory including retaliatory discharge. See Johnson v. Morris, 453 N.W.2d 31, 41-42 (Minn.1990) (distinguishing official immunity from section 1983 qualified immunity while analyzing state law claims which arose from same set of facts as section 1983 claims); see also Elwood v. Rice County, 423 N.W.2d 671, 677 (Minn.1988). Thus, if Rico states a valid retaliatory discharge claim, which we assume given the procedural posture of this case, we must determine if the state and/or Gregg are entitled to any statutory or common law immunities.

III

Until 1976, the doctrine of sovereign immunity, with several exceptions, prevented suits against the state without its consent. In the Minnesota Tort Claims Act, the legislature waived its governmental tort immunity by creating a general rule of liability "where the state, if a private person, would be liable to the claimant." Minn.Stat. § 3.736, subd. 1 (1990). The waiver of immunity is subject to the discretionary function exception, which provides that "the state and its employees are not liable for * * * a loss caused by the performance or failure to perform a discretionary duty, whether or not the discretion is abused." Minn.Stat. § 3.736, subd. 3(b) (1990).

Although almost every government function involves some degree of discretion, we have recognized that the legislature did not intend the discretionary function exception to nullify the general rule of liability. Holmquist v. State, 425 N.W.2d 230,...