Landmark decision brings new clarity and protection for whistleblowers

August 30th, 2017

Halunen Law - Landmark Decision in Friedlander v Edwards

This month, the Minnesota Supreme Court issued a unanimous, landmark decision expanding protections for employees who report legal violations to their employers. The Friedlander v. Edwards Lifesciences, LLC, et al., decision involves a straightforward interpretation of a statute and at first glance may seem unremarkable. The truth of the matter is, it’s a big deal. To fully understand the ruling’s impact let’s explore an example that may sound familiar:

Imagine you are a compliance officer at large bank. Your boss shares a plan with you involving the highest levels of the company, to add fake accounts and credit cards for bank customers without their knowledge or permission. Appalled, you object to this plan and call it fraudulent. Your boss laughs and fires you. You, in turn, sue the bank for wrongful termination.

It may be surprising but until Friedlander your legal case would likely have been doomed even though Minnesota has a whistleblower protection law.

Before Friedlander, the bank would have argued to the court that you didn’t report unlawful conduct in good faith. The bank would point out two indisputable facts: (1) investigating and reporting such unlawful conduct was part of your job as a compliance manager; and (2) the conduct you reported was widely known and acknowledged by the bank, including your boss.

The Minnesota Whistleblower Act protects employees against retaliation by their employers for reporting potential violations of law in good faith. It always has. But when the legislature first enacted the Whistleblower Act, it didn’t define the term good faith. Without a legislative definition to guide it, the Minnesota Supreme Court interpreted good faith to mean, “for the purpose of exposing an illegality.”

For more than 15 years this definition of good faith caused courts to scrutinize the employee’s motivations for making a report. Employers successfully argued that at least two rules logically flowed from the definition:

  1. Employer knowledge. If the employee reports to a superior who already knows about the conduct—and the employee knows that superior already knows—then the employee can’t be trying to “expose” anything.
  2. Job duties. If the employee’s job duties require her to report wrongdoing, and reports conduct through the normal chain of command, the employee is just doing her job and not reporting, “for the purpose of exposing an illegality.”

The courts’ definition of good faith left major gaps in the protection of Minnesota employees. Employees who reported unlawful activity for equally just motivations—such as stopping unlawful practices well-known to their employer—were often unprotected. The definition also threatened to eliminate protections for large swaths of employees in compliance positions such as the bank employee in the example above. As a result, courts often dismissed cases because the employee lacked the legal motivation for the report required by prior court decisions.

In 2013, the Minnesota legislature amended the Minnesota Whistleblower Act and gave its own definition of good faith. The new definition made no reference to the employee’s motives: the good-faith requirement was satisfied so long as the report was not knowingly false or in reckless disregard of the truth. Despite this amendment, most courts continued to apply the prior courts’ definition of good faith.

That changed with the Minnesota Supreme Court’s recent unanimous decision in Friedlander. The Court held that the legislature meant what it said. It is now irrelevant whether an employee made a report “for the purpose of exposing an illegality.” By extension, an employee’s job duties are irrelevant, too. The report only has to be truthful.

Minnesota’s employees can now act according to their conscience and oppose unlawful practices occurring in the workplace with greater protections from retaliation. It’s that simple. That’s a good thing for employees and the rule of law.

Read the recent news release on this case.

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