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Home / All News / Whistleblower verdict against city of Otsego is overturned
Court finds no ‘report’ or causal nexus existed

Whistleblower verdict against city of Otsego is overturned

A city finance director’s stated concerns of suspected illegal practices by other employees did not constitute a “report” and thus were not protected by the state’s Whistleblower Act, the Court of Appeals has held.

The plaintiff — who in memoranda and comments to city officials outlined her concerns about certain overtime practices and other labor-related issues — was terminated shortly after two new city council members and a new mayor were elected. The plaintiff received a verdict of approximately $380,000 on her claim that the city terminated her for “whistleblowing” in violation of the state Whistleblower Act, Minn. Stat. sec. 181.932.

But the Court of Appeals reversed, concluding that “the employee did not engage in protected activity and failed to establish a causal link between her action and elimination of her position.”

The 19-page opinion, Cokley v. City of Otsego, Minnesota Lawyer No. CA-248-01, was written by Judge Terri Stoneburner.

Patricia Beety, who represented the city, said the decision reaffirms existing whistleblower law.

“The city’s position has been consistent — [the plaintiff] isn’t a whistleblower,” Beety said.

Beety pointed out that the actions and intent of the employee at the time of the alleged “whistleblowing” are material. “After the fact theories created for litigation aren’t going to pass muster,” she explained.

No protection, no causation

Plaintiff Phyllis Kay Cokley was the business/finance director and director of economic development for the city of Otsego from 1995 to 1996. Her job description included managing payroll and pay equity issues, supervising Occupational Safety and Health Act (OSHA) mandate programs and keeping informed on state and federal legislation. The evidence at trial established that she did not supervise OSHA programs. (The Court of Appeals noted that the exact scope of her duties was disputed.)

While in the city’s employ, the plaintiff raised three concerns about the city’s actions. One had to do with the Fair Labor Standards Act, one with OSHA and one with the classification of the building inspector as an independent contractor.

She stated her concerns in two memoranda and in conversations with members of the city council.

After the memoranda had been distributed, a new mayor and two new city council members were elected. The plaintiff wrote a congratulatory note to the mayor in which she stated that she wished to discuss “various issues that I feel are of concern.” Six days later the mayor-elect, who was a member of the city council, moved to reorganize the personnel, eliminate the plaintiff’s position and hire a city administrator. The city council approved the reorganization motion without discussion. The plaintiff’s position was eliminated after a public hearing a week later.

The plaintiff filed suit, alleging that her position had been eliminated because she had engaged in whistleblowing and that her conduct was protected by state law.

‘McDonnell Douglas’

The Court of Appeals observed that the Whistleblower Act, Minn. Stat. sec. 181.932, is interpreted under a McDonnell Douglas standard, under which the employee must establish a prima facie case. The employer must then articulate a legitimate reason for the employment action, and then the employee may demonstrate that the reason is pretextual.

A prima facie case is established by a causal connection between statutorily protected employment conduct and adverse employment action by the employer, the court said.

“The City argues that [the plaintiff] failed to prove statutorily-protected conduct and causation between her conduct and elimination of her job. We agree,” wrote Stoneburner.


The plaintiff believed certain scheduling practices by the city clerk and deputy clerk violated the FLSA. Her job responsibilities did not include verifying the accuracy of time cards. She submitted a memorandum to the city clerk, chair of a subcommittee rewriting the personnel policy, suggesting changes about work hours and how overtime was earned and paid. The memorandum stated, “past procedures regarding overtime and compensatory time have not been in conformance with the [FLSA].” She also talked to a council member, who told her she was correct but advised her to “leave it alone.”

The Court of Appeals observed that to qualify under the statute a report must “blow the whistle” by notifying the employer of a violation of law that is a clearly mandated public policy.

Stoneburner wrote, “As a matter of law, this non-specific reference [in the memorandum] to past practices not in conformance with the FLSA is insufficient to implicate a current violation of law or public policy.”

Further, the court stated, the evidence of conversations with the council member took place in the context of the subcommittee work on the personnel policy. The plaintiff told the council member that the employees were receiving benefits not required by FLSA, but she testified that FLSA provided only a minimum standard. There was no evidence that she discussed the issue further or that she discussed with any council member a violation of law that implicated public policy, wrote Stoneburner.


Concerns about OSHA were originally raised by a city maintenance employee, Duane Fielder, who discussed them with the plaintiff. She arranged a lunch with Fielder and a member of the city council, and may have discussed Fielder’s concerns with another city council member. Fielder had previously submitted the OSHA concerns to the city council.

The plaintiff wrote a memo summarizing a workshop she had attended which included sessions about OSHA requirements. The memorandum stated that the city “must provide training and be able to document that training has occurred.” The memo also outlined “the 14 most cited training standards for the public sector” and concluded that “safety training must be done and must be documented.”

The Court of Appeals found that the memo outlined OSHA requirements as taught at the workshop but did not assert that the city was in violation. The court also determined that the memo was informational.

The court also held that neither the meetings with the city council member nor the memorandum met the requirements of a report under the act and should not have been submitted to the jury for a determination of whether they were made in good faith.

Building inspector

The plaintiff became concerned that the city building inspector was erroneously classified as an independent contractor and should have been classified as an employee. She discussed this concern with a member of the council. She testified that she prepared a memorandum, but the memorandum was the same as the OSHA memorandum prepared after attendance at a workshop. It stated that the building inspector must carry insurance and not act as a consultant regarding building code violations.

“[The plaintiff’s] memo does not alert the council to the concern that [the plaintiff] expressed at trial, that the building inspector’s classification was in violation of ‘independent contractor laws in Minnesota,’ PERA requirements, or any other laws or r
egulations…There is no evidence that [the plaintiff] pursued this concern beyond her reference to insurance in the … memo. Neither the memorandum nor the concerns [the plaintiff] expressed to [the city council] report a violation of any law or regulation and do not, as a matter of law, qualify as protected activity under the Whistleblower Act,” concluded Stoneburner.

Conjecture and speculation

Turning to the issue of causation, the court determined that the plaintiff failed to produce any evidence of a connection between the alleged “whistleblowing” conduct and the elimination of her position.

The court was “mindful,” wrote Stoneburner, that retaliation may be proved by circumstantial evidence that justifies an inference of retaliatory motive. However, “in this case, [the plaintiff] has presented a theory of causation based on conjecture, not premises of fact from which a causal connection can be inferred,” wrote Stoneburner. “As is clearly demonstrated from the nature of her concerns and the manner in which she addressed them, [the plaintiff] did not intend to blow the whistle until after her job was eliminated, at which point she seized on the theory to explain the abrupt, seemingly arbitrary elimination of her job.”

The Court of Appeals concluded: “The district court erred by failing to direct a verdict for the City at the close of [the plaintiff’s] evidence, placing the jury in the position of determining whether the reasons for reorganization advanced by the City were ‘pretext’ without requiring [the plaintiff] to make a prima facie case under the Whistleblower Act. [The plaintiff’s] counsel adeptly used this error to his advantage, successfully persuading the jury to substitute speculation for evidence. Once the verdict was in, the district court erred by failing to grant judgment notwithstanding the verdict, because [the plaintiff] did not engage in any protected activity and failed to present evidence beyond speculation to show any causal link between the concerns she had expressed several months earlier with the decision to eliminate her position. Viewing that evidence in the light most favorable to the verdict, judgment for [the plaintiff] cannot be sustained on any reasonable theory.”

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